‘Bil­lion dol­lar’ Shazam made just £40m in the last year

The Sunday Telegraph - Money & Business - - Business - By James Tit­comb

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.”

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