Destiny Media Technologies Q4 2024 Earnings Report

Destiny Media Technologies EPS Results

• Actual EPS: -$0.02
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Destiny Media Technologies Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Destiny Media Technologies Announcement Details

• Quarter: Q4 2024
• Date: 11/21/2024
• Time: Before Market Opens
• Conference Call Date: Thursday, November 21, 2024
• Conference Call Time: 5:00PM ET

Destiny Media Technologies (OTCMKTS:DSNY) develops technologies that enable the distribution of digital media files in a streaming or digital download format over the Internet. It offers Play MPE, an online platform that distributes promotional content, including broadcast quality audio, video, images, promotional information, and other digital content from record labels and artists to broadcasting professionals, music curators, and music reviewers to discover, download, broadcast, and review the content; Play MPE CASTER; Play MPE Quickshare provides a distribution tool for Play MPE customers to promote music; and Play MPE Player for music curators to review and download content through cloud-based player and mobile apps. The company also provides Music Tracking Radar, a digital tracking service that tracks and reports the number and times customers track is played; Clipstream, an online video platform for encoding, hosting, and reporting on video playback that can be embedded in third party websites or emails; and playback through its JavaScript codec engine. It markets and sells its products in the United States, Canada, Europe, Asia, South America, Africa, and Australia. The company was founded in 1991 and is based in Vancouver, Canada.

Destiny Media Technologies Q4 2024 Earnings Call Transcript

Key Takeaways

• Revenue grew 9.6% for the year and 7.5% in Q4—its highest growth rate since 2010 across all major groupings.
• The MTR product launched early in Q4, with initial revenue under 0.2%; repeat customers and an upcoming integration with Play MPE suggest an inflection point within six months.
• A self-service checkout feature is under development and expected to be fully delivered within the next year, which management calls a “game changer” for entering new markets like Portugal.
• International distribution—leveraging proprietary country-specific lists—now accounts for nearly 5% of revenue, up 67% year-over-year, highlighting growth in global market penetration.
• Approximately 50% of revenue comes from independent labels, which management expects to outpace growth from major labels as focus on marketing and list expansion continues.

Presentation

[Operator]

Good afternoon, everyone. Thank you for joining us on today's webinar. Before we begin, I'd like to announce that we'll be referring to today's earnings release, which was sent to the newswires earlier this afternoon. I'd also like to remind you that this conference call could contain forward-looking statements about Destiny Media Technologies within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current beliefs and expectations of management and are subject to risks and uncertainties, which could cause the actual results to differ materially from those forward-looking statements. Such risks are fully discussed in the company's filings with the SEC and SEDAR, and the company does not assume any obligation to update information contained in this call. During the webinar, we will discuss certain non-GAAP financial measures.

[Operator]

The non-GAAP financial measures are presented in the supplemental disclosures and should not be considered in isolation of, or as a substitute of, or superior to the financial information prepared in accordance with GAAP, and should be read in conjunction with the company's financial statements filed with the SEC and SEDAR. The non-GAAP financial measures used in the company's presentation may differ from slightly similarly titled measures presented by other companies. Our reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures can be found in the earnings press release. Also, I'd like to mention that following the presentation, there will be a questions and answers session during which you can submit questions by selecting the raise hand icon at the bottom of your screen.

[Operator]

Your questions will be pulled in the order that they are received and at which point you'll be prompted to unmute your microphone before speaking. With that, I'd like to turn the call over to your host, Fred Vandenberg, Chief Executive Officer.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Thanks, Rebecca, and welcome, everyone. Revenue for the year grew by 9.6%. Q4 was up about 7.5%, and this was seen across all major groupings. As many of you know, we completed a years-long project building out international capabilities for our largest client. We moved them over to that platform during the year, but our product and engineering teams have been able to now focus on some things that are going to help us grow Play MPE and add new revenue streams. We're starting to see the results of that, and we're very excited about that. The revenue is its highest in Q4, highest annual revenue, highest growth rate since 2010, highest independent revenue, etc., etc. We also launched a new product in June, early Q4, called MTR. As expected, that revenue is small. It's less than two-tenths of a percent of our total revenue. It's early stage, as designed.

