Abu Dhabi-based Anghami records 23% jump in Q1 revenue as it strives to cut losses

The music streaming company’s full-year revenue reached $35.5m, with premium subscribers rising to 1.4 million

Abu Dhabi-based music streaming service Anghami was the first regional technology company to list shares on Nasdaq in New York, earlier this year. Chris Whiteoak / The National

Anghami, the music streaming rival to Spotify in the Arab world, reported an annual 23 per cent rise in first-quarter revenue, as the company strives to cut losses incurred last year.

Revenue for the three-month period to the end of March climbed to $9.3 million, driven by a rise in subscriber numbers, Abu Dhabi-based Anghami said in a statement on Wednesday.

Subscription revenue for the reporting period increased 26 per cent to $7.3m, with average revenue per unit jumping 10 per cent to $1.87.

Anghami's monthly premium subscribers rose 13 per cent to more than 1.5 million, while the number of paid monthly subscribers surged 43 per cent to more than 1.2 million, compared to the same three-month period for 2021.

“Total number of active users increased by 20 per cent year-over-year to 18.5 million in Q1 2022,” Anghami said. “Growth of users was driven by increased localisation … in Arabic and original content, an improved recommendation engine, unique social features and special activations in several countries.”

Revenue in 2021 climbed 16 per cent annually to $35.5m, on the back of its growing subscriber base.

The company’s premium subscribers rose 2 per cent year-on-year to 1.4 million at the end of 2021, driven by improved customer retention, the introduction of new subscription plans and smart billing enhancements, Nasdaq-listed Anghami said.

“2021 was a very special year for us, with many significant milestones leading up to our listing on Nasdaq, paving the way to achieve our growth goals that started to flourish in Q1 2022,” Eddy Maroun, co-founder and chief executive of Anghami, said.

Anghami, which listed its shares in February, posted an operating loss of $13.6m in 2021, as the company incurred “significant costs” to licence content and continues to pay royalties to music labels, publishers and other copyright owners for such content, it said in a US Securities and Exchange Commission filing.

Increased competition and the maturation of business might impact Anghami’s revenue growth rate in future, warned the company, which distributes its application through smartphone and tablet app download stores managed by Amazon, Apple, Google and Microsoft, among others.

“Certain of these companies are now, and others may in the future, become our competitors, and could stop allowing or supporting access to our service through their products, could allow access for us only at an unsustainable cost, or could make changes to the terms of access in order to make our service less desirable or harder to access, for competitive reasons,” Anghami said in the filing.

“Our ability to increase the number of users will depend, in part, on our ability to distribute our service, which may be affected by third-party interference beyond our control. The use of our service depends on the ability of our users to access the internet, our website and the Anghami app.

“Enterprises or professional organisations, including government agencies, could block access to the internet, our website, and the Anghami application for a number of reasons such as security or confidentiality concerns or regulatory reasons that could adversely impact our user base,” it added.

In 2021, Anghami partnered with Amazon Prime to offer its services to Prime members in the UAE and Saudi Arabia — and with Amazon Alexa to create an enhanced interactive experience for Amazon Echo device users.

The company said its advertising revenue grew 70 per cent to $9.8m last year, with advertising gross margin growing from 38 per cent in 2020 to 53 per cent in 2021.

“We expect ad-supported segment revenues to recover driven by a return to advertising spending by leading brands. In addition, we believe a strong growth in ads will come in the form of branded content and direct ads rather than the traditional agency model,” Anghami said in the SEC filing.

With the addition of content from Saudi Arabian entertainment company Rotana, exclusive material from Egyptian superstar Amr Diab — the most streamed Middle Eastern artist — and the partnerships with Sony and Amazon, Anghami expects to tap into new market segments that were not previously reachable, it added.

“This will help us grow our base and ultimately continue growing our premium subscribers. The increase in premium subscribers will result in growth of subscription revenues.”

Anghami, which has expanded its partnerships with 41 telecom operators across the region, established its global base and research and development centre in Abu Dhabi Global Market last year, as part of the Abu Dhabi Investment Office's $545m innovation programme partnership.

Adio has provided Anghami with financial and non-financial incentives to set up at ADGM, allowing it access to a competitive talent pool and established infrastructure.

The company remains committed to launching more innovative offerings, expanding its global reach and delivering value to customers.

“We are confident that this positive development will continue through 2022 as we benefit from our growing partnerships and offerings,” F Jacob Cherian, co-chief executive of Anghami, said.