Audioboom Group PLC

LSE:BOOM

Earnings Call Analysis

Audioboom's Strong Q3 Performance Sets Stage for Future Growth

Audioboom reported a robust third quarter, showcasing all-time high revenue and a record EBITDA of $2.5 million, which analysts expect will exceed. The company is focusing on expanding in Canada and investing in tech innovations for smoother operations, anticipating a higher gross margin of 31%. They aim for a U.S. listing, targeting $100 million in revenue and $8-$10 million in EBITDA. As the podcasting landscape grows, Audioboom is gaining market share and emphasizes that present share prices reflect undervaluation, making it a compelling time for investors.

Strong Recovery from Ad Market Challenges

Audioboom reported impressive earnings for Q3 2024, achieving $18.8 million in revenue, marking a 34% increase year-on-year. This impressive growth signifies a remarkable rebound from the ad market recession experienced at the end of 2022 and early 2023. With four consecutive quarters of revenue growth, the company demonstrates its resilience and ability to capture market share, placing itself firmly ahead of competitors in the audio advertising space. This growth trajectory signals a potentially bright future as further recovery in the ad market may yield additional pricing upside of 10% to 15%.

Significant EBITDA Growth

Adjusted EBITDA for the quarter reached $1 million, up $3 million from a loss of $2 million during the same period last year. Year-to-date adjusted EBITDA stands at $1.3 million, already surpassing initial market expectations of $1.3 million for the full fiscal year. Analysts have now revised their earnings guidance to $2.5 million for the entire year, reflecting confidence in sustained performance. The company's efficient management of fixed operating expenses coupled with robust revenue growth has been essential in driving this EBITDA growth.

Showcase Driving Revenue Evolution

The company's advertising marketplace, Showcase, has been a significant contributor to revenue. In Q3, Showcase generated $7 million, nearly doubling in revenue since Q3 2023. Key factors driving this success include a remarkable 68% increase in advertising pricing and sales of over 1 billion impressions, representing a 24% year-on-year volume growth. By contributing over 30% of Audioboom's total revenue in 2024 and realizing much higher gross margins compared to its other revenue lines, Showcase highlights the strategic pivot towards higher-margin offerings.

Healthy Cash Position and Operational Efficiency

Audioboom's cash position remains healthy, reporting $3.3 million at the end of September 2024, slightly down from $3.5 million. This decline is attributed to a $1 million advance payment to a key creator, marking the last of such contractual obligations. The company maintains a stable operational expenditure base of $2.8 million, ensuring that revenue growth flows through effectively to EBITDA. With only 39 employees, Audioboom boasts impressive revenue generation efficiency with over $1.3 million of revenue generated per employee this year.

Industry Position and Future Growth Opportunities

Audioboom is positioned as the fifth-largest podcast publisher in the U.S. and is experiencing a fast-growing medium with projected growth of 22% annually over the next six years. Thus, the company sees a pathway to reach $250 million in revenue by 2030, fueled by continuing market expansion and operational efficiency improvements. Importantly, Audioboom aims to continue enhancing its technology and innovating products while selectively expanding its global presence, particularly in markets like Canada.

Outlook for Q4 and Potential U.S. Listing

The company anticipates strong performance in Q4 due to seasonal demand driven by major sporting events, holidays, and anticipated ad revenue from the U.S. election cycle, with $71 million in revenue already on the books as of this earnings call. Furthermore, there is an ongoing exploration of a potential U.S. listing, with management indicating the need to reach at least $100 million in revenue and $8-10 million in EBITDA prior to making that leap. Achieving these benchmarks would enhance the company's visibility to more sophisticated investors.

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon, ladies and gentlemen. Welcome to the Audioboom Group plc Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so.

And before we begin, we would just like to submit the following poll and if you could give that your kind attention, I'm sure the company would be most grateful.

And I would now like to hand you over to the executive management team from Audioboom, Stuart.

[Stuart Last, executive]

Thank you so much, Jake. Hello, everyone. It's really great to be with you today to talk about really what was a fantastic quarter for Audioboom. I hope you all agree, we'll get into that into some more detail very, very shortly. First of all, as Jake said, get those questions in, we'll have some time at the end for that. We've got about 45 minutes, I think, here today. So we'll do as many questions towards the end of the presentation as we can.

