Auddia Inc., a proprietary AI platform for audio identification and classification and related technologies, has signed a definitive purchase agreement to acquire AM/FM streaming app Radio FM. Closing the acquisition remains subject to financing the acquisition cost.
Michael Lawless, CEO of Auddia, said the company sees strong subscription conversion numbers off the free tier of its faidr app, which is solidifying confidence that a large number of AM/FM streaming listeners are willing to pay a subscription to avoid commercials while listening to their favorite stations. The challenge now becomes how to grow the free tier user base cost-efficiently to increase the company’s pool of potential subscribers.
“The Radio FM acquisition allows us to acquire 4.6 million retained users at a customer acquisition cost that is approximately 70% lower than the cost to acquire a free tier user through our direct marketing methods. This is obviously a far more economical and faster way to build revenue, reduce burn, drive subscriptions, and achieve sustainability. We look forward to engaging with investors to secure the financing needed to close the transaction,” said Lawless.
The Radio FM asset consists of US$2.3M in 2023 revenue with US$1.4M in related operating cash flow and represents approximately 4.6 million monthly active users on the free tier. The acquisition is priced at US$13M cash at closing, with an additional US$2M paid six months after closing, assuming certain performance milestones are maintained.
Auddia says it is continuing to advance discussions with the other two previously disclosed acquisition targets under LOI and will provide an update on their status in the coming days.
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