Acast AB (publ) (ACAST) Earnings Call Transcript & Summary

Welcome to the Acast Audiocast Press Conference 2022. [Operator Instructions] And today, I'm pleased to present CEO, Ross Adams; and CFO, Emily Villatte. Please begin the meeting.

Thank you very much. Good morning, everyone. The sun is shining here in the U.K., and we've got some good news to talk about. Thank you for everyone for what is an incredibly exciting day for us here at Acast as well as our new partners, Podchaser and indeed, for the entire whole podcast industry. As you've heard, I'm Ross, CEO of Acast and I'm joined by our CFO and Deputy CEO, Emily Villatte. As you will have seen this morning, Acast is signed an agreement to acquire Podchaser. This acquisition will bring together the world's most comprehensive and authoritative podcast database in Podchaser and the one's largest independent podcast company. And is Acast enough Together, we'll push forward in addition to the benefit of open podcast ecosystem at [ Poland ], and we'll be able to go even further on our early leadership in discoverability and innovation strengthening our overall position as a company. The Podchaser attracts more than 4.5 million podcasts, hundreds of thousands of ratings and reviews and the advertisers of the world's top 5,000 podcasts, making up 1.7 billion data points through verified contributions from listeners and podcasters themselves Podchaser's database makes it easy for listeners to discover new podcasts and find information about existing ones across all of the listening apps out there. It also provides trustworthy, transparent data for advertisers and marketing professionals to more efficiently find and reach engage podcast audiences. And this increased visibility helps creators grow their shows and make more money. The company's unique proprietary podcast data spans and powers the entire podcast ecosystem, improving discoverability for all parties. Together, we plan to deliver the industry's richest metadata set for podcasters and advertisers. But before we dive more into our plans, I want to just hand over to Emily, who will expand on the financial details of the transaction.

Thank you, Ross. All right. Let's have a look at the numbers. So, the initial consideration amounts to USD 27.2 million with potential add-ons of up to USD 6.8 million based on meeting performance criteria. For Acast, the acquisition adds additional fast revenues, thanks to Podchaser's business model that monetizes the data it [indiscernible]. If we look at the Podchaser annual recurring revenues, the consideration represents an estimated ARR multiple of 4x to 5x in the coming 12 months. The consideration will be paid nearly in cash around 85% of it and newly issued shares around 15% over a period of 3 years. Now as part of the structure, we have tax dilution of 2.39% for the existing shareholders based on a share price of SEK 14. If the share price is lower than SEK 14 when shares will be payable, any deficit will be payable in cash. And equally, if the share price is higher than SEK 14 when future shares are payable, the number of shares payable will reduce by the equivalent amount. And Acast will finance the cash proportion of the consideration buy if cash on hand. And as a reminder, Acast had SEK 1.3 billion in cash as at the end of Q1 2022. Podchaser is expected to be cash flow positive during 2023, and we are expecting to complete this transaction on August 1. Back to you, Ross.

Thank you, Emily. Let's dig a little deeper into this -- what this acquisition will mean practically for our 2 businesses and, of course, the industry as a whole. Podchaser helped solve one of podcasting toughest problems. It's all about boosting discoverability in podcasting. That is the ease with which listeners can find new podcasts to enjoy and advertisers can find new shows to align with. So why does this union make such great sense? Well, firstly, Acast and Podchaser true champions of the open podcasting ecosystem. And what I mean by open podcasting is an ecosystem where all shows are available to be listened to and monetize across any listening app or platform. Combining our efforts to accelerate the innovation and democratization of this broadcasting ecosystem for podcasters, listeners and advertisers everywhere. Together, we'll unlock the vast opportunity we know exists for open podcasting to not just have parity with the data held by closed payroll platforms, but to leap forward and surpass them. We now aim to accelerate and maximize that data for all players in the industry. So podcasters will benefit from enhanced discoverability to drive their growth and monetization goals. And advertisers will benefit from superior performance metrics, enabling them to more efficiently reach their valuable audiences with access to data points covering demographics, consumption, reach and favorability. I think it's also crucial to underline that Podchaser case will continue to operate as a separate brand and independent business. It is extremely important that it continues to operate at the very heart of the industry serving all parts of it. To Podchaser, Acast is an attractive proposition in their journey as our 2 companies have shared ethos around supercharging the open podcast ecosystem to create the best tools possible for listeners, podcasters and advertisers. The acquisition of Podchaser follows a number of high-profile recent announcements from us here at Acast, including our integration with Facebook Owner, Meta and podcast Giant, Mark Maron, joining the Acast Creator network, and I cannot wait to see what we will achieve together. That's it. But I think now we are ready for questions, please, operator.

[Operator Instructions] And there seems to be no audio questions. I'll now hand it back to the speakers.

Great. Em should we -- anything to add to here or should we?

Seems like everything is crystal clear.

Great. Thanks for joining, everyone. We'll speak to you soon.

This concludes our conference call. Thank you all for attending. You may now disconnect your lines.