It’s by no means a uninteresting week at Utopia Music.
A couple of days in the past, the Switzerland-headquartered music agency confirmed that it was shedding round 15% of its world workforce, totaling round 100 jobs.
That information arrived lower than six months after a earlier spherical of layoffs on the firm in November, which noticed 20% of its headcount – or round 230 positions – axed.
Now, the corporate is aiming to boost EUR €65 million ($72m) by way of a brand new shareholder possibility program.
That’s in response to a letter issued to Utopia shareholders on Friday (April 21), obtained by MBW. The corporate says that the brand new capital would fund its operations till it turns into worthwhile, which it initiatives to be in June 2024.
In complete, Utopia says it’s seeking to elevate €83 million ($91m) from this new spherical of exercise.
That features the €65 million in new share choices, plus “as much as a complete of €25 million” that has already been dedicated by Utopia’s “three largest shareholders via conversions of their shareholder loans and convertibles”.
(This €25m determine, says the agency, could cut back relying on how shut it will get, by way of the €65m provide, to elevating €83m in complete.)
Present shareholders are being given one possibility for each 4 shares they already personal. Shareholders can then select to transform these choices into shares, for €10 per share, earlier than the provide expires on Could 5.
In accordance with paperwork seen by MBW, Utopia plans, by way of the choices program, to dilute its present share construction (33.11 million shares) with a most of 7.5 million new shares.
Within the letter, Utopia founder and Govt Chairman, Mattias Hjelmsted, revealed that Utopia’s annual internet revenues in 2022 stood at €24 million on an adjusted professional forma foundation (i.e. omitting the turnover of not too long ago bought property equivalent to Sentric).
Utopia, wrote Hjelmsted, is focusing on €41 million in internet revenues in 2023, representing development of 71% year-on-year.
“On the similar time, we’re bettering our margins via scalable tech merchandise, which might be an necessary facet in our profitability journey,” he mentioned.
Hjelmsted informed shareholders that lately, Utopia has “deployed a ‘hyper development’ scaling technique supposed to utilize the then profitable market that strongly rewarded development, with out concentrate on instant profitability”.
He added that this technique “was extremely depending on new investments fuelling that development” and claimed additional that, “midway via that course of, the world modified dramatically and the funding surroundings grew to become very delicate to growth-focused (and not-yet-profitable) firms like Utopia”.
Continued Hjelmsted: “Whereas many firms continued to hope for the world to show higher, we made some robust choices, and we tailored.”
“We’re at the moment holding an inside fundraising spherical that displays the help of our present shareholders and can assist additional propel the corporate in the direction of profitability.”
Utopia, in an announcement to MBW
MBW reached out to Utopia immediately (April 24) for a remark in regards to the plans to boost new capital by way of the brand new choices program.
A spokesperson informed us: “Utopia has beforehand raised a number of profitable financing rounds and we’re grateful to have a powerful shareholder base that’s dedicated to the corporate and to its future.
“We’re at the moment holding an inside fundraising spherical that displays the help of our present shareholders and can assist additional propel the corporate in the direction of profitability.”
Utopia’s so-called “hyper-growth scaling technique” noticed the corporate go on a hiring and acquisition spree in 2021 and the start of 2022.
Amongst the businesses it purchased throughout that point have been Nashville-based monetary providers firm, Lyric Monetary and Quincy Jones-backed emotional information enrichment firm Musimap.
It additionally purchased UK warehouse, success, and distribution agency Cinram Novum; UK-based bodily and digital music distributor Correct Music Group; and Absolute Label Providers, one other UK-based distribution and providers supplier for impartial artists and file labels.
In December 2021 it acquired US-based music trade listing ROSTR and Austria-based music information analytics platform, ForTunes. In February final yr, Utopia acquired Liverpool-based music writer and publishing administration firm Sentric Music Group.
These latter two firms have since been divested by Utopia.
Imagine purchased Sentric from Utopia final month, only a yr after Utopia itself acquired the agency, whereas Utopia bought music trade listing and information platform, ROSTR, again to its founders in February.
