From the Interim Report Q3 2024
“Looking forward to continuing to strengthen Storytel’s excellent position in the market”
I am both excited and honored to step into the role of CEO at Storytel Group. As I start this new chapter, I want to acknowledge the team’s successful execution of the company’s profitable growth strategy under the leadership of my predecessor Johannes Larcher- and I’m looking forward to continuing to strengthen Storytel’s excellent position in the market. Under my leadership, we will continue to move the world through a story, explore new possibilities, and push the boundaries of what can be achievedall in order to deliver incremental value to our customers and stakeholders.
Strong operating performance
In the third quarter, Storytel Group continued to deliver on its profitable growth strategy, resulting in record-high group revenue, adjusted EBITDA, and cash flow. The strong operating performance resulted in an adjusted operating profit of 105 MSEK, excluding items affecting comparability, equaling a margin of over 11 percent.
Revenue growth reached 7 percent in the third quarter. The slower growth rate was primarily due to a stronger Swedish Krona. Revenue growth at constant exchange rates (CER) was 8 percent. At the same time, adjusted cost of sales decreased by 2 percent and adjusted operating expenses by 5 percent. The Group’s adjusted EBITDA increased significantly by 77 percent year-on-year to 178 MSEK in the third quarter, thanks to continued revenue growth and strict cost management. This marks the highest level in Storytel’s history, equal to a margin of 18.7 percent. The Group’s operational cash flow amounted to 146 MSEK, representing 15.3 percent of total revenues.
In the quarter, the Streaming segment grew the subscriber base by 10 percent year-on-year, while revenue growth was 42 MSEK, equal to 5 percent or 8 percent with CER. ARPU decreased by 4 percent due to currency headwinds and a higher proportion of new subscribers in lower priced tiers. In the five Nordic core markets overall revenue growth reached 3 percent, or 5 percent with CER. In the five Non-Nordics core markets, price increases offset currency headwinds and revenues grew by 16 percent, or 19 percent with CER.
The Publishing segment showed a strong increase in revenues, by 33 MSEK to 285 MSEK. This represents growth of 13 percent, driven by strong growth in digital sales of 18 percent while sales of printed books increased 6 percent, due to strong book releases.
Solid health of the subscriber base
The summer high season marked steady progress for the Streaming business, with notable achievements in both intake and customer retention. Paid churn stayed at record low levels, also driven by summer campaigns in the Nordics that introduced new subscription tiers with flexible pricing options, offering consumers more personalized choices allowing them to select a plan that best suits their needs.
These efforts were supported by improved CRM practices that have become an effective acquisition engine through initiatives such as winback and complete registration while also increasing customer loyalty. As a result, Storytel has not only expanded its subscriber base but also continues to have a strong health of the base. Finland, in particular, saw outstanding success with the “Premium for Life” campaign this summer, resulting in significantly reduced churn and strong subscriber growth of 30 percent year-on-year.
Increased consumption from internal publishers As the owner of some of the most prestigious publishing houses in the Nordic region, Storytel Group is uniquely positioned to blend the best of publishing and streaming into an attractive consumer offering and to deliver high-quality content across a wide range of genres. Consumption of titles from the Group’s internal publishers continues to show steady growth, underscoring the quality of the content lineup. In the third quarter, the Storytel original from Danish bestselling author Nis Jakob attracted consumers in both Denmark and Sweden with his Red Revenge series, while the intense true story In Sickness and in Health drew significant audiences in Finland.
Norstedts had a successful summer release with Emelie Schepp’s thriller Hundra dagar i juli, which topped all bestseller lists in Sweden. At Gummerus, Anni Kytömäki’s Mirabilis led the Finnish fiction category, while G.T. Karber’s Murha! contributed significantly to the growth of non-fiction. In Denmark, People’s partnered with Mofibo to launch Sofie Sarenbrant and Carina Bergfeldt’s Fødselsdagen, which was offered exclusively on Mofibo during a four-week period.
In September, Swedish crime author Sammy Jeridi signed a multi-book deal with Norstedts and Storytel, showcasing the dynamic synergies between the streaming platform and publishing houses within the Group, following Denise Rudberg, to enter into such an agreement.
Well positioned for the future
The strategic shift towards increased efficiencies and profitable growth, initiated in 2022 and reinforced in 2024, has led to significantly higher profitability while maintaining solid growth. With the continued strong competition, particularly in our core Nordic markets, we have applied a disciplined approach to marketing spend. Therefore, our full-year revenue growth guidance has been revised to around 8 percent.
At the same time, we will be close to or reach the previously outlined 2026 mid-term targets of adjusted EBITDA margin above 15 percent, and operational cash flow above 10 percent of revenues, already in 2024- more than two years ahead of plan. This achievement significantly strengthens the company’s financial position and opens up several strategic opportunities.
I’m filled with excitement for what lies ahead. The dedication of the team, the board, our authors, partners and consumers are the driving force to our success. Together with our passionate team I look forward to creating an even brighter future for Storytel Group.
October 29, 2024
Bodil Eriksson Torp, CEO