[Fred Vandenberg, CEO at Destiny Media Technologies]

MTR is only really able to convert sales to customers that are interested in monitoring a song or two. So we see sales are small, and that's expected, but they are growing. We have repeat customers. Customers from Play MPE are converting over to MTR. We think there'll be an inflection point when we are able to add larger customers, and we expect to see some clarity on that over the next six months. EBITDA was $577K, a little bit down from last year, but we're just investing in product growth. So I'll keep this reasonably high level. I know there's a lot of words here, but these are really more blocking and tackling type of business growth things. So the interest, I think, here for the investors is really that the things that we're working on are starting to have that effect on revenue.

[Fred Vandenberg, CEO at Destiny Media Technologies]

We think that we will continue to work on these kinds of things, and they will have a positive reinforcement of that growth. Play MPE is an ecosystem where songs get from record labels to promotional destinations. We often talk about radio because that's intuitively easy to understand, but it's not just radio. It's the media, bloggers, influencers, retail store programming, etc. It also includes radio, of course, terrestrial and internet radio. Internet radio is internet streaming radio is becoming a greater portion of the share of ear as the years pass by. That's hard to say. In very simple terms, the bigger that we build this network, the greater the value that we have. We are starting to build a number of things that will help on each side of that platform.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Caster is what we call the distribution side of the platform. We've started with some list selection improvements, adding international lists, making it easier to select those lists, and during the year, we started on an entirely new capability of a checkout. The first delivery of that was the self-sign-up, so what we're working on is where customers can complete the sale all by themselves, so they can sign up, select lists, and then check out and pay in the platform, and that's something we're working on. Self-sign-up, if you've been watching our press releases, that was actually delivered after year, after the fiscal year, but it's really the completion of it is going to come over the course of the next year, like calendar year from now, and we think that'll be a bit of a game changer for us.

[Fred Vandenberg, CEO at Destiny Media Technologies]

On the player side of things, there's a number of things we're working on here. We released commenting, which is something where the recipient side can engage actively with the owners of the content and request more content, that sort of thing. But the player side is where you really see the value. So we have an engaged audience, and we are working on things to expand that audience. So getting recipients to sign up to expand their audience. So we're really investing in recipient-driven aspects that will help grow that entire value and snowball in their importance. As I said, MTR is airplay tracking. We launched that in June. Shortly after we launched, we started working on something called the Caster integration, which really is a way for MTR customers to buy very easily after they've sent through Caster.

[Fred Vandenberg, CEO at Destiny Media Technologies]

What we've seen initially is that while the two businesses were standalone, that we were very successful in selling from Caster users to MTR. So we made it a little bit easier so you can do it in one-stop shop kind of thing. From a marketing perspective, we did quite a lot during the year. The first thing we really did is a bit of a reorganization of staffing, but then we began prepping for global marketing, improving our site scores, allowing us to target regional marketing efforts. We consolidated three brands. We rebranded, and we started improving some lead tracking to just improve the effectiveness of marketing efforts. And we began some customer re-engagement strategies. These are really just the block and tackling of marketing that we were starting to see the impact of on our revenue. And with that, I will turn it over to questions.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Thanks, Fred. Yeah, so if anyone has any questions, please use the raise hand option at the bottom of your screen. Any questions will be pulled in the order that they're received. If you raise your hand, please ensure that you have access to a microphone. And if you wish to retract your question, please just click that raise hand icon again to lower your hand. Your camera will remain off, but once prompted, please unmute your microphone before asking your question. And I do see one hand raised already. So Jerry, if you would like to go ahead.

[Analyst]

Can you hear me?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Yep.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Hi, Jerry.

[Analyst]

Hey, how are you doing? Just quite simply, what catalysts should investors be looking to see from Destiny over the next calendar year to signal that revenue growth above the 10% range is coming to Destiny? What are the keys? What should we be looking for? How will you be telling us those catalysts? Just can you give us some insight on that?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Okay, well, there's a few different things. We continue to work on things that we think are going to be a catalyst to revenue growth. When it comes to.

