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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 to offer music streaming and download services to their own customers.

Stock data

Market cap.£12.5m
Last close3.13p
High / Low (52 weeks)5.9p / 3.1p
Stock market listingLN
Forecast net debt (£m)0
Forecast gearing ratio (%)0
TeamTechnology
SectorTechnology

Price performance

%1m3m12m
Actual(32.8)(31.3)(44.4)
Relative *(30.2)(26)(40.9)

* % Relative to local index

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Company news

Investment summary

7digital’s interims show good progress in developing its B2B offering, with revenues up by 52% on H117 (including acquisitions). This reflects strong demand from brands for music as an adjunct to other products and services, as a differentiator and in order to improve brand loyalty. With an expanding portfolio of commercial content and the brand relationships, 7digital is well placed to exploit its independence and build a sizeable business. With management reiterating its expectations of the group moving into profit in H218, our revenue and EBTIDA forecasts are unchanged. We expect EBITDA to move ahead strongly in FY19e, given growing revenues on a lower fixed cost base. This puts the shares on a rating well below software peers, currently valued on a P/E of 21.6x.

Last updated on 01/10/2018

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2016A 11.2 (4.3) (5.6) (4.9) N/A N/A
2017A 16.8 (1.6) (3.8) (2.3) N/A 26.9
2018E 21.8 2.4 (1.0) (0.2) N/A N/A
2019E 26.5 6.5 3.0 0.7 4.5 2.4

Last updated on 01/10/2018

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, such as via connected devices. 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 28/09/2018

Key management

Simon Cole, CEO

Company address

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