7digital 'well-positioned' to weather Covid-19

Digital music solutions group 7digital said on Monday that it was "well-positioned" to handle the Covid-19 pandemic, despite noting that several new contracts and renewals expected to be signed in the second quarter would now be pushed out until later in the year.

7digital said it had started 2020 strongly, with contract renewals, new contracts signed, and a healthy pipeline; however, as a result of Covid-19, it now expects certain new contracts and renewals to shift into the third and fourth quarters of the year.

In response, the AIM-listed company said it had implemented a number of cost-saving measures to support the liquidity and financial position of the business - including organisational restructuring and securing a short-term rent concession on its leased property. The measures were expected to reduce monthly running costs and generate in-year savings of approximately £750,000.

As far as the group's previous guidance on mid-year profitability was concerned, 7digital said it now expects to achieve operational profitability during the second half of the year.

Chief executive Paul Langworthy said: "We have acted quickly to implement measures to protect our liquidity during the crisis and we are proud of the response of our employees. We are also encouraged that the Company has not lost any customers during this period and has continued to win new business.

"7digital is well-positioned to benefit and grow from incumbents and new entertainment formats that would leverage music to drive loyalty in their customer base. This strengthens the board's confidence that the Company is well-positioned to accelerate growth when normal trading resumes."

As of 1100 BST, 7digital shares were up 6% at 0.21p.