RTHM.L Regulatory News (RTHM)

RHYTHMONE PLC

FINANCIAL THIRD QUARTER 2017 TRADING UPDATE

London, England and San Francisco, CA. - 16 January 2017 - RhythmOne plc ("RhythmOne", or the "Company", LSE AIM: RTHM), today updates the market on its performance for the third quarter of the financial year 2017, covering the period from 1 October 2016 to 31 December 2016 ("Q3 2017" or "the Period").

Financials

RhythmOne's Q3 2017 financial performance was in line with previously upgraded expectations for FY2017. During the seasonally strongest quarter of the financial year, the Company produced sequential monthly growth in revenue and EBITDA1, with Core products accounting for approximately 84% of group revenues. This performance was led by particularly strong growth in programmatic platform revenues, which achieved new daily, monthly and quarterly benchmark highs.

Products

Aligned with its stated growth strategy, RhythmOne continued to ramp its Core mobile, video and programmatic capabilities and, specifically, RhythmMax - its unified programmatic platform. During the Period, the Company integrated a number of new global programmatic demand and supply partners, and entered into five new EU markets, bringing the total to 14 in the year to date. As planned, the Company also expanded its platform infrastructure, doubling its data center capacity in Amsterdam to help scale new supply and demand activity in the EU region - with additional expansion planned for the Asia Pacific region later in the year. Key programmatic performance indicators below illustrate a significant rise in volume of 94% year-on-year, coupled with an as expected drop in fill rate, in line with the year-on-year trends (see table and note 4). Programmatic inventory also saw a strong rise in pricing of 92% year-on-year, driven by vastly expanded supply relationships and increased monetization of high-value, high-impact and high-margin video and rich media inventory.

Acquisition

The acquisition of Perk, Inc. ("Perk") remains on track and is set to close in January 2017. RhythmOne and Perk have developed a detailed integration plan to streamline processes and costs across the sales, operations, finance and technology functions, and expect to begin execution of the plan immediately upon close to help realize both revenue and cost synergies over the next twelve months. The Company also has begun to integrate Perk's cross-device, owned and operated inventory into RhythmOne's unified programmatic platform, deepening the Company's offering of unique brand and performance-focused supply.

Outlook

"We are pleased to provide this update on our third quarter trading, with revenue and adjusted EBITDA1 performance in line with expectations," said S. Brian Mukherjee, CEO of RhythmOne. "Our primary driver of growth - the RhythmMax platform - hit record highs for revenue and profitability during the Period, which we see as clear evidence of progress against the Company's stated strategy. As we enter the seasonally slowest quarter of the financial year, the performance we have achieved during Q3 creates the foundation for our expectation of a return to full year profitability in FY2017. We also look forward to closing the Perk acquisition, which will add a substantial volume of unique mobile and performance supply to our platform, and to onboarding Perk's leadership team, which will bring significant and relevant operational experience, as we look to drive profitable growth organically and through acquisitions."

The information communicated herein constitutes inside information.

Notes:

1. This press release contains references to adjusted EBITDA and adjusted Loss for the Period attributable to equity holders of the parent. These financial measures do not have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP measures. The non-GAAP measures used by RhythmOne may not be comparable to similar measures used by other companies. Adjusted EBITDA is defined as profit/(loss) attributable to equity holders of the parent before interest, other expenses, taxes, depreciation and amortisation, share based payment expense, acquisition and exceptional costs and other expense. Management believes that this measure is a useful supplemental metric as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how the results are impacted by non-recurring costs, how the results are taxed in various jurisdictions, or how the results are affected by the accounting standards associated with the Group's share based payment expense.

2. Q12016, Q22016 and Q32016 KPIs are adjusted to reflect on-platform (RhythmMax) and off-platform (third-party) programmatic products.

3. Volume of transactions (ad requests) processed through the platform. Volumes are continuously optimized for performance and yield.

4. Proportion of the transaction volume monetized. The Q12016, Q22016 and Q32016 adjustments now include combined on-platform and off-platform metrics, which resulted in year-on-year increases in volume and price, and a decrease in the fill rate due to improved quality controls and yield optimization.

5. Average price across all ad formats, expressed as Cost per Mille or Thousand Impressions.

About RhythmOne

RhythmOne is a technology-enabled digital media company that connects online audiences with brands through premium content across devices. Founded in 2004, the Company pioneered Internet video search and works with digital advertisers, publishers and content providers to offer fully integrated, cross-screen solutions that span desktop and mobile video, rich media, display, social and native advertising, and content formats. Through its fully integrated programmatic platform, RhythmMax, the Company represents digital advertising inventory across owned, controlled and extended supply sources. The RhythmMax platform includes unique brand safety technology, RhythmGuard, which combines leading third-party verification and proprietary filtering technologies to ensure inventory quality in brand safe environments. RhythmOne's goal is to maximize the return on advertising spend and provide the most efficient and effective marketplace for digital advertising. The Company is headquartered in San Francisco, California with offices in the US, UK and Canada. For more information please visit www.rhythmone.com.

Analyst and Investor Contact

Dan Slivjanovski

RhythmOne plc

Financial Media Contacts

Edward Bridges / Charles Palmer

FTI Consulting LLP

(UK) 020 3727 1000

Nomad and Broker for RhythmOne

Nick Westlake (Nomad) / Lorna Tilbian / Mark Lander

Numis Securities Limited

(UK) 020 7260 1000