Kobalt Music Group will be profitable by next summer.
That’s the message from the company’s leaders – CEO Laurent Hubert and Founder/Chairman Willard Ahdritz – today, as Kobalt’s fiscal results for FY2019 are published.
Those results show that Kobalt’s revenues across all of its business divisions reached $543.4m in the year to end of June 2019, up 35.1%.
In terms of ‘gross collections’ – which factor in gross neighbouring rights revenues, rather than slimming them down to net – Kobalt says its total sales last year hit $616m, up 25% YoY.
In the first half of this financial year (ending June 2020), Kobalt says, its group-wide revenues are up by around 20%, with gross collections expected to approach $700m in the full FY.
“In our forecasts, we see that by end of June 2021, we will be group profitable.”
Willard Ahdritz, Kobalt
The company posted an adjusted EBITDA loss of $21.6m in FY2019, widening on the $15.3m loss recorded in FY2018.
However, speaking to MBW in a soon-to-be-published interview, Hubert and Ahdritz explained that a period of heavy investment, both in Kobalt’s tech systems and the faster-than-usual growth of its workforce, is now complete – which should result in bigger operating margins at the company in the years ahead.
Said Ahdritz: “Despite a big investment on the recorded and technology side in the past two years, from today into next year we expect to have an almost flat operational cost, and in our forecasts we see that by end of June 2021, we will be group profitable.”
Added Hubert: “We’re starting to show scale and operating leverage in our business; we have the ability to take more revenue at less [proportionate] cost. This is something we could always have done, but in the past to fuel growth we put cost ahead of revenue.”
Kobalt Music Group runs four distinct business divisions: (i) music publishing; (ii) recorded music (via AWAL); (iii) Kobalt Neighbouring Rights (KNR); and (iv) global collection society AMRA.
In addition, KMG also handles the administration of copyrights acquired by two royalty funds that are managed by Kobalt Capital Ltd.
Kobalt’s music publishing in FY2019 grew revenue by over 28% to $405m in FY2019, making up 34.1% of Kobalt’s overall group revenues. The firm’s publishing signings/repertoire include Childish Gambino, Dave Grohl, FINNEAS, Bob Marley and Marshmello.
The biggest percentage jump in Kobalt’s divisions in FY2019 came with AWAL, which saw revenues increase by 86% year-on-year to $111.5m, thanks to signings like Kim Petras, Nick Cave & The Bad Seeds and Little Simz, plus label partners like Glassnote Records.
AWAL also works with the act that Kobalt calls “the world’s biggest independent artist”, Lauv (pictured), who has racked up more than 5 billion streams to date.
Three more interesting stats from Kobalt’s FY2019 results:
- The two music royalty funds managed by Kobalt Capital Ltd – one launched in 2011 and the second in 2017 – have made investments totalling $1.1bn to date;
- Digital collection society AMRA saw its revenue grow by 46% in FY 2019 to $65.6m;
- Kobalt’s average headcount grew from 515 to 652 employees during FY2019 and has since expanded in France to further support its roster.
“This past year was another banner year of growth. In addition, we successfully scaled our business to support our clients in the next phase of Kobalt,” said Willard Ahdritz, Founder & Chairman of Kobalt.
”For the past 20 years, Kobalt has worked to create a better music industry for artists and songwriters. Our pace and focus on more transparency, less confusion, and being tech and talent-friendly has had a major impact on the industry. Kobalt’s mission is stronger than ever and we are aiming for future growth and profitability. I’m very excited to continue to serve our clients with the global strength of our staff, systems, technology and partners.”
“I’m excited about this next phase of profitable growth, while continuing to offer the best global services to talent and partners.”
Laurent Hubert, Kobalt
Laurent Hubert, CEO of Kobalt, added: “In the past three years, Kobalt has grown significantly and succeeded in many areas. With any company that grows at our pace to compete with highly entrenched competitors, it’s remarkable what we’ve been able to achieve.
“As an agent of change in the publishing industry to help songwriters and help take artists to the top of the charts via our recordings arm, AWAL, we still know there’s more to do. There’s opportunities to be more efficient and provide more value. I’m excited about this next phase of profitable growth, while continuing to offer the best global services to talent and partners.”
On the subject of running a business in the age of COVID-19 lockdown, Ahdritz commented, “The music industry is entering some uncertain times as a result of the coronavirus crisis, which is being felt around the industry, especially in live music.
“As much as I believed large parts of the industry would transform into digital 20 years ago, I’m confident that our company – and others that have truly invested in tech, systems and global remote workforces – are well-prepared to continue to support artists, songwriters and partners during this time of crisis.
“Our hearts go out to the songwriters, artists and all those hard-working people behind the scenes whose livelihoods are severely disrupted right now especially in the live music industry and we all hope for a swift recovery.”
“I’m confident that our company – and others that have truly invested in tech, systems and global remote workforces – are well-prepared to continue to support artists, songwriters and partners during this time of crisis.”
Willard Ahdritz, Kobalt
Hubert added, “Kobalt has taken many proactive steps to ensure our staff’s safety and well-being in this uncertain time. I’m pleased to say that we transitioned smoothly to an all remote workforce back on March 10th.
“While not intentional for this exact scenario, our unique global setup that allows our teams and creatives to leverage tech remotely has us well-prepared. It did not take us long to get our operations up and running to support all of our clients. Kobalt is well-capitalized and we will continue to invest in staff’s well-being and our client services to achieve our long-term business goals.”Music Business Worldwide