Audioboom Group plc (BOOM) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Audioboom Group plc investor presentation relating to the Q1 2020 (sic) 2021 trading update. [Operator Instructions] The company may not be in a position to answer every question it receives during the presentation itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via our Investor Meet Company dashboard, and you'll be notified once they're ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. And I'd now like to hand you over to Stuart Last, CEO; Brad Clarke, CFO of Audioboom Group plc. Good afternoon.

Good afternoon, everyone. Good morning from New York City. I'm here in New York, Brad is in the U.K. I'm just really pleased to think that you could all join us to hear a little bit more about progress within Audioboom. I think we've got some fantastic news to talk to a really strong Q1 for us. We'll take a look at everything that's driving that strong performance for us. We'll look at the company's strategy and talk a little bit more about where we're going over the next 9 months of 2021 and beyond. And then at the end, we have lots of questions already coming through. Those are questions pre-submitted, so looking forward to answering a few of those questions with you. Will jump straight in. Usually, I think I like to talk a little bit about the position of the company and the company's strategy at the top here. But I think today, we'll just dive right in on our Q1 results that you all already have seen, I think, but we're very proud of the progress within the company and a very strong quarter for Audioboom. So just to talk through those results, fantastic quarter for revenue, a record revenue of $9.5 million. That was up 49% on the year on Q1 2020. And I want to just kind of reiterate this point that, that growth percentage, that 49% year-on-year growth was benchmarked by the only non-COVID impacted quarter of 2020. So we really started to see the COVID impact in the second quarter just because of the way our advertising contracts work, our advertisers have 30-day out clauses in those contracts, which meant when COVID hit in the middle of March, they were not able to come out of those contracts until April. So we saw no real impact in that first quarter of 2020. And so to have 49% year-on-year growth, I think, against the non-COVID-impacted quarter, it is very, very strong. And if you kind of think about where we're going across the rest of this year, you're going to start to see some very high percentages there when we look back at those soft Q2 and Q3s of last year. So expect to see some very good growth metrics, I think, when we compare against those COVID impacted quarters of last year. The other point I want to make on that strong revenue number is a sequential growth, the 12% growth against Q4 of 2020, which was $8.5 million. So we added $1 million quarter-to-quarter. And the key thing there is that usually we will see a softening of advertiser demand in the first quarter of each year as a seasonal impact that our business has, that the industry has and then the wider media ad supported business has. We did not see that this year. We've been able to kind of ride the growth of the industry, drive pricing, keep that demand high from advertisers. And therefore, we've grown quarter-on-quarter, which I think is a fantastic result. But the big one that we were really focused on, and when I presented the story of Audioboom back at the start of this year, we really looked at making sure and being super-hyper focused on Audioboom being profitable in 2021. And I'm really pleased to say that for Q1 of 2021, we had our maiden adjusted EBITDA profitable quarter of $30,000. It sets us up really well for the year. So all in all, a record quarterly performance, record revenue, fantastic growth story year-to-year and quarter-to-quarter and then to be profitable. So early in the year, I think that just sets us up for an incredible year ahead, something we're very pleased at Audioboom. This next slide, I really wanted to put in here because I just wanted to talk to you about the Audioboom's unique value proposition. And I think you'll see that coming through in the slides where I talked to you about what is driving performance and what will drive performance and growth in this company. And I think the key part of our value performance is this combination of platform and content. So in the early part of Audioboom's existence, 2014 to 2018 years, the company was very focused on building out a platform. That's the technology platform for the hosting and distribution of podcast content. It's the ad tech and the advertising marketplace which dynamically inserts advertising into content and connects with various programmatic ad exchanges and networks globally. And then it's the premium sales platform and inventory management system that sits on top of that. Those parts of the platform are very, very scalable. So right now, we deliver around 8,000 podcast content channels through the platform. The platform is scalable to the point where we could easily deliver 100,000 podcast channels through that platform. And it's -- it doesn't require any further investment to take it to that level of scale. So that platform is really driving the business from beneath. And then on top of that, over the past 2 to 3 years, the second phase of Audioboom is really scaling the content that sits on that platform and runs through that platform. So we have around 91 million downloads per month running through that platform. We're reaching 25 million unique users every single month through that platform. And really our focus and our future focus and future investment will be growing out that content on top of the platform. And that comes in 3 main ways. That's Audioboom's own productions, our original content and the productions that we work on in-house, it's our partnerships with third-party and independent podcast producers, those top-tier publishers that have podcast in top 100 podcast charts on Apple and Spotify. And then thirdly, it's the work that we do with our hobbyist and enthusiast level podcast partners. Those subscribers that pay us $10 or $20 a month to use our platform and our tool sets, smaller podcasts, but again, part of the growing content expansion business. So very much these 2 things work hand in hand. It's very unique to Audioboom. We really are one of the only podcast businesses in the world that have both of those elements, the technology and platform element combined with the content element. And you look at the M&A activity in the space over the past 2 years from the likes of Spotify, Amazon, SiriusXM, iHeartMedia. That's all been focused around putting these 2 elements together, focused on acquiring content and focused on acquiring technology. Audioboom is very unique in that we have both of those parts in the business, and that has really been driving this strong performance over the past 18 months and will continue to do so going forward. And when we look at that first quarter strong performance, there's 4 or 5 key reasons that I wanted to talk about as to why that performance has been so strong. And this really relates to that content operation and that content expansion that I just talked to. The first one here is just the incredible show retention that we have at Audioboom, very low churn. We grow those partnerships, work very organically with the hosts and the producers of those independent podcasts. And when we renew deals, we're renewing them for 24 months or 36 months. So these are long-term partnerships. And just in that quarter, during Q1, we have -- we've renewed partnerships with shows that deliver more than $6 million of annual revenue. So True Crime Obsessed in the Obsessed Network, our partnership