The continued devaluation of the naira has negatively impacted local and international businesses operating in the country, including Mdundo, an Africa-focused music streaming service.
In its third-quarter fiscal report, the Kenyan music startup revealed that its revenues fell short of forecasts due to the naira crisis.
Nigeria is one of Mdundo’s key markets, along with Kenya, Ghana, Tanzania, and South Africa which all accounted for two-thirds of the company’s monthly active users last year. The startup which is listed on the Danish stock exchange and reports earnings in the Danish Kroner, said it currently targets revenue of DKK 12 million to 14 million ($1.71 million to $1.99 million) for the fiscal year 2023-2024, which ends June 30, 2024.
According to the reports, this is below its forecast from mid-2023, when the company expected revenue for 2023-2024 to come in at DKK 17 million to 21 million ($2.42 million to $2.99 million).
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“Subscription and advertising revenue growth measured in DKK is impacted by a 38 percent decline in the Nigerian naira value from January to March 2024,” the company said in its report for fiscal Q3, which is the first quarter of 2024.
The first time the local currency closed at over N1,000 against the greenback in 2024 was on January 3, 2024, when it tumbled to N1,035.12/$ at the Nigerian Autonomous Foreign Exchange Market. In March the naira dropped to an all-time low of N1,615)/$ but currently exchanges at around N1,245.
Despite this, Mdundo, in its reports said its revenue in Nigeria keeps growing when measured in naira.
“Furthermore, the naira’s depreciation reduces operating costs when measured in DKK, leading to improved Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) guidance for 2023/24,” the company stated.
“With Nigeria’s sizable market and vibrant music industry, Mdundo sees long-term potential. Management closely monitors the evolving situation in Nigeria,” the report stated.
The company also reported that its monthly active users (MAUs) grew to 34.5 million at the end of March 2024. It said it expects to hit 35 million by the end of the fiscal year in June and 50 million MAUs in 2025.
