For Audacy, 2021 was a year of “solid revenue growth” and “strategic transformation,” President and CEO David Field told investors Wednesday, as the company rebranded from Entercom and launched its own podcast and streaming radio and music app. “We have purposefully reimagined Audacy as a scaled multi-platform audio content and entertainment company, with outstanding leadership positions across the full spectrum of audio, including the fastest growing areas of the business,” Field said during the company’s fourth quarter earnings call.
The company did not release any details on how the Audacy app is performing. But when asked by analysts whether it made sense to invest in the product in a crowded marketplace, executives defended the move.
“We believe and I think the facts support that we are as good as anybody at generating and developing outstanding premium, differentiated content,” said Field. “And we’ve also cultivated a strong, differentiated position in the podcast space.” In addition to being what he calls a “natural competitor” with a platform that reaches 200 million people each month, Field thinks as more marketers focus on audio, having a standalone Audacy app will allow the company to grab a meaningful share of those dollars.
“We don’t look at the distribution business as a winner-take-all position,” said Field. “We don’t need to be the only player.”
Audacy’s fourth quarter digital ad revenue increased 16% compared to a year ago to $68.1 million. While the company does not release podcast-specific revenue, Field said he feels “very good” about the segment which he said had a “solid” 2021. For all of 2021, digital revenue totaled $237.8 million, a 25% jump from 2020, to account for 20% of Audacy’s total revenue.
The gains were in part due to its acquisition of Podcorn and its deal to buy AmperWave, the cloud-based distribution and monetization platform for live and on-demand audio streams, from WideOrbit.
Audacy reported its overall streaming audio revenue increased 35% during the fourth quarter, and Field said it should get a boost this year as they make “significant improvements” to the app.
Executive VP and CFO Rich Schmaeling also noted that the fourth quarter digital revenue growth rate was “somewhat negatively impacted” by what were some now-resolved technology issues that popped up when Audacy migrated to a new third-party ad server.
Revenue Falls Short Of 2019 Level
Total fourth quarter revenues grew 8% year-over-year to $344.7 million. When political ad sales from the 2020 presidential election are removed from the comparison, revenues increased 13%. Wall Street welcomed the upbeat report sending shares of “AUD” up 23% in Wednesday trading in New York.
But Audacy has not yet recovered to pre-pandemic revenue levels and management declined to say when it expected to do so. However, fourth quarter revenues were within 5% of pre-COVID levels when subtracting political ad sales, the impact of lower auto advertising and a curtailed events schedule, Field said.
The vast majority of Audacy’s revenue is generated by its 235 radio stations across 48 markets, with a major market skew. Broadcast spot revenue, including local and national ad sales, grew 2.4% year-over-year to $222.1 million. Factoring out political, spot revenue increased 10%.
Local spot revenue grew faster than national and now accounts for about 70% of total core advertising.
Core spot revenues climbed 24% in the second half of 2021 compared to the first half, which Schmaeling chalked up to “the ongoing recovery and the improving performance of many of our top advertising categories, including hospitals and clinics, casual dining, recruitment, sports, sporting events, and furniture.”
Ad sales in the mushrooming sports betting category shot up 13% to $45 million, exceeding company expectations in what management says will become a $100 million category as more states legalize mobile sports betting. The BetQL Audio Network, which Audacy launched after its November 2020 acquisition of sports data and iGaming affiliate platform QL Gaming Group, is growing at a triple-digit rate, the company said without providing specifics.
While Audacy benefitted from a strong ad recovery, some categories, like automotive, concerts, fast food, and travel “are getting meaningfully better but still have a ways to go to get back to pre-pandemic levels,” Schmaeling said.
Other categories have surpassed their 2019 sales levels, including mortgage lenders, tourism, casinos, software, HVAC, and other home improvement categories.
As live events returned, Audacy saw a 111.5% jump in billings from sponsorships and events to $20.3 million. While revenue from events is forecast to more than double in 2022, it’s not expected to fully recover to pre-pandemic levels this year.
First Quarter Pacing Up In ‘Mid-Teens’
Field said they expect a total revenue growth rate in the “mid-teens” during the first quarter of 2022 compared to a year ago, despite “disrupted” advertising categories like automotive. He told analysts they see continued “strong growth” in the company’s digital business, including podcasting.
“We believe 2022 is setting up to be a strong year for Audacy as we are able to capitalize on the many meaningful organizational enhancements that we've made across the organization in the form of acquisitions, innovation, and new talent and capabilities,” Field said. “As we increasingly benefit from these enhancements, and integrate the various pieces across the company, they will contribute to an acceleration of our top and bottom-line growth.”