FULLTEXT DEL 1 AV 1
Kvartalsrapport Q2 2023
===== SIDA 1 ===== ===== SIDA 2 ===== Highlights Q2 Financial Highlights ● Streaming revenue up 13% from Q2 2022 to 799 (704) MSEK, 15% excluding Russia ● Group net sales increased by 9% from Q2 2022 to 851 (781) MSEK, 11% excluding Russia ● Gross profit of 333 (290) MSEK, equaling a margin of 39.1% (37.2%) ● EBITDA of 40 (-6) MSEK equaling a margin of 4.6% (-0.7%). Adjusted for items affecting comparability, EBITDA last year amounted to 13 MSEK ● Basic and diluted earnings per share amounted to -0.41 (-0.80) SEK ● Cash flow from operations before changes in working capital amounted to 24 (-55) MSEK ● Operational cash flow amounted to -5 (-49) MSEK Q2 Other Highlights ● Storytel Awards surpasses the milestone of 200,000 votes – audiobook fan engagement soaring to record levels. ● Significant multi-year agreement with Bulgaria’s largest telco A1 Bulgaria. The deal makes Storytel part of exclusive selection of premium services on A1 Bulgaria’s platform, reaching more than 4 million potential customers. ● Storytel acquired the rights to the Finnish bestselling Koskinen crime series. ● Storytel held a Capital Markets Day and presented mid-term financial targets together with the strategic direction to further strengthen its leading position. ● Storytel entered into a strategic partnership with ElevenLabs and announced the upcoming launch of a new VoiceSwitcher feature. Highlights after the End of the Quarter ● Storytel entered into a strategic partnership with Telenor-owned CBB Mobil, a Danish provider of communications and entertainment services, to accelerate growth in Denmark. ● Storytel launched the first version of its new VoiceSwitcher feature together with ElevenLabs, available in all markets on selected books in the English language. 2 ===== SIDA 3 ===== CEO-statement A strong foundation for sustainable and profitable growth In the second quarter of 2023, we saw strong streaming growth through continued execution of our profitable growth strategy, with focus on improving operational and financial performance. The second quarter marked the fifth consecutive quarter of positive Group EBITDA and underlines the improvements that have been made. Storytel Streaming saw extended organic revenue growth, increased ARPU, solid subscriber growth and subscriber engagement as well as stable and healthy churn levels. Our disciplined approach is laying the foundation for continued profitable growth, supported by near-term operational improvements across our business. In the quarter, we demonstrated continued progress through new Partnership agreements, improved Content economics, and the concluded successful implementation of new service tiers and price levels in the Nordics. We have fine-tuned our strategic plan and presented new mid-term financial targets at our Capital Markets Day in Stockholm on June 13. New mid-term financial targets and updated strategic direction At our Capital Markets Day, we provided the market with a detailed update on the Group’s strategic direction and operations, as well as new mid-term financial targets. The Board of Directors has decided on the following mid-term financial targets: Revenue • Total net sales to reach at least 5,000 MSEK in 2026 through organic growth • Organic average annual streaming revenue growth of 15 percent EBITDA margin • EBITDA margin of at least 12 percent in 2026, with a long-term ambition of 15 percent or higher CAPEX • CAPEX of about 5 percent of Group revenue • Positive and significant increase in operational cash flow from 2023 The targets are ambitious but attainable and my executive team and I are fully committed to deliver in line with these targets. Jointly, we have set the direction for the company going forward and how we will deliver, step by step, to reach our mid-term financial targets. Storytel is already a well-positioned leader in the fast growing audiobooks industry, and our strategy of operating both D2C Streaming services and leading publishing houses provides us with valuable advantages. We will allocate our resources to markets with the right conditions for success, and by continuously increasing our subscriber base, we will deliver profitable growth over time. Strong revenue growth and improved profitability in the second quarter Streaming revenue excluding Russia increased by 15%, and amounted to 799 (693) MSEK, driven by a solid performance in the Nordic region and in most of our growth markets. ARPU grew 12% to 130 (116) SEK. Group net sales for the quarter grew 11% excluding Russia and totaled 851 (770) MSEK. The gross margin was 39.1% (37.2%), an increase by 1.9 percentage points versus the same quarter last year. The EBITDA margin improved to 4.6%, compared to a margin of 1.6% in Q2 2022, adjusted for items affecting comparability. Cash flow from operations before changes in working capital was 24 (-55) MSEK and operational cash flow amounted to -5 (-49) MSEK. The improvement was derived from our strategic shift to focus on profitable growth. Solid progress for our Partnerships Team Our newly formed Partnerships team is dedicated to bringing more listeners to the platform through partners such as mobile app stores, OEMs, telcos, financial services and e-commerce players. The team delivered solid progress in the quarter with 3 ===== SIDA 4 ===== multiple agreements with new partners across different geographies and verticals. In April, we closed a significant multi-year agreement with Bulgaria’s largest telco, A1 Bulgaria, a part of the A1 Group that currently has over 26 million users across seven European countries. This agreement allows Storytel Bulgaria access to 4 million potential customers. After the end of the quarter, in July, we entered into a strategic partnership with Telenor-owned CBB Mobil – a Danish provider of communications and entertainment services. The partnership enables Mofibo – part of Storytel and the largest distributor and reading platform for