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7Digital boosted by move to higher margin licensing

“It is clear that, as the market for streamed music and radio services grows, so does 7digital,” said CEO Simon Cole.

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Losses are expected to have narrowed, and in 2016 7Digital aims to achieve profitability.

Music firm 7digital (LON:7DIG), in an update ahead of its full year financial results, highlighted an improvement to higher margin licensing revenues.

As a result it expects financial results for 2015 to be in line with management expectations.

The company said licensing revenue was up 21% to £6.5mln for the year, and said gross margins rose to 70%.

At the same time, revenue from production was up 49% at £1.8mln while a move away from low margin sales meant content revenue was down about 50% at £2mln.

7digital added that earnings losses for the year will have narrowed, in line with expectations.

"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,” said Simon Cole, 7digital chief executive.

“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."

Separately, 7digital also announced a new contract win with eMusic.

The customer, which was recently takeover and is being re-launched, will access licensed content from 7digital's global catalogue and will rely on 7digital for rights holder reporting.

Quick facts: 7Digital Group PLC

Price: 0.18 GBX

AIM:7DIG
Market: AIM
Market Cap: £4.42 m
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