Audioboom Group plc (BOOM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Audioboom Group plc Interim Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during today's call. However, the company can review all questions submitted today and will publish those responses which it's appropriate to do so. We'll now submit a poll. If you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to the management team from Audioboom. Stuart and Brad, good morning to you both.

Thank you. Good morning, everyone. A special day today. We are both in the room together, I think, for the first time on one of these. So it's good to be with you. For those of you that don't know us, I'm Stuart Last, CEO of Audioboom. I've been CEO for the last 6 years and been with Audioboom for just over a decade actually. So I'm pleased to be with you today.

Yes. Thanks, everyone, for joining. I'm Brad Clarke, CFO here at Audioboom Group. I've been with the company since March of 2018. It's been a quite exciting week for the company. So I look forward to taking you through that today.

For those of you who regularly join us, I think this presentation will be slightly different. I think we'll spend the first half focused on year-to-date performance and results. Second half we'll focus more on the transaction, give you more detail there, walk you through that. And then as always, a Q&A session at the end. So we have around 45 minutes today, and it will be split up and presented to you in that format. So yes, I think the key parts for today's meeting, as I said, we'll look at H1 results first. We've continued that positive growth story -- positive results, everything as expected, on track to deliver a record performance for 2025. As you know and as you saw on Wednesday afternoon, we also initiated first steps in our accelerated growth plan, our M&A strategy with the acquisition of Adelicious Limited. So we'll give you more detail on that one. I think one of the key parts being that overnight we created the second largest podcast network in the U.K. We'll talk more about the rationale behind it from a strategic point of view. And then obviously, we're just keen to stress that this transaction just makes so much sense, immediately earnings accretive in 2025 and full year '26 as well. So I think a great deal and a fantastic step forward for the business. And then we'll talk more about some of the operational highlights in H1, continued expansion of Showcase, which you know is important for our growth going forward, the launch of AI in the platform, just some important steps to continue that organic growth alongside our first steps on the inorganic side. So yes, great week for us and excited to tell you more today. Just step back once here and just to kind of give anyone that's new to Audioboom this week, just a little insight into the business model and what we do. Audioboom operates in the podcast industry. We're a platform business. And the platform does very important -- very key job of connecting 3 elements of podcasting together to create that value at scale globally. So the Audioboom platform works with podcasters and creators. It connects their content to audience by distributing that content out to all of the major podcast listening apps like Spotify, Apple Podcasts, and Pandora in the States. And then we work with more than 10,000 advertisers to monetize that content. So without Audioboom at the heart of that, connecting those 3 elements together, there's limited value in podcasting. Audioboom does this very well at scale. We have more than 8,000 podcast channels running through the platform, 35 million-plus unique monthly listeners, and that's before the Adelicious acquisition and more than 100 million monthly downloads, as I said, more than 10,000 brands advertising with us. We partner with podcasts. We partner with them and that partnership is to have exclusive distribution and monetization rights. So that's how we work with podcasts. Out of those 8,000-plus channels, there's a core group of 250 major podcasts, some of the