audiobooks and e-books in Denmark – to be part of CBB’s streaming offering and thereby increasing Storytel’s reach in one of our top ten markets. Great Content and personalization driving subscriber growth As a leader in the spoken-word audio entertainment space, our mission is to move the world through story. We are increasingly focused on Content as one of the core pillars of our strategy. With a dedicated global Content team in charge, we aim to bring more and widely appealing content to our audiences, and we are expanding our activities in the areas of Original and exclusive content to attract and retain the most valuable customers with high levels of loyalty, high ARPU, and high lifetime value. In May, we announced the acquisition of the rights to the Finnish bestselling Koskinen crime series, which is a huge success spanning over four decades in Finland. The agreement gives our digital publishing house Storyside the rights to Jokinen’s popular catalog, including a new Koskinen adventure planned for release in the Spring of 2024. In June, we announced an exclusive partnership with the leading AI speech software provider ElevenLabs. The collaboration will include the development of AI voices specifically tailored to our core markets and the production of AI narrated audiobooks. A new VoiceSwitcher feature will allow enhanced personalization of our service, facilitating a truly unique and customized listening experience. The first version of the new VoiceSwitcher was launched in July, available in all markets on selected books in the English language. Near term guidance Our full-year guidance from February remains unchanged with organic streaming revenue growth in line with the previous year, an increased EBITDA margin versus 2022, and at least a break-even operational cash flow (EBITDA – operational capex). Finally, I want to take this opportunity to thank the audience and the great interest in Storytel’s Capital Markets Day in June and wish all customers, partners and employees a great end of the summer. Stockholm in August Johannes Larcher, CEO 4 ===== SIDA 5 ===== Table 1: Key Performance Indicators TSEK Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Streaming Total 1 Revenue 704,454 742,426 742,283 742,081 798,881 Revenue excl Russia 693,464 732,837 742,374 742,081 798,881 Gross profit 278,554 307,463 304,594 317,067 344,949 Gross margin 39.5% 41.4% 41.0% 42.7% 43.2% Avg. Paying Subscribers 2,031,000 2,064,000 2,036,000 2,041,000 2,055,000 ARPU (SEK/month) 116 120 122 121 130 Streaming Nordics 1 Revenue 469,390 492,765 498,336 496,630 543,765 Gross profit 177,354 189,289 184,767 200,992 227,364 Gross margin 37.8% 38.4% 37.1% 40.5% 41.8% Avg. Paying Subscribers 1,078,000 1,129,000 1,132,000 1,125,000 1,122,000 ARPU (SEK/month) 145 145 147 147 162 Streaming Non-Nordics Revenue 235,064 249,662 243,947 245,451 255,117 Revenue excl Russia 224,074 240,073 244,038 245,451 255,117 Gross profit 101,190 118,173 119,828 116,075 117,585 Gross margin 43.0% 47.3% 49.1% 47.3% 46.1% Avg. Paying Subscribers 953,000 935,000 904,000 916,000 933,000 ARPU (SEK/month) 82 89 90 89 91 Books Revenue 156,999 147,199 193,069 130,083 128,668 Gross profit 78,185 81,916 85,141 68,472 67,525 Gross margin 49.8% 55.6% 44.1% 52.6% 52.5% Group total 2 Revenue 780,730 805,819 866,663 796,293 851,070 Gross profit 290,363 311,907 322,377 315,501 333,183 Gross margin 37.2% 38.7% 37.2% 39.6% 39.1% Revenue Growth YoY Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Streaming Total 1 Revenue 29.2% 27.3% 22.7% 6.2% 13.4% Revenue excl Russia 31.0% 29.5% 27.0% 9.2% 15.2% Revenue – CER 25.6% 22.0% 16.6% 2.9% 9.8% Streaming Nordics 1 Revenue 10.9% 10.2% 8.6% 8.3% 15.8% Revenue – CER 8.5% 6.9% 4.8% 6.8% 13.9% Streaming Non-Nordics Revenue 92.5% 83.7% 67.0% 2.3% 8.5% Revenue excl Russia 111.6% 102.2% 94.5% 11.0% 13.9% Revenue – CER 85.1% 71.7% 53.5% -4.7% 1.6% Books Revenue 4.7% -18.3% -5.5% -12.9% -18.0% Revenue – CER 3.6% -19.4% -7.0% -14.6% -20.0% 1 Streaming revenue includes all of Storytel Norway’s revenue. 2 In the consolidated accounts, Storytel Norway is reported in accordance with the equity method. As a result, the Streaming revenue listed in Table 1 is higher than in the consolidated statement of accounts in order to provide a more accurate figure for average revenue per subscriber. Please see Note 5 for additional details. 5 ===== SIDA 6 ===== Developments during the second quarter, Group Comparative figures in brackets pertain to the second quarter 2022 Net sales Group net sales for the quarter increased by 9% from the comparative period to 851.1 (780.7) MSEK, and increased by 11% when excluding Russia. The increase is driven by solid growth in the Streaming segment’s top markets, especially the Nordics, while the Books segment’s external sales declined in line with expectations. In the US, Audiobooks.com continued its focus on increased profitability rather than revenue growth. Organic streaming revenue growth, when excluding Audiobooks.com and Russia, was 14% at constant exchange rates in the second quarter. Average paying streaming subscribers increased by 14,000 during the quarter and amounted to 2,055,000 with an average ARPU of 130 (116) SEK. The increase in the subscriber base versus the same quarter last year is explained by growth within the Nordic segment. Net subscriber intake was strong in the latter part of the quarter. Gross profit Cost of sales for the period totaled -517.9 (-490.4) MSEK. Gross profit amounted to 333.2 (290.4) MSEK, which equals a gross margin of 39.1% (37.2%). The gross margin increased by 1.9 percentage points versus the same quarter last year, and decreased by 0.5 percentage points versus the first quarter of 2023. The improvement was mainly explained by positive development in the streaming business. EBITDA EBITDA for the period totaled 39.6 (-5.7) MSEK, which equals an EBITDA margin of 4.6% (-0.7%). Adjusted for items affecting comparability, EBITDA last year amounted to 