North American sales led the way during the third quarter for global podcast company Acast, which reports overall revenue grew 32% to $38.8 million. The pace of North American sales was even stronger, with net sales increasing 55% versus a 25% growth rate for Acast’s European markets.
“It is still too early to point with certainty to the moment of broad recovery and upswing in the world's advertising markets,” CEO Ross Adams said. But on a conference call with investors Tuesday, he said despite the macroeconomic backdrop, Acast continues to strengthen its position.
CFO Emily Villatte said despite a “mixed advertiser sentiment” during the third quarter, the company also benefited from easy year-to-year comparisons. “But we’re still happy with our growth against the macroeconomy,” she said. “I think it validates our position and execution of our strategy.” Villantte said that the main driver of their growth was selling more ads, with CPMs remaining “relatively stable” this year. “We are seeing new advertisers testing out the media, and we have advertisers that we've worked with for several years coming back,” she said.
Acast did not provide any revenue forecast for the current quarter, but Villantte said she expects it will come down to how much spending is done next month.
“Clearly there is mixed advertiser sentiment out there,” she said. “December is always an interesting month, you can either have some last-minute spending and accelerate into that quarter. Or you can see some years we have seen a tightening of budgets and a hold back in December. so we're monitoring this closely.”
Villantte said that while their global footprint helps, in the U.S. there has been several positive data points which she credits with helping produce their best Q3 results in North America.
Villantte also noted that expenses were down 11% versus a year ago, as part of a “continued reduction” in the number of employees. Still, she said they have continued to invest in North America to drive further growth with several new hires for its sales and operations teams. In August it hired Greg Glenday as Chief Business Officer, a new position for Acast, as well as making several other sales team changes.
Acast has been focused on growing revenue and scaling back on its expenses for the past year and management said its goal to turn profitable in 2024 remains unaltered.
“We're on track towards profitability,” Adams said. Acast reported a loss of $2.4 million during the third quarter compared to $7.9 million loss during the same period a year ago. And it had an operating loss of $4 million.
“During the third quarter, we have succeeded in balancing growth with prudent cost control, positioning us on our established path to profitability,” Adams said. “Our efforts to develop podcasts into an increasingly efficient advertising channel continues, and during the quarter, we introduced several initiatives that enhance our ability to further scale up revenues.”
Acast had 1.28 million listeners during the third quarter, a three percent decline from a year ago. It attributed that to the ongoing rollout of iOS 17 which changes how podcast episodes are downloaded on mobile devices which in turn affects the measurement of listens.
“In the long term, the change will mean a more accurate picture of the listening frequency for each podcast, which is a positive development for the industry,” Adams said. “In the short term, we expect a decrease in the number of overall listens.”
He estimated that the drop will be an even bigger 10% during the fourth quarter.
