Loss-making 7Digital Group says it will be profitable this year

Digital music and radio services company The 7Digital Group has issued a trading update to investors showing that its FY sales in 2015 were flat at around £10.4m.

The UK-born firm said the 12 months to December 31, 2015 represented a “year of encouraging operational and financial progress”, in line with expectations and – crucially – involved a “substantial reduction in trading losses”.

The company, which works with the likes of Onkyo, Guvera, OpenLIVE and The Overflow hasn’t confirmed what its annual net loss was for 2015 – that will come in March with its full fiscal announcement.

But it has said that, in 2016, it believes it will turn the tide and become a profitable entity.

In 2014, The 7Digital Group PLC posted a net loss of £2.63m on revenues of £10.21m (a figure which since appears to have been restated at £10.4m).

And in 2014, the company posted sales of £11.55m with a net loss of £4.54m.

The 7Digital Group was formerly UBC Media Group, before it went through a reverse acquisition with 7Digital Group Inc on June 10 2014.

In 2015, the company said that its annualised monthly recurring revenues were up by 72% to approximately £5.8m (£3.4m in 2014).

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“We remain on track to achieve profitability by the end of 2016.”

Simon Cole, 7Digital

EBITDA losses narrowed in line with expectations, while gross margins rose to 70%.

Licensing revenues increased by 21% to approximately £6.5m (2014: £5.4 million).

Content revenues reduced by 50% to approximately £2.0 million (2014: £4.0m), reflecting what 7Digital called ‘the deliberate move away from these low margin sales’.

Simon Cole, Chief Executive of 7digital, said: “We are pleased with the progress made in 2015 – it was a year in which our business model was validated by the growth rate of our recurring licensing revenues.

“It is clear that, as the market for streamed music and radio services grows, so does 7digital. We remain on track to achieve profitability by the end of 2016 and look forward to continued growth this year and beyond.”

In the second half of the year, 7Digital struck agreements with the likes of Mariposa for Oi and Algar Telecom, Onkyo, Technics, ROK Mobile, Tónlist, Imagination Technologies, Electric Jukebox, OurSound and Google Cast.

Recent activity has included the announcement of 7Digital’s MQA high quality audio format for both downloads and streaming and a new deal to power the re-launch of download site eMusic.

In addition, 7Digital announced earlier this month that it was to acquire French digital music service Snowite.Music Business Worldwide

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