By Vinay Naik (Warwick), Amarins Laanstra-Corn, Roshni Padhi, Winston Shum (Stanford)
Overview of the deal
Total Transaction Size: $235 million
Date Announced: Nov. 9th, 2020
Spotify’s acquisition of Megaphone marks the start of a new shift in the digital streaming industry, placing greater importance on dynamic podcast advertising within the wider audio ecosystem. Podcast advertising is projected to surpass $1 billion in 2021, according to the IAB. As one of the world’s leading podcast advertising and publishing platforms, Megaphone’s unique offering will enable Spotify to target ads to its 320 million monthly listeners. This acquisition follows the launch of Spotify’s proprietary Streaming Ad Insertion (SAI) technology, the company’s first step to delivering engaging and precise ads to podcast listeners globally, in real-time. Megaphone gives Spotify the possibility to extend this technology to third-party podcast publishers for the first time, positioning them as a leader within the industry.
“We believe that Megaphone and Spotify’s shared value in innovation will drive the podcast ecosystem forward around the world.” -- Brendan Monaghan, CEO of Megaphone
Company Details: Acquirer – Spotify
Spotify is currently one of the largest audio-streaming platforms on the market. It is a freemium service as the basic models are offered at no cost but additional premium services are available for purchase. They currently provide access to over 60 million songs and have recently branched into other forms of audio media. As of 2017, Spotify was not yet a profitable company. Revenues in Q1 2020 were approximately $1.7 billion.
Founded in 2006, headquartered in Stockholm, Sweden
CEO: Daniel Ek
Number of employees: 2,960
Market Cap: $49.49B (as of dd/mm/yyyy)
LTM Revenue: $7.57B
LTM EBITDA: -$546M
LTM EV/Revenue: 6.71
LTM EV/EBITDA: -92.19
Company Details: Target - Megaphone
Megaphone is one of the leading providers of podcasting technologies for both publishers and advertisers. Their technology enables advertisers to connect to over 60,000 unique audience segments. It also assists content creators in developing profitable business models.
Founded in 2015, headquartered in Washington D.C., United States