Africa-focused streaming service Mdundo reports 41% jump in active users, as Nigerian currency crisis pressures revenue
Africa-focused music streaming service Mdundo reported one 41% YoY Monthly active users (MAU) soared, but its revenue missed forecasts due to Nigeria's currency crisis.
Mdundo, which is listed on the Danish stock exchange and reports earnings in Danish kroner, said it was targeting revenue DKK 12 million to DKK 14 million (1.71 million USD to 1.99 million USD) for the 2023-2024 fiscal year, ending June 30, 2024.
It's below its forecast from mid-2023when the company expects revenue for 2023-2024 to reach DKK 17 million to DKK 21 million (2.42 million USD to 2.99 million USD).
“Subscription and advertising revenue growth measured in DKK was impacted by 38% off inside [Nigerian] naira value from January to March 2024,” the company said in its fiscal third quarter report, corresponding to the first quarter of 2024.
During this period, the naira fell from trading at around 775 naira to the US dollar, to a low of above 1,600 naira to the dollar, before rebounding to around 1,200 naira to the dollar by the end of the month. 3.
Nigeria's currency has been under pressure since last year, when the government's plan to issue new banknotes and encourage the use of digital payments by limiting cash withdrawals hit a snag. There is a shortage of money nationwide has led to an increase in foreign currency demand in the unofficial “parallel market” for currencies.
In January this year, markets regulator FMDQ said it had revised its method of calculating the official value of the naira, causing a strong recession of its value when the official exchange rate more closely matches the rate in the unofficial parallel market.
“Despite this, revenue in Nigeria continues to increase when measured in naira,” Mdundo said in the report released on Wednesday (April 16).
“Furthermore, the depreciation of the naira reduces operating costs [when measured] in DKK, resulting in improved EBITDA guidance for 2023/24,” the company added. “With Nigeria's large market and vibrant music industry, Mdundo sees long-term potential. Management closely monitors the evolving situation in Nigeria.”
Nigeria is one of Mdundo's key markets, along with Kenya, Ghana, Tanzania and South Africa. These five countries accounted for about two-thirds of Mdundo's MAUs as of last year.
Additionally, the company's advertising revenue is under pressure. In its H1 financial report for February, Mdundo recorded a sharp decline in advertising revenuedip 41% YoY ARRIVE 2.5 million DKK (357,000 USD), the cause is said to be due to delayed reseller agreements and poor performance.
Mdundo's user base continues to grow by leaps and bounds. The company reported 34.5 million monthly active users by the end of March 2024, up from 24.5 million in the same quarter a year ago and that number is expected to be reached 35 million at the end of the fiscal year in June. That's in line with forecasts from last year.
The company reiterated its expectations that it will be achieved 50 million MAUs in 2025.
“With Nigeria's large market and vibrant music industry, Mdundo sees long-term potential. Management closely monitors the developing situation in Nigeria.”
Mdundo
Additionally, the company said user growth is “expected to slow” and as a result, the company “shifts its focus from user acquisition to a stronger focus on improving business of the unit to its existing customer base”.
For the fiscal year ending June, the company targets a negative EBITDA of DKK -6 million to DKK -7 million (-856,000 USD to -1 million USD), which will mark an improvement of approximately DKK 1 million to DKK 2 million compared to the previous financial year.
Mdundo reiterated his forecast that the company will turn EBITDA positive by 2025.
The company's user growth was driven by its strategy of partnering with local wireless carriers in key markets, which allowed the company to overcome card penetration hurdles. low payments by African consumers.
“It gives customers an easy and simple way to pay for our premium products,” CEO Martin Nielsen told MBW in an interview in September 2022.
The company emphasized in its latest earnings report that it built “impactful advertising campaigns” in its fiscal third quarter, including with Coca-Cola for the Coke, Sprite and Fanta brands, and with Diageo for brands like Captain Morgan, Chrome and Serengeti Lite.
It also ran a campaign for the Kenya-based banking group NCBAas well as a campaign for Diageo's Tusker beer to “empower female artists across Africa. Collaborate with influential figures such as Fena Gitu And Asige crystalWe created engaging audio ads to inspire the next generation of female musicians.”Music business worldwide