12.8 MSEK. The significant improvement is driven by the strategic shift to focus on profitable growth. Operating profit Operating profit for the quarter totaled -29.4 (-94.5) MSEK. The comparable quarter included items affecting comparability of -45.6 MSEK. The improvement was to a large extent derived from the above outlined strategic shift to focus on profitable growth. Selling and marketing expenses decreased by 17.8% to -218.8 (-266.1) MSEK. The comparable quarter included items affecting comparability totaling -6.1 MSEK. Technology and development expenses totaled -63.9 (-72.1) MSEK, which includes continuous investments in the platform, striving to increase subscriber engagement. The comparable quarter included items affecting comparability totaling -14.1 MSEK. General and administrative expenses totaled -95.6 (-59.6) MSEK. The increase is mainly due to the strategic shift and reorganization of 2022 that resulted in an increased centralization of certain functions and of the management team, as well as effects on accruals in the cost base last year in relation to the reorganization and of long-term incentive programs. The comparable quarter included items affecting comparability totaling -0.8 MSEK. Group total Q2 2023 Q2 2022 Net sales 851.1 780.7 Cost of sales -517.9 -490.4 Gross profit 333.2 290.4 Selling and marketing expenses -218.8 -266.1 Technology and development expenses -63.9 -72.1 Administrative expenses -95.6 -59.6 Other operating income 13.8 13.5 Profit from participations in associates 2.0 -0.5 Operating profit/loss -29.4 -94.5 Net financial items 11.4 31.5 Profit before tax –18.0 -62.9 6 ===== SIDA 7 ===== Net profit Profit before tax for the period amounted to -18.0 (-62.9) MSEK. Net financial items for the period totaled 11.4 (31.5) MSEK . The amount includes a 21.5 (44.8) MSEK positive FX effect from a USD denominated commitment derived from the acquisition of Audiobooks.com, -10.5 (-9.1) MSEK in net interest costs, and other FX effects from the revaluation of certain balance sheet items. Taxes for the quarter amounted to -12.7 (8.6) MSEK. Net profit for the quarter amounted to -30.7 (-54.4) MSEK. Earnings per share for the period totaled -0.41 (-0.80) SEK, before and after dilution. Cash flow Cash flow from operating activities before changes in working capital was 24.3 (-54.7) MSEK, with the improvement driven by the strategic shift to focus on profitable growth. The change in working capital was 12,1 (-9.5) MSEK, resulting in cash flow from operating activities of 36.4 (-64.2) MSEK for the quarter. Cash flow from investing activities was -52.2 (-69.8) MSEK. Cash flow from financing activities was -10.4 (139.8) MSEK. Total cash flow for the period was -26.2 (5.8) MSEK. 7 ===== SIDA 8 ===== Developments during January–June 2023, Group Comparative figures in brackets pertain to the period January–June 2022 Net sales Group net sales for the period increased by 8% from the comparative period to 1,647.4 (1,527.9) MSEK, and increased by 10% when excluding Russia. The increase is driven by solid growth in the Streaming segment’s top markets, especially the Nordics, while the Books segment’s external sales declined in line with expectations. In the US, Audiobooks.com continued its focus on increased profitability rather than revenue growth. Organic streaming revenue growth, when excluding Audiobooks.com and Russia, was 11% at constant exchange rates in the period. Average paying streaming subscribers increased by over 7,000 during the period and amounted to 2,048,000 with an average ARPU of 125 (115) SEK. The increase in the subscriber base versus the same period last year is explained by growth within the Nordics segment. Net subscriber intake was strong in the latter part of the second quarter. Gross profit Cost of sales for the period totaled -998.7 (-949.0) MSEK. Gross profit amounted to 648.7 (578.9) MSEK, which equals a gross margin of 39.4% (37.9%). The gross margin increased by 1.5 percentage point versus the same period last year. The improvement was mainly explained by positive development in the streaming business. EBITDA EBITDA for the period totaled 70.1 (-154.1) MSEK, which equals an EBITDA margin of 4.3% (-10.1%). The corresponding period last year contained items affecting comparability of 134.2 MSEK; adjusted for this, the EBITDA last year amounted to -19.9 MSEK. The significant improvement is driven by the strategic shift to focus on profitable growth. Operating profit Operating profit for the period totaled -77.4 (-321.4) MSEK. The comparable period included items affecting comparability totaling -179.1 MSEK. The improvement was to a large extent derived from the above outlined strategic shift to focus on profitable growth. Selling and marketing expenses decreased by 24.3% to -424.5 (-560.6) MSEK. The comparable quarter included items affecting comparability totaling -25.6 MSEK. Technology and development expenses totaled -133.4 (-168.5) MSEK, which includes continuous investments in the platform, striving to increase subscriber engagement. The comparable quarter included items affecting comparability totaling -57.4 MSEK. General and administrative expenses totaled -192.7 (-189.3) MSEK. The increase is mainly due to the strategic shift and reorganization of 2022 that resulted in an increased centralization of certain functions and of the management team, as well as effects on accruals in the cost base last year in relation to the reorganization and of long-term incentive programs. The comparable quarter included items affecting comparability totaling -60.5 MSEK. Group total Q1-Q2 2023 Q1-Q2 2022 Net sales 1647.4 1527.9 Cost of sales -998.7 -949.0 Gross profit 648.7 578.9 Selling and marketing expenses -424.5 -560.6 Technology and development expenses -133.4 -168.5 Administrative expenses -192.7 -189.3 Other operating income 19.1 19.5 Profit from participations in associates 5.5 -1.4 Operating profit/loss -77.4 -321.4 Net financial items -4.9 25.1 