So usual format today, for those of you that are new to the business, we'll do a quick look at the industry and the business model. We'll dive into those Q3 results, talk to you about those in more detail and then take a look at our future focus and what's to come. But yes, for those of you that are new to the business, welcome. My name is Stuart Last, I'm the Chief Executive Officer, I've been the CEO of Audioboom for just around 5 years now, but I've been with the company for 10 years launching the business here in New York back in 2015. And before that, I was at the BBC running digital audio. So more than a decade deep in podcasting. I love the medium, I love audio. I'm just really happy to be driving this business forward.

[Brad Clarke, executive]

Hi everyone, I'm Brad Clarke, Chief Financial Officer here at Audioboom. I've been here for 6.5 years since March 2018, based in London, chartered accountant, mainly focused on media organizations, previously worked at Brave Bison [ moves ] U.K. before join in Audioboom in March 2018. I will ask a little bit later on to take you through a few financial slides, but until then, back to you Stuart.

[Stuart Last, executive]

Thank you, Brad. So what are we talking about today? Well, I think the first thing, the first biggest part of the story is just strong revenue and EBITDA growth during Q3, the model is in full flow, and you're seeing that coming through on the revenue and the EBITDA side of things, EBITDA significantly ahead of the previous market expectation of $1.3 million for the full year. So we've seen an analyst upgrade there to $2.5 million and we'll talk more about that across the presentation. What's driving that EBITDA was gross margin improvement through a real focus on the quality revenue lines, and you'll see that theme running throughout this presentation.

We really are focused on those higher-margin revenue lines, particularly Showcase our ad product, our ad marketplace, which is really booming at this point also reducing our minimum revenue guarantee obligations through contract restructuring. We have a very stable OpEx base that Brad will walk you through. All of that is providing and starting to deliver a gearing of EBITDA. And we have an exciting Q4 ahead of us, the sports season, the holiday seasons, and a further boost by the U.S. election. So let's get into all of that and kicking things off really with a look at the podcast market as it is in our business model for anyone that is new to the company.

So this is what Audioboom does, right? We have a very special place and a very important place in the podcast ecosystem. Our platform sits at the heart of podcasting, and what it does is it connects creators and their content with audience and with advertisers, and without a platform like Audioboom in the middle providing that technology and ease of use, there is no value in podcasting. So we partner with independent creators, independent podcasters, they distribute all of their content through Audioboom. It's very efficient, one click distribution out of all of those listening apps like Spotify, YouTube, Pandora, Apple Podcast, everywhere where there is audience, Audioboom is delivering that content, helping those creators grow their audience and then we bring in advertisers to monetize that audience. So we bring them in two different ways. We bring them in for live host endorsements that creator reads, the sponsorship or the advertising messages, and then we use our marketplace Showcase to dynamically to deliver live in real-time advertising as well, very targeted to the audience.

So joining those three elements together, Audioboom is at the heart of it, we create real value and we've done this now for the past 10 years. We do it very efficiently and we do it very well and you can see that from our results over the past few years. Our model works. It delivers growth over the past 7 years, it's delivered 44.1% CAGR, and that equates to around 1,200% growth our revenue since 2017. So this is a model that we are starting to prove and have proven over the last 7 years. The model really does work. We've outpaced our competitors. We've outpaced industry growth significantly across that time.

We broke even in 2021, and we've delivered EBITDA profit in 3 of the last 4 years. So again, are showing that, that model that we've created is working. We think there's a fantastic future opportunity here as well. Podcasting is our very fast-growing medium. Projected to grow an average of 22% over the coming 6 years. So we can see what that opportunity looks like. If we keep pace with the wider industry, there's a $250 million revenue opportunity here by 2030. So we have outperformed the market to this point and keeping pace with industry growth over the coming years. Provides significant revenue opportunity and obviously being a shareholder of Audioboom is a fantastic way to be exposed to the structural growth that is happening in podcasting globally at the moment.

And this work that Audioboom has done has positioned us as the fifth largest publisher in the U.S., this is a chart here that I'm just super proud of. I think the team here have done an incredible job amongst some strong competition to position us a fifth largest podcast publisher in the U.S. You can see the big names there on the left-hand side, this is the Edison Research ranker, there is also a Triton Digital Podcast Ranker, again, we sit fifth that Triton Digital Ranker, also of the top podcast network the U.S. But we also have a global footprint. We are the second largest publisher in the U.K., fifth largest in Australia, in Canada we're fourth, New Zealand with second, Latin America, ninth. So we have a global footprint, global growth, global revenue, and that's all coming together, as you'll see in the Q3 results.

