7digital Group (7DIG)

Business description

7digital provides an end-to-end, white-label digital music platform and access to global music rights enabling its clients (incl. musical.ly, Onkyo, Panasonic, MediaMarktSaturn, Electric Jukebox, eMusic, TDC, DTS, Fender, SoundHound and i.am+) to offer music streaming and download services to their own customers.

Stock data

Market cap.£17.5m
Last close4.38p
High / Low (52 weeks)7.9p / 3.9p
Stock market listingLN
Forecast net cash (£m)7.6
Forecast gearing ratio (%)N/A
TeamTechnology
SectorTechnology

Price performance

%1m3m12m
Actual0.6(18.2)(36.4)
Relative *(5.6)(15)(39)

* % Relative to local index

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Company news

Investment summary

7digital starts 2018 on a much stronger financial footing: the £8.5m raise strengthens its balance sheet and the 24-7 acquisition last year provides the platform for profitable growth. We expect the deals announced over the course of 2017 to start to convert to revenues during 2018, which, together with the restructuring, provides the basis for our forecast profitability in 2018. Almost half of the current market cap reflects the value of the cash raised, suggesting that the platform and customer relationships are valued at c £12m. We consider the FY18e EV/EBITDA of c 4.0x to be an attractive valuation for a group well-positioned in the rapidly evolving market for music streaming services.

Last updated on 02/03/2018

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2015A 10.4 (2.1) (7.6) (7.1) N/A N/A
2016A 11.9 (3.5) (4.7) (4.1) N/A N/A
2017E 17.3 (1.0) (2.1) (1.3) N/A N/A
2018E 24.9 3.0 2.1 0.5 8.8 67.5

Last updated on 21/02/2018

Latest research

Latest video

Executive Interview - 7digital

Industry outlook

Streaming has revived the music industry and with only 2% of the world’s adult population paying for such services the opportunity remains significant. The market is dominated by a few global platforms; 7digital’s success is predicated on its view that there remains a vast untapped market for music services that will be served by a range of business models. By providing the back-end technology and catalogue to companies that may want to act as alternatives to these major platforms, 7digital is aiming to become the world’s leading end-to-end music services group.

Last updated on 02/03/2018

Key management

Simon Cole, CEO
Matthew Honey, CFO

Company address

69 Wilson Street
London
EC2A 2BB
United Kingdom
+44 (0)20 7099 7777
View website