TOP IDEAS: Revenues and profits are on track to rise
as Destiny Media Technologies Inc. (TSXV: DSY) secures a bigger deal with
Universal Music and other labels for use of Play MPE, a SaaS service for
securely distributing content in the music industry.
share price accumulation target of $0.35 for Destiny Media Technologies Inc.
was initially reached on December 3, 2018. For the record, we do not revise
share price targets for our Investorfile Top Ideas - Small Cap Value Stocks. We
have positioned our blog to be one of the first providers of a pragmatic
perspective of a small cap company stock's potential worth, where there may be
uncovered value that has been largely overlooked by the investment community
Media Technologies Inc. (TSXV: DSY – C$0.32) is already reporting consistent revenue growth and profits. But the
recent deal with Universal Music and interest from other music labels are
strong indicators that the best growth is yet to come.
Destiny Media Technologies is the
provider of Play MPE, a cloud-based enterprise Software-as-a-Service (SaaS)
used by the recording industry for promoting and distributing broadcast-quality
audio, video, images, promotional information and other digital content
securely through the internet. All exported songs are marked in real time with
Destiny’s watermark technology, which has received numerous US and global
Company describes its Play MPE technology as a software system for the music
industry to transfer pre-release broadcast-quality music, radio shows and music
videos to trusted recipients such as radio stations, media reviewers, VIPs,
DJs, film and TV personnel, sports stadiums and retailers.
Fiscal 2018 was
a good year for the operations of Destiny Media Technologies. The
Company reported higher revenues at US$3.6 million, EBITDA that almost doubled
at US$812K and net income of $US656K, which was up 127% from the prior year.
The Company earned US$0.01 per share for the year.
Destiny Media Technologies entered fiscal 2019 with
strong momentum as well by reporting good results in its first quarter with
adjusted EBITDA of US$246K and net income of US$220K. At the end of fiscal
first quarter, the Company maintained a strong working capital position of
US$2.5 million, made up mostly of cash and near-cash investments. Destiny Media
Technologies remains debt-free. The Company reports all of its financial
results in US
Based on recent
financial results, the Company has a very sound foundation. But the growth
story for Destiny Media Technologies is
just beginning and small cap investors should start paying more attention.
In July of last
year, Destiny Media Technologies released a major upgrade (Version 8) for its Play MPE encoding software.
The upgraded software featured many significant
improvements and thus its usage is being embraced by the music industry; so
much so that the Company just renewed a multi-year master agreement with
Universal Music (a major label) that will generate a 14% increase in recurring
monthly fees having commenced on January 1, 2019. Universal Music labels to
date account for about 40% of the Company’s total annual revenues.
Destiny Media’s Management had stated (during its
fiscal 2019 Q1 investor conference call) that its Play MPE business is seeing
increased interest in many market segments and among many different music
labels, including UMG, Atlantic and Warner, all which have commenced new usage
of the latest version of Play MPE software. Thus, the Company is forecasting a
long-term sustainable pattern of increasing revenues beginning in its third
quarter of fiscal 2019. Management has said that it expects the new agreement
with Universal Music to increase revenue growth in fiscal 2019 and that the
increase in revenues will outpace the increase in costs so that, in the
immediate future, profitability will increase, too. This statement is music to
Investorfile had initiated coverage on Destiny
Media Technologies and appointed the stock to its list of Top Ideas just two
months ago (See: Destiny
Media Technologies is a value buy that is growing and already profitable).
Since then, the daily closing price of the Company’s stock had peaked at C$0.36
but has settled to around C$0.30, and up 50% in value from our initial recommendation
date based on the last close.
Since we initiated coverage
on Destiny Media Technologies on November 11th of last year, two sets of
financial results have been released (Fiscal 2018 and Fiscal 2019 Q1) and the
public disclosure of the aforementioned Universal Music agreement. Based on
what has transpired, with confidence, we continue to encourage value-driven
small cap investors to accumulate shares of Destiny
Media Technologies up to a price of C$0.35. We feel this Company continues to
be a very compelling growth investment opportunity. At this valuation
level, there is still ample capital appreciation potential over time.
We note that in addition to Destiny Media’s shares
trading in Canadian currency under the Canadian stock listing (TSXV: DSY), the
stock also trades with higher daily trading volumes on OTCQX in the USA under
the trading symbol DSNY, where the stock price is quoted in and trades in US
The Company has approximately 55 million shares
Destiny Media Technologies website: www.dsny.com
Author ownership disclosure: Yes:
article is for informational purposes only. This article is based on the
author's independent analysis and judgment and does not guarantee the
information's accuracy or completeness. The information contained in this
article is subject to change without notice, and the author assumes no
responsibility to update the information contained in this article. The information
contained within this article should not be construed as offering of investment
advice. Those seeking direct investment advice, should consult a qualified,
registered, investment professional. This is not a direct or implied
solicitation to buy or sell securities. Readers are advised to conduct their
own due diligence prior to considering buying or selling any stock.
is not engaged in an investor relations agreement with Destiny Media Technologies
Inc. nor has it received any compensation from Destiny Media Technologies Inc. for
the preparation or distribution of this article.
author of this article has acquired and may trade shares of Destiny Media
Technologies Inc. through open market transactions and for investment purposes