[Analyst]

Is there anything you can point to in the current product groupings that would signal to investors that revenue growth is happening in your product offerings now, not to mention some of the future products that you're developing?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Yeah, the checkout feature that we are building is going to come in a couple of different stages. We expect it to be complete a year from now, and we think that that's going to be a game changer by itself. That is going to allow us to sell into markets where we really don't have sales. So, for example, just take Portugal, for example. Portugal, we have an active recipient list. We have active recipients, engaged audience, but we really don't have any independent sales there. And that's because by itself, it's hard to sell profitably into a market like that. But with the improvements to marketing and when we have a fully start-to-finish sales process that's automated, we'll be able to, I think, grow and capture new markets like that. With MTR, our revenue has started quite small. It's going well. It's improving month after month.

[Fred Vandenberg, CEO at Destiny Media Technologies]

In terms of selling and making improvements to MTR revenue, that's going to come in a number of inflection points. One being when we can sell to customers that want to buy monitoring for more than one song, one or two songs. That's a lot of the addressable market, and the sales will be higher. The other inflection point would be when we launch globally. Right now, we're primarily in North America, U.S., and Canada, really only. And then later on, a little bit more distant in the future is when we can start leveraging the data that we gain from that and sell that as a package. So it's really going to be a number of different things.

[Analyst]

Would you envision that the current revenue rates around 9%-10% looking forward, should we be modeling the same rates of revenue growth or higher rates?

[Fred Vandenberg, CEO at Destiny Media Technologies]

I think it probably depends on what segment you're talking about with us.

[Analyst]

In total, I guess.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Yeah, no, I understand what you're asking, Jerry. With the independent record labels, I would expect that growth, I think it was 9% what the split is for, or maybe it was 10%, sorry, 10% for independents for the last year. We would expect and hope that that grows. We think that combination of improved marketing, acquisition of new territories, more international lists, sales that we'll be able to move that higher. Major labels, that's a different thing. I think I would expect the revenue growth there to be smaller. But the more we can sell to independents, that's going to be the area where our real growth is coming from. MTR is a new product where the growth rate will be higher or should be higher. But in terms of how it impacts our overall growth, that'll come, like I said, inflection points.

[Fred Vandenberg, CEO at Destiny Media Technologies]

So I don't have a good answer for that right now, but it'll become clearer in the next six months.

[Analyst]

Forgive me, this is in the MDA. How much is your current revenues made up by independents?

[Fred Vandenberg, CEO at Destiny Media Technologies]

It's about 50/50 right now. It's about 50/50.

[Analyst]

50/50 with the majors and independents.

[Fred Vandenberg, CEO at Destiny Media Technologies]

That's right. Yeah.

[Analyst]

You feel the largest growth will be coming from the independents over the next calendar year or so?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Yeah.

[Analyst]

With more modest growth with the majors.

[Fred Vandenberg, CEO at Destiny Media Technologies]

That's right. Yeah.

[Analyst]

I guess the warrant is the growth of the MTR, right?

[Fred Vandenberg, CEO at Destiny Media Technologies]

The what? Sorry.

[Analyst]

The warrant. Yeah, the warrant. The MTR is the bonus that's hard to pin down, but it could be attractive as we move forward.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Yeah, I guess that's right. MTR is a really interesting product that does have a huge upside, I think, but it's going to take us some time to get there. But with a solid foundation for Play MPE, that lends itself to a business like MTR. And as our capacity to be really smart about what we're adding, I think we'll be able to add new products and services as well. But it's just coming to a fruition, really. We were stalled for a few years there where we were focused entirely on building out the international capabilities for our largest client. And now we're starting to do the smart things that are actually going to. What that did is solidify that core revenue base in that business. And I think now we're doing the smart things that are going to help grow revenue longer term.

[Analyst]

Other than organic, are you looking at any M&A or any interesting options in M&A, or is that something that's not in the current focus?

[Fred Vandenberg, CEO at Destiny Media Technologies]

It's definitely something we're considering. We're open to different things, and we're spending a little bit more time now on, I guess, what we could call inorganic growth, like M&A. I wouldn't say it's isolated to M&A activities, but the last year, I think, well, the last couple of years, we were focused in on improving our product development process, and then improving our marketing and business development processes. And I think we're not without some speed bumps there, but we can now start being a little bit more proactive about doing things that are going to strategically advance the company faster.

