Akazoo Provides Second Quarter 2019 Results, with Revenue Up 37%

  • Second Quarter 2019 Revenue of €33.8 Million, Up 37% year-over-year (“YoY”)
  • 5.3 Million Premium Subscribers, Up 32% YoY
  • First Half 2019 Revenue of €64.5 Million, Up 39% YoY

NEW YORK and LONDON / ACCESSWIRE / September 27, 2019 / Akazoo S.A. (NASDAQ:SONG) (“SONG” or “Company”), a leading global music streaming platform and media technology company with a strong international market position focused on emerging markets, today announced improved financial results for the three- and six-month period ending June 30, 2019.

“In the second quarter and through the first half of the year, the Company successfully executed its growth plan and delivered results ahead of expectations,” said Apostolos Zervos, Founder & CEO of Akazoo. “The underlying trends in our business remain favorable and this is reflected in our premium subscriber growth. We maintain our 2019 revenue guidance of €134 million and have confidence in our ability to execute our long-term strategy.”


    Q2 2018       Q1 2019       Q2 2019     % change YoY       H1 2018       H1 2019     % change YoY  
Total Revenue
    24,627       30,717       33,804       37 %     46,455       64,521       39 %
Adjusted Gross Profit
    10,031       12,609       13,995       40 %     18,955       26,604       40 %
Adjusted Gross Margin
    40.7 %     41.0 %     41.4 %           40.8 %     41.2 %      
    2,324       3,722       3,732       61 %     4,731       7,454       58 %
    9.4 %     12.1 %     11.0 %           10.2 %     11.6 %      
Subscribers (eop)
    4.0       5.1       5.3       32 %     4.0       5.3       32 %
Registered Users (eop)
    31.4       41.1       43.3       38 %     31.4       43.3       38 %

(1): Accrued transaction costs related to the business combination of €0.4 million are included in operating expenses for Q2 2019

Second Quarter Review

Users and Subscribers

Total Registered Users in the second quarter increased 38% YoY to 43.3 million. Growth in Subscribers was 32% YoY to 5.3 million, primarily driven by increased efforts on in-house marketing campaigns and user retargeting of H2 2018 Registered Users. Subscriber growth was broad-based with stronger gains experienced in Southeast Asia and Eastern Europe.


Total revenue was €33.8 million in Q2, representing growth of 37% YoY. Total year-to-date revenue was €64.5 million, representing a gain of 39% YoY. Average revenue per user (“ARPU”) for our Subscriber remained relatively constant at €2.05 in Q2.

Adjusted Gross Margin

Adjusted gross margin of 41.4% in Q2 improved from the 40.7% in Q2 2018, mainly driven by a slight decrease in our payment processing fees and commission rates of certain revenue share agreements. The adjusted gross margin excludes media costs, which are mostly costs incurred to acquire and retain subscribers. These costs are included in the cost of revenue, although most peers classify such costs under operating expenses, below the gross profit line.

Operating Expenses

Reported operating expenses of €4.5 million in Q2 increased 48% YoY, or 34% YoY excluding the accrued transaction costs associated with Akazoo‘s business combination with Modern Media Acquisition Corp. on Sept. 11, 2019. Operating expenses in H1 2019 increased 44% to €8.2 million, or 37% YoY, excluding accrued transaction costs.


EBITDA grew 61% in Q2 to €3.7 million compared with €2.3 million in Q2 2018. EBITDA for the first six months of 2019 was €7.4 million versus €4.7 million, an increase of 58%. The EBITDA margin in Q2 was 11.0% (or 12.3% excluding accrued Transaction Costs), an increase from 9.4% in Q2 2018. EBITDA performance was largely driven by strong subscriber growth along with a decrease in Media Costs, due to a concerted effort to control customer acquisition expenses in Q2.

Related News

The business combination with Modern Media Acquisition Corp. (MMDM) closed on Sept. 11, 2019 and generated $54.9 million in gross proceeds for the Company, significantly strengthening the balance sheet.

“We are excited about the market opportunities that lie ahead of us and believe that we are beginning a new chapter in Akazoo‘s growth story. A strong balance sheet gives the Company significant flexibility to implement innovative organic growth plans, expand our Sonic AI technology, and to make strategic acquisitions in the quarters ahead,” said Zervos.

After close of the business combination, the Company’s basic and diluted common shares outstanding totalled 49.6 million. To learn more about Akazoo, visit https://www.akazoo.com/

About Akazoo

Akazoo is a global, on-demand music and audio streaming and media and AI technology company, founded 2010, with a focus on emerging markets and a presence in 25 countries. Akazoo‘s premium service provides subscribers with unlimited online and offline high-quality music streaming access to a catalogue of over 45 million songs on an ad-free basis. Akazoo uses patented AI for music recommendations and offers online and offline listening. Akazoo’s free, ad-supported radio service consists of over 80,000 stations and exists as a separate services and application. As consumers across the globe continue to shift their media consumption to mobile devices, Akazoo is equipped with a world-class mobile application and user experience which works seamlessly across a multitude of mobile devices and provides a high-quality user experience across a range of mobile networks from 2g to 4g LTE and soon 5g.

