Even without AWAL, Kobalt Music Group is a $600+ million annual business…and comfortably profitable
Kobalt Music Group has achieved headline-grabbing sales over the past year.
So without these flagship domains of his company – namely AWAL and Kobalt Neighboring Rights, both sold to Sony ten months ago in a $430 million deal – how big is the Kobalt business? newly lightened in 2022?
The answer might surprise you.
Kobalt told MBW today (March 7) that he expects to generate somewhere near USD $625 million in gross inflows in its current fiscal year, through end-June 2022. music.)
Kobalt also expects to end the current fiscal year with about a tenth of that number, $65 millionin EBITDA result.
These Kobalt forecasts arrive as the company’s detailed fiscal results for its previous FY – the year to the end of June 2021 – are published.
This is a particularly interesting set of financial data for Kobalt, as it lays bare the company’s financial performance in fiscal year 2021. without Neighboring rights AWAL and Kobalt.
Kobalt is today divided into two defined operational divisions:
- (I) Kobalt Music Edition, which administers music publishing rights on behalf of clients, and provides asset management services to buyers of music catalogs (formerly Kobalt Capital); and
- (ii) AMRAa global music royalty collection company for songwriters and publishers.
In these two operating divisions alone, Kobalt Music Group’s total revenue (excluding asset management fees) for fiscal year 2021 was $519.4 million.
This represents an increase of 11% on a like-for-like basis compared to $465.9 million he posted the previous year.
Kobalt’s publishing division increased revenue in fiscal 2021 by 9.6% to $478.4 millionfrom $436.1 million in the previous year.
And AMRA’s annual revenue exceeded $100 million for the first time in fiscal 2021, reaching $109.8 million. It was by 40.2% compared to the previous year ($78.3 million).
Overall, in terms of gross inflows (including asset management fees), Kobalt claims to have generated $548 million in FY2021, up 15% YoY.
What has all this translated into in terms of profit?
Perhaps the most important statistic here: Kobalt Music Group’s profit from continuing operations (i.e. removing any contributions from AWAL and Kobalt Neighboring Rights) was $5.9 million during fiscal year 2021.
It was an improvement of – wait – $71.8 million compared to the result of the same operating divisions during the 2020 financial year, when they recorded a $65.9 million loss.
According to Kobalt, his company posted a EBITDA of $48.5 million ($44.0 million adjusted EBITDA) in fiscal 2021 – the first time in its history that it has recorded annual profitability.
Note: Kobalt’s latest financial statements reveal that AWAL and Kobalt Neighboring Rights combined posted a $15.17 million pre-tax loss (with revenue of approximately $150 million) for Kobalt in fiscal 2021.
Largely thanks to the sale of those two companies to Sony as part of that $430 million deal in May of last year, Kobalt ended June 2021 with $314.98 million cash at the bank.
“The past two years have been transformative for Kobalt,” said Laurent Hubert, CEO of Kobalt.
“Our financial success starts with our team supporting some of the best songwriters in the world. Year after year, Kobalt’s hard work and focus continues to be recognized within the industry.
“Across all genres, Kobalt has received awards such as ASCAP’s Independent Latin Publisher of the Year, BMI’s Gospel Publisher of the Year, and the Hip-Hop/R&B Publisher of the year of BMI, all of which are very high honours.”
“The past two years have been transformative for Kobalt.”
Laurent Hubert, Kobalt
The now-closed Kobalt Capital division was the investment adviser to two copyright buyout funds (carrying the money from third-party investors) that were both sold for big bucks in the past few years. past two years: the first of these funds, launched in 2011, sold to the Hipgnosis Songs Fund for $343 million at the end of 2020; the second fund, launched in 2017, was sold to KKR/the Hendel family for $1.1 billion in October last year.
In a note to shareholders in the 2021 fiscal year results, Kobalt Founder and Chairman Willard Ahdritz said, “As a technology leader and agent of change for the music industry, we are not resting on our laurels. In Act 1, we transformed the publishing industry with our global collection platform by introducing transparency, fairness and technology with Kobalt.
“In Act 2, we transformed the recording industry with AWAL with Music as a Service (MaaS) for emerging artists. It’s been a tough two years in the midst of a global pandemic, but through it all , Kobalt persevered and came out stronger than ever.
“With the strong growth of multi-jurisdictional music services like Spotify and Apple as well as new segments in health and fitness, I believe AMRA is indispensable in the industry, and this will be our biggest innovation ever. this day.”
Willard Ahdritz, Kobalt
“We exited our AWAL and Neighboring Rights businesses – successfully selling them to Sony – and exited Kobalt Music Capital with the sale of Fund I to Hipgnosis and Fund II to KKR and the Hendel family. Now a profitable and well-capitalized business, we are able to fully focus on doubling our award-winning publishing and digital society businesses.
“These milestones paved the way for our third act: eliminating friction and spillovers in the last mile of paying songwriters and rightsholders with AMRA, our global digital company. With the strong growth of multi-jurisdictional music services like Spotify and Apple as well as new segments in health and fitness, I believe AMRA is indispensable in the industry, and it will be our biggest innovation yet.
Writers signed to Kobalt Music Publishing found success last year with co-writes on The Weeknd’s hits “Blinding Lights” and “Save Your Tears” (both co-written by Max Martin), Doja Cat” Kiss Me More”, Karol G “Bichota”, Justin Bieber “Lonely” (co-written by Finneas) and “Peaches” (co-written by Andrew Watt), Kali Uchis “Telepatia” and many more.
Kobalt Music Publishing’s client list includes Andrew Watt, Finneas O’Connell, Ozuna, Karol G, Lorde, Phoebe Bridgers, Stevie Nicks, The Foo Fighters, Roddy Ricch, Gunna, Kali Uchis and many more.
According to Kobalt, AMRA processed a record $29 billion in music royalties (up 40% year-over-year) in fiscal year 2021, distributing nearly $200 million in digital royalties directly to songwriters and licensees of rights.
Kobalt added in a note to shareholders, “AMRA’s business model is also not impacted by the pandemic in the same way as the rest of the industry, as revenues are heavily skewed towards digital collections. Today, AMRA’s global rollout has reached every corner of the world outside of the United States and includes direct digital collections for China, Brazil, and Japan, and continues to grow.
Through 13 global offices, Kobalt serves over 700,000 songs, 30,000 songwriters and 500 publishers.The music industry around the world