As one of the fastest-growing companies in Europe, e-book distribution platform Legimi saw a significant increase in user numbers and revenues in the past two years. Mikołaj Małaczyński, CEO, speaks with Acuris Capital Intelligence about the impact of the pandemic, the war in Ukraine and media consumption on the company’s ambitions. 

By Joanna Socha

Q. What is your operational outlook for 2022?

We are an e-book distribution platform and we play a part in the subscription economy, which gained momentum during the pandemic. Our clients use e-books and audiobooks on smartphones, tablets and e-readers. We are now active mainly in the Polish market, where we are a leader in the e-book category, but we are also expanding to German-speaking countries. We have already set up a subsidiary in Germany and provide our content to users in the DACH region via a freemium model. Our plan going forward and a goal for this year is to increase conversion to the premium model.

Q. What risks do you see to this plan? 

First, we see growth in subscription-based services, which means customers need to decide which services are a priority for them. We are not worrying about the competition, but rather about how much the market is saturated with subscription-based businesses. Still, when it comes to books, we are early in the development of this segment.

Q. You mentioned international expansion—how are you planning to finance it? 

We have financial leverage in the form of bonds. We intend to transfer the bonds to the bank in the form of an investment bank loan. We have about zł6-8 million worth of debt; we would like to stay around these numbers. We are also listed on the NewConnect stock exchange in Warsaw. This means we can issue new shares when needed but, at this point, I think it’s the least preferred scenario. We see many other options—particularly debt options that we could use—but our primary strategy is to reinvest profits.

We work with an IR agency and advisers, and they support us, especially in debt financing. I think the best solution for us at this moment is to tame shareholders’ appetite for dividends and sacrifice profitability for the sake of further growth. We also apply for various government and EU grants.

Q. I suspect that the pandemic positively influenced Legimi’s growth, but how is it going now? 

At the very start of the pandemic, we saw significant interest in our apps. Audiobooks for children, for instance, doubled in popularity. Even though electronic books have a relatively high entry barrier, as readers of the physical copies are convinced of their superiority over e-books, we still saw growing acceptance. Since the beginning of 2020, we doubled our user numbers and these figures are continuing to grow despite the lifting of many restrictions. The whole sector is growing.

Q. What are you most proud of as the year progresses? 

We are starting to see the impact that our company has on the whole sector. We counted our yearly carbon footprint and realised that the CO₂ required to produce enough paper for our readers had they not chosen e-books might be equivalent to around 10,000 cars driving in city traffic for an entire year.

But our business is not just benefiting the environment. We are providing younger generations with a substitute for other tablet-based entertainment, which has been crucial during the pandemic and is so important right now during the war in Ukraine.

We are focusing on supporting refugees through books in both the Polish and Ukrainian languages. Ukrainian students may struggle when adjusting to a new country. We not only provide them written materials in their language, but this also gives them a moment of rest amid all the anxiety. We look not just at our business needs—we want to listen to society’s needs. That’s why we work closely with public libraries and plan to support them technologically.

A bit of background: Mikołaj Małaczyński is the CEO and co-founder of Legimi, Poland’s first e-book lending platform. Launched in 2009, the platform’s subscription model provides access to about 80,000 titles. In March 2022, the company was included on the FT 1000 list of Europe’s fastest-growing companies.