‘Billion dollar’ Shazam made just £40m in the last year
SHAZAM, the British technology company known for its music recognition technology, made just £40.3m in revenues last year, returning it to growth but raising questions about its billiondollar valuation.
The company, one of a handful of British “unicorns”, increased sales by 14pc after they had fallen from £36m to £35.2m the year before.
Shazam’s app “searches” for a song by listening to it via a smartphone’s microphone, helping users identify a song they hear on the radio or in public. It has traditionally made revenue from sending users through to music download services such as itunes so they can purchase the song, with Shazam taking a referral fee.
It also runs adverts on its app or charges for a paid, advertising-free version. However, the rise of music streaming services at the expense of one-off purchases has dented income from music, and the company has shifted to concentrate on different areas. It now makes most of its money from users “Shazamming” television and print adverts, with the app recognising sound from an advert or scanning an image to send users through to an advertiser’s promotional page.
In 2015, Shazam received a $30m (£22m) investment round from Kleiner Perkins Caufield & Byers, Institutional Venture Partners and others that valued it at $1bn.
It said in September last year that it had become EBITDA profitable – an operating measure that excludes interest, tax, depreciation and amortisation – and that its app had been downloaded more than a billion times.
Accounts filed for Shazam Entertainment Limited at Companies House revealed that Shazam made a statutory pre-tax loss of £4m in 2016, cutting the deficit from £16.6m the previous year. Headcount fell from 251 to 221.
“We are very pleased with our 2016 performance and we’re in great financial shape,” Andrew Fisher, Shazam’s executive chairman. “To be clear, we didn’t state we were profitable for the whole year and our strategy is to continue to operate right at or around profitability while re-investing in key areas of our business such as product innovation, R&D and human capital.”