$1.4bn-valued Epidemic Sound grew its revenues by 49% in 2020, with a net loss of $17.8m

MBW is getting used to writing about billion dollar (and/or multi-billion dollar) music companies from Europe. Yesterday, it was France’s Believe; today, it’s Sweden’s Epidemic Sound.

Epidemic Sound, of course, hasn’t always been the most popular entity amongst certain factions of the music industry. But it’s generating significant sums of money – and new financial results published by the company in Sweden today (June 2) have allowed us to take a fresh view on the health of its finances.

According to Epidemic’s new annual fiscal report, its revenues grew by 49% YoY in 2020 to SEK 575 million (approx. $69.5m).

Those same results also reveal that Epidemic Sound’s net losses amounted to SEK 147 million last year ($17.8m) – a narrowing on its net loss of SEK 186m ($22.5m) in 2019.

The firm’s operating EBITDA came in at a loss of 47.6m SEK ($5.7m) in 2020, roughly a third of the size of the equivalent loss it posted in 2019 (140.9m SEK).

Epidemic Sound’s latest results come just two months after it completed a $450m funding round that included money from investment giant Blackstone.

The investment saw Blackstone Growth (BXG) team up with EQT Growth in the round, giving Epidemic a $1.4bn valuation.

Epidemic Sound’s existing investors prior to that round included Creandum and EQT Mid-Market, as well as Atwater Capital.

Elsewhere in Epidemic Sound’s financial results, the company reports that its ‘Other External Costs’ increased by 15% to SEK 319m ($38.6m), up from SEK 276m (approx. $33.4m) in 2019.

This increase, it says, came as a result of its “long-term growth strategy”.

Epidemic also reports that its ‘Personnel Costs’ increased to SEK 318m ($38.5m) in 2020, up from SEK 263m ($31.8m) in 2019, which it claims is “partly a consequence of the restructuring the company was forced to make in connection with the onset of the pandemic”.

In May last year, Epidemic Sound laid off nearly a fifth (19%) of its 419-strong global workforce, with co-founder and CEO, Oscar Höglund telling Music Ally at the time that the redundancies were being made as part of a  “realignment” of Epidemic Sound’s business model.

The firm’s increased staffing costs in 2020 also follow what Epidemic now says was the “successful recruitment of the majority of key people in senior positions”.

Epidemic says that it counted 336 full-time employees at the end of 2020.

“2020 was the most transformative year in the history of Epidemic Sound.”

Oscar Höglund, Epidemic Sound

Oscar Höglund, Epidemic Sound co-founder and CEO, said in a statement: “2020 was the most transformative year in the history of Epidemic Sound.

“We accelerated to a completely digital business model and made several key recruitments. Furthermore, we expanded our world class music catalog with thousands of new amazing tracks.”

Added Höglund: “I am proud of our team for adapting so well and for contributing to making 2020 such a successful year.

“It is clear that the demand for restriction-free music just keeps on growing and I could not be more optimistic about the future.”

In June last year, Epidemic Sound announced a deal to supply copyright-free music to the media library of Adobe, best known for its creative software and stock images.

Last year also saw Epidemic’s music heard over 1.5 billion times a day on YouTube. It also signed music licensing partnerships with tech companies such as Canva, Getty and Lightricks.

Epidemic Sound expanded into the US market late 2019, appointing Kate Vale as its Managing Director in North America. Vale is the former MD of Spotify in Australia and New Zealand (ANZ).

Epidemic’s business model has two tiers: (i) licensing its library of rights-cleared production music to broadcasters, airlines and hotels; and (ii) generating royalties from this music on streaming services such as Spotify and YouTube, as well as licensing it to platforms like Netflix and Twitch.

Epidemic fully acquires the rights to its composers’ music (both masters and publishing) via one-off upfront payments, but commits to paying through 50% of streaming revenue to the composers whose music it’s bought.

  • All SEK-USD currency exchanges in the above story were made at current exchange rates

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