Profit before tax -82.3 -296.3 8 ===== SIDA 9 ===== Net profit Profit before tax for the period amounted to -82.3 (-296.3) MSEK. Net financial items for the period totaled -4.9 (25.1) MSEK. The amount includes an 18.1 (49.7) MSEK positive FX effect from a USD denominated commitment derived from the acquisition of Audiobooks.com, -23.7 (-38.4) MSEK in net interest costs, and other FX effects from the revaluation of certain balance sheet items. Taxes for the period amounted to -10.2 (9.5) MSEK. Net profit for the period amounted to -92.5 (-286.8) MSEK. Earnings per share for the period totaled -1.23 (-4.22) SEK, before and after dilution. Cash flow Cash flow from operating activities before changes in working capital was 42,1 (-189.9) MSEK, with the improvement driven by the strategic shift to focus on profitable growth. The change in working capital was 16.0 (35.5) MSEK, resulting in cash flow from operating activities of 58.1 (-154.3) MSEK for the period. Cash flow from investing activities was -100.0 (-1,020.5) MSEK. Cash flow from financing activities was -222.7 (711.5) MSEK. Total cash flow for the period was -264.6 (-463.3) MSEK. 9 ===== SIDA 10 ===== Other information Financial position, equity & liquidity (compared to June 30, 2022) At the end of the period, the Group had 531.3 (447.9) MSEK in cash and cash equivalents. The equity-to-asset ratio at the end of the period was 52.5% (44.2%). Total equity for the quarter was 2,165.4 (1,821.0) MSEK. Non-current liabilities totaled 952.9 (965.2) MSEK. The company has a revolving credit facility (RCF) of 850 MSEK, of which 700 MSEK is utilized. Current liabilities amounted to 1,007.7 (1,331.7) MSEK. A bridge loan facility of 500 MSEK utilized in connection with the acquisition of Audiobooks.com has been replaced with a 200 MSEK term loan during the first quarter of 2023. Total available liquidity (cash and cash equivalents and unutilized RCF) totalled 681.3 MSEK at the end of the period. Annual General Meeting 2023 The AGM resolved, in accordance with the Nomination Committee's proposal, that the Board of Directors shall consist of eight directors and that the number of auditors shall be one registered audit firm. In accordance with the Nomination Committee's proposal, Hans-Holger Albrecht, Lina Brouneus, Lutz Finger, Joakim Rubin and Jonas Tellander were re-elected as Directors of the Board. Adine Grate, Jonas Sjögren and Alexander Lindholm were elected as new directors of the Board. Hans-Holger Albrecht was re-elected as Chairman of the Board of Directors and Jonas Tellander was re-elected as vice Chairman of the Board of Directors. Ernst & Young Aktiebolag was re-elected as the Company auditor. Ernst & Young Aktiebolag has announced that the authorized accountant Johan Holmberg will continue to be the auditor in charge. Parent Company Storytel AB is the Group’s Parent Company and responsible for Group-wide management, administration and financing. Net sales for the Parent Company amounted to 10.5 (8.8) MSEK. Profit before tax amounted to 2.0 (-4.4) MSEK, and profit/loss for the quarter amounted to 2.0 (-4.4) MSEK. Total equity amounted to 4,206.9 (3,817.2) MSEK. The condensed income statement and balance sheet for the Parent Company are presented on page 20. Risks and uncertainty factors The Group is subject to significant risks and uncertainties. As noted in the 2022 Annual Report, these factors include the prevailing economic and business environments in each of the Group’s markets; commercial risks related to expansion into new territories; political and legislative risks related to changes in rules and regulations in the various territories in which the Group operates; exposure to foreign exchange rate movements; changes in the ability to access capital markets; and the emergence of new technologies and competitors. More recently, we have seen inflationary pressures that could affect the purchasing power of our consumers, and thus in the long term also their willingness and ability to remain as subscribers. Furthermore, given the developments in Ukraine, Storytel announced in the first quarter of 2022 its intention to pause its operations in Russia. This has been implemented, and the operations were phased out during the third quarter of 2022. As of June 30, 2023, there is no significant balance sheet exposure related to Russia. 10 ===== SIDA 11 ===== Investigation in Turkey In the first quarter, The Turkish Competition Authority notified Storytel Turkey Yayincilik Hizmetleri A.S. (“Storytel Turkey”) that it has opened an investigation into Storytel Turkey on the basis of a complaint from a third party in Turkey. Storytel is cooperating with the Turkish Competition Authority, and it is too early to determine or predict the outcome of the investigation. Significant events after the period In July, Storytel entered into a strategic partnership with CBB Mobil, a Danish provider of communications and entertainment services, to accelerate growth in Denmark. In July, Storytel launched the first version of the new VoiceSwitcher together with ElevenLabs, available in all markets on selected books in the English language. Full-year 2023 guidance Storytel’s full-year 2023 guidance from February remains unchanged: ● Organic streaming revenue growth in line with previous year (excluding Audiobooks.com and Russia) ● Increased EBITDA margin (adjusted for items affecting comparability) versus 2022 ● At least a break-even operational cash flow (EBITDA - operational capex). Mid-term financial targets The Board of Directors in Storytel has decided on the following mid-term financial targets: Revenue ● Total net sales to reach at least 5,000 MSEK in 2026 through organic growth ● Organic average annual streaming revenue growth of 15 percent EBITDA margin ● EBITDA margin of at least 12 percent in 2026, with a long-term ambition of 15 percent or higher CAPEX ● CAPEX of about 5 percent of Group revenue ● Positive and significant increase in Operational