biggest podcasts in the world that really drive the distribution and monetization of this platform. If you listen on Spotify or Apple or elsewhere and you click play, that piece of content will be delivered from the Audioboom platform and that allows us to attach advertising and to monetize that content wherever it is listened to. And then on the advertising side, we have 2 ad products -- 2 major ad products. One is our Premium ad product, one is Showcase, our marketplace, which I mentioned a few minutes ago. The Premium ad product, that's when the host of the podcast is delivering the ads in their voice, they're endorsing their product, their audience really trust the host. They go out and buy the product . It's immediately measurable for the advertiser. This tends to be brands that are smaller, they're disruptive brands, they're direct-to-consumer brands, but they love podcasting because they can see the results of it immediately and they can drive revenue through their podcast advertising. And then Showcase, that's our marketplace. It's built around the advertising tech. It's very efficient. Showcase is used more by bigger global blue-chip brands because they like the scale and the efficiency that it offers and also the targeting capabilities that it offers too. So within Showcase, if an advertiser, let's say, Procter & Gamble wants to reach 25- to 50-year-old females in the Northeast of America with household income of $100,000, we can offer that targeting to the brand, and that's a great thing for them. With the recent addition of AI, which we'll talk about a little later into Showcase, we're able to offer other tools like brand safety tools that are very important to that as we do more and more work with those bigger blue-chip global brands. So that's, I think, a very kind of quick and hopefully clear overview of the Audioboom platform and what we do every day within Audioboom and what we're really focused on here. And then we'll walk through our H1 2025 performance and then Brad will give you some more focused detail on some of this. But in terms of revenue for H1, $35.1 million, modestly up on last year, as we've kind of been talking about over the last 12 months, our real focus has been delivering higher quality revenue. And you can see that happening here, $7.4 million of gross profit. So that gross profit line, what Audioboom retains after revenue shares with those content creators, with those podcasters, $7.4 million, that's up 30% versus the same period last year. And then again, you can now see that gearing to EBITDA as well, $1.8 million of adjusted EBITDA in H1, up 500% versus the same time last year. So still looking at that top line growth, but it's going to be higher quality revenue that will flow through our P&L and started to gear EBITDA, as you can see that we've done significantly last year. So we continue Audioboom on a standalone pre-acquisition basis, still continue to be on-track to deliver the $80 million and $4.5 million of adjusted EBITDA that the market expects. Now obviously with the acquisition of Adelicious that changes, updated broker market expectation of $83.2 million for the year and $4.9 million of adjusted EBITDA. And again, we'll give you more detail on that when we talk about the Adelicious acquisition. As it stands today, Audioboom, on a stand-alone basis, has more than $70 million of that first $80 million booked. That's already on the bookies. We're ahead -- $5 million ahead of where we were at this point last year, and you can kind of see that pathway, I think, to delivering that record year for the business. And then Showcase, as we mentioned earlier on, just continues to be that fastest growing part of our revenue mix. And the key thing there with Showcase is that higher gross margin that it comes with. So 24% year-on-year growth H1 of this year to last year, really a key part of our work and our focus going forward is to continue grow Showcase that will deliver the stronger gross margin, gross profit and EBITDA for the second half of the year. Brad?

