BOULDER, CO - Auddia Inc. (NASDAQ:AUUD), a company specializing in AI audio identification and classification technologies, announced its intention to purchase Radio FM, a prominent streaming service for AM/FM radio. The deal, valued at $15 million, is contingent on Auddia securing the necessary funds to complete the acquisition.
Radio FM boasts 4.6 million monthly active users and generated $2.3 million in revenue last year, with $1.4 million in operating cash flow. This acquisition is expected to significantly reduce Auddia's cash burn while potentially increasing its subscription base. Radio FM was recently recognized as an Editor's Choice app in the Google (NASDAQ:GOOGL) Play Store, a distinction shared by only two other apps in its category.
Auddia’s CEO, Michael Lawless, highlighted the strategic benefits of the acquisition, noting that Radio FM's user base could be acquired at a customer acquisition cost approximately 70% lower than Auddia's current marketing methods. This move is anticipated to accelerate revenue growth, drive subscription numbers, and move the company towards sustainability.
The terms of the agreement include a $13 million cash payment at closing and an additional $2 million contingent on Radio FM maintaining certain performance milestones six months post-acquisition. Auddia is also in advanced discussions regarding acquisitions of other targets and plans to provide updates in the near future.
Auddia, known for its flagship audio superapp faidr, offers subscription-based, ad-free listening on AM/FM stations and podcasts, along with interactive digital feeds for deeper storytelling. The company aims to leverage its technology to transform how consumers interact with audio content.
This news is based on a press release statement from Auddia Inc.
InvestingPro Insights
Auddia Inc.'s (NASDAQ:AUUD) ambitious move to acquire Radio FM comes at a time when the company's financial health is under scrutiny. With a market capitalization of just $3.15 million and a troubling P/E ratio (adjusted for the last twelve months as of Q3 2023) of -0.38, investors may question the company's ability to sustain such an acquisition without further diluting shareholder value.
InvestingPro Tips gleaned from https://www.investing.com/pro/AUUD highlight some of the challenges Auddia is facing. The company is quickly burning through cash and has seen its stock take a significant hit, dropping by 22.09% in the last week alone. Additionally, Auddia has not been profitable over the last twelve months, a trend that could concern potential investors about the company's future prospects.
The company's financials show a gross profit of -$0.18 million and an operating income (adjusted) of -$7.06 million for the last twelve months as of Q3 2023. Auddia's short-term obligations also exceed its liquid assets, indicating potential liquidity issues that could complicate the acquisition process.
Despite these challenges, Auddia's planned acquisition of Radio FM could be a strategic move to bolster its user base and drive subscription numbers, as noted by CEO Michael Lawless. The company's valuation implies a poor free cash flow yield, but the acquisition might offer a path to improved financials if it can indeed reduce Auddia's cash burn and leverage Radio FM's established user base.
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