Africa-focused streaming service Mdundo experiences 41% leap in lively customers, as Nigerian foreign money disaster pressures income

Africa-focused music streaming service Mdundo has reported a 41% YoY leap in month-to-month lively customers (MAUs), however its revenues have are available in in need of forecasts on account of a foreign money disaster in Nigeria.

Mdundo, which is listed on the Danish inventory alternate and experiences earnings in Danish kroner, mentioned it’s focusing on income of DKK 12 million to 14 million (USD $1.71 million to $1.99 million) for fiscal yr 2023-2024, which ends June 30, 2024.

That’s properly under its forecast from mid-2023, when the corporate anticipated income for 2023-2024 to return in at DKK 17 million to 21 million ($2.42 million to $2.99 million).

“Subscription and promoting income development measured in DKK is impacted by a 38% decline within the [Nigerian] naira worth from January to March 2024,” the corporate mentioned in its report for fiscal Q3, which corresponds to calendar Q1 2024.

Throughout this era, the naira fell from buying and selling at round 775 naira to at least one US greenback, to a low above 1,600 naira to the greenback, earlier than bouncing again to round 1,200 naira to the greenback by the top of March.

Nigeria’s foreign money has been underneath strain since final yr, when a authorities plan to introduce new banknotes and encourage using digital funds by limiting money withdrawals hit a snag. Cash shortages across the country led to a surge in demand for foreign currency echange within the unofficial “parallel market” for currencies.

In January of this yr, market regulator FMDQ mentioned it had revised its methodology for calculating the naira’s official worth, causing a sharp downturn in its worth because the official alternate fee got here to extra intently match the speed on the unofficial parallel market.

“Regardless of this, income in Nigeria retains rising when measured in naira,” Mdundo mentioned in its report issued on Wednesday (April 16).

“Moreover, the naira’s depreciation reduces working prices [when measured] in DKK, resulting in improved EBITDA steering for 2023/24,” the corporate added. “With Nigeria’s sizable market and vibrant music trade, Mdundo sees long-term potential. Administration intently displays the evolving state of affairs in Nigeria.”

Nigeria is certainly one of Mdundo’s key markets, together with Kenya, Ghana, Tanzania and South Africa. The 5 international locations accounted for roughly two-thirds of Mdundo’s MAUs as of final yr.

Moreover, the corporate’s promoting income has come underneath strain. In its fiscal H1 report in February, Mdundo recorded a steep decline in ad revenue, dipping 41% YoY to DKK 2.5 million ($357,000), which it attributed to a delayed and underperforming reseller settlement.

Mdundo’s consumer base continues to develop by leaps and bounds. The corporate reported 34.5 million month-to-month lively customers on the finish of March 2024, up from 24.5 million in the identical quarter a yr earlier, and it expects that quantity to hit 35 million by the top of the fiscal yr in June. That’s according to its forecasts from final yr.

The corporate reiterated its expectations that it’s going to hit 50 million MAUs in 2025.

“With Nigeria’s sizable market and vibrant music trade, Mdundo sees long-term potential. Administration intently displays the evolving state of affairs in Nigeria.”

Mdundo

Past that, the corporate says consumer development “is anticipated to decelerate,” and because of this, it’s “shifting focus from consumer acquisition to a stronger give attention to bettering unit economics for the present buyer base.”

For the fiscal yr ending in June, it’s focusing on a adverse EBITDA of DKK -6 million to DKK -7 million (-$856,000 to -$1 million), which might mark an enchancment of roughly DKK 1 million to DKK 2 million over the earlier fiscal yr.

Mdundo reiterated its forecast that it’s going to swing to a constructive EBITDA in 2025.

The corporate’s consumer development has been pushed by a technique of partnering with native wi-fi suppliers in key markets, which it says permits it to beat the impediment of low penetration of fee playing cards amongst African shoppers.

“It permits the purchasers a straightforward and easy methodology of fee for our premium product,” CEO Martin Nielsen advised MBW in an interview in September 2022.

The corporate confused in its newest earnings report that it constructed “impactful promoting campaigns” in fiscal Q3, together with with Coca-Cola for Coke, Sprite and Fanta manufacturers, and with Diageo for manufacturers corresponding to Captain Morgan, Chrome, and Serengeti Lite.

It additionally ran a marketing campaign for Kenya-based banking conglomerate NCBA, in addition to a marketing campaign for Diageo’s Tusker Lager to “empower feminine artists throughout Africa. Partnering with influential figures like Fena Gitu and Crystal Asige, we created compelling audio ads to encourage the following era of feminine musicians.”Music Enterprise Worldwide