Yes. Thanks, Stuart. So you can see guys the change in revenue contribution, first half of this year versus first half of last year. As Stuart said, we've seen an increase in those revenue lines, which contribute a higher gross margin being Showcase at 30% and Premium at 20%. So in the detail for the first half of this year, Premium web has hosted -- endorsed the -- endorsed products that grew by $11.6 million or 9%, up to $19.5 million. Showcase increased by 24% or $2.3 million up to $11.6 million. Sonic, our third product where we -- [indiscernible] a brand agency placing spend across any globally available podcast, that contributes 15% of gross margin. That decreased by $2.9 million or 43%. So we've seen Audioboom increased by $3.9 million. Sonic increased by $2.9 million, hence, our gross revenues increased by $1 million. Now the point to note with Sonic is that we've seen -- we're going to see a shift in spend this year versus last. So for 2024, we saw spend weighted towards the first half of the year, lowering in the second half. This year, what we'll see is lower spend in the first half and higher spend in the second half of the year because the spend is concentrated around the [ FNTSY Sports ] NFL season, and we'll see that increase as we go through the second half of the year. So we can see the detail on the contribution. We've seen that gross profit increase by 30%. And as we'll see shortly, because of our relatively stable fixed OpEx base, we've seen that EBITDA increased 6x in the first half of the year versus last. Okay. We can see the revenue trends here. There's seasonality in the revenue that we recognize at Audioboom, where it's weighted towards the second half of the year. That happened last year. It's going to happen again this year. We can see that revenue trend on the top left-hand corner. The top right-hand corner, we can see the gross profit increases, and we can see that gross margin increasing as well. So those new to the story, the gross revenue that we recognize is the amount of invoice brands as we collect that. Cost of sales is what we pay to our podcast partners and that leaves us with the gross profit or net revenue, you can also call it that in terms of what Audioboom retains. So our gross margin for the second quarter reached 23%. And actually, in June, it reached 25%. So we can see that scaling as we went through the year. I wouldn't expect it to go above that level, but we can see good progression on that gross margin versus last year. The bottom right-hand corner, we can see what we call as minimum guaranteed true-ups. So when we enter into agreements with our podcast partners, we guarantee them amounts of revenue over that contractual period. Because of the seasonality in revenue, there may be instances where we true-up to that minimum guarantee level. And because our revenue is weighted into the second half of the year, we may see minimum guarantee true-ups at a higher level in the first half and then they lower in the second half of the year. And we've seen that percentage reduce. Back in 2023, there were challenging advertising market conditions. The company has restructured a lot of its contracts, and we've seen those minimum guaranteed true-ups fall to a lower level as we've gone through the last few quarters. We'd expect those to still be there in the second half of the year, but at a lower level. And that's good for our gross profit, recognizing higher gross margins as those commitments are met, and we'll see that through the second half of the year as well. And this is the OpEx base that I mentioned earlier on. So that's been -- we can see that over the last 1.5 years, that's been very, very stable, about $2.9 million -- $2.8 million a quarter. 60% of our cost is in relation to salaries and commissions. We've got 42 heads within Audioboom before the acquisition and that 60% of the cost is related to that, 20% is in relation to technology costs and running the platform that we have for Audioboom, but that OpEx base has been very, very stable. Hence, why we're saying once that revenue grows -- once that gross margin grows, more of that is going to drop down to the profit line. We're expecting that to go forward. We'll come to Adelicious shortly on an OpEx base, running on around $250,000 to $300,000 per quarter. So you will see that next time increase, that's because of the acquisition, but the fundamentals still stay the same in terms of a relatively stable OpEx base within the company. And in terms of the cash and working capital cycle of the business. So the cash collection cycle continues to work well collecting 103% of revenue booked in the first half of the year. But we noted in Q2, it was that actually reduced to 93% of invoicing in the second quarter. So what we saw was that we collected a significant amount of cash post quarter end as our customers preserve their own cash. And what we've actually seen as well as a number of new agencies that we're working with have slower payment terms. So more towards the 90-day mark, which impacted that cash out. As we can see from the right-hand side, the amount that's provided for in terms of any bad debt actually as a percentage of revenue remains at a very small level. So in the first half this year, $90,000 against just over $35 million booked is a very, very small proportion. So simplistically, once we invoice that amount, we're very, very certain of collecting it. But there is -- we have noticed that trend of debtors being slightly slower to pay. We pay our leading podcast partners on 30-day terms, collecting on an average of 80 days. So there's a timing difference between paying people and collecting. But we are very, very good at collecting and that's what we're going to be focused on very well during the second half of the year. What we've noticed during the third quarter is the revenue increase in June. We'll step off slightly in July. So we're paying lower revenue shares at the start of the quarter, but collecting on the higher revenue months at the end of Q2. So we should expect that cash position to improve slightly as we go through the end of the quarter. And also as well, the company does have an onerous contract, which is unwinding and that finishes at the end of December. At the end of June, we have $1.5 million of that provision left that will unwind. And once we step into 2026, the company will not need to pay between $250,000 and $300,000 per month to true that contract up. So cash will be retained within the business. And you'll see from the forecast that we expect cash to be relatively flat this year. And then as we get into 2026, with the end of the onerous contract and increased performance, we should start to see that cash position grow and EBITDA being more of a proxy for cash generation because there's only a lease cost in terms of cash costs below the EBITDA line. So that's our expectation going forward into 2026 is that cash generation.

