Auddia Inc., an AI platform for audio identification and classification, signs a definitive purchase agreement to acquire Radio FM (RFM), an AM/FM streaming app. Closing the acquisition remains subject to financing the acquisition cost. In early January, 2024, Google selected the Radio FM streaming app as an Editor’s Choice app in the Play Store, making it only the third app in the Radio category to get an Editor’s Choice badge alongside iHeart and Pandora.

Auddia CEO Michael Lawless said, “We are seeing strong subscription conversion numbers off the faidr free tier which is solidifying our confidence that a large number of AM/FM streaming listeners are willing to pay a subscription to avoid commercials while listening to their favorite stations. The challenge now becomes how to grow the free tier user base in the most cost-efficient manner possible to increase our pool of potential subscribers.”

He added, “The Radio FM acquisition allows us to acquire 4.6 million retained users at a customer acquisition cost (CAC) that is approximately 70% lower than the cost to acquire a free tier user through our direct marketing methods. This is obviously a far more economical and faster way to build revenue, reduce burn, drive subscriptions, and achieve sustainability. We look forward to engaging with investors to secure the financing needed to close the transaction.”

The Radio FM asset consists of $2.3 million in 2023 revenue with $1.4 million in related operating cash flow and represents 4.6 million monthly active users on the free tier. The acquisition is priced at $13 million cash at closing with an additional $2 million in cash paid six months after closing assuming certain performance milestones are maintained.

Auddia continues to advance discussions with the other two previously disclosed acquisition targets under LOI and will provide an update on their status in the coming days.