LONDON (Alliance News) - Digital music platform 7digital Group PLC said on Thursday it is confident of meeting its expectations for the full year following a positive first half trading update.
Total monthly recurring revenue for the first half rose by 4% year-on-year. Licensing revenue in June rose by 17% compared to the year before.
7digital additionally expects a debt repayment of GBP818,000 from music streaming service Guevara Ltd to be paid over the next 8 months.
However, due to termination payments from the legacy BlackBerry Ltd contract being included in the year previous and the planned reduction in low margin content revenue, overall turnover was broadly unchanged year-on-year, at approximately GBP5 million.
The firm said it won contracts worth a combined value of GBP1.1 million in the second quarter, demand coming both from both new and existing customers, which should help the company reach its full year expectations.
The recent acquisition of leading French digital music provider Snowite also resulted in new business, the company said. Additionally, 7digital reached an agreement with Cdiscount, a leading online retailer in France, to launch a new music service in the coming months.
In line with a "strategic emphasis" on "further developing" commercial relationships with rights holders, 7digital reached new agreements with two unnamed major music labels. The online music platform will license and provide access to their catalogues for 7digital customers and also provide services to the labels. This will contribute to the company's full year revenue.
7digital also said on Thursday it won its first contract using high resolution audio technology. The company said it identified high resolution audio a year ago as an important growth segment within digital music.
With over 50% of 2016 revenue expected to be denominated in foreign currencies, 7digital expects the effect of recent currency changes will benefit the company in the second half of the year.
"Our momentum towards break even and profit continues with over GBP1 million of business closed in the last 12 weeks alone. Although we have only included a few weeks of our Snowite acquisition in the first half's numbers, it is clear from the contract wins that our new French operations will deliver significant business for us," said Simon Cole, 7digital chief executive.
Shares in 7digital were up 7.3% Thursday morning at 7.38 pence.
By Lucy Heming; lucyheming@alliancenews.com
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