Year-end Report Jan-Dec 2014 This information is mandatory for Aspiro AB (publ) to publish pursuant to the Swedish Securities Exchange and Clearing Operations Act and/or the Swedish Financial Instruments Trading Act. This information was submitted for publication at 08:30 am on 5 February 2015. The Quarter in Brief 2 The Quarter in Brief Fourth Quarter 2014 • On 1 December, Aspiro reported that its global expansion • Net sales for the fourth quarter were SEK 74.5 m (69.3 m), was continuing with the launch of the company’s streaming an increase of 8%. service in Canada, Switzerland, Austria and Pakistan. • EBITDA for the fourth quarter was SEK -35.8 m (SEK -17.7 m). Post Period End Highlights • Profit/loss for the quarter was SEK -41.5 m (SEK -19.1 m). • On 13 January, Aspiro reported that its global expansion • The group’s cash and cash equivalents were SEK 63.5 m was continuing with the launch of the company’s HiFi (SEK 58.6 m) as of 31 December 2014. It is the Board’s as- streaming service in the Netherlands, Belgium, Luxem- sessment, that given the current strategic plan and the asso- bourg, Finland and Ireland. ciated capital needs, the company is not fully funded for the • On 30 January, the Board reported its recommendation coming twelve months. The Board is considering various to the stock holders to accept the public bid from Project funding alternatives. The Board further notes that a change Panther Bidco at 1.05 SEK per share. of ownership of the company, inter alia by way of a comple- • Aspiro prepared the launch of TIDAL in another 20-plus tion of the public bid from Project Panther Bidco, could give countries. In the first quarter the service will launch in Aus- rise to new funding opportunities for the company. tria, Czech republic, Cyprus, Denmark, Estonia, France, • On 31 December 2014, Aspiro’s music streaming services Greece, Hungary, Italy, Latvia, Lithuania, Malta, Norway, had 500,000 paying users, down by 12,000 on the end of Portugal, Romania, Switzerland, Singapore, Slovakia, Slo- the previous quarter. The number of HiFi customers was venia, Sweden, South Africa and Turkey. 35,000 (12,000 on TIDAL), against 20,000 at the end of the previous quarter. Key Figures Oct-Dec 2014 Jan-Dec 2014 The Period January-December 2014 Continuing operations (2013) (2013) • Net sales for the period were SEK 303.2 m (SEK 248.3 m), Net sales, SEK m 74.5 (69.3) 303.2 (248.3) a 22% increase. EBITDA, SEK m -35.8 (-17.7) -78.5 (-63.7) • EBITDA for the period was SEK -78.5 m (SEK -63.7 m). Profit/loss, SEK m -41.5 (-19.1) -84.1 (-82.4) • Net profit/loss for the period was SEK -84.1 m Operating margin, % -49.2 (-27.5) -27.6 (-30.6) (SEK -82.4 m). Basic earnings per share, SEK -0.09 (-0.05) -0.21 (-0.23) Diluted earnings per share, SEK -0.09 (-0.05) -0.21 (-0.23) Highlights of the Quarter • On 9 October, Aspiro reported that it had signed agree- Other Key Figures ments with 16 new integration partners for the launch of its Equity/assets ratio, % 7 (20) 7 (20) HiFi streaming service in the US and UK. Return on capital employed, % -145.34 (-49.69) -383.30 (-124.96) • Aspiro launched its HiFi streaming service TIDAL in the US Return on equity, % -145.41 (-49.51) -383.32 (-124.48) and UK on 28 October, and had 32 integration partners. Cash flow from operating activities, per share, SEK -0.05 (-0.05) -0.14 (-0.08) CEO’s Comments 3 Q4 2014, CEO’s Comments The launch of Aspiro’s streaming service in the USA and UK under its new brand TIDAL, is the biggest step in Aspiro’s his- tory and its reception has been overwhelming. Gaining trac- tion from massive media exposure and headlines like ”For- get Spotify, get CD quality music” (Forbes) and ”TIDAL—the streaming service Taylor Swift wants to be on” (Bloomberg), our customer base rapidly overtook our high expectations. In just a few weeks, TIDAL was the headline of over 1,600 articles and news features. Actually, we shouldn’t be surprised by a unique music servi- ce offering hi-fi quality, HD music videos and tailored editorial material from recognized music journalists on a single plat- form attracting such huge interest. Given our limited financial resources to conduct marketing campaigns like the major play- ers, we have been diligent and effective in making an impres- sion on new markets with exceptional results. The work on establishing TIDAL in the US, UK and Canada, for example, is obviously far from complete—our marketing activities conti- nue and the numbers of integration partners are still rising. At present, we have secured collaborations with over 30 partners, including leaders like Sonos, Denon and Harman