Thanks for that. That was great, and I think all of our positive performance and strong numbers across the business over these past few years have really led us to establish a strong position, particularly in the U.S. podcast market. So all of this has come together. It's positioned Audioboom as the fifth largest podcast network in the U.S., where the majority of our focus has been to this point in the most lucrative podcast market in the world. And we keep incredible company, I think, in that top 10 giant businesses ahead of us, one group is owned by Amazon and iHeartMedia, SiriusXM, Spotify, all huge companies, NPR being the BBC of the U.S., the New York Times and obviously the large radio group. So very proud of our position in the U.S. And we haven't had such strong growth and traction in the U.K. We haven't focused on that market as much. And that's one of the factors behind the acquisition of Adelicious that we announced this week. But also, I think key to that acquisition is the recognition that Audioboom platform business is really well primed to be a consolidator in this space. So when you look at that top 10 on the left-hand side here, one key point is that they only control around 25% of the revenue in the U.S. and U.K. in podcasting. So podcasting remains extremely fragmented. The other 75% of that revenue in the U.S. and the U.K. is running through more than 100 small independent networks and publishers. And one key point to those networks and publishers -- the small networks and publishers is that they do not own or operate their own technology or platform. They're very reliant on third-party platform and technology. And we recognize that consolidation of these 100 is something that we can lead on and something that will accelerate our growth in the coming years through an M&A strategy. So we believe that our platform will do a great job of allowing any targets that we bring on to it, the ability to really focus on what they do best, which is content creation, content curation, running a network. Our platform will supercharge their distribution, their marketing and their monetization of that content. So yes, we believe we can be the leader in the inevitable consolidation of podcasting over the coming years. And our first target -- I think [ our perfect ] first target, and we announced this week the acquisition of Adelicious. Adelicious are a U.K. podcasting company. So as I said before, we had great success in the U.S., focused less on the U.K., but Adelicious, combined with our U.K. Audioboom team, is now positioned really strongly to lead the market in the U.K. You'll recognize, I think a lot of faces on this slide. Adelicious has a very similar business model to Audioboom. It partners with talent, partners with podcasts and monetizes that content for the podcasters and have great relationships in the U.K. with talent agents, with management companies. They do a really good job of working with well-known talent and entertaining podcasts. And to give you a view on what they've achieved to this point after launching just 4.5 years ago, they became the fourth largest network in the U.K. and they have 50 premium podcasts, but many more other podcasts running through their network. They have around 20 million monthly downloads. So that would be added on top of Audioboom, 100 million downloads, so much more advertising inventory and content for us to monetize to get 5 million unique listeners to Adelicious podcasts. And in 2025, they're expected to deliver $7.6 million of revenue. That's a conservative number we feel and $3.2 million of that, again, a conservative number will be recognized by Audioboom in its 2025 numbers. So obviously, the transaction completes after the half year, so less than half of the year of Adelicious within the group. And as I said, conservatively, $3.2 million of their revenue for 2025 will be recognized by Audioboom. In terms of the rationale, I think this is a great deal, and it's very clear on why it was the right first acquisition for Audioboom. So -- you can see on the left here as of -- 3 days ago, Adelicious was the fourth largest podcast network, Audioboom was the fifth largest podcast network in the U.K. market. Putting the 2 of them together creates the second largest podcast network in the U.K. with a very kind of clear pathway, I think, to becoming -- and an ambition to becoming #1 by 2030. So I think when we think about whether it's a buy or build, we could have invested in our U.K. operation. But I do believe this acquisition has fast forwarded that position by around 5 or 6 years. So we decided to buy here, taking market share, building out a strong U.K. operation. And in terms of why do it now through an acquisition, well, I think timing is very important. So the U.K. podcast industry has been underinvested in to this point. Just on a per capita basis, brands and advertisers are investing $1.60 per capita into the U.K. podcast space. In the U.S. with a mature level of podcast industry, they are investing around $7. So we believe there is a big delta here, and we believe that this will start to correct in the coming years. We're seeing the momentum. We're seeing the data around listenership in the U.K., time spent listening in the U.K. and brands beginning to step into podcasting. So we believe that this will start to correct. By taking that expanded position today through the acquisition of Adelicious, we are really positioning ourselves to capture a greater share of that upside that's going to come over the next 5 years. So to give you an overview of the transaction detail, I'm sure you've read about them over the past couple of days, but we'll break that down into a little more detail. I think -- and a key part to me, and I'll show you a slide on this in a moment, is just what a fantastic deal this was to be able to acquire Adelicious for slightly less than 1x their 2025 revenue. Wherever the consideration lands through the initial and the earn-outs, we were able to acquire them at around 1x of their 2025 revenue, which is much, much lower than any of the transactions that are happening in podcasting, particularly in the U.S. market. So we believe this is a great deal for the company and shareholders. So the initial consideration that we'll pay is GBP 4.5 million that will be [ delivered ] 60% in cash, 40% in shares. The placement -- the successful oversubscribed placement was to raise that GBP 2.7 million in cash. The 40% that is going to sell us in shares was agreed at the 90-Day VWAP as of