with Formula 1 to produce and monetize their shows, our partnership with The Morning Toast and many others have been renewed. So very strong renewals that leads to good organic growth through their increases in audience over time. And as I said, more than $6 million of annual revenue renewed through those show retentions. The second part that we've been very pleased with, again, has driven much of that growth in Q1, is the work we're doing around Audioboom Originals and a slight shift in focus around Audioboom Originals as well. So we released 2 big shows produced and co-produced in-house by the Audioboom production teams. The first one is RELAX! with Colleen Ballinger, the second Dark Air with Terry Carnation, which is written and stars Rainn Wilson from the U.S. version of The Office. They are our biggest 2 podcast hits today, original content hits today. And really, that's come from a slight change of focus with what we're doing with Audioboom Originals. Here, we are now focused on working with bigger talent and leveraging that talent to drive audience. So before we were creating more shows but they were less impactful. Right now, we are focused on working with big talent, making each one of those launches more impactful, reaching new audience and then driving those shows to commercially successful places. Obviously, the third part of our -- of this and the real driver of our growth and our expansion around content is signing new premium level partnerships. Like I said, these are shows that appear in the top 100 of iTunes. They are professional level podcasts. And again, just in the last 3 months, we have signed some major shows both in the U.K. and the U.S. that will form part of our premium network going forward. And then, of course, we're riding some very strong industry tailwinds. So if you look at the podcasts industry, particularly here in the U.S., the organic audience growth has been very fast over the past year. So in the last Edison Research Infinite Dial study, there was a 17% increase in the number of U.S. adults consuming podcasts on a weekly basis. Additionally, there was a 14% increase in the number of episodes that each one of those listeners was consuming. Those 2 numbers combined are driving the consumption of podcasts and we've seen that within Audioboom. And we've seen a very strong increase in the amount of consumption of our podcasts. That leads to the creation of more and more ad inventory for us to sell. We can sell it at higher prices. And again, we drive the performance of the network by riding those industry tailwinds. So that content growth, all of those items are growing our content footprint on top of our very scalable podcast platform. And I think one thing that I'm really proud of and I wanted to note here was our position within the industry as a result of that content growth. We have moved up in the Triton Digital Rankers to be the fourth largest podcast company in the U.S. on The Rankers by terms of unique weekly reach. And that's an incredible step for us as a small business. If you look at our competitive set, we are performing so strongly. Stitcher is a company that's owned by SiriusXM, a multibillion-dollar radio company and to come another multibillion-dollar radio company Westwood One as well. Wondery was just acquired by Amazon for $300 million NPR is the equivalent of the BBC here in the U.S. So we are in and amongst a very well-funded and very well-resourced competitive set and we are outpacing the growth of these companies. We've moved up from 6th position in 2020 to 4th position in early 2021. We are increasing our market share and as I said, we are outperforming the wider industry on pretty much every metric right now. So Audioboom is moving quickly. We have great momentum. I'm very happy to kind of take that into the next part of the year. When I think about what the platform delivers to Audioboom, we've talked about how our focus on content growth has expanded the level of content and level of advertising inventory that we have within the business. The platform is driving the demand, it's driving the pricing, it's driving revenue optimization. And that's why the platform is so important to the Audioboom business alongside the content operation. So some key points, I think, from the first quarter, again, for driving that growth. Our premium advertising demand, that's the top 200 shows in our network. It's those live reads or host reads that are embedded into the fabric of the show, they are high-value units. We've seen no traditional Q1 seasonal drop off. Like I mentioned before, we usually see a slowdown in that advertising in the first quarter. We did not see that this year. And when you look at the -- what that means in a more detailed way, our top 15 shows had a 97% fill rate across that quarter, which is an incredibly strong performance. And there is high demand from advertisers for those top-performing shows and to be at 97% sellout for the first quarter was a very strong performance for us. As a result of that demand and of the unique way we sell advertising for those premium shows, we've been able to drive up pricing as well. So our average unit rate, the average price to buy 1 unit -- 1 advertising unit in one of our top podcasts has grown by 22% since last year. And that's driven by organic audience growth. There's now more audience listening to each one of those shows so we can charge more money there. There's also demand, more customers and advertisers trying to buy that content. So we're doing a very good job of increasing the pricing across the entire network. And then thirdly, an integral and growing an area of the platform that's growing in importance is our ad tech platform. So while our top 200 shows in the first 90 days after an episode launches, we monetize through those high-value embedded advertising units. The long tail of shows, the rest of the 8,000 plus those top tier shows, once an episode gets to 90 days old, those are monetized in a different way through advertising technology, dynamically inserting advertising into those pre-roll, mid-roll and post-roll advertising slots in a piece of content, whether a piece of content is 90 days old or 5 years old, we can push fresh ads and remonetize that content. And I think until 2019, we'd seen relatively flat performance from the ad tech and the monetization from the ad tech. We've done a very good job of increasing that over the past 2 years, and revenue from ad tech in Q1 was up 316% on the previous year. So we are optimizing the monetization of our podcasts, particularly around the archives and the long tail of our 8,000 shows that we work with. All in all, the platform, combined with our increase in the content operation has driven incredibly strong performance in the first quarter of the year. And as a result, our analyst has upgraded the market expectation for Audioboom. So just to run you through those details, if you haven't seen them, our 2021 revenue expectation is now $37.5 million, that would be a 40% increase on 2020's revenue number. And obviously, that was previously set as $35.4 million. So a step up to $37.5 million as our revenue expectation for the year. Our adjusted EBITDA expectation is now $50,000, and that's versus $1.7 million loss last year in 2020 and for the first time, we've also introduced 2022 expectations as well. So the 2022 revenue expectation currently sits at $45 million. And the adjusted EBITDA expectation is a profit of $1.1 million. So we've welcomed the upgrade of that expectation by our analyst, and we look forward to performing against that. And we're very confident that we will hit those numbers. And for the next few slides, I will throw over to Brad, who can run you through some of the financials in a little more detail.

