Last week, Kobalt announced that its revenues in FY 2022 (to end of June last year) were up 22% YoY, topping USD $600 million.
Now, via a new filing at UK Companies House, MBW can publish more granular details on Kobalt’s financial performance in the year – including a remarkable jump in annual profits.
Kobalt Music Group‘s annual revenues in FY 2022 from continuing operations stood at $631.2 million, according to the filing.
That was up by 21.5% YoY – or by $111.8m – on the equivalent figure from FY 2021.
Kobalt’s publishing division grew net revenue by 20.8% YoY to $577.8 million in FY 2022, while its global digital collection society – AMRA – hit annual revenues of $117.3 million, up 6.8% YoY.
(Kobalt recorded intra-company eliminations of $63.8 million across divisions in FY 2022 to calculate its $631.2 million annual revenue figure. Meanwhile, Kobalt’s annual ‘gross collection’ revenue in publishing hit $616.1 million in the year; see below.)
Kobalt’s operating profit nearly doubled in FY 2022, up by 71.1% YoY to $21.9 million from $12.8 million in the prior 12 months.
It was Kobalt’s second straight FY of profitability, according to the company.
Kobalt’s filing reveals that it spent $212 million on acquiring music publishing IP in the year.
To help fund these acquisitions, the filing further confirms, “During the year… [Kobalt] closed a $400m senior secured revolving facility and a $150m senior secured last-out delayed draw term loan facility.”
Kobalt notes in its annual results for FY 2022 that in its last three financial years, it has spent $249 million on advances to writers.
It tells its shareholders that these advances contained “higher margins and longer contractual retention” than has been typical in previous years, “further enhancing our key objective of increasing profitability in FY22”.
In other words, Kobalt has been paying writers larger sums in order to lock in deals with higher margins for the company, and for a longer stretch of years, than it once did.
Kobalt’s cash position at the end of FY 2022 stood at $60.8 million, while the firm confirmed in its filing that owed borrowings of $255.5 million at the date of its relevant balance sheet (end of June 2022).
The calendar year of 2022 was a historic year for Kobalt: Francisco Partners became the firm’s majority owner via a $750 million deal agreed in September last year.
That event came a few months after the FY in question here (FY 2022).
The other biggest recent event in Kobalt’s recent history – the sale of AWAL and Kobalt Neighbouring Rights to Sony Music for $430 million – took place in the prior fiscal year to FY 2022 (i.e FY 2021, to end of June 2021).
That $430 million sale was the primary reason why Kobalt’s profit after tax in FY 2021 stood at a whopping $341.3 million (see below).
It also largely explains why Kobalt’s average global headcount in FY 2022 (402) was smaller than in FY 2021 (597).
In a statement included in Kobalt’s FY 2022 annual fiscal report, the company’s founder and Chairman, Willard Ahdritz said: “Since day one, Kobalt has paved a unique path to transform the music industry for the benefit of creators. Through the creations of our businesses, we’ve been able to unlock, to my estimation, billions in money shifted back to the creators, something we are very proud of. Our social impact has also been recognized by the Stanford Social Innovation Review in their September issue, which presented a paper on Kobalt’s impact on the music industry.”
Added Ahdritz: “In this past fiscal year, we had set our sights on Kobalt’s next chapter through the sales of AWAL, Neighbouring Rights, and our Kobalt Capital Funds. As a result, Kobalt has become stronger, and we’ve been able to double down on our core publishing business and AMRA, our digital global society, to continue to innovate for the benefit of creators and rights owners.
“Together, we will continue to blaze new trails to help supercharge the music industry, still always with the purpose of benefiting creators and rights owners… Somebody. stop us!”
Willard Ahdritz, Kobalt
“Over the years, we’ve had many suitors wanting to invest in Kobalt, but never one so aligned with our vision and strategy as Francisco Partners (“FP’’). They were the right partners to take Kobalt into our next growth phase. I am happy to welcome FP as Kobalt Music’s new majority owner. I would like to thank all investors who have believed in and supported Kobalt from day one who now had the opportunity to exit.
“Without our clients and employees, we would not be able to execute our vision. I would like to thank everyone involved for another great year of growth and expansion, navigating through the challenging environments we have had on a global level.
“Together, we will continue to blaze new trails to help supercharge the music industry, still always with the purpose of benefiting creators and rights owners.
“Somebody stop us!”
Kobalt’s CEO, Laurent Hubert, praised the performance of Kobalt’s publishing company in the report, claiming: “Kobalt’s successful fiscal year results from the hard work and diligence of the best creative, synch, operations, tech, and overall global infrastructure in the music industry.”
Kobalt’s successful writers in FY 2022 included Rogét Chahayed, Sam Fender, Finneas, Max Martin, Andrew Watt, Ozuna, Karol G, Phoebe Bridgers, Stevie Nicks, Justin Quiles, The Foo Fighters, Roddy Ricch, and Gunna.
Hubert noted that AMRA had recognized “significant growth” in FY2022 “predominantly from its current client roster and new client acquisitions and new digital licensing services”. agreements.
Added Hubert: “AMRA’s business model and specific dedication using its state-of-the-art technology platform to ensure global writers and artists are paid accurately and fairly for digital usages around the world is solidified as the next generation of PROs.
“AMRA’s global roll-out has reached all corners of the world outside the US and includes direct digital collections for China, Brazil, Japan, and, more recently, Canada. It is the broadest territorial scope in the industry which continues to generate revenue growth.
“AMRA’s business model is built to meet the needs of the rapid growth of global digital music consumption and is once again positioned to set new standards for global digital collections among societies.”
Kobalt’s now-defunct investment management arm, Kobalt Capital, facilitated the sale of two music-owning funds in the past two years for a total of $1.4 billion:
- Fund One was sold to Hipgnosis Songs Fund for $323 million in late 2020;
- Fund Two was sold to KKR / the Hendel family for $1.1 billion in October 2021.
Today, Kobalt continues to acquire music copyrights, but does so via the balance sheet of its main company, using its own finances.
You can read the full Kobalt FY 2022 Companies House filing through here.Music Business Worldwide