It’s been a difficult time for 7digital. Last month the B2B music service warned that it faces entering administration unless it secures an investment of £4.5 million by July 31.
In the latest issue of Music Week out today (July 8), we quiz CEO John Aalbers and tech investor Tamir Koch about their turnaround plan.
The latest financial results for the year ending December 31, 2018 show that the company has some grounds for optimism.
Group revenue grew by 19% to £19.9m, with the 2017 result restated at £16.7m. Gross profit increased by 24% to £14.7m, while overall gross margin increased from 71% to 74%.
The adjusted EBITDA loss for 2018 was £2.5m (with the prior year restated at £1.8m). And operating loss widened to £12.1m (2017: £5.2m).
Following the period covered by the financial results, 7digital lost a major contract with Media Markt Saturn. It received €4m (£3.59m) as part of a settlement sale of bespoke technology from the Danish business and transfer of staff to TDC Group.
The departure of CEO Simon Cole was announced in March 2019, along with the exit of deputy CEO Pete Downton and interim CFO David Holmwood. 7digital has since appointed new CEO John Aalbers and CFO Julia Hubbard, who completed a review of the business. The company will refocus on its cloud-based streaming platform.
In the statement to the Stock Exchange, Aalbers said: "Having arrived at 7digital in April 2019 with Julia Hubbard and finding the company facing financial difficulties, we are pleased to have been able to secure excellent new investors in the form of the consortium headed up by Tamir Koch and David Lazarus.”
The consortium has so far injected £1.3m.
"Tamir and David have an exciting vision for the music industry and see 7digital as playing a key role,” said Aalbers. “As such, they have expressed a strong desire to invest further funds to stabilise the business and enable 7digital to execute its new enterprise strategy."
Board changes last month include the departure of Sir Donald Cruickshank as chairman and Eric Cohen as a non-executive director.