Acast (ACAST): North American Inflection Point Drives Profitability Turnaround

Idea note

This is an Idea note; It’s a collection of early signals – companies mentioned in fund letters, blogs, or by sharp investors online. Not a full pitch, just a starting point for ideas that might be worth a more in-depth look.

Acast: North American Inflection Point Drives Profitability Turnaround

Idea source: Protean

Acast AB (ACAST:STO) - Swedish podcast technology platform providing hosting, distribution, and advertising solutions. Listed on Nasdaq Stockholm with SEK 2.9bn market cap

Ticker: ACAST | Timeframe: 12-18 months | 🚅 Financial momentum | Lind ownership: No

Overview

Acast operates as a leading podcast technology platform serving over 140,000 shows and generating more than 1 billion quarterly listens across 3,300+ advertisers. The company’s business model centers on monetizing podcast content through programmatic advertising, with particular strength in the rapidly growing North American market where podcast advertising spend continues to outpace traditional media.

• North American momentum: 65% Q1 growth with positive contribution profit versus losses in prior year, indicating successful market penetration.

• Operational leverage: 31% increase in Average Revenue Per Listen (ARPL) to…

Overview

Acast operates as a leading podcast technology platform serving over 140,000 shows and generating more than 1 billion quarterly listens across 3,300+ advertisers. The company’s business model centers on monetizing podcast content through programmatic advertising, with particular strength in the rapidly growing North American market where podcast advertising spend continues to outpace traditional media.

• North American momentum: 65% Q1 growth with positive contribution profit versus losses in prior year, indicating successful market penetration.

• Operational leverage: 31% increase in Average Revenue Per Listen (ARPL) to SEK 0.48 demonstrates improving monetization efficiency.

• Clear path to profitability: Adjusted EBITDA margin improvement of 300bp year-over-year with management targeting 3-5% margins for full-year 2025.

Latest development

• Strategic partnerships expanding: Announced exclusive ad sales partnership with The Athletic in April 2025, adding 35+ high-quality sports podcasts with 100+ million annual listens.

• Updated financial targets: Management announced conservative 15% organic growth CAGR target for 2025-2028, down from previous 40-45% target, signaling focus on profitable growth.

Financials

• Strong Q1 2025 performance: Net sales grew 30% to SEK 535.4m with 26% organic growth, while operating cash flow turned positive at SEK 29m versus -SEK 15.5m prior year.

• Approaching profitability: Adjusted EBITDA loss narrowed to SEK 3.3m (-1% margin) from SEK 15.1m (-4% margin) in Q1 2024, with management targeting positive cash flow and 3-5% EBITDA margins for full-year 2025.

Valuation

• Reasonably priced: Trading at 1.0x EV/S NTM, right at the one-year median. The price expectations do not seem aggressive given the underlying improvements in the business.

• Re-rating potential: As the company achieves sustained profitability and demonstrates the durability of its North American success, multiple expansion from current levels appears likely given the scalable, asset-light business model with strong competitive positioning. The key is to understand long-term profits margins and how long the growth runway is.

Our view

Acast profitability inflection and growth momentum warrant a deeper look. The key is to understand long-term profit levels to create a reasonable assumption of future valuation.

The current multiple valuation (EV/S) appears neither to be at a high nor a low point, despite growth acceleration. This might create an interesting setup. However, for us, a profit or cash flow valuation is what we use, so to gauge the price in relation to value, more in-depth research would be necessary.

1YR price performance

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