Audioboom’s revenues jumped but losses were more than expected during the 12 months its boss said "would be the year that we proved our business model".
The podcast firm revealed bumper fourth quarter revenues today, but negative earnings swelled as a result of increased costs from a strategic push to move operations to the US.
“We’re [now] a UK company in name only”, chief exec Rob Proctor told City A.M.. He stressed that sales of £630,000 in the fourth quarter – half of all the revenues generated over the year – proved the firm had turned a corner.
We are really excited for our prospects in 2017; the key priority is again strong revenue growth, as we focus increasingly on our US operations.
I believe that podcasting will be a $1bn industry in the next few years.
The focus on revenue growth comes at a cost: the negative earnings and a drain on cash flow.
Audioboom - which makes City A.M.'s Unregulated podcast - called on a cornerstone investor, property magnate and husband of popstar Holly Valance, Nick Candy, to put a further £2.3m into the business in August after flirting with an investment from China.
Proctor revealed his frustration at negotiating with the unnamed Chinese investor. “We were led to believe they already had the necessary government approval [to invest],” he said.
Unfortunately, such approval would not be considered by Chinese authorities until a draft sales agreement was in place. This forced Audioboom to announce a deal to the market that was very much in its infancy.
“In UK terms we wouldn’t have made the announcement at all,” said Proctor. But on advice from his brokers the firm informed the market. “For me personally, I don’t think we should have announced this at all.”
Nevertheless, the focus on US markets has helped reduce the firm’s monthly cash burn from around £325,000 to £250,000, Proctor explained. And Audioboom said it would save £465,000 through culling UK headcount.
The firm does continue to soak up cash and with just £710,000 left in the bank at the end of the year, investment will be required in the New Year.