Great. Thanks, Stuart. Thanks also to everyone for joining. I'm Brad, CFO, been with Audioboom for the last 3 years. What I wanted to do on this slide is, in this announcement and previous announcements we said, the company has got very good cost control. I wanted to display here what actually means. We've displayed here our total OpEx base for the last 2 years. And you can see the average across that period is $2 million. And if you extended it back into 2018, you see that the 2018 average $1.9 million. So we've been able to maintain that control on our cost base at $2 million, while we've driven that impressive top line revenue growth. So as Stuart said, 49% year-on-year. If you go over 2 years, it's 106%. In terms of the breakdown of our OpEx, the main area of costs within the business is salaries and commissions. Our sales staff are incentivized through commission to drive that top line revenue growth. Next biggest bucket, of course, is our technology costs, our hosting and bandwidth cost accounting for around 18%. Sorry, salaries and commissions account for around 66% of our cost base and then we got the other categories there. But I'm very proud of that fact that we've managed to -- like I said, maintain that cost base relatively consistent over the last 2 years, while we've driven that really impressive market-leading top line revenue growth. And I mentioned the major cost category that we have, I'd say major, we've only actually got 35 staff within the business. So if you look from Q1 to -- Q1 2019 to Q1 2021, we've actually reduced that account by 17%, albeit that's only 6 head reduction. But the team within Audioboom being very, very focused. Everyone's got a specific role to help drive growth within this business. And we fair very favorably when you look at our major competitor within the U.K. and Europe, [ AirCast ] has over 300 heads, over 10x the start level of Audioboom. So we're very, very proud of that team to be able to keep that performance going over the last couple of years. If we -- if you've listened to previous presentations, I normally major on the data collection side of the business. That continues to be the #1 focus for our 3-maned finance team within Audioboom, and we've started the year well at collecting over $8.5 million, averaging $2.8 million a month, which is up $600,000 on the $2.2 million average per month in 2020. If you look at the graph on the left-hand side, what I've displayed is that you can see receivables in orange, revenue blue, payables in gray, and we've mapped that over the last 2 years. And what you can see is the receivables have increased as we've gone through Q4 and Q1, the company's largest quarters in terms of revenue. Now in terms of the actual analysis and assets of those receivables, the actual debtor days have decreased since the year-end from 87 down to 71. And as I said before, the collection profile of the group is really quite strong. So you'll note in the trading update, cash decrease from end of December to the end of March by $1.1 million from $3.3 million down to $2.2 million. But it's important when you look at the company, in my view, is to look at the total asset value of the company. So cash and debtors. And if you look at the end of December and the end of March, our figure is consistent at $9.5 million. So the impact of scaling a business and growing a business is that there are those shifts on the balance sheet from cash to debtors. It's also important to note that in the quarter, we paid $0.7 million to our third-party talent, podcast partners in recoupable advances. So that does impact the working capital of the business. So in order to retain, attract, help fund podcast partners, we do offer as part of certain contracts recoupable advances, and they are fully recoupable over the life of the deal. You reduce future payments by a proportion of the advance. So that does impact working capital within the business. So we paid $0.7 million of those advances in the first quarter. So that just gives us a little bit of an insight there in terms of the working capital of the business. In terms of payables, they remain consistent between the end of December and at the end of March, $4.3 million at the end of March, $4.1 million at the end of December. So we can see that clearly, the business is growing. But in terms of our processes in-house where [ Axon ] and I view us as market leading in terms of the podcast sector, in terms of the actual collection profile and processes that we have within the business. Further note just in terms of the resources available to the company, we've also got access to a further $3.3 million of the SPV investments loan. We haven't drawn down on that in the first quarter, so that's still available to the company, should we require it. Back to you, Stuart.