[Analyst]

Okay. Any changes in the competitive landscape with your MTR product?

[Fred Vandenberg, CEO at Destiny Media Technologies]

MTR?

[Analyst]

Oh, sorry, with your flagship product, the competitive landscape.

[Fred Vandenberg, CEO at Destiny Media Technologies]

For MPE, you mean?

[Analyst]

Yeah, Play MPE. Sorry.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Nothing in terms of industry changes. The industry is always changing. Spotify's DSPs are starting to get some traction in terms of the share of ear. But that's more of, I think there's a perception that that hurts us in terms of marketing, but that's not really the case. Radio is still a dominant force with us, and it's growing. It's just we just have to be smarter about expanding that recipient base. And we're doing that. We have a lot of different recipient types.

[Analyst]

Okay. Final questions. Is your buyback active, and are you planning any investor relations activities?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Buyback is not currently active. We're considering it given the stock price, but we'll announce something if it gets, if we decide to pursue that. Investor relations, we have been pretty quiet for a lot of years now, and I think we're going to start reconsidering that. I think you're starting to see revenue toggle up a little bit. It's been on a little bit higher than typical for now six quarters. I think it would be really beneficial to invest in IR activities when that rate maybe toggles up a little bit more, but we're looking at it.

[Analyst]

Okay. Well, those are all my questions. Thank you.

[Analyst]

Thanks, Jerry. We don't have any other raised hands, but we've got a couple of questions that have been asked. We've got one, Fred, from Jeff. What portion of your business is now from labels distributing internationally?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Okay. So international distribution happens in a few different ways. I'll just talk about the one that's maybe newer. Last year, we began creating and marketing international lists, international distribution lists. So if you had a country song, you could now send that to an international country list instead of picking individual countries. We don't know of anybody else that does this. I know we're a small company, but I believe we're the largest in the world at what we do, and nobody else really has the international capabilities that we have. So I think to the extent that we can capitalize on that, it'll be a good source of revenue growth. So we started providing, creating these international lists. Those customers are dominated by probably exclusively independent labels. The majors tend to distribute locally, only locally.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Those international lists are, I think, just a little less than five international distributions are less than 5% of our total revenue as opposed to a label, a U.S. label sending to a U.S. destination. But now we're starting to see some growth in the international. They realize that we have these international lists, and it's grown by probably about two-thirds, like about 67% growth. I think last year it was about 3% of our total revenue. And so I think this will be a good space to watch. As I mentioned, when we're talking about the player, we're looking at ways to have the player side of our network grow organically. And so to the extent that we can do that, the value of those international distributions goes up. We're also looking at acquiring new markets.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Like I said earlier with Portugal, in Portugal, we have active recipients and an active recipient distribution list, but we have no independent clients, and so improvements in marketing that we made this year, and then when we have a full checkout system, there's going to be some capacity for those labels to profitably distribute in Portugal, but there's going to be some more appeal internationally as well, so international distribution is something I think we're uniquely capable of doing and going to be a good source of revenue growth.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Great. Thank you. Next question is from Andy. When will MTR affect revenue?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Okay. So what did I say earlier? I touched on it a little bit, I think, already. I mean, MTR is already impacting revenue. It's very small. There'll be an inflection point when we can sell to larger clients. That's going to. There won't be an event. That'll be a process, but we'll become able to do that within the next six months, and we'll grow that capability. That'll be an inflection point. I sure hope it will be an inflection point. Then when we move internationally and then when we capture the data from it, that's going to be a real. That's the bigger long-term carrot for that.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Thank you. There is one other question from Andy, but you may have already touched on it, but I'll ask anyway. Is the company planning on doing more share buybacks?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Yeah. Yeah. Jerry, you asked that as well. I think that's the. We'll make a decision on that, and we'll announce anything that's approved to do that.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Perfect. The next question is, can we have an update on the Universal contract?