Cash Flow from 2023 11 ===== SIDA 12 ===== Group Financial Statements Condensed Consolidated Interim Statements of Comprehensive Income TSEK Q2 2023 Q2 2022 Q1-Q2 2023 Q1-Q2 2022 Q1–Q4 2022 Net sales 851,070 780,730 1,647,363 1,527,900 3,200,382 Cost of sales -517,887 –490,367 -998,679 -949,039 -1,987,237 Gross profit 333,183 290,363 648,684 578,861 1,213,145 Sales and marketing expenses -218,815 -266,148 -424,540 -560,628 -942,799 Technology and development expenses -63,938 -72,111 -133,403 -168,453 -322,699 General and administrative expenses -95,558 -59,570 -192,702 -189,254 -370,020 Other operating income 13,760 13,494 19,095 19,452 34,424 Result from participations in associates 2,016 -500 5,466 -1,369 -1,070 Operating profit/loss -29,352 -94,472 -77,400 -321,391 -389,019 Net financial items 11,370 31,538 -4,854 25,125 5,347 Profit/loss before taxes -17,982 -62,933 -82,254 -296,265 -383,672 Tax -12,748 8,584 -10,219 9,460 3,402 Profit/loss for the period -30,730 -54,350 -92,472 -286,806 -380,270 Profit for the period attributable to: Parent Company shareholder -31,721 -54,356 -94,511 -288,296 -382,957 Non-controlling interest 991 6 2,039 1,490 2,687 Earnings per share, SEK Group total, basic -0.41 -0.80 -1.23 -4.22 -5.51 Group total, diluted -0.41 -0.80 -1.23 -4.22 -5.51 Statement of comprehensive income Profit/loss for the period, after tax -30,730 -54,350 -92,472 -286,806 -380,270 Other comprehensive income Items that will be reclassified to profit/loss (after tax) Translation difference 68,286 112,201 59,252 129,571 162,821 Items that will not be reclassified to profit/loss (after tax) Revaluation of defined-benefit pension plans - 59,361 -3,483 59,361 106,538 Revaluation of hedging instruments - - - 8,580 10,031 Total other comprehensive income for the period, after tax 68,286 171,562 55,769 197,512 279,389 Total comprehensive income for the period, after tax 37,556 117,213 -36,703 -89,293 -100,881 12 ===== SIDA 13 ===== Total comprehensive income for the period attributable to: Parent Company shareholder 36,565 117,206 -38,742 -90,784 -103,568 Non-controlling interest 991 6 2,039 1,490 2,687 Condensed Consolidated Interim Statements of Financial Position TSEK 30 Jun 2023 30 Jun 2022 31 Dec 2022 Intangible assets 2,668,558 2,633,552 2,622,416 Tangible assets 22,525 30,310 25,985 Right-of-use assets 109,913 118,723 115,360 Non-current financial assets 81,009 104,540 87,690 Inventory 94,645 106,816 102,107 Current receivables 618,015 676,068 658,581 Cash and cash equivalents 531,326 447,866 776,341 Total assets 4,125,990 4,117,873 4,388,480 Equity 2,165,372 1,821,033 2,192,950 Non-current liabilities 952,885 965,163 831,307 Current liabilities 1,007,733 1,331,677 1,364,223 Total equity and liabilities 4,125,990 4,117,873 4,388,480 Condensed Consolidated Interim Statement of Changes in Equity TSEK Q1-Q2 2023 Q1-Q2 2022 Q1–Q4 2022 Opening equity for the period 2,192,950 1,910,603 1,910,603 Profit/loss for the period -94,511 -286,806 -380,270 Non-controlling interest 2,039 2,412 -6,449 Other total comprehensive income for the year: Translation difference 59,252 129,571 162,821 Revaluation of defined-benefit pension plans -3,483 59,361 106,538 Hedge accounting - 8,580 8,580 Transfer of cash flow hedge to business combinations - 1,451 1,451 Transactions with owners: Share issue -1,074 - 391,068 Share based incentive programs 10,200 -4,139 -1,391 Closing equity for the period 2,165,372 1,821,033 2,192,950 13 ===== SIDA 14 ===== Condensed Consolidated Interim Statements of Cash Flows TSEK Q2 2023 Q2 2022 Q1-Q2 2023 Q1-Q2 2022 Q1-Q4 2022 Profit/loss after financial items -17,982 -62,933 -82,254 -296,265 -383,672 Where of interest paid -15,914 -8,693 -30,352 -17,515 -28,761 Adjustments for non-cash items 52,967 13,487 137,212 114,497 288,614 Taxes paid -10,689 -5,259 -12,895 -8,112 -22,517 Cash flow from operations before changes in working capital 24,296 -54,706 42,063 -189,881 -117,575 Change in working capital 12,131 -9,452 16,037 35,544 17,130 Cash flow from operating activities 36,427 -64,158 58,100 -154,3337 -100,445 Cash flow from investing activities -52,167 -69,831 -99,976 -1,020,511 -1,141,390 Cash flow from financing activities -10,429 139,765 -222,710 711,523 1,085,350 Cash flow for the period -26,168 5,776 -264,586 -463,325 -156,485 Available funds at the beginning of period 540,432 447,628 776,341 905,882 905,882 Cash flow for the period -26,168 5,776 -264,586 -463,325 -156,485 Translation differences in available funds 17,062 -5,538 19,571 5,309 26,944 Available funds at end of period 531,326 447,866 531,326 447,866 776,341 14 ===== SIDA 15 ===== Notes to the Condensed Consolidated Interim Financial Statements Note 1 Accounting and Valuation Principles This interim report includes the Swedish Parent Company Storytel AB (publ), CIN 556575-2960, and its subsidiaries. Storytel is one of the world's largest streaming services for audiobooks and e-books and has more than 700,000 titles in the service globally. Our vision is to make the world a more empathetic and creative place through fantastic stories that can be shared and appreciated by anyone, anywhere and at any time. The Streaming operations within Storytel Group take place under the brands Storytel, Mofibo and Audiobooks.com. The publishing business is managed by Storytel Books and the audiobook publisher Storyside. Storytel Group is present in over 25 markets. The Parent Company is a limited liability company with its registered office in Stockholm, Sweden. The address of the head office is Tryckerigatan 4, 111 28 Stockholm, Sweden. Storytel applies the International Financial Reporting Standards (IFRS) as they have been adopted by the EU. This consolidated interim report was prepared in accordance with IAS 34 Interim Financial Reporting, recommendation RFR 1 issued by the Swedish Financial Reporting Board, and the Annual Accounts Act (1995:1554), where applicable. The interim report for the Parent Company was prepared in