So let's dive into that Q3 performance and take a look here, I'll break each of these down in a little more detail. You probably know the headline numbers, but we'll go through those and give you some more information as we do. So first off, $18.8 million of revenue in Q3 2024, really strong performance here, up 34% year-on-year. The growth is significantly ahead of industry projections. Again, you've seen the industry projection numbers earlier, and we continue to outpace our competitors and grow faster than the rest of the industry and grab that market share. This was the fourth successive quarter of year-on-year revenue growth following that ad market recession around late 2022 and early 2023. We rebounded from that. We're moving on past that ad market recession, and we've delivered a great revenue number here. Still some upside to come as the industry and the ad market recovers from the ad market recession, 10% to 15% pricing upside, I think, is still in there so we have still some way to go to really get back to a healthy ad market, but I think we do a great job of proving ourselves as we come out of that market recession.

That $18.8 million of revenue in the quarter enabled us to deliver $1 million of adjusted EBITDA during Q3. So that's a significant jump on the same quarter last year, a $3 million increase in adjusted EBITDA versus a loss of $2 million loss in Q3 of last year. So really moving forward when we see that higher revenue and the other parts of the business model. I think gross margin improvement, the fixed OpEx there, that's gearing that EBITDA and allowed us to deliver about $1 million.

As you know, year-to-date, that's a $1.3 million EBITDA. So trading significantly ahead of the previous market expectation that led our broker today to increase that market expectation up to $2.5 million for the year. As you -- as we go through this presentation, I think you'll see that we kind of brimming with confidence here, and we do feel that we will be able to outperform that new number that's in the market and go beyond that $2.5 million of adjusted EBITDA for the year.

And then cash remains healthy $3.3 million in the bank at the end of September, that's a marginal decline from $3.5 million a quarter earlier. I think the key kind of thing to understand here is that during that period, we paid a $1 million advance to one of our key creators, that was an obligation in the contract with that creator. So $1 million advance was paid to that creator, that was the only remaining advanced payment that we have in the business. So over the past 3 years, we've pushed back against paying advances against revenue and that was the final one, and that was a $1 million advance during that period, which has led to a marginal cash decline at the end there. And of course, as you know, we have a $1.9 million overdraft facility to meet use of as well, giving us some further comfort.

I'll walk through our KPIs next. We release these every quarter, and they tell something of a story about the health and the growth of the business. First off, we'll start on the left-hand side here. This is our global downloads number. It's a monthly average across the quarter, and it highlights the size of our network and how big our network is growing. Let's talk about the chart first. You can see very good consistent growth from early 2020. Early through until the final quarter of last year going up to 127 million monthly downloads at its peak, and then you see a drop off there, and I've highlighted it, that is the result of a change that Apple made their iOS and therefore, their podcast listening app and that changed the way that podcasts are downloaded and it had a pretty material impact in downloads across the industry.

Audioboom fared better than most of our competitors in that. And as you'll see, and I'm really pleased to show you of today, the impact of the Apple iOS 17 lasted around 9 months. We're now starting to go back up again. So podcasts were downloaded across our network of around 96.5 million times each month during Q3. That's a slight uptick from Q2. So we're turning that corner, and we'll see network download starting to slowly move back up. And of course, as you know, downloads equals available advertising inventory that we can go out and to sell and monetize. So it's a good proxy for the size of our inventory levels and what we can go and monetize and how big we can grow our revenue.

eCPM, that's our second KPI, that's the middle chart here. eCPM is the amount of revenue that we extract from every 1,000 downloads across the network. So it's a sign of how well we optimize our monetization. It's a sign of how well our pricing is doing, how well our fill rate and our sell-through rate against our inventory is doing here.

So again, look, let's look at the chart, very strong consistent growth from early 2020 onwards, then we saw a dip, that's that global ad market recession that I talked to you about through late '22 and early 2023. And then you see us there on the right-hand side of that chart rebounding very strongly over the past 4 quarters where we've seen that revenue growth. We've been resilient to the ad market recession. We're growing again. And we hit a record $66 per 1,000 downloads in the last quarter, driven by that high revenue number. So we are really extracting more value from every 1,000 downloads than any of our competitors that's a market-leading number, and it's a number that should also move forward in Q4 as we go into a strong demand period for the business.

And then finally, brand count, the chart on the right-hand side here, the number of advertisers that pays Audioboom every month to advertise across our network, this one runs back to early 2021. And again, it's strong, consistent growth across that period going from just over 2,000 advertisers back start 2021, up to 8,200 advertisers in the most recent period. What you're seeing here, you've seen a slight plateauing on the top right here, this is a change in pricing strategy.