Omni. In the fall, we also launched our music streaming services in Switzerland, Austria and Pakistan, and in January we launched TIDAL in the Netherlands, Belgium, Luxembourg, Finland and Ireland. Our expansion in all these new markets has just begun, and we anticipate continued growth. We’ll be launching in another 20-plus countries as early as during the first quar- ter. We are a small company with big ambitions, and we’ll keep moving at full speed to expand our subscriber base and ARPU. Simultaniously, the Board considers, that given current strategic initiatives and expenses, the company lacks complete the bid, which stockholders with a total participating interest funding for the next twelve months. of 75.9% have already accepted. As reported separately, our progress resulted in Project But for myself and my colleagues, the focus of our efforts is Panther Bidco, owned by Shawn Carter, also known as Jay-Z, unchanged—to keep developing our music services and make making a takeover bid for the company on 30 January. This them available to a growing number of potential customers. bid corresponds to a premium of some 60% and an indepen- dent committee within Aspiro’s Board takes a positive view of Andy Chen CEO About Aspiro 4 About Aspiro Aspiro is a media technology company at the forefront of Our Vision the ongoing redefinition of music consumption in the mo- The Aspiro Group aims to be the leader in providing world- dern digital world. Through its brands WiMP Music and class music entertainment through content and technology. TIDAL, the company offers a subscription-based premium Our vision is based on the following key principles: music streaming service, the industry’s only multimedia • Access: Delivering the best music entertainment service music experience with HiFi audio quality, HD video and an across multiple devices and platforms, ranging from mobile editorial profile including features, articles and interviews. phones to the user’s living room, RADR Music News (RMN) is a syndication platform • Quality: Providing the best quality sound and music expe- for video, enabling publishers to distribute and mo- rience to our customers and netize on high quality music content. Mobile Search • Audience: Helping music content to reach its global au- provides text-based directory enquiries in Norway. dience The Aspiro-group is headquartered in Oslo, with opera- tions in Norway, Sweden, Denmark, Germany and Poland. WiMP/TIDAL RADR Music News Mobile search WiMP/TIDAL is a subscription RADR Music News is a Text-based directory enquiries based music streaming syndication platform, offering in Norway, through the service with HiFi audio quality, media companies a curated company’s short numbers integrated editorial content, catalog of over 75,000 selected 1985 and 2100. Consumers video and additional services music videos from the major pay per search. Aspiro has such as a music magazine. labels and independent labels content agreements with Through editorial teams, and aggregators. RADR provides database providers to provide WiMP/TIDAL provides daily music videos and other music the telephone numbers for the recommendations, tips and related content including text-based directory enquiry playlists for any occasion. The concerts, interviews, behind- services. ad-free service is accessible the-scenes material and short from computers, mobiles, documentaries, often exclusive. tablets and home audio systems. Sales and Results of Operations 5 Sales and Results of Operations Figures in brackets are for the corresponding period of the previous year. Fourth Quarter 2014 Net sales for the fourth quarter were SEK 74.5 m (SEK 69.3 m), an increase of 8%. The year-on-year revenue increase was res- trained by a smaller user base for WiMP, due to a renegotiated agreement with Canal Digital of Norway. EBITDA for the fourth quarter was SEK -35.8 m (SEK -17.7 m). Largely, the lower profit is due to increased expenses rela- ting to the launch of TIDAL in the US and UK. Net sales in the Music business area were SEK 71.9 m (SEK 65.5 m), up by 10%. EBITDA was SEK -31.8 m (SEK -17.2 m). Net sales in the Search business area were SEK 2.6 m (SEK 3.8 m), down by 32%. EBITDA was SEK 1.2 m (SEK 1.9 m). The reduced revenues from the Search business area are an expected and normal trend in a structurally declining market. Earnings per share for the fourth quarter, basic and diluted, were SEK -0.09 (SEK -0.05). Full Year 2014 Net sales for the full year were SEK 303.2 m (SEK 248.3 m), an increase of 22%. In year-on-year terms, sales in the Music business area were up by SEK 62.7 m (28%).