RTHM.L Regulatory News (RTHM)

FINANCIAL YEAR 2017 TRADING UPDATE

London, England and San Francisco, CA. - 12 April 2017 - RhythmOne plc ("RhythmOne" or the "Company") today provides a preliminary update on its expected performance for the full year ended 31 March 2017 ("FY2017" or "the Period"). Note that this update is based on unaudited, pre-close figures that may be subject to change following audit review of the Company's accounts.

FinancialsDuring the Period, RhythmOne has successfully executed against three key objectives it set forth at the start of the financial year and reiterated during the half year:

· Return to full year profitability on an adjusted EBITDA1 basis;

· Growth of the Core mobile, video and programmatic product lines; and

· Accelerated drawdown of Non-Core product lines.

Financial and operating performance for the year is expected to be in line with management expectations, as follows:

FY2017 was a pivotal year for RhythmOne. With a return to profitability, strategic focus on Core mobile, video and programmatic trading and complete drawdown of Non-Core product lines, the Company has accomplished the fundamental transformation it began over two years ago. Within Core, programmatic revenues increased substantially in FY2017, and now account for a majority of total revenues. During the year, the Company reinforced its position as a leading omni-channel, multi-format, supply-side competitor with massive scale, cutting edge technology and unique, high quality inventory. RhythmOne's focus now shifts to accelerating revenue growth and profitability through both organic efforts and acquisitions, as the industry continues to consolidate. The Company also finished the financial year in a strong, growing cash position.

Operations For FY2017, RhythmOne continued to invest in its Core strategic capabilities of mobile, video and programmatic trading, while simultaneously accelerating the drawdown of certain historical Non-Core and non-programmatic product lines. Core revenues grew over 28% year-on-year, and 56% half-on-half, attributed largely to the performance of RhythmMax, the Company's unified programmatic platform.

Since inception, the RhythmMax platform has consistently exceeded the Company's target performance benchmarks relative to volume, fill rate and pricing, the key drivers of revenue growth. Year-on-year, volume and price grew by 87% and 70%, respectively, and although the fill rate dropped, it appears to be stabilizing at the current volume levels. This performance is a result of deepening supply and demand relationships, geographic expansion including a total of 15 new international markets. Pricing improvements were driven by the packaging and monetization of high-value, high-impact and high-margin video and rich media inventory. Comparative operating metrics are outlined below:

In addition to the growth of its Core technology platform, the Company also completed the acquisition of Perk, Inc, a mobile-first supply side rewards and engagement platform, thereby enhancing its unique audience offering. In late Q42017, RhythmOne integrated Perk's mobile apps and websites, providing access to Perk's engaged user base within the RhythmMax platform.

Non-Core ExitGiven the evolution of the industry and momentum within its Core business lines, the Company took critical steps during H22017 to exit all remaining Non-Core operations that are no longer considered strategic to future growth. This action included the sale of the Prime Visibility services business and the methodical and cost-neutral exit of certain non-programmatic, desktop advertising and applications products.

Critically, the exit of Non-Core products is expected to eliminate the volatility associated with falling and unpredictable revenue streams and, on a go-forward basis, concentrates Company resources and strategic focus exclusively on Core growth initiatives that are fully aligned with dominant industry trends. Moreover, the measured approach the Company has taken to managing a reduction in the Non-Core cost basis ensures a neutral to net positive impact on expected future growth and profitability.

Outlook"The fundamental re-structuring of our business that we set in motion over two years ago is now complete. An accelerated return to profitability in each of the last three quarters clearly demonstrates achievement against our stated strategy and goals," said S. Brian Mukherjee, CEO of RhythmOne. "Based upon current revenue dynamics, we expect our unified programmatic platform, RhythmMax, to be the principal driver of future Company growth. We are proud to have built and scaled an industry-leading, $100M+ run-rated programmatic business that now ranks #1 internationally and #2 in the US in quality according to Pixalate, Inc. and #5 in size, according to comScore, Inc. Through the platform, RhythmOne has unified the entire supply side of the value chain, streamlining interactions between advertisers and consumers, and enhancing the efficiency and effectiveness of online advertising campaigns. We enter the new financial year in a strong, competitive position, with a focused product portfolio that is aligned with key industry growth trends in a rapidly evolving market. The Company anticipates FY2018 to be a period of Core revenue growth and profitability, through both organic efforts and scale acquisitions, as opportunities to consolidate the industry proliferate."

The Company will publish its full-year results on Monday, 15 May 2017.

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. FY2017 and H22017 figures represent best pre-close estimates of the minimal levels of performance expected to be achieved during the period, that may be adjusted post audit.

3. Cash includes Cash, Cash Equivalents and Marketable Securities

4. Comparative operating metrics are adjusted to include on-platform (RhythmMax) and off-platform (third-party) products.

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

6. Proportion of the transaction volume monetized, which is impacted by seasonality and fluctuations in demand and supply.

7. 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 in the UK, 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 / Roger Newby

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