the 15th of May when the letter of intent was signed, which means that those shares will be 405,000 shares at a price of GBP 4.44. So we'll be receiving a significant discount to where the share price is today on that element of the initial consideration, which again really helps this deal be accretive from day 1 and to prove positive for all of us. Two elements of deferred consideration, up to GBP 3 million earn-out based on what they deliver this year in the 2025 revenue. So that revenue will land between GBP 4.4 million and GBP 8 million. There will be a kind of a pro-rated payment up to GBP 3 million based on their achievements this year in terms of revenue. And then a further GBP 2.5 million of deferred consideration payable connected to one key podcast that they have. So if that podcast delivers in full with Audioboom seeing its full gross margin over the 2-year life of that podcast contract than the further GBP 2.5 million will be payable. Those deferred consideration elements will be payable next June and then in May of 2027, 40% in cash, which we expect to pay from company cash reserves and 40% in shares and then a further 20% in our own discretion. So that's, I think the breakdown of the transaction details. All of that said, wherever this lands, including the deferred consideration, we land at kind of a 1x revenue multiple. These are the comps in the podcasting space over the last 5 to 7 years, almost all of them done well above that 1x level, the median being 4.4x. And again, just speaks, I think, to the fantastic deal that we've been able to put together here. We understand I think that this is our first time doing this as a company. And if we want to further our accelerated strategy through further M&A, we really do need to execute well on this. And the [ view ] of Adelicious is a very straightforward business model that matches much with what we do. That will make the integration very short, very efficient, create a very quick pathway, I think, to creating those synergies. I'll outline some key points, I think, for you today, which will help you understand that. I think the first one being Andy Goldsmith, the CEO of Adelicious and his expanded role within Audioboom. So Andy has joined Adelicious a few years ago from Global Media and The Guardian. He's been really the driving force behind the growth of Adelicious. He'll take on an expanded role within our U.K. operation focused on business development, content operations and advertising sales that will lead that widened. team. He also joined the Audioboom management team. So I think he's going to be a really great addition to Audioboom and Audioboom's executive team. Other key part, I think, to the integration is our ability to connect Showcase, our ad marketplace into their inventory very quickly within the first 30 days. That's going to deliver some immediate incremental revenue. We will consolidate the U.K. sales team. So the Adelicious sales team and the Audioboom sales team will come together. Each of them will bring unique customers to the table who can then buy advertising inventory across the officer roster effectively. So unique advertisers in Adelicious will now be able to access the Audioboom podcast's roster and vice versa. Again, that's going to be pretty quick incremental revenue there as well for the U.K. sales consolidation. Switching over teams to the London office and then switching over into Audioboom technology stack and the Audioboom platform and switching off the third-party software and IT platform that Adelicious is reliant on will happen within the first 60 days, and that's going to save significant money and also just make this thing more optimized, having full view and intelligence around advertising inventory and everything Adelicious does will be a key part. And then for 2026, as we talked to you all about before, we do a lot of our advertising sales work in the October and November of the preceding year. So it's really important to us, and we'll have a real focus on ensuring that all of that Adelicious content and advertising inventory is brought into our inventory intelligence platform ahead of that Upfronts [indiscernible]. So generally, when we go into a new year, we've already booked around 50% of the revenue for the year, working with our biggest customers in the Upfront season, just ensuring that Adelicious inventory is in our platform. We have full view on intelligence around it, will allow us to sell well ahead of 2026 and be in a good spot for next year as we grow together. So yes, I think Adelicious is a perfect company for us to initiate our growth plans with a lot shared ambition and a lot of shared vision for the U.K. podcast space. On day 1, we've created the second largest podcast network. I think it's a real great deal for Audioboom and really does set out our intentions for the future. So just a couple more slides for us before the Q&A. So getting final questions in for that one. Obviously, as part of the Adelicious acquisition, we've seen the market expectations for 2026 being upgraded and that comes off the back of some strong historic performance for Audioboom, some very consistent performance for Audioboom. So the 2025 revenue market expectation lift to $83.2 million, as I said, $3.2 million of that Adelicious revenue for the year will be recognized by Audioboom in 2025 as they joined the group past the halfway point. And then in 2026, that revenue market expectation will be in that $4.5 million. You see here the continued strong progress in our gross profit. We talked a lot about quality of revenue, and you'll see the upgrades here in terms of what that looks like for 2025 and then 2026. And the same with EBITDA, continued gearing of EBITDA expected. We'll recognize around $0.4 million of EBITDA from Adelicious this year -- in the remaining part of this year after they joined the group and then that 2026 adjusted EBITDA margin expectation of $7.2 million. So you can see how this acquisition is flowing through the company and helping us build over the coming years. And as I said before, I think to sum things up, this acquisition initiates that growth strategy adds 20 million monthly downloads, 5 million unique listeners to our platform, allows us to take that lead role in consolidating the U.S. and U.K. podcast markets, lift those revenue expectations. And as I said, right at the top here, it's immediately earnings enhancing. So a great deal for Audioboom, it just sets us up for a good spot for the rest of this year and the future too.

