Key points:
- 7Digital shares surged 38.9% after releasing its half-year results.
- The company’s revenues surged 21% compared to last year.
- The B2B music streaming is on a rapid growth trajectory.
The 7Digital Group PLC (LON: 7DIG) share price surged 38.9% after the company released its interim results for the half-year ended 30 June 2022. The company noted that its revenues rose 21% to £3.9 million compared to £3.3 million in H1 2021.
The B2B music solutions company also noted that its licensing revenues grew 45% to £2.5 million versus last year’s £1.7 million figure. The firm’s gross margins improved to 70.2% compared to last year’s 62.6%.
Also read: Five Best Shares For Beginners To Watch In 2022.
Investors were pleased with the figures, as evidenced by the rally in 7Digital shares. The company’s improving margins is a significant attraction, given most of its revenues are generated from music streaming deals, which do not require a large team.
Therefore, 7Digital can operate with a small team to keep its costs low while growing its revenues. As a result, the company’s operating loss shrunk to £0.2 million versus last year’s £1.9 million loss.
7Digital had cash and cash equivalents worth £0.03m as of 30 June 2022 compared to last year’s £0.5 million, while the figure had risen to £0.6 million as of 27 September 2022. Some of the highlights of the six months included attracting five new licensing customers and three contract expansions or extensions.
The company signed a new £1 million contract with a pan-Asian consumer services company and secured a contract extension worth €2.2 million with a B2B music streaming service.
Paul Langworthy, 7digital’s CEO, said: “This was a great six months for 7digital. We delivered strong revenue growth and achieved adjusted EBITDA profitability as the new and expanded contracts we won last year and in the early part of this year began to ramp up. We continued to win new customers and sign renewals with existing customers, many of which are multi-year agreements. Some of these deals also include significant usage terms, which we expect to drive further increases in revenue as these clients scale their own services.”
So, should you buy 7DIG shares? The short answer is yes, 7Digital shares are trading at a great price. However, conservative investors may wait for a pullback to provide a better entry price.
*This is not investment advice.
7Digital (7DIG) share price.
7Digital share price surged 38.89% to trade at 0.25p, rising from Tuesday’s closing price of 0.18p.