[Fred Vandenberg, CEO at Destiny Media Technologies]

Universal, we're working on. Universal, like I said, we built out their international platform, and they moved over in March of 2024. We're working on a longer-term deal right now with them. Right now, we're month to month, but we're in talks with them for a longer-term deal.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Perfect. The next question is, what was the goal of building MTR and Play MPE? What benefits do you foresee?

[Fred Vandenberg, CEO at Destiny Media Technologies]

What's the goal of building Play MPE? Play MPE was.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Sorry. Bundling MTR and Play MPE. That's my bad.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Sorry. Okay. Well, bundling them, what we saw when we first launched MTR. We launched MTR initially as a standalone business because it was going to be easier to bring it to market as a standalone product. And quite frankly, we have MTR customers that are not Play MPE customers. What we saw, though, when we initially started MTR was that people didn't know that this kind of service even existed. So advertising and that sort of thing wasn't particularly successful because people aren't going to find something that they're not looking for. And so what we did is we started advertising that to Play MPE customers, and that was successful.

[Fred Vandenberg, CEO at Destiny Media Technologies]

What we did is we changed our strategy a little bit, and during the year, we rebranded and made them consistent and made them all under one website, made a lot of improvements to our website, and we started working on the integration. Essentially, when you distribute through Play MPE now, you can automatically sign up for MTR. It was really just a way of selling MTR to Play MPE customers in a way that was efficient. Now they don't have to upload songs twice and that sort of thing. That was launched after year-end. We just press released that recently.

[Fred Vandenberg, CEO at Destiny Media Technologies]

The next question. Please tell us how happy you are after the MTR rollout in Canada after one year.

[Fred Vandenberg, CEO at Destiny Media Technologies]

The MTR was launched in the U.S. in June. Last year, it was only in Canada and was really a nascent product that had a lot of things that we needed to work on. It was productive in Canada in the sense that it provided some clarity on what precisely needed to be built, some technical challenges that we overcame. The revenue is quite low right now, but that's kind of expected, and well, it is expected. I'm really quite, we're all very excited about the possibilities of it. It's not only a new product that is being successful. It shows signs that customers want it that are larger that we just can't service right now. It really gives us a lot of optimism of when we do address this, that it'll be successful.

[Fred Vandenberg, CEO at Destiny Media Technologies]

I think also the insights that you get from a collaboration between distribution and ultimate success is really going to be a very valuable combination of services.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Great. Thank you. And then I think this could be our final question. Allocation of capital. How should we model next year? R&D mostly.

[Fred Vandenberg, CEO at Destiny Media Technologies]

So we capitalized software development costs when we are building out something that's new capabilities. That's not always easy to differentiate what's a new roof or what's a new shingling or whatever. That's a poor example, I guess, but what's an improvement versus a wholly new thing is sometimes a little bit challenging to predict. But we're continually making improvements to the platform, new capabilities, and we have to capitalize those costs because they're new. I know it adds some complexity to understanding the financial statements, but it's really just we're investing for growth, and we're trying to pursue a much faster revenue growth. So that's what the capital expenditures are for. You're starting to see depreciation catch up to our capital investment, so the net income is sort of what you would expect, but that still includes a lot of investment for revenue growth.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Okay. Thank you. I think that is our. Oh, sorry, we actually just got one more question from Spencer Thom. What is the trend in quarterly capitalized investments?

[Fred Vandenberg, CEO at Destiny Media Technologies]

What is the trend in quarterly capitalized investments? Spencer, you've kind of stumped me there. I mean, we capitalize software development costs, and I don't know if I know what they would be quarterly. It's probably reasonably consistent. What happens is we have staff that work on software when it's a new thing. We capitalize that amount, so it lowers our salary and wages expense, but ultimately, that is expensed as amortization when we start to depreciate it. We do a reconciliation each quarter on that, so I'd probably need to sit down and figure that out.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Okay. I think that is all of our questions for today.

[Fred Vandenberg, CEO at Destiny Media Technologies]

Okay. Thanks very much, everyone. And I'll speak to you very shortly in mid-January.

Participants

Executives

• Fred Vandenberg, CEO

Analysts

• Analyst