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Audioboom (LON:BOOM) has agreed a tie-up with a major American radio network.
Chief executive Rob Proctor describes the Cumulus deal as “transformational” and “a very big step towards revenue generation”.
“This partnership represents a major step-change in our plans for monetisation, and as we see the full roll-out of our platform across the entire USA we expect to benefit from a considerable increase in monthly listens and registered users but also a steady flow of advertising revenues,” Proctor said.
Cumulus Media Holdings, owner of 450 regionally targeted stations, is America’s second largest network of radio stations and through the new partnership it will use the Audioboom platform to broadcast content online.
It is also envisaged that Audioboom and Cumulus will collaborate to commission and produce original audio content, like for example new podcasts covering news, sports and country music.
Westwood One, a syndication and media sales arm of Cumulus, will sell advertising tied to the new content resulting from the agreement as well as other American content that will be provided by Audioboom.
Westwood, a leading mutl-platform content provider, has a strong brand portfolio that includes the NFL, NBC Sports Radio, the GRAMMYs, NASH, and Rdio. It accumulates 244mln weekly listeners, and 70mln monthly digital users.
Lew Dickey, chief executive of Cumulus Media, said: "This exciting new partnership marries Cumulus's and Westwood One's best-in-class local and national content with Audioboom's industry-leading technology and distribution capabilities.
“Radio is America's number one reach medium, and as listeners continue to increase their consumption of audio, this partnership allows for new ways for consumers to explore and engage with the radio stations and on-air talent they know and love today.”
“Additionally, from an advertising perspective, the short-form and on-demand digital medium provides a unique and effective way for brands to activate consumers.”
Audioboom has, however, revealed that the attention paid to arranging the new partnership with Cumulus does mean that its internal advertising revenues for the current year will be substantially skewed to the latter part of the year.
It also means that sales are likely to be lower than current market expectations.
Nevertheless, the company says it is still confident of achieving its long-term plan for substantial growth in advertising sales.
Audioboom also told investors it will increase its marketing budget by around £800,000 over the course of the financial year to support its progress towards that goal.
The company said it is targeting cash generation and profitability in 2017.
"As we've consistently explained, the generation of significant advertising revenues is a long-term goal, and so we have initially focused on building up our active user base and content partners,” Proctor says.
“This transformational deal will help to boost these existing KPIs, but it is also a very big step towards revenue generation.”
Cumulus, as part of the new partnership deal, will have the opportunity to acquire a stake of up to 3.8% in Audioboom, via share warrants attached to the deal. These warrants will be exercisable at a premium price of 12.5p (versus current market price of 6p).
House broker Shorecap described it as “good and bad news”.
“They say 2016 looks good, though, given the deal they have just signed,” analyst Peter McNally said in a note. “We have always thought the estimates here have been conservative for the longer term, so it we think it still looks very interesting and is starting to show some real signs of future monetisation.”