Storytel pursues ambitious growth as streaming sales leap 23% in third quarter

Storytel pursues ambitious growth as streaming sales leap 23% in third quarter

Audiobook streaming service Storytel has released its financial results for the third quarter, revealing its streaming sales have risen 23% and its subscriber base is up 34%.

The results stated that the company's streaming sales rose 23% to 490 MSEK (million Swedish krona), or £42.7m, in the third quarter of 2020 (July–September 2020) compared to 399 MSEK (£34.8m) in the third quarter of 2019, while print publishing sales increased by 29% to 150 MSEK (£13m) from 116 MSEK (£10.1m).

Net turnover for the company increased almost 24% to 609 MSEK (£53.1m) in the third quarter of 2020. Looking at sales for the year to date, from January 2020 to September 2020, net turnover came in at 1,676 MSEK (£146m).

During the third quarter of 2020, Storytel had an average of 1,360,300 paying subscribers – an increase of 103,300 customers compared to the second quarter of 2020, exceeding forecasts and up 34% on the third quarter of 2019.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) in the group in the third quarter of 2020 totalled 7,023 TSEK (thousand Swedish krona), or £612,600, equalling a positive EBITDA margin of 1% (Q3 2019: -13.1%). 

The company had a busy July, with highlights including entering into an agreement to acquire a 70% majority interest in Iceland’s book publishing house Forlagið (1st July); establishing a new geographic business region, Storytel MENA (8th July) following the acquisition of Kitab Sawti, a leading audiobook streaming service in the Middle East; and acquiring an 80% majority interest in Nordic production company Earselect AB (10th July). It also entered into an agreement to acquire iCast Ltd (“iCast”), an audiobook streaming pioneer in the Israeli market, at the end of August. In October, Storytel Finland launched a new complementary time-limited subscription concept, Storytel Light, a new model offering 20 hours of monthly reading time for the price of €9.99, and in the same month Storytel went live in Belgium.

Jonas Tellander, founder and c.e.o., wrote in a letter to shareholders that he believed audiobooks would account for more than half of all sales in Sweden's fiction market by the end of the year, and he was encouraged by the increasing popularity of audiobooks and expects them to continue to expand globally.

"I remember painting a rather bold scenario in 2016 at FutureBook that audiobook sales would soon grow bigger than physical book sales in Sweden. According to a report by the Swedish Publishers’ Association from 21st September, covering the first eight months of 2020, subscribed audiobook streaming services surpassed physical bookstore sales as the second biggest sales channel for books. It is my strong belief that audiobook sales will represent over 50% of the total fiction book sales in Sweden at the end of 2020," he said. "This development, on one of the most mature audiobook markets, certainly indicates that there is opportunity and excellent potential for both Storytel and publishers with a digital mindset to grow the global book market fuelled by the increasing popularity of audiobooks. This spurs and motivates us even more in our global expansion. The audiobook journey has only just begun.

"Storytel saw continued high demand for its service and an influx of customers that resulted in us exceeding our forecast for both subscriber and revenue growth for the third quarter – a period that historically is the strongest of the year in our industry. In a world where the Covid-19 pandemic is affecting the everyday life of the entire global community, Storytel continues to successfully create value for authors, publishers and its growing customer base, both in the Nordic and the Non-Nordic segments."

The company's forecast for the full year for total streaming revenues is 1,878 MSEK (1,436 MSEK in 2019), which would correspond to approximately 31% growth year-on-year; the ambition is to surpass more than four million subscribers and almost 5 BSEK (billion Swedish krona) in streaming revenue in 2023.