Middle East and North Africa-focused music streaming service Anghami has reported an 18% YoY increase in paying subscribers in Q1 2024.
Meanwhile, its annual report for 2023 showed a narrowing of its operating loss, despite “headwinds” from the war in Gaza and a devaluation of the Egyptian pound that drove revenues down.
The number of premium subscribers reached 1.87 million as of March 31, the end of Q1, the NASDAQ-listed company said in a statement released on Tuesday (April 30).
Anghami reported an 8% YoY increase in revenue for the quarter, driven primarily by a 27% jump in subscription revenue in the quarter. That helped narrow its operating loss from USD $5.4 million to $2.7 million, “reflecting progress towards profitability.”
Its quarterly gross margin improved to 26%, from 20% a year earlier.
The company noted that it had “accomplished several key strategic deals” during the quarter, including “an investment from Saudi media leader SRMG, an expanded partnership with Rotana Music, and an expansion of the exclusivity agreement with [Egyptian singer] Amr Diab (including four concerts in major cities across the MENA region).”
The Q1 performance suggests Anghami is moving past a turbulent 2023, which showed steep revenue declines offset by lower costs that allowed for an improved gross margin.
In its annual report filed with the Securities and Exchange Commission (SEC), Anghami showed a 14.6% YoY decline in total revenue, to $41.38 million.
Despite this, the company’s operating loss for 2023 narrowed to $14.56 million, compared to $17.38 million in 2022. This was largely due to shrinking cost of revenue, which fell from $39.13 million in 2022 to $31.09 million in 2023.
The company’s gross margin for the year, for all segments, rose to 24.9% from 19.3%.
The company breaks down revenue into three segments: Premium (subscriptions), Ad-Supported and Live Events.
Revenue from Premium came in at $24.56 million, accounting for around 59% of the total, and down 9.3% YoY.
Ad-Supported revenue came in at $9.90 million, down 17.9% on the year, while Live Events brought in $6.92 million, down 26.1%.
“Anghami’s 2023 financial performance was directly affected by the devaluation of the Egyptian currency. This was partially offset by the strong growth in premium subscribers in Egypt, a key market in the MENA region,” Anghami said in a statement on Tuesday.
“In addition, the Gaza war significantly disrupted advertising activities and live events in Q4 2023, resulting in the postponement of several key projects and events until 2024.”
Egypt is Anghami’s third-largest market by revenue, after the United Arab Emirates and Saudi Arabia.
The company also reported a 27% YoY decline in Premium average revenue per user (ARPU), which fell to $1.53 from $2.09 a year earlier.
The company attributed this to currency devaluations in Egypt and Lebanon, “alongside the introduction of new pricing plans. Notably, the launch of offerings like the Arabic-only plan aimed at countries with traditionally lower ARPU, such as Egypt, contributed to this shift.”
Anghami added that “core subscription business continues to deliver growth in number of subscribers, supported by the rapidly growing advertising and production segments that have delivered impressive results overcoming multiple challenges and headwinds in 2023.
“We anticipate significant potential revenue growth following the OSN+ transaction.”
Elie Habib, Anghami
Last fall, Anghami was issued a warning by the NASDAQ that it risked delisting due to its low share price, which at the time was hovering below USD $1.
Weeks later, the company announced that OSN Group, owner of MENA-focused TV and movie streaming service OSN+, would be acquiring a majority stake in Anghami in deal that valued Anghami at $3.69 per share, in a merger that the companies said would form an “entertainment powerhouse” in the region.
As part of the merger, OSN handed over its streaming service and brand to Anghami, and paid $38 million for 36.99 million shares of Anghami, per the annual report. OSN Group now holds a 55% stake in Anghami.
Anghami’s share price tripled on the news, peaking at $3.11, but has since fallen back and has been trading at $1.10 to $1.30 in recent weeks, which is outside the danger zone for NASDAQ delisting.
The Q1 numbers don’t reflect the merger, as it was completed shortly after the end of the quarter.
“2023 was a transformative year for Anghami. We repositioned our business to boost margins and profitability and expanded our services in the region. We anticipate significant potential revenue growth following the OSN+ transaction,” said Elie Habib, Anghami co-founder and CEO.Music Business Worldwide
