(UPDATED) Digital distributor The Orchard ((NASDAQ: ORCD) today reported financial results for the fourth quarter and year ending December 31, 2008. The results include both the merger with the Digital Music Group in November and the acquisition of TVT Records.
For the full year, revenues doubled to $57.4 million from $28.5 million in '07. This compares to overall digital music industry growth in 2008 of approximately 25% as reported by the IFPI. Net loss for 2008 was $2.3 million, compared with a loss of $7.6 million in '07. During the full year 2008, about 3% of revenue was derived from the TVT.
WHERE THE MONEY CAME FROM
Combined revenue from digital downloads and subscriptions comprised 78% of revenue in both 2008 and 2007. Approximately 11% of 2008 revenue was derived from sales to mobile devices, as compared to 10% in '07. iTunes represented 55% of total revenue in 2008 compared to 54% in '07.
At the end of last year, the company had approximately 1.3 million tracks available for sale, an increase of 27% from '07. During the fourth quarter of 2008, there were approximately 15.2 million paid downloads from The Orchard's catalog, an increase of 79% compared to the corresponding period in '07.
MORE THAN A COMMODITY BUSINESS
Commenting on the 2008 results, Greg Scholl, President and CEO of The Orchard said, "Despite a very challenging macro-economic environment during the second half of 2008, The Orchard has again driven strong revenue growth and continues to outpace the industry substantially. And, for the second consecutive quarter, we have generated positive EBITDA and driven positive cashflow that we can re-invest into our growth."
"We did so while expanding our gross margin over the course of the year, through smart acquisitions and our strategy of being a value-added media services company and not simply a commoditized provider of technology services forced to compete primarily on price. We intend to increase our focus on cost management during 2009 while still achieving robust revenue growth and protecting our sector-leading gross margins to build value for our stockholders."