So we've lifted our floor pricing, particularly around Showcase, our automated ad product. We lifted that floor pricing. It forces advertisers and brands to pay more to be on our network. So therefore, it limits slightly the number of brands that can afford to pay us to be on the network. But overall, our pricing strategy drives revenue. And we're seeing a tick back up here in that brand count to over 8,200 in the most recent period.

And that's a sign that our blue-chip brand strategy. We launched a new sales unit in-house just over a year ago, and they are working with bigger, stronger, more international blue-chip brands, bringing those into the network and you're seeing come onboard and pay a higher price to be advertising within our network. So very pleased with these KPIs, all heading in the right direction, all show that we are trending in the right direction.

So today, I think the next 2 slides I really do want to highlight, Showcase. I talked about it being booming, excuse the pun, but it really is flying at this point. Showcase is our global advertising marketplace. We launched it around 3 years ago it's our second advertising product and this is a product that is ad tech based. In real time, it matches supply and demand puts those things together allows us to monetize our audience in a very targeted way. So to break that down a little bit further, the supply comes from all of our network content and our ad inventory. So our technology pushes all of the available ad inventory that we create into Showcase.

Within that platform, we match it up with demand that's advertising and buyers coming from our in-house team, our blue-chip brand advertising team, and then also a programmatic buying ecosystem that we have put together over the past 3 to 4 years. And that's where we tap into ad networks, create an automated programmatic buying arrangements with advertisers and then we partner up with monetization teams around the world to suppliers with revenue in each of those regions as well.

So Showcase is putting those two things together. The supply and the demand, it does it very efficiently at huge volumes. And it allows those advertisers to target their advertising against audience, which is pushing the price higher there. That's something that advertisers want. So we are allowing them to do that, and that's driving Showcase revenue really, really quickly at this point. So we delivered $7 million of revenue through Showcase over this last period, that's almost a doubling of revenues since Q3 of 2023. So you can really see the results of that work that we are doing.

What is driving that? Well, it's pricing increase. I talked about it a little earlier. It's those blue-chip brands coming in and paying higher pricing to get that audience targeting and that scale and volume that we have within Showcase, and that's led to a 68% increase in the pricing that we are seeing within Showcase. And then it's also volume we've sold over 1 billion impressions in the last quarter, that's up 24% against a year ago. So Showcase working really well, growing and really driving things forward for us. And you'll see why we are talking today a lot about that focus on high-quality, high-margin revenue.

So this chart at the top here. highlights our revenue makeup across the business over the past few years. In 2021, the first year of Showcase delivered and contributed around 11% of our group revenue. roll that forward to 2024 so far, and Showcase is contributing over 30%. And in Q3, actually, that contribution was closer to 37%. So Showcase really pushing things forward, contributing more of our revenue every single time.

And why is that good? Well, you can see the gross margins there at the bottom, Showcase has a significantly higher gross margin than our other two revenue lines of Premium Ad sales and Sonic advertising as well. So real focus on Showcase driving that forward, creating more inventory for Showcase to sell.

Why is Showcase so successful? Well, I just said that inventory growth is one of the key things there. Showcase over this last quarter, has delivered and sold around 3.5 minutes of advertising per hour of content, and that's up from 2.2 minutes of advertising per hour, a year ago, which is a strong increase in how much advertising is flowing through Showcase, but there's significant upside there as well, right? So 3.5 minutes, 3.6 minutes of advertising per hour, that's not a high number if you compare us to commercial radio, for example, ad loads in commercial radio 4 or 5x higher than that.

Now I'm not going to push to those levels. That's going to create a bad product, a bad listener experience. But we can easily see that we could double the amount of advertising that Showcase is delivering within an hour of content and see significant upside in Showcase through inventory growth.

The other thing that will keep Showcase moving and keep Showcase growing is our kind of ad tech innovation, you're aware of some of this already. But AdRip is a tool that we launched over a year ago that helps podcasters create more ad inventory from their content. We've had great adoption of AdRip over the past 18 months, more and more of our podcasters are using that on every episode that they create and that is driving ad inventory.

Secondly, we're innovating around brand safety. So we have a set of tools that we're bringing into the business that will allow advertisers to see content that is safe for their messages and safe for them to be aligned with has been in particular focus around the U.S. election season but that will continue through and we'll continue to offer those brand safety tools to advertisers on the demand side.

And then we continue to integrate with more demand side providers, more ad networks, more programmatic partners to really open us up for more demand to increase our fill rates and to drive that Showcase revenue even further.