[Operator Instructions] While Brad and Stuart take a couple of moments to review your questions submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides will be available via the platform a bit later on. Brad, Stuart, as you can see, we've had a number of questions from investors. So thank you to everybody for your engagement, both ahead of today's event and throughout today's presentation. If I may just hand back to you guys, and I'll pick up from you at the end.

Yes. Thank you. So obviously, I think lots of questions about the transaction. So we'll try and cover as much of that and give you a bit more detail as possible here on that. So yes, as we said, we believe it's a great deal for Audioboom at less than 1x revenue with that immediate accretion. I think key points being that being able to deliver 40% of the consideration at GBP 4.44 share price is really a great business. But we recognize that there may be some disappointment with the placing in price. But it's tough when we put out a positive Q2 trading update last week, and then we saw an immediate selloff and lowering of the share price. It really is another example of share price and performance not matching up. [indiscernible] saw that drop off and that obviously didn't help with maintaining that [ placing ] price. But to give you some background, we ran a very tight fundraise completed in other 4 days and we ran into a very targeted group of investors. One key goal that we have here alongside raising the money, obviously, was to bolster the level of long-term institutional holdings, which we've done to help remove that volatility that we've just had a history of because of the heavy retail shareholding. So you can recognize the frustration on the price, but this was done with that intention of institutionalizing the shareholder register. We've done a great job of that, very targeted and very tight fundraise here. Directors did not participate in the placing, and that was to help institutionalize the register. And then the final point perhaps on this one is that we did assess whether or not to do a retail offering, but really due to that price falling after those positive Q2 results and then the tight discount to that price, we couldn't take any further dilution here. And I think we've made the right decision there. And I think the market really does look like they understand the positives of this transaction and it is being supported. I got one more, Brad, and then I'll throw it to you perhaps. The other question that we've seen a few times here is just on share buybacks. I think this came in following our AGM notice where we included a standard resolution. We do that every year. We include a standard resolution each year in the AGM notice, which will give us the authority to buy back shares if we want to. In terms of how we use cash, as Brad spoke to earlier, cash will be pretty static across 2025. And then in 2026, EBITDA becomes a proxy for cash once again. So we start building cash within the business. As we talked about earlier, we believe we're a great platform for M&A. So the use of that cash as it grows next year will just be -- need to be considered alongside those M&A goals as well. So that share buyback authority is a standard resolution we have in there every single year. Just as a reminder, the AGM will be on July 30.