Thanks, Brad. I'm going to show you all, I think, a few good-looking charts here, charts that are all heading in the right direction when we look at our KPIs. And the first one is the new KPI. This is our global downloads data point. And we brought this in because it's more of an industry standard metric. It allows us to compare Audioboom's growth versus the growth of our competitors. It's measured by the Interactive Advertising Bureau's Podcast Measurement standard and is verified by our measurement partner Triton Digital. So this is a very reliable stat. It's been something that we have been tracking since the start of last year, although we have only included it as a KPI from this year forwards. And here, you'll see some fantastic growth from 64 -- 63 million downloads on average per month a year ago to 87 million downloads per month on average in Q1 of 2020. So that's 37% in growth year-on-year. And I just want to call out the March 2021 number, 91.6 million, another huge step forward. So this is showing the results of our focus on our content expansion strategy. It's coming together very well. We're increasing and scaling up the size of our content business. Our second KPI is our brand advertiser count. This is the number of advertisers that we work with directly through our premium sales network. So this doesn't include the hundreds and thousands of advertisers that come through our ad tech. These are the ones that we work -- these are the customers that we work with in a very one-to-one way, and they advertise on our biggest 200 podcasts, buying those high-value units. And I think the key points to focus on here are, if you look at Q1 of 2020, you'll see a dip, and that's a seasonal dip. I've talked about that drop-off in the first quarter of the year. So we saw that last year. But this year, I'm very pleased that we maintained, exactly maintained actually, the level of brands that we work with from Q4 of last year into Q1 of 2021. So that's clearly a big driver of our performance in the first quarter of this year. And then our third KPI, and this one is my favorite and many of you may have heard me talk in detail about this one before. This one is the one we call our eCPM and it effectively is a measurement of the value that we are extracting from every 1,000 downloads of our ad-supported content. So it's an optimization metric. It's how well we are monetizing that content. And we've seen very good growth in this KPI. If this was to go back as far as the start of 2018, you would see a $13 number at the start of 2018. And we most recently hit a record of over $40 for Q1 of 2021. Again, here, you will see that dip, that COVID impact in Q2 and Q3 of last year before we got back on another good upward trajectory. So the key points here, I think, on this KPI are -- there is a lot of headroom here for us to continue that growth. So we're up to $40. I think there is a kind of a ceiling somewhere around $150 mark on this KPI. And let me break that down for you, the reason why, each podcast or each podcast episode generally has around 4 to 5 individual ad units in it. We sell on average, each 1 of those units for around a $25 eCPM, that's $25 per 1,000 downloads. So a full episode has around $125 of value attached to it. If we were to sell every single podcast fully out, a 100% sellout rate, our eCPM would be in and around the $125 mark. So you can see that we've made great progress there, but we still have a lot of opportunity here to continue to optimize our sales function. I showed you that stat earlier were 97% fill-out rate against our top 15 shows. Obviously, that's going to drive eCPM higher. But as you go further down our list of shows, the long tail of shows, again, the optimization drops off a little bit. So we're very good at fully optimizing our top shows. We're working very hard now to continue to optimize the entire group, drive this eCPM KPI even higher. And like I said, somewhere around $125 is the ceiling on this KPI. So just a reminder and just to talk through again Audioboom's growth strategy. I think what we've done a very good job of in the past 18 months is being very clear on how we will grow this business. And it's all through scaling that content on top of the platform. And we do that in 3 ways. We do that through content acquisition, and that's the work we do with third-party and independent podcasters. We do that through making content. That's the work we do through Audioboom Originals or through our production arms. So that shows like Dark Air, which we just released. Those are our -- as our partnership with Formula 1 where we are producing that content for the partner. So that's where we're making content. And Sonic Influencer Marketing, which is our business down in Austin, Texas, they are focused on accessing content. So what that platform does is allows us to access advertising