Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Storytel AB (LTS:0GBU, Financial) reported its best quarterly financial performance ever with record high revenues of 954 million SEK and an adjusted EBIT margin of 18.7%.
- The company saw a 10% growth in its paying subscriber base, reaching over 2.3 million subscribers, with 40% of this growth driven by the core Nordic markets.
- The Finnish market experienced a 30% year-on-year growth in subscribers, attributed to successful campaigns like Premium For Life.
- Adjusted gross profit margin improved by 4.6 percentage points year-on-year to 45.7%, driven by increased consumption of high-quality content from internal publishers.
- Operational cash flow was strong at 146 million SEK, reflecting disciplined strategy execution and cost efficiency measures.
Negative Points
- The average revenue per user (ARPU) decreased by 2% year-on-year organically, and by 4.4% when including adverse currency exchange effects.
- The non-Nordic core region's subscriber intake was slower than expected, partly due to price increases in markets like the Netherlands and Poland.
- The company faces challenges in balancing subscriber growth with profitability, particularly in managing customer lifetime value against subscriber acquisition costs.
- There is uncertainty regarding the impact of new market entrants like Spotify in the Netherlands, which could affect subscriber growth and market share.
- Despite strong financial performance, the company is cautious about future pricing strategies and market competition, which could impact growth projections.
Q & A Highlights
Q: Can you share some of your key observations after being with Storytel for about a month?
A: Bodil Ericsson Torp, CEO: I'm deeply impressed by the team's work, particularly in strategy execution, marketing investments, and cost efficiency. The company is in a strong position, and my responsibility is to take it to the next level.
Q: Can you explain the strong subscriber growth in the Nordic region, particularly in Finland?
A: Peter Messner, CFO: The growth was driven by new pricing plans and the "Premium For Life" campaign, which offered a 50% discount for a lifetime subscription. This strategy resulted in a 30% subscriber growth in Finland and contributed to low churn rates.
Q: How have the new pricing and subscription packages performed, particularly among younger audiences?
A: Peter Messner, CFO: The differentiated pricing tiers have been successful in attracting younger audiences. The introduction of flexible plans has allowed us to cater to different consumer segments, improving customer acquisition and retention.
Q: What is the outlook for subscriber growth in the non-Nordic core streaming segment?
A: Peter Messner, CFO: The subscriber intake was slower due to price increases in markets like the Netherlands and Poland. However, new pricing tiers have been introduced, which should positively impact subscriber growth moving forward.
Q: With strong cash flows and a solid balance sheet, is M&A something Storytel is actively pursuing?
A: Peter Messner, CFO: M&A is one of the strategic opportunities we are considering. We are reviewing our business plans and will update the market if there are any developments. Our strong financial position allows us to explore various strategic options.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