Use of Non-IFRS Measures

We define EBITDA as Net Income before Net finance costs, Income tax expense and Depreciation and amortization. We believe EBITDA is useful to our management and investors as a measure of comparative operating performance from period to period and among companies as it is reflective of changes in pricing decisions, cost controls, and other factors that affect operating performance, and it removes the effect of items not directly resulting from our core operations. We believe that EBITDA also is useful to investors because this metric is frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies in the technology industry and other industries similar to ours. Our management also uses EBITDA for planning purposes, including the preparation of our annual operating budget and financial projections. EBITDA has limitations as an analytical tool. EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, EBITDA is not intended to be a measure of discretionary cash to invest in the growth of our business, as it does not reflect tax payments, debt service requirements, capital expenditures, and certain other cash costs that may recur in the future. Management compensates for these limitations by relying on our results reported under IFRS as issued by IASB in addition to using EBITDA supplementally.

We define “Free Cash Flow” as net cash from operating activities less capital expenditures. We believe Free Cash Flow is a useful supplemental financial measure for us and investors in assessing our ability to pursue business opportunities and investments. Free Cash Flow is not a measure of our liquidity under IFRS and should not be considered as an alternative to net cash from operating activities.

Akazoo defines Adjusted Gross Profit as Gross Profit plus Media Costs added back, which are costs incurred to acquire customers, consistent with reporting of public peers.

EBITDA, Adjusted Gross Profit and Free Cash Flow are non-IFRS measures and are not a substitute for IFRS measures in assessing our overall financial performance. Because EBITDA, Adjusted Gross Profit and Free Cash Flow are not measurements determined in accordance with IFRS, and are susceptible to varying calculations, it may not be comparable to other similarly titled measures presented by other companies. You should not consider EBITDA, Adjusted Gross Profit and Free Cash Flow in isolation, or as a substitute for an analysis of our results as reported on our consolidated financial statements appearing elsewhere in this proxy statement/prospectus.

Forward Looking Statements

This release contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on the current expectations, estimates and projections of the Company about its operations, industry, financial condition, performance, results of operations, and liquidity. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Statements containing words such as “may,” “could,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “project,” “projections,” “business outlook,” “estimate,” or similar expressions constitute forward-looking statements. Forward-looking statements represent management’s current expectations or predictions of future conditions, events or results. These forward-looking statements include, but are not limited to, statements about, or are based upon assumptions regarding, the Company’s strategies and future financial performance; expectations or estimates about future business plans or objectives, prospective performance and opportunities and competitors, including revenues; customer acquisition and retention; operating expenses; market trends, including those in the markets in which the Company competes; liquidity; cash flows and uses of cash; capital expenditures; the Company’s ability to invest in growth initiatives and pursue acquisition opportunities; the Company’s products and services; pricing; marketing plans; the anticipated benefits of the transaction with MMDM; the sources and uses of cash; and the continued listing of the combined companies’ securities on Nasdaq. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s good faith beliefs, assumptions and expectations only as of the date hereof. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted, many of which are beyond the Company’s control. Reported results should not be considered an indication of future performance. Except as required by law, we undertake no obligation to publicly release the results of any revision or update to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Interim Condensed Consolidated Statement of Operations


(in € thousands, except share and per share data)

  Three months ended June 30,     Six months ended June 30,  
  2019     2018     2019     2018  
    33,804       24,627       64,521       46,455  
Cost of revenues
    -25,536       -19,243       -48,832       -36,023  
Media costs
    -5,727       -4,647       -10.915       -8,523  
Other direct costs
    -19,809       -14,596       -37,917       -27,500  
Gross profit
    8,268       5,384       15,689       10,432  
Operating expenses
    -4,536       -3,060       -8,235       -5,701  
Depreciation and amortisation
    -2,197       -945       -3,840       -1,891  
Operating profit
    1,535       1,379       3,614       2,840  
Finance income
    27       0       40       0  
Finance costs
    -251       -7       -544       -12  
Finance income/(costs) – net
    -224       -7       -504       -12  
Profit before income tax
    1,311       1,372       3,110       2,828  
Income tax expense
    -3       -10       -1       -20  
Net income attributable to owners of the parent
    1,308       1,362       3,109       2,808  
Income per share attributable to owners of the parent
    0.27       0.33       0.65       0.68  
    0.32       0.33       0.74       0.68  
Weighted-average ordinary shares outstanding
    4,793,045       4,105,706       4,793,045       4,105,706  
    4,933,235       4,105,706       4,933,325       4,105,706  
Profit/(loss) attributable to non-controlling interest
    0       0       -1       0  
Profit attributable to Akazoo Limited
    1,308       1,362       3,108       2,808  

Interim Condensed Consolidated Statement of Financial Position


(in € thousands)


6 months



12 months


  2019     2018  
Non-Current Assets
Intangible assets
    32,121       27,582  
Property, plant and equipment
    1,105       1,266  
Trade and other receivables
    30       30  
Deferred tax
Total Non-Current Assets
    33,256       28,882  
Current Assets
Trade and other receivables
    39,258       34,683  
Cash and cash equivalents
    832       501  
Total Current Assets
    40,090       35,184  
Total Assets
    73,346       64,066  
Equity and Liabilities
Share capital
    58       58  
Share premium
    46,765       46,765  
Other reserve
    -1,390       -1,413  
Retained earnings
    3,421       312  
Total Stockholders’ Equity
    48,854       45,722  
Non-controlling interests
    -9       -9  
Total Equity
    48,845       45,713  
Non-Current Liabilities
Pension liability
    31       31  
Current Liabilities
Trade and other payables
    19,716       16,005  
Interest bearing loans and borrowings
    4,754       2,317  
Total Current Liabilities
    24,470       18,322  
Total Liabilities
    24,501       18,353  
Total Equity and Liabilities
    73,346       64,066  


Media Inquiries:
Megan Cuellar

Investor Inquiries:
Peter Miselis

SOURCE: Akazoo

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