inventory in podcasts that don't belong to the Audioboom network. Effectively, they can monetize podcast content wherever that podcast is affiliated. So the -- whichever network it belongs to or publisher it belongs to, Sonic Influencer Marketing can monetize that content by working with clients and brands to access the advertising inventory. So those 3 things together, that's growing our content operation and our content footprint, and is kind of the key around the next 4 to 5 years growth within this business. And the last slide for me, I think, before we get to questions, and this is really like what we're looking at across 2021 and how set for continued growth we are. I think the first point to make is that we have incredible revenue visibility within the business. So at this point, we are 90% booked to our original $35.4 million revenue expectation and 85% book to the upgraded $37.5 million expectation. So again, having that visibility on the revenue fills us with a lot of confidence that we will outperform the number that's in the market today. So we're all set to go through that across the year. Another point here in how we are underpinning that revenue performance is how we are selling the inventory on our top shows. So let me kind of give you a little bit of background. As the industry has professionalized over the past few years, we now go through an upfronts process, where we open up sales to our biggest customers in October and November of the year before, they can buy across our entire roster at slightly discounted prices. The good thing for us is we get money on the books. And for our smaller shows, that's fantastic because the -- we can see the support across our smaller shows for the entire year. For our larger shows, we now hold back that inventory. We don't allow our top customers to buy that inventory for Q3 and Q4 during that upfronts discounted process. And that allows us to drive higher pricing on our top shows in Q3 and Q4. So we've got to that 90% of market forecast booking number, and we've only just opened up Q3 inventory on our bigger shows and we won't open up Q4 inventory on our biggest shows until June. So we know that, that is -- there's still a lot of inventory there to sell on some of our bigger shows. And again, that gives us a lot of confidence that we will go above and beyond those market expectations. Another partnership that we just announced was with MAPP Media in the U.K. That partnership will monetize again our archives and our long tail through those ad tech dynamically inserted advertising impressions while Audioboom's in-house team concentrates on those premium units. Again, this is another partnership around optimization. And that partnership began on April 1. So the Q1 strong performance doesn't recognize any of the revenue that we will drive through our partnership with MAPP Media, we'll start to see that revenue coming through in Q2 and beyond. And then similarly, we've just announced 3 global sales partnerships. So for me, this is a very efficient way of stepping into other global markets. As you may know, previously, we did have an operation on the ground in India. We shut down that operation last year. It was a very inefficient way of working in a very unique market. So I think as we grow, we will develop partnerships in new territories that we want to expand into and that will be the efficient way of doing business there. The Australian Radio Network is our partner in Australia. We have worked with them in the past, whereby they were able to monetize just a handful of our top podcasts. The new partnership that we have with them that started on April 1 allows them to monetize the entire roster of 8,000 podcasts in Australia. So again, that will be new revenue that is coming through that partnership that we wouldn't have seen any of in Q1, and we'll see that from Q2 onwards. Rogers Media, a partnership we actually first announced in the fall of -- in autumn of last year. Again, that partnership is now coming through and Rogers Media in Canada, which is our fourth biggest market, those campaigns are now being sold from April onwards. So again, we will start seeing revenue coming through that partnership across this year. And then Ideabrew Studios, which is a more efficient way of doing business in India. India is our fifth biggest market. Ideabrew Studios will sell our inventory in India and also the Middle East, and that partnership launched on April 15. So again, more new revenue coming through those optimization partnerships across the year. So these items combine just a few of the reasons why we're very confident on outperforming those market expectations. And I think -- and I hope you'll be pleased to see that we've set ourselves up for a really strong year in 2021. And we are growing in a very good way, and we're excited about what the next 9 months will give us.

