7DIG.L Regulatory News (7DIG)

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10 December 2020

7digital Group plc

("7digital" or "the Company")

Business and Trading Update

7digital (AIM: 7DIG), the global leader in B2B end-to-end digital music solutions, provides the following trading update and reports on the significant progress made by the business in the second half of the year.

Operational Profitability Achieved as Expected

In the second half of the year, 7digital has been capitalising on its leading music platform, global music catalogue and industry experience, and focused on growth in a number of emerging market trends and formats. The Company has seen significant progress in three key areas - social media, home fitness and artist monetisation - where music streaming plays an integral role in customer engagement. This is evidenced in new contracts signed in the second half such as a global technology company, Triller and Apex Rides alongside customers renewing or extending contracts such as ROXI, GrandPad, jazzed and Moodagent. In total, the Company has signed five new contracts, four expansions and eight renewals in H2 2020. As a result, the Company is pleased to confirm that it has achieved operational profitability in the last quarter of 2020 and increased revenues in H2 2020 when compared to H1 2020, in line with management's expectations.

7digital typically enters into contracts which include a fixed fee and variable, usage-based terms, ensuring that the Company benefits as its customers scale up their offering. As a consequence of new contracts ramping up in 2021, clients increasing their usage of 7digital's platform and deals in the pipeline, the Board envisages receiving incremental revenues from these customers and expects to report substantial year-on-year revenue growth in FY 2021, resulting in operational profitability for the full year 2021.

Specifically, in the second half of the year, the following progress was made in the three key areas:

Social

In the second half of the year, the Company signed a contract with Triller to power the world's fastest growing social music video app, which has more than 250 million downloads. Last month, Triller hosted the Mike Tyson vs Roy Jones Jr boxing fight, which was streamed live on the app and shattered pay-per-view pre-sale fight records. In November, Brazilian football star Neymar Jr became the latest celebrity to switch from TikTok to Triller, becoming an official brand ambassador. The footballer, who has 143 million followers on Instagram, will post content exclusively to Triller. 7digital is set to capitalise on growth in the usage of Triller. Looking ahead, the Company expects two significant contracts in 2021.

Home Fitness

7digital entered the home fitness market in September 2020 by signing a 12-month contract with Apex Rides. This smart bike and in-home fitness platform has now successfully launched and is leveraging 7digital's catalogue and playlisting tool to give customers access to music-powered classes. During the half, 7digital integrated its advanced label and publishers clearing tool. This enables the Company to offer an end-to-end solution to the fitness industry and positions 7digital to be a dominant music solution provider. The Company anticipates this segment to continue to grow in 2021 and expects to sign c. six deals next year.

Artist Monetisation

eMusic Live, which was launched in August 2020 to create the industry's most advanced commercial live streaming platform, has hosted multiple live concerts and started generating revenues for 7digital. In November 2020, eMusic Live partnered with world-leading music agency HarrisonParrott to create Virtual Circle, an exclusive online concert and music hub for classical music listeners. Virtual Circle will feature performances in 2020 and throughout 2021 from its roster of 300 international artists, touring clients, orchestras, chamber orchestras, symphonies and dance groups, alongside other partner organisations. The platform launched on 8 December 2020, with an exclusive international performance by the Oslo Philharmonic. In 2021, the Company plans to stream hundreds of shows and as a result expects eMusic Live to contribute significant millions to Company revenues.

High Retention Rate and Renewals

In addition to the extensive pipeline of new commercial opportunities, the Company is pleased to report a very high retention client rate of 93%. The strength of the Company's technology platform, global music catalogue and industry experience has enabled 7digital to extend and expand its partnerships with exciting music-based innovators.

The Company has supported new client jazzed in rolling out its new HD tier to its music service and its launch globally in new major territories. Likewise, 7digital is supporting the reach of US-based GrandPad across Europe, starting with the UK and Ireland. Similarly, the Company is backing the expansion of Moodagent, a streaming service that creates personalised playlists from songs, artists or moods, to multiple countries across Europe as well as in India, a market that posted 18% in music revenues growth in 2019. Made-for-TV music entertainment provider ROXI, backed by Robbie Williams and Kylie Minogue and now pre-loaded on Sky Q set-top boxes, renewed its partnership with 7digital to deliver shared interactive music entertainment experiences to millions of Smart TVs and satellite set-top boxes across Europe.

Commenting, Paul Langworthy, Chief Executive Officer of 7digital said: "We had a better performance in the second half of the year compared to the first half of 2020 as world-renowned new clients such as a global technology company and Triller signed contracts and long-term clients such as ROXI renewed their contracts with us. As a result, the Company became operationally profitable for the first time, as per management's expectations.

"7digital is gaining momentum in each of our three key areas. Our strategy of focusing on social, home fitness and artist monetisation demonstrates our ability to create value for new markets in a rapidly evolving music industry. As we ramp up activity in these markets and continue to support and improve services for current clients, we anticipate substantial growth in our business and revenues in 2021."

Online Investor Meeting

The Company will host an online investor meeting, open to all existing and potential shareholders, today, Thursday, 10 December 2020 at 2.00 p.m. GMT. On the call, 7digital CEO Paul Langworthy will provide an operational overview of the business as well as the growth drivers for the Company, followed by a question and answer session.

Interested parties can register to attend and submit their questions using the following link: https://docs.google.com/forms/d/15mmnMcTpsOX3_6KQwAjsDFpUvV5L2PUV3Wgz0seRVCI

Enquiries

About 7digital (www.7digital.com/)

7digital is the global leader in B2B end-to-end digital music solutions. The core of its business is the provision of robust and scalable technical infrastructure and extensive global music rights used to create music streaming and radio services for a diverse range of customers. These include consumer and social media brands, online fitness technologies, mobile carriers, broadcasters, automotive systems, record labels and retailers. 7digital also offers radio production and music curation services, editorial strategy and content management expertise.

7digital fosters industry growth and innovation by simplifying access to music for clients. From years of being the largest independent producer of programming for the BBC and powering services for partners like Triller, Soundtrack Your Brand, Global Eagle, Grandpad and Fender, 7digital is perfectly positioned to lead innovation at the intersection of digital music and next-generation radio services.