Then we invest, right? So we -- as you know, we launched our blue-chip brand team in the fall of last year, just around a year ago. We've expanded in the U.K. and the U.S., with some key hires earlier in this year. And next year, we will continue to invest into that sales team. So we will hire more sales people that are focused on brand sales, blue-chip brand sales, both in the U.K. and the U.S. this will increase fill rates. This will increase pricing and we'll keep Showcase moving forward. So I'm very happy with the work that we're doing here around Showcase that higher-margin revenue line is driving not just the revenue forward, but it's increasing our EBITDA significantly as we go into Q4.

And Brad, I'll throw over to you for a few minutes to go into some more details on the numbers.

[Brad Clarke, executive]

Great. Thanks, Stuart. Hi, everyone, again. So let's go through these next few financial focused slides, a few new data points for year initiative over the last few sessions. This first slide focus on revenue, gross margin and our podcast partner minimum guarantee exposure over the last 5 quarters following on from what was, in my view, a very strong record of Q3 update this morning, very much return to form for the company. It's great to see the company reporting its fourth successive quarter of year-on-year revenue growth following the ad market downturn, which Stuart has mentioned, revenue growth of 34%, very impressive, driven along very nicely by our growth in Showcase revenue, which Stuart was just going through in detail.

Our top left chart shows that ready growth over quarters. The graph on the top right-hand corner of the page details, how our gross profit has progressed over this year as well with a $3.3 million improvement in gross profit in Q3 of this year versus last, significant improvement again on that metric. We can also see how that gross margin percentage has improved over the last 12 months as well, improving from 3% in Q3 of last year to 20% in this year, again, representing the fourth successive quarter gross margin improvement on that line, another significant improvement.

How has this been delivered? Well, we've, of course, mentioned that revenue growth over the last year. But importantly as well, revenue growth has been delivered at the same time as reducing our minimum guarantee exposure, for anyone new bit of background for you, to secure exclusive advertising rights to leading podcast talent, we offer capitally-modeled guarantee revenue shares to secure them to secure those advertising rights. Once those this has been agreed, it's a job with the company to meet and ideally exceed those minimum guarantees in order to deliver the gross margin that we expect through selling advertising.

For the leading podcast talent in America, where the majority of our revenue is generated, plus around 20% to 25%. What we saw during the ad market downturn were challenges with the MG contracts, whereby the deals we agreed were based on higher advertising rates than what we're able to be obtained before the downturn, and we refer to this gap as a minimum guarantee true-up, effectively a shortfall on the agreed minimum revenue share and recognition of a lower gross margin than anticipated.

What the company has done and worked extremely hard to do over the last 18 months is; a, honor all contractual minimum guarantees to maintain our relationships with our podcast partners are important reputation point for the business. And when contracts come up for renewal, we restructure them to make sure that the MG levels are attainable.

What the graph in the bottom right details, well, that's the percentage of content partner payments that relates to MG true-ups over our total cost of sales. We can see that spike in Q3 of last year, we recognized our exposure to MG true-ups in our P&L, hence, the EBITDA loss in Q3 of last year. But since Q3 of last year, we've seen our MG exposure significantly decrease quarter-on-quarter as we focused on maximizing the value of our inventory on MG shows, we're now clearly seeing the beneficial impact of the contract restructuring, reducing the exposure to MG contracts as well as increasing that top line revenue number has had a very beneficial impact on the group's margin recognized, and importantly, the adjusted EBITDA that we report.

So let's go forward to this next slide, what we can see on here about OpEx and adjusted EBITDA. Well, what we've said consistently over the last 18 months is that our OpEx base doesn't materially change, and when we return significant revenue growth, our adjusted EBITDA would grow because the cost base wouldn't change at the same rate as revenue growth. Well, that's exactly what's happened in the third quarter of this year. We've grown revenue, we've reduced the MG exposure. OpEx base didn't change. Guess what, that EBITDA has increased, that's really pleasing to see and it's validation of what we've been communicating in a recent update.

In terms of the OpEx, we can see that on the left-hand side, that's in line with previous quarters at $2.8 million, and our adjusted EBITDA reached $1 million in the third quarter, $3 million higher than Q3 last year. As a total, the effect didn't change and the consistency of that OpEx hasn't changed either with around 65% of the cost spent on staff and commissions and 25% on technology costs, that consistency will continue to go forward.

I view us as efficiency leaders within podcasting, just 39 employees within the company generating over $1.3 million of revenue per employee on a year-to-date basis this year. And I think that compares very favorably if you compare us to other podcast companies or companies within wider media as well. We compare extremely favorably on that revenue per employee metrics, and we've actually done that exercise internally as well as the basket similar companies, and we compare very favorably on that revenue per employee basis.

