Africa-focused music streaming service Mdundo has reported a 239% YoY jump in revenue from paid subscriptions, with the company recording a 23.2% YoY increase in monthly active users (MAUs).
In the annual report for its fiscal year ended June 30, 2023, released on Tuesday (September 26), Mdundo reported a subscription revenue surge from DKK 7.2 million (USD $1.02 million at current exchange rates) in 2021-2022, to DKK 12.6 million ($1.78 million) in 2022-2023.
(Mdundo is headquartered in Kenya, but listed on Denmark’s Nasdaq First North Growth Market exchange, and reports its earnings in Danish krone.)
Subscription revenue now accounts for 35% of the company’s total revenue, up from 18% in the prior fiscal year. The soaring subscription numbers mean the company is on track to meet its goal of logging a positive EBITDA by 2025, Mdundo said in its report.
The company is “on track” to raise 40% of its revenue from subscriptions going forward.
Advertising revenue also grew, rising from DKK 6 million to DKK 8.2 million, a 37% YoY increase. That brought total revenue to DKK 12.6 million, marking a 75% YoY increase.
“While our performance slightly trailed our guidance of DKK 13-16 million, management thinks the progress remains acceptable,” the annual report stated.
Revenue growth was affected by “a significant weakening” of the Nigerian naira late in the fiscal year, and a 25% decline in the Kenyan shilling over the course of the year, Mdundo noted.
Although the report didn’t break out the number of paid subscribers, total MAUs were at 26.6 million at the end of June, exceeding the company’s earlier guidance of 25 million, and marking a significant increase from the 20.3 million recorded at the end of the previous fiscal year.
The report reiterated Mdundo’s earlier guidance indicating that it will hit 35 million MAUs by the end of the 2023-2024 fiscal year, which would be a 32% YoY increase.
The company recorded an EBITDA loss of DKK -7.7 million, a 3.5% improvement from the prior fiscal year. The result “aligns with our guidance of negative DKK 7-8.5 million for 2022-23,” the company said.
“An ordinary result after tax of DKK -10.2 million, while representing a deficit, is viewed as a satisfactory outcome due to investments in future growth and profitability,” the report stated.
“This performance harmonizes with our mission to emerge as the foremost pan-African music service. Our sights remain set on achieving 50 million unique monthly active users by mid-2025.”
For FY 2023-24, Mdundo is aiming for DKK 17-21 million in revenue, which would be a 35% to 66% increase over the last fiscal year. It’s targeting EBITDA of DKK -6.5 million to -7.5 million, an improvement of up to DKK 1.3 million.
Mdundo said its 2020 IPO resulted in DKK 36 million in net proceeds, cash it has been using to finance its growth. Its current cash position is DKK 15.5 million, representing 43% of the IPO’s proceeds.
“It’s noteworthy that Africa is embarking on a journey akin to that observed in the Western world a decade ago, transitioning from illegal to legal music services.”
Mdundo annual report
The company reiterated its focus on five key markets: Nigeria, Kenya, Tanzania, Ghana and South Africa.
“These key markets encompass a combined population of 422 million people, approximately 35% of Sub-Saharan Africa’s population. They offer substantial growth opportunities due to high internet penetration rates and robust economic development. In June 2023, these markets accounted for 15.0 million of Mdundo’s 26.6 million monthly active users,” the report stated.
According to a 2022 report from GSMA, 615 million people in sub-Saharan Africa are expected to sign up for mobile services by 2025, on top of the roughly 500 million that were already subscribed as of 2020.
“[T]he total addressable market is positioned for remarkable growth,” Mdundo said in the report. “This rapid expansion in digital connectivity underscores the immense growth potential across the continent.”
These partnerships collectively give Mdundo access to a customer base of 185 million people. They also enable the company “to address the low usage of payment cards in Africa and deliver enhanced value to its users,” Mdundo said in its report.
“I’m confident that in the future 15-20% of all music on the global charts will be by African artists.”
Martin Nielsen, Mdundo
“While data on consumption and revenue within Sub-Saharan Africa is currently limited, an encouraging trend is evident. Management holds the view that both consumption and revenue within the continent are experiencing rapid growth,” the report asserted.
“Drawing parallels with historical shifts in music consumption patterns, it’s noteworthy that Africa is embarking on a journey akin to that observed in the Western world a decade ago, transitioning from illegal to legal music services.”
“The target audience of our service is significantly different to the [other] streaming services,” Mdundo CEO Martin Nielsen told MBW in an interview last year.
“The mass market in Africa is primarily accessing music through illegal channels and it is our vision to provide them with a legal and easy alternative that is usable within the device, internet and income restrictions of this audience.”
Mdundo says it’s focused on “delivering locally relevant service and content,” with a “strong emphasis on providing locally relevant service and content, acknowledging the significance of cultural diversity and local preferences.”
The company previously announced that around 80% of all music consumed in its key focus markets is African catalog. The streaming service is approaching 500,000 African songs directly uploaded to Mdundo by more than 140,000 creators.
“I’m confident that in the future 15%-20% of all music on the global charts will be by African artists,” Nielsen told MBW. “The music industry is going through a massive democratization.”Music Business Worldwide