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Mar
14
Destiny Media Technologies is set for accelerated growth and a higher stock price
Posted by: Gerry Wimmer
3/14/2021
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TOP IDEAS: Recent trends indicate that Destiny Media Technologies (TSXV: DSY) is capitalizing on its product and business development investments for its B2B music promotion SaaS platform. Revenues and profits will soon reflect this.



It has been two years since Investorfile posted an update on Destiny Media Technologies, and the share price is up 70% in value since we first initiated coverage on the Company as one of our Top Ideas in small cap value stocks (See: Destiny Media Technologies is a value buy that is growing and already profitable.)

But, today, we feel another update is warranted in advance of an inflection point that could see the Company’s revenues and profits escalate leading into fiscal 2022.

Destiny Media Technologies, Inc. (TSXV: DSY – C$1.83) owns and operates a cloud-based Software-as-Service (SaaS) platform called Play MPE. According to the Company, Play MPE is the world’s leading music promotion B2B platform, which connects record labels and artists to influential music curators around the world. Play MPE software is used to transfer pre-release broadcast-quality music, radio shows and music videos to trusted recipients such as radio stations, media reviewers and music influencers: VIPs, DJs, film and TV personnel, in order to increase the likelihood that the music becomes popular and to directly increase record labels' and artists’ revenue. Today, Play MPE customers include the world’s largest record labels: Universal Music, Warner Music and Sony Entertainment, as well as a multitude of Independent labels.

Since our last update, we note that Destiny Media has made several notable investments to promote product development. Among the many new product features released, the Company has updated its Play MPE software service by expanding data tracking and platform functionality to become the primary communication link for music promotion. According to the Company, music marketing and promotion are increasingly data-driven, and Play MPE is uniquely positioned as the gateway to music curators and influencers to track and relay synthesized data sets.

One of the most significant changes that have occurred over the last year is the expansion of the Company’s management team in the areas of marketing and business development. Expanding the business development team has proven to vastly better customer relationships, sales lead conversions, and contractual commitments. We note that the Company has reported that new customer leads are up 32% this year and revenues from Independent record labels are up significantly as of late. Also, Major labels such as Universal Music and Sony Music have expanded their music promotion distributions exclusively using Play MPE over more music genres and in new geographic regions, according to the Company. Fees for using Play MPE as distribution software are charged based on the number of songs to the number of destinations, with some fees with Major Labels fixed to longer-term agreements.

The above-noted trends provide us with evidence that the Company’s investments in the product and people are paying "dividends” and, as such, shareholders will be able to reap the financial benefits by owning the stock.

As mentioned, Investorfile is of the opinion that Destiny Media Technologies’ revenues and profits could be at a significant inflection point for accelerated growth. While we acknowledge that Destiny Media Technologies' share price now exceeds the accumulation target we set at C$1.75, the stock is still reasonably valued for a SaaS growth company based on its earnings-per-share metrics.

The Company (which reports in US currency) has reported it has earned US$0.02 per share in each of its last two quarters, adjusted EBITDA margins around 25% and good cash flow generation all on a modest US$4.5 million annual revenue base. It goes without saying that Destiny Media Technologies is a very profitable operation today and any acceleration in revenue growth (which we expect) could have a significant impact on earnings and to the Company’s stock price over the near- and long-term. Therefore, in our opinion, the stock price still has plenty of upside potential from its current trading levels.

Last reported, Destiny Media Technologies held over US$3 million (US$0.29 per share) in cash and had no bank debt. For a small company, it continues to maintain a very strong balance sheet.

In addition to its Canadian stock listing the Company is a reporting issuer in the United States. Destiny Media Technologies shares trade with higher volumes in the USA under the symbol DSNY. Last close for DSNY: US$1.46.

The Company has approximately 10.45 million shares outstanding.

Destiny Media Technologies website: www.dsny.com

Author ownership disclosure: Yes: TSXV: DSY


Investorfile's share price accumulation target of C$1.75 (post share-consolidation) for Destiny Media Technologies Inc. was initially reached on December 3, 2018.


Read Disclaimer:

This 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.

Investorfile.com 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.

The author of this article has acquired and may trade shares of Destiny Media Technologies Inc. through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.