On the next slide as well, with our DSO as well on the right-hand side of this page, we can see that DSO consistently remaining below 90 days, which is our target. Q3 this year, it was 77. As I said, we're very efficient in this company, collected very close to 100% of revenue booked this year. Revenue recognized comes with minimal risk of cash as we can see on the bar chart on the right-hand side as well, under $100,000 of bad debt provision and write-offs last year loss of $11,000 this year. So it's a proportion of revenue even last year, it was tiny, this year, it's miniscule. So that gives us comfort in terms of the revenue that we've been recognizing.

Cash balance, relatively consistent over the last year or so, but given the increase in revenue recognized in the third quarter associated revenue share payments will also increase as well. So we effectively -- there's a question from this from one of the listeners earlier on in the presentation, Andrew, I think it was in terms of why does macro transition directly into cash straightaway?

Well, in terms of revenue recognition, we're recognizing the revenue for advertising when the podcast is broadcast. On average, we're taking 77 days to collect that revenue. Some customers pay within 30 days, some slightly longer. We're paying our podcast partners on 30-day terms. So there's a timing impact there, Andrew, in terms of when we are expecting to see that cash flow through into the business but given the significant increase in EBITDA. We're also expecting that to flow through in the cash in the business, especially on the not writing any of that revenue of. So hopefully I answered that question, Andrew, but let me it doesn't.

Coming back to the cash point, and we also need to make sure our collections on point through the final quarter of this year. Obviously, Q4 is going to be strong revenue-wise. Q1, we'd expect that seasonally to be lower. And therefore, we expect revenue share payments to be lower as well in Q1, so therefore, in Q1 of next year, collecting the higher revenue numbers that we are recognizing as we're expecting to some improvement in the cash number there.

Historically, adjusted EBITDA has been a proxy for cash generation still true with a caveat that we have provided for a couple of onerous contracts in 2023, and we are servicing those, which is why, again, while we're not seeing that improving in the cash position. Once those contracts end next year, the expectation is, once again, adjusted EBITDA will be a proxy for cash generation.

Hopefully, those data points on the new data points and those new data points give you a quick background is what we're looking at in terms of the quarter. Please continue to send in the questions.

Handing back to you, Stuart, to wrap up before the Q&A.

[Stuart Last, executive]

Thanks, Brad. All right. The last little section from me and then we'll do some Q&A then. Here is what we're focused on really, I think for the last part of this year, no surprises here, I think. We're expecting strong revenue growth again in Q4. Q4 is, as Brad said, seasonally, the strongest period for the business, and we expect nothing different this year.

So as of today, $71 million, more than $71 million of revenue on the books with the 2.5 months of the year still to go. So we're in a strong position right now. We have our brand sales focus, our team are continually working on getting into those bigger international blue-chip agencies to connect and partner with the brands in this final quarter. We're expecting further expansion of Showcase, I walked you through all the elements of that, and why Showcase will continue to grow and to move forward very quickly and all the pieces that we're investing in and innovating around to improve that Showcase growth.

The reason why Q4 demand is so high, it comes down to a few things, but the NFL season in the U.S. is a big driver of our revenue in Q4. English Premier League as well does the same in the U.K., and of course, it's holiday season. So lots of demand from advertisers around thanksgiving and then the Christmas period also. This year, we're further boosted by the U.S. election. We have, as you'll have seen a couple of weeks ago, renewed contracts with some of the biggest political and new shows that are out there, and those are driving revenue through us for this U.S. election season and beyond.

A question came in, I think, earlier just asking how much of our Q4 revenue is related to the U.S. election and if that's the reason why Q4 revenue will be higher. It's a small reason why it's a nice boost, but demand is always higher. The election will just add to that and take it on a little bit further. So it's not our full performance in Q4 is related to the U.S. election. That's a small chunk of it and a nice chunk to have. But really, it's the success of Showcase the brand sales and the Q4 demand that will be pushing back Q4 revenue.

And then, of course, I highlighted it earlier, but we are back to network growth, the impact of the Apple changes falling away less prominent now. So the network is growing again more downloads, more ad inventory, more for us to sell in our highest demand period of the year. So that's the revenue growth side that we're focused on.

The EBITDA side, we said it before, the analyst has upgraded full year EBITDA to $2.5 million. We're confident of beating that. So those reductions in minimum guarantee obligations, that Brad talked about, the restructuring of contracts and also the renewal of contracts on more favorable terms, that's reducing our minimum guarantee obligations, less true-ups, higher gross margin that flows through.

