Acast maintains positive outlook despite job cuts and continued unprofitability

Independent podcast company Acast ended its last quarter of 2022 on a “positive note”, according to the company’s year-end financial results, despite uncertainty in the advertising market. 

By the end of Q4 2022, Acast had a year-on-year increase of 35% in net sales, which its chief executive, Ross Adams, credited to more advertisers investing larger budgets in podcasting as a medium for their brands. Despite this, he warned that the macroeconomic environment could still lead to reduced growth. 

“This is an important trend for the long-term positive development of podcasts as an advertising medium,” Adams said. “At the same time, a weaker economy means that more advertisers are more cautious than before, which has a countervailing effect in the short term.”

In September 2022, Acast announced that it would be reducing its work-force by 15% due to the uncertainty in this environment, which led to a high operating loss and lower organic net sales for the company. Increase in advertising purchases and growth in non-advertising related revenues, however, increased Acast’s organic growth in the last quarter by 17%. 

The platform has also since successfully reduced its operating loss due to the cost-cuts in Q4 by almost 60%, with most costs going towards restructuring related to redundancies and towards other investments such as its acquisition of podcast database Podchaser.

“Acast’s route to profitability is through dedicated work on our internal efficiencies and cost control, combined with healthy growth generated by proactive product-led innovations that give rise to an increase in automated sales, and a continual evolution of our advertising offering,” Adams said. “The cost reductions announced at the end of the summer are now complete and we enter 2023 with a solid foundation to continue developing Acast as a global independent market leader in revenue creation for podcasts.”

Acast is also continuing to make international investments to expand its global presence, which has proven to be most successful in the UK with a 28% increase in net sales from 2021 to 2022. The platform also recently started to expand its presence into new European markets after partnering two production companies in the Netherlands – Tonny Media and Meer Van Dit. 

With more than 90,000 podcasts now being hosted on Acast as of this year, the platform has posted a 22% year-on-year growth in listenership globally – although the number of listens remained relatively flat over the course of 2022, growing by just over 5% from Q1 to Q4. 

With the development of new technologies, such as its self-serve advertising platform Acast Marketplace, as well as the launch of a key-word targeting tool, Acast also recorded an increase in programmatic ad sales by the end of Q4, which accounted for 13% of the platform’s overall revenue. 

During Adams’ appearance on a previous PodPod episode, the CEO described the US podcast market as “incredibly immature” when it comes to digital advertising, with too much reliance on direct response advertisers. 

“We were laughed out of the room five years ago when we launched programmatic [advertising], and with big headlines saying that programmatic is gonna kill podcasting,” he said.

“I think a trend in the US is that they understand how to monetise podcasts from a direct response perspective… whereas when it comes to brand advertising, they're still fairly nascent when it comes to ad technology within podcasting and targeting… so I think there's lessons from both sides that are starting to come together.”