accordance with Chapter 9 of the Annual Accounts Act (Interim Report) and recommendation RFR 2 issued by the Swedish Financial Reporting Board. The same accounting principles, bases for calculation and assessments were applied to the Group and the Parent Company as in the most recent annual report. A detailed description of the Group’s other applied accounting principles and new and pending standards is included in the most recently published annual report. During 2022, Turkey was defined as a hyperinflationary economy and as such the Group applies IAS 29 related to its entity in Turkey. There are no new IFRS standards or amendments of existing IFRS standards during 2023 that have had a material impact on the performance and financial position of Storytel. Disclosures pursuant to IAS 34.16A are also presented in the financial statements as well as related notes, and are an integral part of this financial statement. All amounts in this statement are stated in thousands of Swedish krona (TSEK) unless otherwise specified. Differences in rounding may occur. Note 2 Significant estimates and judgements When preparing the financial statements, the company’s management and the Board must make certain assessments and assumptions that affect the carrying amounts of asset and liability items and income and expense items, respectively, as well as other information provided. The assessments are based on experiences and assumptions that the management and the Board deem to be reasonable given the prevailing circumstances. Actual outcome may then differ from these assessments if other conditions arise. The estimates and assumptions are evaluated on an ongoing basis and are not considered to entail any material risk of significant adjustments in the reported values of assets and liabilities during subsequent periods. Changes in estimates are reported in the period in which the change is made if the change has only affected this period, or in the period in which the change is made and future periods if the change affects both the current period and future periods. For other significant estimates and judgements, please refer to 15 ===== SIDA 16 ===== the most recent annual report. Note 3 Definitions and key ratios including alternative performance measures Storytel reports a number of different items and financial key ratios in its consolidated financial statements. The key ratios aim to make it easier for investors and other stakeholders to analyze and understand Storytel's operations and development in the same way that the business and its development are monitored by management. Of these measures, some are defined in IFRS, while others are defined in neither the financial framework nor other legislation. For key ratios that are not defined in IFRS, this report presents their purpose and how they relate to the financial statements presented in accordance with IFRS. For definitions of financial measures and key ratios used, please see below. Note 4 Transactions with related parties In general, there were no significant changes in the scope or type of transactions with related parties to the Group other than those presented in the most recent Annual Report. Transactions with associated companies take place on market terms. Note 5 Business segments The Group has divided its operations into three segments: Streaming Nordics, Streaming Non-Nordics (which includes Audiobooks.com) and Books. The division is based partly on the type of business conducted (Streaming versus Books) and the geographical division for the streaming business (Nordics versus Non-Nordics). Apr-Jun 2023 Streaming Nordics Streaming Non-Nordics Books Total segment Group-wide items and eliminations Other adjustments Group total Revenue from external customers 543,765 255,117 128,668 927,549 -92,655 16,176 851,070 Internal revenue - - 53,621 53,621 -53,621 - - Cost of sales -316,400 -137,532 -114,764 -568,697 61,374 -10,564 -517,887 Gross profit 227,364 117,585 67,525 412,474 -84,903 5,612 333,183 Jan-Jun 2023 Streaming Nordics Streaming Non-Nordics Books Total segment Group-wide items and eliminations Other adjustments Group total Revenue from external customers 1,040,395 500,568 258,751 1,799,713 -183,210 30,860 1,647,363 Internal revenue - - 101,683 101,683 -101,683 - - Cost of sales -612,038 -266,908 -224,436 -1,103,382 119,678 -14,975 -998,679 Gross profit 428,356 233,660 135,997 798,013 -165,215 15,885 648,684 The costs listed under Gross profit are not allocated to segments but are reported for the Group as a whole. Internal revenue for the Books segment that relates to sales from streaming is already included as a cost reduction in the segment reporting for the Streaming segments. Revenue and Cost of sales from Storytel AS are included in the Streaming Nordics segment. 16 ===== SIDA 17 ===== These are subsequently eliminated in the column “Group-wide items and eliminations”, and the license fee from Storytel AS is also added back. Group total Apr-Jun 2023 Jan-Jun 2023 Gross profit 333,183 648,684 Selling and marketing expenses -218,815 -424,540 Technology and development expenses -63,938 -133,403 Administrative expenses -95,558 -192,702 Other operating income 13,760 19,095 Profit from participations in associates 2,016 5,466 Operating profit/loss -29,352 -77,400 Net financial items 11,370 -4,854 Profit before tax -17,982 -82,253 Apr-Jun 2022 Streaming Nordics Streaming Non-Nordics Books Total segment Group-wide items and eliminations Other adjustments Group total Revenue from external customers 469,390 235,064 156,999 861,453 -87,441 6,717 780,730 Internal revenue 39,322 39,322 -39,322 Cost of sales -292,036 -133,874 -118,136 -544,045 61,140 -7,462 -490,367 Gross profit 177,354 101,190 78,185 356,730 -65,622 -745 290,363 Jan-Jun 2022 Streaming Nordics Streaming Non-Nordics Books Total segment Group-wide items and eliminations Other adjustments Group total Revenue from external customers 927,945 475,108 306,304 1,709,357 -175,043 -6,414 1,527,900 Internal revenue 77,430 77,430 -77,430 Cost of sales -584,803 -255,838 -221,149 -1,061,790 128,024 -15,273 -949,039 Gross profit 343,142 219,270 162,584 647,567 -124,449 -21,687 578,861 Group total Apr-Jun 2022 Jan-Jun 2022 Gross profit 290,363 578,861 Selling and marketing expenses -266,148 -560,628 Technology and development expenses -72,111 -168,453 Administrative expenses -59,570 -189,254 Other operating income 13,494 19,452 Profit from participations in associates -500 -1,369 Operating profit/loss -94,472 -321,391 Net financial items 31,538 25,125 Profit before tax -62,933 -296,265 17 ===== SIDA 18 ===== Note 6 Revenue from contracts with customers Apr-Jun 2023 Books Streaming Other Group total Type of product or service Revenue from subscriptions of streaming service - 706,226 - 706,226 Revenue from publishing activities 128,668 - - 128,668 Other - - 16,176 16,176 Revenue from contracts with customers 128,668 706,226 16,176 851,070 Jan-Jun 2023 Books Streaming Other Group total Type of product or service Revenue from subscriptions of streaming service - 1,357,752 - 1,357,752 Revenue from publishing activities 258,751 - - 258,751 Other - - 30,860 30,860 Revenue from contracts with customers 258,751 1,357,752 30,860 1,647,363 Apr-Jun 2022 Books Streaming Other Group total Type of product or service Revenue from subscriptions of streaming service - 617,013 - 617,013 Revenue from publishing activities 156,999 - - 156,999 Other - - 6,717 6,717 Revenue from contracts with customers 156,999 617,013 6,717 780,730 Jan-Jun 2022 Books Streaming Other Group total Type of product or service Revenue from subscriptions of streaming service - 1,208,644 - 1,208,644 Revenue from publishing activities 306,304 - - 306,304 Other - - 12,952 12,952 Revenue from contracts with customers 306,304 1,208.644 12,952 1,527,900 Note 7 Financial instruments Valuation hierarchy The levels of the valuation hierarchy are described as follows: Level 1 – Listed prices (unadjusted) in active markets for identical assets and liabilities. Level 2 – Observable input data for the asset or liability other than quoted prices included in Level 1, either directly (i.e., price quotations) or indirectly (i.e., derived from price quotations). Level 3 - Asset or liability input data that is not based on observable market data (i.e., non-observable input data). 18 ===== SIDA 19 ===== Acquisition option Storytel's acquisition option (put/call option) refers to the future acquisition of the remaining 13.3 % shares in Earselect AB, which will result in an additional transferred consideration of 8,237 TSEK, after the consideration paid in the first quarter, see note 8. The acquisition option is reported at fair value in the statement of financial position, measured in accordance with IFRS 9 and categorized in accordance with Level 3 of the IFRS 13 fair value hierarchy. Since the price of the option is not dependent on any conditions beyond the time aspect, and since the discounting effect attributable to the time value at the time of acquisition was insignificant, no discounting has taken place, and the carrying amount is considered to correspond to the fair value of the acquisition option. Contingent consideration The contingent consideration related to the acquisition of Aula is reported at fair value in accordance with Level 3 of the valuation hierarchy. The fair value is estimated by using a valuation model that discounts the present value of expected outgoing cash flows by a risk-adjusted discount rate. Expected cash flows are determined using probable scenarios based on expected financial outcome and future financial forecasts. The most significant input factors used to measure fair value are the risk-adjusted discount rate of 12.6% and the forecast future development of profitability, growth in net sales, and the level of digital sales. Given that the contingent additional consideration at the balance sheet date can amount to at the most TSEK 761, no changes in input factors are judged to result in any material impact on the fair value of the item in the balance sheet or income. During the period, unrealized gains or losses for the contingent consideration held as at the balance sheet date are not material. This amount is included in other operating expenses in the consolidated statement of income. The discounting effect is recognized in net financial income. Financial liabilities valued at fair value Q1-Q2 2023 Q1-Q2 2022 Q1-Q4 2022 Opening balance 13,124 23,095 23,095 Consideration paid -4,275 - - Change in value recognized in profit/loss - - 48 Change in value recognized in OCI - financial derivative - -8,580 -8,580 Transfer of cash flow hedge to business combinations - -1,451 -1,451 Closing balance 8,849 13,064 13,124 Other receivables and liabilities For current receivables and liabilities, such as accounts receivable and trade payables, and for non-current liabilities with variable interest rates, the carrying amount is considered to be a good approximation of the fair value. Note 8 Business combinations The purchase price allocation for Audiobooks.com, acquired in January 2022, was closed in 2022 and remains unchanged compared to as presented in the annual report for 2022. A consideration of 4,275 TSEK for Storytel’s acquisition option in Earselect was paid during the quarter. Storytel obtained a further 6.83% ownership and owned at the end of the period 86.7% of Earselect. 