Billion-dollar company Shazam is finally turning a profit CREDIT: SHAZAM
Music discovery app Shazam has finally reached profitability after 15 years and a billion-dollar valuation.
One of the UK's few tech "unicorns" - startups worth $1bn (£770m), Shazam announced the financial milestone as it heralded a billion downloads to date, 500 million of which happened in the last two years.
Expanding its remit beyond recorded music into image-recognition, marketing campaigns and augmented reality has helped Shazam achieve "double-digit revenue growth". On Thursday, it said was profitable when it came to EBITDA, a measure of profitability that excludes taxes and depreciation in assets.
"We have actually been profitable in the past," said Andrew Fisher, executive chairman of Shazam. But the company went "back into loss-making" to expand its remit and "develop a new paradigm for the advertising industry".
Capitalising on the vast number of users that were "Shazam-ing" - looking up on the app - songs in adverts, the company partnered with advertisers such as Nike and Coca Cola to offer more search results than just song titles.
"We still provide the name of the song in the advert, but then we go on to provide a richer experience," said Mr Fisher. "We've been able to provide immediate responses at the point of inspiration."
For example, if a user searches for a song used in a car insurance advert they will see the name of the track, as well as being prompted by Shazam to call said insurer and get a quote.
The company has also introduced image-recognition technology that means users can scan visual cues, such as a film poster on the side of a bus, and be taken straight to a ticket booking system.
"As we've matured these areas of the business it has helped us get back to profitability," said Mr Fisher.
Shazam's Andrew Fisher
If the company's download numbers are anything to go by, it doesn't appear to have isolated its 20m daily users by moving away from its music look-up roots.
"It took us almost 10 years to reach 500m downloads," said Mr Fisher. "It took just two years to reach 1bn, so in the last 24 months we've doubled our downloads."
Shazam is now setting its sights on emerging markets, including Asia, Africa and the Middle East and will next week launch a smaller version of its mobile app that works with slower connection speeds.
Separately, music streaming service Spotify was reported to be in takeover talks with its $700m rival Soundcloud.
Soundcloud, which is known as a free audio upload service, launched a subscription based streaming service to rival the likes of Spotify and Apple Music earlier this year.
Spotify boasts 40m paying subscribers and revenues of €1.95bn (£1.5bn), but is yet to make a profit.