Auddia Inc. believes many AM/FM streaming listeners are willing to pay to listen to their favorite stations without commercials. To advance that goal, it plans to acquire streaming app Radio FM to grow its user base.
Auddia is an AI platform for audio identification and classification; its stock trades on NASDAQ, though it has just executed a reverse stock split hoping to avoid delisting.
It also owns the audio app faidr, which allows listeners the ability to listen to any AM/FM streamer with added personalized content and no commercials, as well as podcasts with an interactive digital feed.
Michael Lawless, CEO of Auddia, said in the announcement, “We are seeing strong subscription conversion numbers off the faidr free tier, which is solidifying our confidence that a large number of AM/FM streaming listeners are willing to pay a subscription to avoid commercials while listening to their favorite stations.”
He said Auddia’s challenge now is how to grow its free-tier user base in a cost-efficient manner to increase its pool of potential subscribers.
“The Radio FM acquisition allows us to acquire 4.6 million retained users at a customer acquisition cost that is approximately 70% lower than the cost to acquire a free tier user through our direct marketing methods.” He said this is a more economical and faster way to “build revenue, reduce burn, drive subscriptions, and achieve sustainability.”
Completion of the deal is subject to financing. The acquisition is priced at $13 million cash with an additional $2 million paid in six months if certain performance milestones are met.
Auddia said Radio FM has $2.3 million in 2023 revenue and represents 4.6 million monthly active users on its free tier. It said that in January, Google selected Radio FM as an Editor’s Choice app in its Play Store, only the third app in the Radio category to get that badge, after iHeart and Pandora.
The company has just completed a 1-for-25 reverse stock split to avoid being delisted on NASDAQ. In December it named a new CFO, John Mahoney, to succeed Tim Ackermann, who resigned last summer.
Auddia has said it has letters of intent for two other possible pending acquisitions “and will provide an update on their status in the coming days.”
