Mdundo, the Africa-focused music streaming service, has continued to demonstrate strong growth in its user base and paid subscriptions despite grappling with revenue challenges linked to African currency fluctuations. According to its fiscal Q1 2024/25 report (calendar Q3), Mdundo now boasts 37.8 million monthly active users (MAUs), reflecting a 29.5% year-over-year increase. This surge in user numbers highlights the platform’s consistent upward trajectory as it inches closer to its goal of reaching 40 million MAUs by the end of the 2024/25 fiscal year, which runs from July 1 to June 30.
However, Mdundo’s top-line performance was impacted by macroeconomic conditions, with total revenue dropping by 5.3% to DKK 11.93 million (USD $1.74 million), down from DKK 12.59 million in the previous fiscal year. The company attributed this decline to the depreciation of African currencies against the Danish krone. Nonetheless, in local currency terms, Mdundo’s revenue actually grew by 10%, demonstrating underlying business growth despite currency headwinds.
Crucially, Mdundo reported a 112% surge in revenue from paid subscriptions in local currencies, underscoring the effectiveness of its strategic pivot towards monetising its user base. Paid subscriptions now make up 68% of the company’s total revenue, a significant leap from 35% in the prior year. In Danish krone terms, subscription revenue rose by 62% year-over-year, helping to offset a sharp 45% decline in advertising revenue. The drop in advertising income was attributed to what the company called “delayed and generally unsatisfactory execution” of its sales strategy.
To bolster its subscription model, Mdundo has been aggressively expanding its network of partnerships with telecom operators across Africa. These partnerships allow users to subscribe to Mdundo via mobile billing, a crucial step given the low penetration of payment cards in many African markets. The company recently signed a major partnership with Globacom Nigeria, which boasts 61 million telecom customers, and hinted at further deals in the pipeline, with at least one additional telecom partner expected to be announced soon. Mdundo has already established agreements with other major telecom players such as Vodacom, MTN, Airtel, and Safaricom.
In terms of profitability, Mdundo reported a narrowing of its EBITDA loss, which fell to DKK -6.4 million from DKK -7.7 million in the previous fiscal year. The company expects further improvement in the 2024/25 fiscal year, forecasting EBITDA losses to reduce to between DKK -4 million and DKK -5 million. Mdundo is also projecting a notable increase in revenue, aiming for DKK 15-17 million ($2.19-2.48 million) by the end of the fiscal year.
Mdundo’s focus on telecom partnerships is key to its strategy of growing paid subscriptions and diversifying revenue streams. By integrating with major mobile networks, the platform enables users to pay for premium services through their phone bills, eliminating the need for credit cards, which are less common in many African markets. This strategy positions Mdundo to continue scaling its paid user base while reducing its reliance on advertising revenue.
