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Readly; Publisher Update
Readly International AB (publ) (”Readly” or the “Company”), the European category leader within digital subscription services for magazines, has been notified that two out of its approximately 800 third party publishers have given, or intend to give, notice to terminate their respective publisher agreements with the Company. More specifically, Aller Media ("Aller") has given notice to terminate their current publishing agreement with Readly, and Bonnier News (including Expressen) ("Bonnier") has informed Readly of an intention to terminate their publishing agreements with Readly.
All eight cornerstone investors (existing shareholders Swedbank Robur, Tredje AP-fonden (AP3), and Consensus Småbolagsfond, together with new investors TIN Fonder, Handelsbanken Fonder, C WorldWide Asset Management, Skandia Fonder and Skandia Liv) in Readly's initial public offering on Nasdaq Stockholm, announced 7 September 2020 (the "IPO" or the "Offering"), have communicated to Readly that this has no impact on their commitment to participate in the Offering for an amount equal to SEK 390 million. Readly’s financial targets and strategy remain unchanged. For regulatory reasons, Readly has prepared a prospectus supplement and filed it to the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”). The prospectus supplement will be published immediately following approval from the SFSA
Maria Hedengren, CEO of Readly
“Readly is on a mission to bring the magic of magazines into the future. That journey includes continuous negotiations with our publishers – it is a natural part of our day-to-day business as a content provider. We are of course disappointed as our readers appreciate these magazines but this demonstrates the strength of having 800 publisher partners, which is an important strategic pillar for us. We are committed to continuing the dialogue with Aller and Bonnier. We hope to find a solution to ensure our customers can continue to enjoy these magazines on their preferred platform without interruption. Our financial targets and strategy remain unchanged. We feel as confident as ever that Readly’s value proposition appeals to the vast majority of European magazine publishers, offering them a new revenue stream at no cost, a wide audience with unique access to new readers and valuable data to further support their business.”
Readly is a European category leader, with approximately 5,000 titles from approx. 800 publishers. In total, titles from Aller and Bonnier (including Expressen) contribute 3.8 percent of Readly’s total number of titles (30.1 percent of Swedish titles), with 0.9 percent of Readly’s global user base reading content from these publishers exclusively (5.4 percent of the Swedish user base).
The agreement with Aller expires in March 2021. The agreements with Bonnier are expected to expire at various dates up to and including the second half of 2021 and content from Bonnier would gradually be removed over this period of time.
Following careful consideration of the potential impact of a removal of the content from Aller and Bonnier, senior management and the Board of Directors of Readly believe that there would be no material impact on the long-term financial goals of the Company if this content were removed. Notably, it is not expected that mid-term compound annual growth rate (CAGR) will be impacted below the mid-term annual growth rate target of 30-35 percent, however, growth may be lower than previously estimated in the year 2021. In addition, the Company expects no impact on the long-term financial goals relating to achieving a gross margin of 35 percent, or reaching a positive EBITDA within 4-5 years.
Readly’s approximately 800 publisher relationships globally have built up steadily since the Company was founded. Historically, only one significant publisher has ever fully removed its titles from Readly, and in that case the titles were reinstated after a 12-month hiatus, during which period the financial performance of the Company was not impacted.
Nathan Medlock, Partner in the Technology Growth Team at Zouk Capital
"As the largest shareholder in Readly for the past 7 years, Zouk remains committed to continuing to support Readly and its management team in its goal to bring the magic of magazines into the future. We remain incredibly impressed by and honored to work with Maria and her team in delivering fantastic and broad-ranging content from the best publishers in the world to readers, no matter where they live. We very much look forward to the next phase of Readly’s growth as a publicly listed company."
On 7 September 2020, the Company announced its intention to launch an IPO of new and existing shares in the Company, and a listing of the Company’s shares on Nasdaq Stockholm.
A prospectus has been approved by the SFSA and published by the Company. Due to regulatory reasons, following the new information regarding Aller and Bonnier, the Company has prepared a prospectus supplement which has been filed with the SFSA. The Company will publish the prospectus supplement immediately following the SFSA’s approval. All eight cornerstone investors have communicated to Readly that this has no impact on their commitment to participate in the Offering for an amount equal to SEK 390 million.
For more information, please contact:
Contact for investors and analysts:
Maria Hedengren, CEO Readly
Annika Billberg, Head of Investor Relations Readly
+46 70 267 97 91, email@example.com
Contact for media:
Linnéa Aguero, Head of PR & Communications Readly
+46 72 503 32 31, firstname.lastname@example.org