That's fantastic. Stuart, Brad, thank you very much indeed for your presentation. [Operator Instructions] Just while the company take a few moments to review those investor questions submitted already, I'd like to remind you the recording of the presentation, along with a copy of the slides and the published Q&A can be accessed via our investor dashboard on the Investor Meet Company platform. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And Stuart, Brad, we have obviously a number of questions come in from investors, some of which you have covered off in the presentation itself, but perhaps I can pick up on these. The first one reads as follows: can you explain a little about how you look to expand your podcast network and strategic partnerships? And are there any new geographic regions you'd like to expand into?

Yes. I think I touched on a couple of those points in the presentation, but there's definitely more detail I can give here. Our growth plan is fully focused on building out that content operation, those professional level creators, our in-house content and those hobbyists and enthusiast level creators. Really, we can deliver value to all podcasters of any size. But when you focus on that key revenue driver of the professional tier, those top 200 shows that we work with, those independent than publishers, the majority of that growth and that new opportunity comes to our relationships with the main Hollywood talent agency. So we've spent the last 3 to 4 years building very strong relationships at UTA, at WME, at CAA and then a whole host of other management companies and talent representation. And that's delivering us greater opportunity to partner with big podcasts than ever before. So I would say today, if I was to look at our business development pipeline, we would have more than 10 individual proposals in with at talent agents to sign and to partner with existing podcasts. They all have strong built-in audiences. They would all fit into our premium network of 200 top shows. They would all be delivering more than $0.25 million of revenue each year. So we have 10 proposals in on any given day to work with new shows. Most of those are in the U.S. Increasingly, we are starting to work with talent reps in the U.K., too, as that market develops, but the majority of that work is in the U.S. And as I kind of said before, I think right now, we are mainly U.S. and U.K. focused when it comes to expanding on the content side. But those partnerships that I just talked through in Australia and Canada and India, those are really focused on sales in other territories, and that's I think the work that we'll do in other territories over the next 2 years, just that sales [ meets ]. And I think one other key point is, while we are doing this great work with the talent agencies to partner and to bring in the big shows, our biggest show that we partnered with today is a show that will deliver more than $3 million of revenue this year. And that show started life as a subscription show. So this highlights the importance of the Audioboom tech platform as well as a funnel for business development. So actually, they joined us 2 years ago. They signed up to our subscription platform. They paid us $10 a month for the first few months. Internally, we have a bunch of flags that were set up to highlight shows where we were seeing audience growth. We saw really strong audience growth with that show. We reached out to that show, made a personal connection with that show. When the audience got big enough, we moved them up into our middle tier of advertising, those lower-value ad tech based units. We worked for the show around best practice, help them grow their audience. Again, once the audience got big enough, we moved them up into our premium tier and decided to monetize through those high-value post endorsements and live reads. So that show has gone from paying us $10 a month to work with us and to use our tool set to delivering $3 million of revenue this year. So on one hand, it's the fantastic work we do with the talent agencies to grow our content partnerships. And then on the other hand, our tech platform will deliver that growth and that funnel of new business.

Fantastic. Thank you, Stuart. Next one we've got here [indiscernible], back in late 2020 you noted the feedback from interested parties during the formal sale process highlighted the nascent stage of the company's original content and production operations. Can you compare where you are today versus this point last year, just to give some sort of comparison?