Showcase gross margin, as you saw, is higher at 31%, and it's contributing to more of our group revenue. And then our stable OpEx base doesn't really change -- hasn't really changed for a number of years, very efficient there, those two things combined, we'll see that EBITDA gearing across the final part of this year.

So we're excited about Q4. We are very excited about bringing those results in early January. Audioboom is in a great place, rebounded, been resilient to those ad market troubles of kind of 2 years ago, four straight quarters now of EBITDA growth and revenue growth, analyst upgrade on the EBITDA side, we're just really pushing forward hard here and we're investing and innovating in all the right areas. So Audioboom is in a great place.

And I will leave -- hand you back to Jake and be back with the Q&A in just a moment.

[Operator]

Perfect. That's great. Stuart, Brad, thank you very much indeed for your presentation this afternoon. [Operator Instructions]. I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard.

Brad, Stuart, as you can see there, we have received a number of questions and throughout your presentation this afternoon. And thank you to all of those on the call for taking the time to submit their questions. But guys at this point, if just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and if I pick up from you at the end, that would be great.

[Stuart Last, executive]

Yes. Thanks, Jake. So I think we've talked a lot about the operations of the business so far. So maybe the first few questions here we'll pick some more corporate questions, this is probably the most popular question four or 5 up these have coming today are seeing about the company exploring a U.S. listing that we talked about 3 months ago, and we talked about it a little bit on the last Q&A, and it says, "Can you update us on the exploration of U.S. listing?"

Yes, look, as you know, we share your frustration around the value of this business and the share price relative to our performance, we just announcing this record performance in so many areas. Relative to that, the share price has just never been this low. And today's small increase, very small increase at this point, highlights exactly that.

So we're frustrated with AIM, we're frustrated with the share price and the valuation of this business, and so we wanted to understand whether being listed in the U.S. would materially improve that valuation and what that process would look like, and that's what we talked about a few months back. We have made good progress, I think, there over the past few months. We spent a lot of time since the summer. Seeking out and in conversation with many trusted and experienced people, everyone from capital markets teams in the U.S., legal, logistics side of things, a lot of information has been shared there, and it's been very helpful.

I think we still need to do more work there's more information needed there. But I think what is clear and what we've heard a lot is that I think we need as a business, just a little more scale before we make that move, right? There are some key numbers that we hear time and time again and those key numbers are really $100 million of revenue and $8 million to $10 million of EBITDA. And the reason for that is because at that size, that would enable us to be visible and of interest to more sophisticated investors in the U.S.

What we do not need, right, what this business does not need is to move to the U.S. and just be in the kind of the sites of unsophisticated lower-class investors in the U.S, that's not going to change that valuation, that's not going to be good for this business. So we need to be at the right size to make that move. So that's $100 million of revenue, $8 million to $10 million of EBITDA.

And I think the exciting thing here for me is that that's not a move that we're making tomorrow, but there's a very clear path in our results to those numbers. Particularly, if you think about those on an annualized basis and what we're going to do in Q4 in this business and how next year is looking, there's a very clear path to those numbers that will give us that scale, that visibility in the U.S. to formalize that move, and I'm really excited that we are on that path to being able to do that.

I lost two. This one is from a question came in earlier asking us to give a background on our major shareholders, because there are different shareholders reported on some websites to what's on the Audioboom Group plc website.

So Brad, maybe you can dig into that one for us as well.

[Brad Clarke, executive]

Yes, sure. I think that was from Gavin, early on ask that question. So yes, I mean, firstly, on that point, in line with AIM rules we disclosed on our plc website, any shareholder that holds more than 3% of the company's shares. Secondly, our major shareholders' page is absolutely reflective of the company's understanding of who the major shareholders of this company are, why I think that's not the case is beyond me, quite frankly.

But the background of what we do regarding understanding who our major shareholders are as a company, we work with our brokers Cavendish, and an external third-party, Equiniti, to conduct quarterly reviews of our shareholder register. These reviews can also be done and have been done on an ad hoc basis, should there ever be a prolonged higher volume period of trading done in our shares, just to understand the movements in the register.

The information for the analysis is subject to a caveat. It's only as good as the information being returned to Equiniti, but given we've been doing this for quite a few years, obviously, we would expect ourselves to be able to take any unusual information in the analysis received. Unless they say, in line with AIM rules, we disclosed any shareholder on our website, who holds more than 3% shares. If we were to identify a shareholder who has not disclosed a movement either below 3% to above 3% or across a percentage threshold, so from 4% to 5% or whatever it might be 10% to 11%, that's the point you have to disclose your shareholding when you cross that percentage threshold.