In the meantime, Utopia is reportedly being sued by US music know-how firm SourceAudio, which is accusing Utopia of reneging on an agreed acquisition deal.
Commenting on the post-Sentric and ROSTR period at Utopia, Hjelmsted informed shareholders on Friday that “Utopia’s new, extra centered technique will heart on the core of Utopia, particularly the Utopia Platform”.
He added: “Going ahead, Utopia will concentrate on scalable high-margin merchandise that drive income and maximize shareholder worth – the way in which we all the time supposed.”
Commenting on the latest layoffs, he wrote: “We’ve lowered prices via two rounds of needed rightsizing (20% in Nov. 2022 and an extra 15% in Apr. 2023), and we are actually on a path in the direction of profitability and sustainable development.
“Merely put: stronger income streams at a decrease value. To additional strengthen our firm, we made adjustments to our administration group earlier this yr to have individuals with extra expertise commercializing merchandise and constructing relationships with the trade.”
Excessive-level exec departures at Utopia this yr included the exit of the agency’s long-time CEO, Markku Mäkeläinen, who left as a part of a administration shakeup in January, which noticed Hjelmstedt assume duty for the day-to-day working of the corporate.
Following the information of Sentric’s acquisition by Imagine, we discovered that former Downtown government Roberto Neri, who joined Utopia as its COO in 2021, and was named as the brand new CEO of Utopia’s ‘Music Providers’ division in January, has left Utopia to grow to be CEO of the worldwide publishing division of Imagine.
Hjelmstedt informed shareholders within the letter final week that “in response to the monetary forecast set by the brand new administration group, we now want some extra funds earlier than we attain profitability”.
“We’ve the merchandise, we have now the gross sales pipeline, and we have now the group. We’ve, actually, completed nearly all of the work essential to take us to profitability. We now simply want the required funding to see this plan via.”
He added: “Earlier than turning to exterior traders we have now determined to provide you, our shareholders, free short-term choices that may be transformed to shares on the worth of €10 per share (valued at €50 within the pre-C spherical).
“Via this strategy, you get to learn from the exhausting work we’ve completed in these previous months and cut back the chance related to attempting to boost funds via a priced spherical in an unstable market.”
Amongst Utopia’s merchandise are its Observe’n’Declare software, which Hjelmstedt defined within the letter “identifies missed income alternatives on YouTube“.
Utopia’s Improve software, in the meantime, goals to “assist enhance music information”, wrote Hjelmstedt, including that “on the core of every little thing, we have now the Utopia Platform – a novel information software that collects information, types information, and pays royalties”.
He claims within the letter that “Via our distribution firms we already characterize 97% of all UK labels, together with all of the majors.”
“With the continued help of our shareholders, we will strongly place Utopia to take the corporate into profitability and proceed scaling as much as convey most shareholder worth.”
Matias Hjelmstedt
Added Hjelmstedt within the shareholder letter: “With the continued help of our shareholders, we will strongly place Utopia to take the corporate into profitability and proceed scaling as much as convey most shareholder worth.
“It’s Utopia’s board of administrators’ robust perception that this elevate, this chance, ought to be awarded to our shareholders who already imagine in Utopia.
“I hope that you just all see this for the chance that it’s and hope on your continued help via this selection program in order that we will concentrate on bringing nice worth to you, our shareholders, sooner or later.”
This information follows a report from information outlet Breakit final month, which revealed that Utopia’s Swedish firm is carrying a considerable unpaid tax debt, as staff within the area claimed their pension premiums (and in a single case, even their wage) have gone unpaid.
MBW requested Utopia for a remark in regards to the state of affairs with its firm and staff in Sweden on the time.
A spokesperson informed us on March 30: “Utopia has grown extraordinarily quick in two years. Our Swedish entity alone grew 5x in staff, which is one out of a number of of our growth places of work.
“We dealt with greater than €300 million final yr, and proceed to develop very quick. Now we’re adapting our group to market shifts to make sure that we will proceed to evolve our enterprise in a sustainable method.
“All funds talked about within the put up have already been recognized and are being resolved. We’ve arrange processes and buildings to make sure that this received’t occur once more.”Music Enterprise Worldwide