Yes, we made good progress. Although I think one thing I would say is that building an original content and production business, just -- it's just not fast. So it shows that we were developing last summer, July and August of last year, those shows that were going into development there. Those have only just been released, have just gone out like Dark Air and RELAX! in February. So there's definitely this lag between the development phase and the investment into that content, and when you see the results of that content. And that lag, that delay could be up to 10 to 12 months as you run through that development and production process in order to have those high-quality hits. I think what I am most impressed with and kind of pleased with, is that shift of focus that I talked to you about a little bit earlier. So we've released fewer shows so far this year. But each one of them has made a much bigger impact. So RELAX! was a show that very quickly went to #1 on the U.S. Apple podcast chart, Dark Air will be the biggest commercial success for any Audioboom Original. There's very strong revenue attached to that show. It was 90% sold out before Episode 1 even launched. And that is because of that focus on working with high-profile talent and our focus on leveraging that high-profile talent to drive the success of the show. So Colleen Ballinger, the host of RELAX!, she has 50 million plus social media followers. She has a huge YouTube channel, When we launched our show, we were able to leverage that audience, drive it to the podcasts and drive that show to #1 on the Apple chart. And then as a result, we have strong audience to sell against, and it's made that show very successful. Rainn Wilson, the guy that we worked with on Dark Air, he's a huge star of the NBC version of The Office. And as a result of his high profile, we've delivered and we've just kind of calculated this in the last 2 days, somewhere around $250,000 of kind of free marketing effectively. He has been a guest on radio morning shows. He's been a guest on TV morning shows here in the U.S. He's appeared on 5 of the top 50 podcasts. And just last week, he was a guest on James Corden's CBS Late Night Show in the U.S. as well. So people wanted him on as a guest. That high-profile made him attractive. He went on those shows. He talked about his new podcast. We built a lot of conversation around that show before the show launched. And like I said before, that will be a big commercial success for us. So this kind of shifting in focus to do less, but to make each one of those launches even more impactful than the last is something that I'm very happy about.

That's great. Thank you, Stuart. Next question we got from an investor today is [indiscernible] follows great progress. Do you see the momentum you have continuing through second half of 2021? I know you've covered this slightly on the presentation already.

Yes. I mean the rest of 2021 is shaping up really, really well. And I talked about my confidence of going above the market expectation. But I think there's even more things that you can look at to get some confidence in where we're going. And as always, content growth is kind of the key here, and we've got lots to get excited about. If you -- just going back to Dark Air, the Audioboom Original that I talked about a moment ago, that's a big revenue driver. You won't see the impact of that revenue until Q2 and Q3 results are announced because actually we didn't launch until April 1. So new content dropping there, that we're able to monetize very effectively. Back in January, we announced a partnership with a show called Fantasy Footballers. That's the biggest sports show in the U.S.. It deliver more than $2 million in annual revenue. But the key thing with this show is that it's very seasonal. So more than 80% of the inventory attached to that $2 million in annual revenue, more than 80% of that inventory happens in the second half of the year. It happens around the NFL season that starts in late August. So again, we've signed that deal but you're not going to see the impact and the revenue impact of that deal until the second half of the year, too. So just a couple of items there that we can be confident about, will keep that growth going for Audioboom. And then as I said earlier, I think at any one moment we have more than 10 proposals in with talent agencies. We're very successful at turning those proposals into partnerships. We are the fourth biggest podcast business in the U.S. People want to work with us, the talent agencies recognize that we do a fantastic job of supporting their talent and their clients'. So we will turn those proposals into partnerships. So we're adding new content all the time. There will be way more content to sell in Q3 and Q4 than there was in Q1, and you can just see the continuation, I think, of that progress.

Great. Thank you, Stuart. We've had a couple of questions around expectations, analyst expectations. But if I can read you this one out, have the analysts upgraded market expectations too conservative given you're already 85% of the way to the upgraded revenue?

I think I'm comfortable and happy with where they are right now. We are still early in the year. Plans last year were hit by something that we didn't see coming in COVID. I think it's good to [ ere ] on the conservative side this early in the year, we are in the second week of April. So I think I am comfortable there. I think the point I do want to highlight, though, it's just how Audioboom has changed over those past 18 months. We now have this very clear growth strategy that the entire team, the Board, our analysts are all very kind of aware of and focused on. And so when we do talk to you about legitimate -- when we do talk about growth opportunities, they are legitimate growth opportunities, right? They're very, very real. And as a result, we now do deliver on our goals. And I think that's very important. I think that means that you can see that we do meet those expectations. We now have a history of the last 18 months of achieving what we set out to do. And so you can be confident in what we're doing. And I do think we are confident to go above and beyond that current or the upgraded expectation. But let's just make sure we do, so let's get there. Let's make sure we do, and then let's talk about where those expectations go.