If we identify that, and that doesn't match with our records, then, we'll contact that individual specifically and asking to submit a TR-1 Form disclosing their shareholding TR-1 submission is a shareholder responsibility rather than the company responsibility. There's some confusion about that, but TR-1 submission is a shareholder responsibility, but the company can absolutely ask shareholders to confirm their holding as we've done historically.

But to conclude again, we conduct analysis quarterly. The major shareholder page was updated for any changes that we received through our TR-1 submission consistently evaluates that register. Hopefully that answers the question. But if not, please email me correctly.

[Stuart Last, executive]

Thanks Brad, time for a couple more I think. This one is, how is AI being used in podcasting and our Audioboom? I think we kind of answered the question similar to this, probably a year ago, maybe a little bit more on this Q&A session. And we've said at the time we're starting to see some tools emerge in some areas where it could be useful to the business. we moved on a lot today. AI touches many, many parts of the business.

So I'll just give you a few examples of those quickly as we don't have too long left, but in our business development, we use an AI tool that can tell us much advertising ran in a particular podcast, any podcast in the world and how those ads were executed, which brands were advertising in the podcast and how the audience reacted to those ads. And that's a key part for us, in being able to value that podcast if we are looking to add it to our network. So that's a very cool tool we have.

We also have another AI tool that creates advertising for Showcase. So we simply take bullet points or a script from an advertiser. We put it into the tool, tell that tool what kind of voice we want and what kind of music, what kind of style the ad needs to be and within 15 seconds, it has created a professionally produced 30-second audio ad that can start running in Showcase immediately, just very, very efficient.

Another tool that helps us, I mentioned brand safety earlier on. There's a brand safety AI tool that we have that basically ensures that advertising doesn't run in content that would be problematic for the brand to the AI, effectively listens to the content, understands the context of the content then they will red light or green light that content for various advertising types.

So lots of different ways we are using it, more and more tools becoming available to us, lots of efficiencies being created, and Brad talks about that low head count that we have in the business, I do think AI will help us over the coming years kind of keep that head count very lean and in a good place.

Probably -- just probably a good one to end on then as we're hitting time, but looking ahead to 2025, where will the company be investing to speed up growth. Well, I think you can all hopefully see the impact our innovation and investment around Showcase and our brand advertising sales focus has had over the past 12 or 18 months, and we're really only just getting started there. So I think we'll invest in expanding that brand sales team, this is the unit that we launched last October, I think it was, to build partnerships with blue-chip global brands, and we'll grow that, we'll add new heads the U.S. that people will be in those major agencies creating those partnerships.

One thing I think that we need to showcase is really more supply. We've had some supply constraints, really Showcase is fantastic. It will deliver revenue and demand against whatever supply we throw at it. So we need more supply that will drive Showcase. So we will invest in more tech innovation, I think, to build tools that go beyond independent creators. As you know, we partner right now with independent creators. We'll look at building tools are more of an enterprise-level solution that will enable us to partner and create supply partnerships with networks and enterprise level providers. So I think that's a big step that we'll push into over the next year.

And then I think we have some global growth in mind. We'll do a great job in the U.S., the U.K., Australia was strong there. I think next territory for us to start to optimize is Canada, where we have strong audience and inventory levels, but we haven't been as strong on the monetization side. So we'll invest there in some form to ensure that really, that revenue kind of catches up with supply.

So those are the three key areas and very exciting to me. I think that will drive this business forward pretty quickly. All right. I think that's pretty much it for time.

So thanks, everyone, back to you Jake.

[Operator]

Perfect. Stuart, Brad, Stuart, that's great. Thank you very much indeed for addressing all of those questions that came in from investors and published all those responses out on the platform and where it's appropriate to do so. But Stuart, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company.

If I could please just ask you for a few closing comments, just to wrap up with, that would be great.

[Stuart Last, executive]

Yes. Thanks, Jake. Look, I think what we've told you today kind of says it all. It's been a great Q3 for this business. All the numbers are really strong records across the business. We are very, very confident that Q4 is going to be even stronger. And again, we'll drive things forward, this model works, the industry is growing. We're taking market share. We are, again, bigger and stronger every single period and like this remains just the best way for you as an investor to be exposed to podcasting, which is going through a period of strong structural growth.

So with the share price where it is now relative to this performance. It's never been cheaper to get in and be exposed to podcasting, which I think, as we all know, is a fantastic medium and incredible part to be part of.

[Operator]

Perfect. Stuart, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company.

On behalf of management team of Audioboom Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.