7digital Group

LN: 7DIG

£4.5m market cap

1.08p last close

7digital Group provides an end-to-end, white-label digital music platform and access to global music rights that enable its clients, which include businesses in the radio, electronics, social media and telecoms industries around the world, to offer music streaming and download services to their own customers.

Investment summary

7digital’s interims show good progress in developing its B2B offering, with revenues up by 52% on H117 (including acquisitions). This reflects strong demand from brands for music as an adjunct to other products and services, as a differentiator and in order to improve brand loyalty. With an expanding portfolio of commercial content and the brand relationships, 7digital is well placed to exploit its independence and build a sizeable business. With management reiterating its expectations of the group moving into profit in H218, our revenue and EBTIDA forecasts are unchanged. We expect EBITDA to move ahead strongly in FY19e, given growing revenues on a lower fixed cost base. This puts the shares on a rating well below software peers, currently valued on a P/E of 21.6x.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2016A 11.2 (4.3) (5.6) (4.9) N/A N/A
2017A 16.8 (1.6) (3.8) (2.3) N/A 9.3
2018E N/A N/A N/A N/A N/A N/A
2019E N/A N/A N/A N/A N/A N/A
Last updated on 21/03/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 13.2 (44.2) (75.8)
Relative* 10.7 (49.0) (76.6)
52-week high/low 5.8p/0.7p
*% relative to local index
Key management
Simon Cole CEO
Julia Hubbard CFO

Content on 7digital Group