There was a question from Paul [indiscernible]. I think during the session about the EBITDA weighting. And as we went through it earlier, the revenue is weighted to the second half of the year and the EBITDA as well. So last year, during the second half of the year, the company generated $3.1 million of EBITDA to meet its market expectations. This year, the company needs to do the same, generate about $3.1 million, to go from $1.8 million up to $4.9 million. So yes, there is that seasonality there in the EBITDA as well. Further question I've seen as well just to clarify on the cash position within the company. The onerous contract I mentioned earlier on, the company provided for that in 2023 $7.5 million of provision. That has been unwinding on the balance sheet since that point. And as of the end of June, that is now $1.5 million. So that impact during 2024 and 2025 hasn't been impacting the P&L. So that's not a cost reduction. That's simply a provision that's unwinding the balance sheet. That's simply the cash that's being paid for that contract. That's why, just to clarify, when you say that the cash would increase next year during 2026, that's effective -- like I mean a big part of that is the company not having to pay that onerous contract. So just to clarify that in terms of the cost and the cash within the company.

If you have -- a question here from Martin about YouTube, but nothing -- asking about whether list of elements on YouTube opening up to allow automated advertising. Nothing -- I think nothing more than we spoke about perhaps last time, but we believe the intention is there to allow us to advertise in the future through YouTube. Right now our Premium advertising can run through YouTube, but Showcase cannot run through YouTube. So we do a really great job on monetizing video content and video podcasting with our premium monetization. And as Martin kind of hints that here, YouTube have stated that they will start to allow pass-through of podcast distribution and potentially automate advertising as well. So we will keep an eye on that and video is definitely an area that we are focused on in the future.

Yet another one, cost of integration, are they material? No, we don't view them as just material. Yes, process is underway. We don't view any significant costs associated with that. You know, we need to get the -- as Stuart said, the inventory onto our platform, [indiscernible] within both companies and from the Audioboom side, the technology that we use, the team have been through that process on an Audioboom stand-alone basis. So no material costs expected. We review the company as we get to know further over the coming weeks and months. But that is quite a straightforward process, as Stuart said earlier on.

Another one here from Martin, how do you see the U.S. ad market in H2 given macro uncertainty? I think it's a great question, obviously. I think it's a question I get asked a lot. I think it's very stable right now. There was certainly some uncertainty around Trump's tariff announcements back in April. We didn't see any big knee-jerk reactions from advertisers pulling budgets or canceling campaigns, but certainly some nervousness, I think, around what was -- what could potentially happen. I think that's drifted. I think there's kind of a confidence level in the advertising -- podcast advertising space anyway. I mean, obviously, there was some negative WPP announcements last week. But you have to remember that the majority of what they do is on legacy media, publishing, TV, and podcasting is new media and exciting space that advertisers want to be in. So I think I would describe the current position as being very stable.

And then final one on Adelicious margins. Will we expect any improvement on those? Adelicious gross margin runs just above 20% -- between 20% and 22%. So in terms of the mix that we have, we wouldn't expect to see any jump up in margin. But obviously, across the group, we've seen that margin profile increase because of the increased contribution in Showcase. So we're going to see improved -- slight improvement on that over the coming months and years, but Adelicious complements what we do within Audioboom currently. So no major changes in margin profile as we go forward, obviously striving to achieve that general trend that we recognized over the last 18 months.

Thanks, Brad. I think we are right at the end, it's 11:15. So yes, thank you -- all of you for joining. Thank you for your questions, and we really do believe in this transaction. And I hope you can understand the logic behind it and the positives that it's going to bring.

That's great. Brad, Stuart. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as we will now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Audioboom, I would like to thank you for attending today's presentation, and wish you a good rest of your day.