19 ===== SIDA 20 ===== Condensed Parent Company Interim Statements of Comprehensive Income TSEK Q2 2023 Q2 2022 Q1-Q2 2023 Q1-Q2 2022 Q1-Q4 2022 Net sales 10,522 8,810 19,342 14,655 43,096 Cost of revenue - - - - - Gross profit 10,522 8,810 19,342 14,655 43,096 Administrative expenses -8,309 -6,420 -16,310 -19,804 -54,223 Other operating income 46 - 46 - 224 Profit from participation in group company - - - - 15,608 Operating profit 2,258 2,390 3,078 -5,149 4,705 Net financial items -294 -6,752 -6,294 2,167 -5,258 Profit/loss before taxes 1,964 -4,361 -3,216 -2,981 -553 Tax - - - - -1,437 Profit/loss for period 1,964 -4,361 -3,216 -2,981 -1,990 Parent Company´s condensed statement of comprehensive income Profit for the period Other comprehensive income, after tax 1,964 -4,361 -3,216 -2,981 -1,990 Total comprehensive income for the period 1,964 -4,361 -3,216 -2,981 -1,990 Condensed Parent Company Interim Statements of Financial Position TSEK 30 Jun 2023 30 Jun 2022 31 Dec 2022 Non-current financial assets 4,848,935 4,605,945 4,848,936 Current receivables 287,260 226,380 228,412 Cash and cash equivalents 98,607 135,514 365,813 Total assets 5,234,802 4,967,839 5,443,161 Equity 4,206,933 3,817,198 4,210,538 Non-current liabilities 698,838 597,932 598,416 Current liabilities 329,031 552,709 634,207 Total equity and liabilities 5,234,802 4,967,839 5,443,161 20 ===== SIDA 21 ===== Number of shares and share capital as of June 30, 2023 There were 77,073,120 (68,281,911) registered shares in issuance at the end of the period, divided between 635 Class A shares and 77,072,485 Class B shares. Share capital totaled 38,536,560 (34,140,956) SEK as of June 30, 2023. The shareholder structure is presented at investors.storytel.com. Auditor's review This interim report has not been audited or reviewed by the auditors of the company. Information about Nasdaq First North Growth Market Nasdaq First North Growth Market (“First North”) is an alternative marketplace operated by the constituent exchanges of Nasdaq Stockholm. It does not have the same legal status as a regulated marketplace. Companies quoted on First North are subject to First North’s rules rather than the legal requirements set for trading on a regulated marketplace. An investment in a company trading on First North implies higher risk than an investment in a listed company. Companies must apply to the exchange and gain approval before trading on First North may commence. A Certified Adviser guides the company through the listing process and ensures that the company continuously satisfies First North’s standards. Information about Nasdaq First North Growth Market. Financial calendar Interim Report January–September 2023 October 31, 2023 Year-End Report January–December 2023 February 15, 2024 21 ===== SIDA 22 ===== Definitions and key ratios including alternative performance measures Net sales Operating main income, invoiced costs, incidental revenue and revenue adjustments. Net sales growth rate, % Net sales for the current year divided by the previous year’s net sales. Net sales growth rate, %, CER Net sales for the current year divided by the previous year’s net sales where the current year’s net sales are calculated at the exchange rates prevailing in the previous year. Gross profit Profit after cost of sales. Gross profit % Operating profit as a percentage of net sales. Gross margin Operating profit as a percentage of net sales. Operating profit (EBIT) Profit before interest and tax. Operating margin (EBIT margin) Operating profit as a percentage of net sales. Profit/loss before taxes Profit after financial income and expenses, before tax. Profit margin (%) Profit after tax as a percentage of net sales. Equity-to-assets ratio (%) Adjusted equity (equity and untaxed reserves less deferred tax, including non-controlling interests) as a percentage of the balance sheet total. Equity The net assets of the business, i.e., the difference between assets and liabilities, including non-controlling interests. Balance sheet total The company’s total assets. FTE Full-Time Equivalents. Number of employees Average number of employees during the financial year. ARPU Average Revenue Per User (subscriber) per month. Average paying subscribers The average number of paying Storytel subscribers during the quarter. For Family subscriptions, each standard stream (not so-called Kids Mode) is considered one paying subscriber. CER Constant Exchange Rates. EBITDA Earnings before interest, taxes, depreciation and amortization. EBITDA margin EBITDA as percentage of Net Sales. Equity-to-asset ratio Adjusted equity (equity including non-controlling interest and untaxed reserves less deferred tax) as a percentage of the balance sheet total. Revenue – Books (Table 1) Physical books and digital sales through channels other than Storytel. Internal revenue from Storytel has been eliminated. All publishing houses in the Group, both those located in Sweden and those located internationally, are included. Revenue – Streaming (Table 1) ARPU * Paying Subscribers. Items affecting comparability (IAC) Items affecting comparability include certain items of a significant character that distort comparisons over time. These have been defined as: ● Costs in connection with acquisitions ● Restructuring costs ● Costs related to operationalizing the pause and eventual wind down in Russia 22 ===== SIDA 23 ===== This information is information that Storytel AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication at 8:00 a.m. CEST on August 1, 2023. Signatures and Assurance The Board of Directors and the Chief Executive Officer offer their assurance that this interim report provides a true and fair view of the Group’s and the Parent Company’s operations, financial position and operational performance. Stockholm, August 1, 2023 Hans-Holger Albrecht Jonas Tellander Chair of the Board Vice Chair of the Board Adine Grate Lina Brouneus Board member Board member Lutz Finger Jonas Sjögren Board member Board member Alexander Lindholm Joakim Rubin Board member Board member Johannes Larcher CEO 23 ===== SIDA 24 ===== Contacts Storytel AB (publicly traded) ● Mailing address: Box 24167, 104 51 Stockholm ● Office: Tryckerigatan 4/Norra Riddarholmshamnen 1, 111 28 Stockholm ● CIN: 556575-2960 ● Email: investorrelations@storytel.com ● Website: www.storytel.com, https://investors.storytel.com For further information, please contact: Niklas Alm, Interim Head of Investor Relations Cell: +46 70 824 40 88 Email: niklas.alm@storytel.com 24