That's great. Thanks, [ Jim ]. The next question we have is around your cost base. The cost base has been steady at circa sort of $2 million per quarter. How much does this need to increase in the next 2 years? Could you actually continue this pace of growth?

I think I talked a little bit about the unique value proposition of that platform that underpins all of that content. And I think the first thing to say is that there's no real investment needed into that platform. It can host and distribute the 8,000 shows that it does today, but it's fully scalable to 100,000 without any real additional cost. The other part is growing our partnerships with independent podcasts doesn't really add to our cost either. We will keep that premium network at around 200 shows, but each of the shows in that network will just be bigger and bigger and bigger than the year before. So we're not really paying money or increasing cost to service, those top 200 content partnerships. The key area of investment for us is Audioboom Originals in the production business. And that does require investment in staffing, investment in marketing and growing audiences to make Audioboom Original as a bigger part of what we do. And we have a goal around that to go from 5% of our revenue attached to Audioboom Originals to 15% of our revenue attached to Audioboom Originals in the coming years, I think. Much of that focus has been in the U.S. at this point, but we will start to grow a content creation business and original content business in the U.K. later on this year. Reasons for that, there's a big gap in the market, we feel, for a commercial content creator. The market is not too crowded. Audience acquisition costs are lower, competition is lower. And then the other thing is there's a huge amount of strong production talent ex-BBC program makers that we can utilize build out that U.K. content creation, and it's very economical to hire in the U.K., too. So producer in the U.S. costs around 75% more than in the U.K. So hence the reason we will focus some of that original content growth in the U.K , too. So cost will increase because we do want to grow out the original content part of the business in Audioboom Originals. But it's mostly around the original content where that gross margin is significantly higher around 40% versus the company-wide average of 22%. So yes, it's increased cost, but it's going to lead to revenue that has a higher margin attached to it. And I think what you're going to see is because of that very good cost control, you will start to see that gearing effect come through over the next couple of years, driving the EBITDA performance higher. So yes, there will be some increase in cost, it won't be dramatic, and it will drive stronger performance for the business.

That's great. Thank you very much indeed. We've had a couple of questions as well, sort of around your major shareholder, but let me just pick this one for you. What do you know of your major shareholders' feelings about the future path of the business?

Yes. I mean I'd say that we're pleased right now that we just have this fix to focus on growing the business through the strategy that I talked to you about today. Again, I think for the first time in a long time, over the past year or so, our shareholders fully understand what we're doing, why we're doing it and what our opportunities are. They understand that we're really now hitting our stride, that we have strong growth ahead of us, and we have strong growth ahead of us independently in the near term. So having that space has been very powerful to us, and we're glad to have that. I feel that the business needs to be free of distractions for us to execute those plans. It hasn't been over the last few years. But it is now. And that's why I'm really excited to kind of keep growing this company and to keep growing this company really as the leading independent podcast business in the world.

That's great. Thank you very much indeed, Stuart. I'm just conscious of time as we are coming up towards the end of the session, and we have covered off a vast number of those questions that we've had through. I know there are some [ few ] around certain subject areas. But if there are any further questions that are submitted, the company will review all the questions submitted today and publish responses where appropriate to do so. And Stuart, perhaps then if I could just ask you just for a few final words just to wrap up before we redirect investors to give you some feedback.

Sure. I mean I think, firstly, just to say thank you to everyone for joining us today. Thank you for the support in the business. We appreciate the questions. We appreciate the feedback. We're in an exciting place for the company. Really great start to the year. We've got a lot of work ahead of us. I just think this is a slightly medium to be a fantastic industry to be in, we have really strong tailwinds. And Audioboom as a business, the fact that we just keep on outpacing the rest of the industry in terms of growth means that we have a fantastic future ahead of us.

That's great. Thank you very much indeed, Stuart. And thank you, Brad, for updating investors today. Could I please ask investors not to close the session as you'll be automatically redirected for the opportunity to provide your feedback. [Operator Instructions] On behalf of the management team of Audioboom Group plc, we'd like to thank you for attending today's session. That concludes the event.