Yahoo Finance
Filing
May. 28, 2021
Dec. 31, 2020 Data
Price: $0.26. Shares: 60m, Cap: $16m.
Dec. 31, 2020 Data
Price: $0.26. Shares: 60m, Cap: $16m.
1.Business
(1) History
(1) History
The company was founded by John Heaven and Cliff Hunt in 1999 and originally it was called Musicrypt. Its main product is called Digital Media Distribution System (DMDS), a system to distribute media via the Internet as a replacement for the CD delivery. John was the CEO and Cliff was the COO of the company. In 2003, they took the company public and raised around $1.7m at $0.75/share.
The company revenue is zero at the time of the IPO. It slowly grew revenue to $800k at 2010. At the same time, it had occurred over $20m in losses which mostly founded by issuing new shares. John Heaven left the company at late 2010.
In 2007, Destiny Media(DSY.V), its main competitor from the US filed a $25m lawsuit with YOO for sending false information to their Canadian customers. Later the company filed a $15m counter lawsuit with DSY for infringing its patent. In 2011, they settled the lawsuits by YOO paying $600k to DSY.
Since sometime in 2008, the company was entering contend delivery for awards events such as Grammy Award, etc. It was very small at the beginning. Gradually, it became been quite significant.
Since 2011, the company was under new management briefly. At the same time, it started a new segment which is aiming to deliver audio&video content for advertising. In 2012, it hired Gary Moss, a long-time board member as the new CEO.
From 2011 to 2016, the company was able to grow revenue from $1.5m to over $5m. Mainly from the Advertising and the Award Management while the music delivery was flat. It still generated over $2m in losses each year but reduced to $800k in 2016.
In 2017, Grant Schuetrumpf joined the company as the leader of the advertisement segment. Coincident with his presents, the company's ad revenue was doubled from around 600k/quarter to around 1.2k/quarter since Q1 2017. As a result, in 2017, total revenue grew to over $7.5m. However, it stayed at $7.5m to $8m until now. Since 2017, it was able to stay profitable with around $500k in real income each year.
In late 2020, Gary Moss resigned from the CEO role and was replaced by Grant. The company paid him around $600k as severance payment in Q4 2020.
In May 2021, the company acquired Digital Media Services Inc(DMS) for USD$5.5m. Paid $2.5m on close and the rest will be paid in 3 years if DMS's revenue reaches a certain milestone. DMS was generating around USD$6m in revenue previous to the pandemic. Now it is generating around US$4m in revenue. The company did this mainly by borrowing from the National Bank Of Canada.
(2) Major business
Its major software platform is called DMDS, a digital secure delivery for media files. It was used in all across its business segments:
1. Advertising
The major growth segment generates close to $5m in revenue which counts 60% of its revenue. It seems still to have more potential in this segment. With the new DMS acquisition, ad revenue could be doubled in the near future.
2. Music delivery
Including both audio and video, this is the original business that hasn't grow much for the last 5 years. It is staggered at around $1.7m in revenue.
3. Award management
Management of the content delivery for award events etc. It hasn't grown that much in the last 5 years at close to $1.5m in revenue.
(3) Industry
Destiny Media(DSY.V): This is its major competitor for years. DSY was exclusively focused on music delivery. It has around 2 times YOO's revenue.
Destiny Media(DSY.V): This is its major competitor for years. DSY was exclusively focused on music delivery. It has around 2 times YOO's revenue.
2. Management
Grant Schuetrumpf: He is an Australian. Previously he has worked for Omnilab Media from 2006 to 2014 in Sydney. In 2014, he moved to New York to in charge of Dubsat(North America&EU), a subsidiary of Omnilab. What Dubsat was doing is quite similar to Yangaroo. In late 2016, Dubsat was sold to Adstream, a UK company that manages the full lifecycle of ads management from creation to analytics. In 2017, he joined Yangaroo as the president of the advertising segment. In late 2020, he was promoted to CEO to replace Gary Moss.
Shepard Boone: SVP of Ingalls and Snyder, a New York-based investment firm that manages around $6.7B in assets. Since 2010, Ingalls and Snyder started to accumulated shares of YOO. Boones was elected to YOO's board in 2019. Currently, he is the largest shareholder of the company.
Gary Moss: He was on Yangaroo's board since 2004. He was YOO's CEO from 2012 to 2020.
3. Financial data
Notes: Debt and cash
Currently, it has 1.9m in cash and no debt. However, because of the new acquisition, it will carry around $3m debt.
Currently, it has 1.9m in cash and no debt. However, because of the new acquisition, it will carry around $3m debt.
Notes 2: Share information
Ingalls and Snyder: Currently, it holds 15.5m shares, around 25%, of which 9.8m shares are under Boone's name.
Gerry Hurlow: He was on YOO's board from 2015 to 2019. In 2015, he holds 4.5m shares, close to 10%. He held 6.2m shares when he left YOO's board. Currently, he is still holding 6m shares.
Anthony Miller: Current chairman. He holds 2.3m shares.
Around 5.5m options outstanding priced lower than $0.185.
In total, insiders hold around 40% if Gerry Hurlow is counted.
4. Valuation and comments
(1) Although 2020 is a good year for the company. Its profit increase is mainly from the government. The real earning of the company since 2017 is around 0.5m per year. The current market cap is around 15m which is not cheap at all.
(1) Although 2020 is a good year for the company. Its profit increase is mainly from the government. The real earning of the company since 2017 is around 0.5m per year. The current market cap is around 15m which is not cheap at all.
(2) It does have some potential, especially in the Advertising segment. If the new acquisition worked out, it could be very good.
5. Risk
(1) The company had a very messy history in the past. It trades its stock like trash and the board changes quite often. The management is paid pretty generously. However, the latest controlling board member and the new CEO seem better. Sill needs some time to tell.
(1) The company had a very messy history in the past. It trades its stock like trash and the board changes quite often. The management is paid pretty generously. However, the latest controlling board member and the new CEO seem better. Sill needs some time to tell.
(2) The is not much organic growth since 2017.
(3) The new acquisition might not work as expected and could drag down the profit.
6. Conclusion
The company is doing well and has some potential. However, the acquisition might not work. The current price is not cheap.
7.Links
