7digital has released its preliminary results for 2014, the first since the merger with UBC Media in June 2014, reporting a 12% drop in total revenues from 2013 to £10.2 million.
The biggest drop for the group came from its content division, where revenues fell by 45%, driven by the market’s move to streaming.
7digital is adapting though, B2B revenues from streaming services rose from 21% to 58% between December 2013 and December 2014, whilst those from downloads declined from 79% to 42%. Undoubtedly this figure is to be viewed in the context of a rapid decline of downloads, but the company appears to be heading in the right direction.
Licensing revenues and monthly recurring revenues provided a bright spot in the report, rising by 7% and 12% respectively.
The company also highlighted that the margins on licensing revenues are very high, at 95%, whilst when it comes to content the margins are on average just 7%.
Net assets increased by £13.3 million, following a £7 million fundraise and £3.5 million raised in the Audioboom divestment. 7digital also reduced its loss for 2014 to £2.6 million from £4.5, a significant improvement.
The company has plans and partners in place in the mobile, connected home and wearables markets, and will continue to develop its radio and retail partnerships.
7digital, given its heavy reliance on download sales, won’t have an easy ride in the short term but the company has the financial resources and the drive to develop new products and aggressively pursue new markets.
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