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CEO letter

From the Interim Report Q1 2024

Dear shareholders,

“Our solid performance last year has set the stage for a strong start to 2024.”

In the first quarter we successfully navigated operational and restructuring challenges with agility and determination. We leveraged our improved operational efficiency to accelerate momentum and achieve robust financial results. The quarter was a testament to our commitment to deliver increased value to our shareholders and laid a solid foundation for 2024 and beyond. As we continue to evolve and adapt to a changing business landscape we remain focused on executing on our profitable growth strategy and to deliver on our targets.

Strong financial development

The first quarter marked another step up in our financial performance as Storytel delivered a strong result with improved profitability and operational cash flow. The group’s adjusted EBITDA increased 167 percent to 104 MSEK, reaching the highest level in Storytel’s history, equal to a margin of 11.7 percent. The operational cash flow was 73 MSEK equal to 8.2 percent of revenues. Total group revenue grew 12 percent while streaming revenue grew 13 percent.

In the Nordics, the 13 percent growth in revenues was driven both by higher average revenue per user, due to price increases carried out late in the first quarter 2023, and a 6 percent growth in average paying subscribers to 1.2 million. Going forward, revenue growth in the Nordics will be driven more by the intake of new subscribers, and we recognize that the market will remain challenging as competition in our home region continues to be fierce. We plan to accelerate Nordic subscriber and revenue growth by continuing to develop a more differentiated, attractively packaged, and customer-oriented service.

Non-Nordic streaming revenues grew 13 percent, mostly driven by the 18 percent increase in our average subscriber base to 1.1 million. Progress was particularly evident in our four Non-Nordic growth markets- The Netherlands, Poland, Bulgaria and Turkeywith more than 25 percent increase in average paying subscribers. In the US, also enjoyed strong subscriber growth on the back of general market growth and higher marketing efficiency.

We anticipate steady growth in Non-Nordic streaming throughout the year, driven by a combination of sustained, strong customer intake combined with increased average revenue per user.

As compared to the previous quarter, average revenue per user came down as new subscriber intake was predominantly driven in geographies and in payment plans with lower average revenue per user.

Total sales in the Books segment increased 7 percent. External sales grew by 1 percent to 131 MSEK while internal sales grew by 22 percent. Storytel Books had a positive first quarter with increased digital sales both externally and internally, showcasing the quality and appeal of our content portfolio. Revenue growth in external sales was also supported by Storytel Books’ recently renewed agreement with Nextory to 2distribute a majority of Storytel Books’ and Storyside’s titles on Nextory’s platform in Sweden, Finland and Denmark. The agreement only came into effect in early February for which the contribution will be more prominent from the second quarter.

Commitment to delivering high quality content

Our content strategy is gaining traction, with consumption of titles from our internal publishers showing steady growth. In Q1, titles from our digital inhouse publisher Storyside reached record consumption levels. True Crime formats like Homosexligan som styrde Sverige by Erik Galli and Min Kamp for Retfærdighed by Thea Pedersen & Jane Fisher-Byrialsen engaged users in Sweden and Denmark upon their releases. Additionally, we are proud to have produced the first ever Turkish audiobook release of one of the most beloved sagas of all time, The Lord of the Rings. I am also excited that Norstedts will be releasing the memoirs of Swedish tennis legend Björn Borg in 2025, available in both print and audiobook formats.

Since 2015, Storytel Awards have annually celebrated talented authors and narrators who captivate and entertain audiobook listeners. This spring, ceremonies were arranged in Stockholm, Helsinki, Copenhagen, Oslo, Reykjavik, and Amsterdam where the Storytel audience’s favorite narrators and authors were awarded over 60 statuettes. These awards are a testament to our commitment to recognize excellence and foster the general growth of audiobooks.

Driving success through efficiency and innovation

This quarter we made big strides in enhancing efficiencies and streamlining our teams to better align with our strategic objectives. The mature and resilient approach demonstrated by our teams throughout this restructuring process is commendable. As a result, we have been able to optimize our operations, reduce redundancies, and created a leaner and more agile organization.

In February, we launched Voice Switcher in Sweden, a groundbreaking feature enhancing the audiobook experience by allowing listeners to switch between human and AI narrators. Notably, renowned Swedish actor Stefan Sauk collaborated with us on this project. His AI-generated voice is already available on 25 audiobooks together with several other AI voices, providing listeners with diverse narration options. The reception has been encouraging, and we expect to introduce Voice Switcher in additional languages soon.

Service differentiation remains a top priority for us, and we have invested significantly in positioning Storytel with unique content and product features. As a next step, we are exploring new pricing packages and offers for our streaming platform, expected to roll out later this year.

I can proudly state that we are off to a strong start in 2024, thanks to the dedication, resilience, and innovative spirit of our team; and I am optimistic about the remainder of this year and beyond.

As recently announced, I will step down as CEO of Storytel Group during the fall. The company has been through a remarkable transformation during the last years and is now a growing, profitable and innovative business in good shape. In service of our mission to “Move the World through Story”, I have confidence that Storytel will continue to create sustainable value for our employees, customers and shareholders for a long time to come.

May 7, 2024

Johannes Larcher
CEO, Storytel