Linkfire – notes from the call with the management


Notes from the call with Linkfire management

Linkfire is the global market leader in smart links for music streaming companies with a 70% market share. For example, you click on Justin Bieber’s song you got from a friend on Snapchat, you get into a link that shows you where you can download the music from, the next concert, or where to buy tickers. That is Linkfire. They link music on social networks to music streaming companies.

Strong Q3 performance

Linkfire delivered Q3 very solid numbers. Revenues grew 42%, driven mainly by commission revenue that increased by 115%. The commission revenue strong growth was caused by a doubling of RPM (Revenue per thousand of customer connections). In the summary, robust quarter, another reconfirmation of the strong investment thesis.

Strong growth will continue

  • Strong growth is guided to continue
  • Snapchat and Twitch are signing licenses with music providers. Both are partners of Linkfire. As the licensed catalog rolls out, an uptake in consumer connections and revenue are expected.
  • Linkfire is talking to several additional partners. The partnership pipeline is maturing and Linkfire are indicating that they will announce more partnerships in the near future.
  • Both big and a bit smaller than big. There should be a lot of newsflow in the following quarters. This will drive revenues further.
  • RPM doubled vs. the last year Q3. The growth in RPM is expected to continue in the future, as the current number is still very small relative to RPM achieved in the best markets for Linkfire.
  • Linkfire is improving its technology to see higher conversion – which drives RPM higher.

Aquisition of SmartURL

M&A activities

  • In the Q report, Linkfire CEO Lars Ettrup wrote:
    • In recent months, we have identified a wider range of M&A opportunities than previously anticipated. Both within areas of traffic growth but also market po[1]sitioning and complimentary entertainment verticals. Areas of particular inter[1]est for growth opportunities are podcasts and audiobooks, which not only is a strong fit for our product and technology but also an area of entertainment that is maturing very fast. Spoken Word’s share of audio listening has increased by 40% over the last seven years; 8% this year alone according to recent studies.
  • Linkfire is working on many partnership deals – Large as well as smaller
  • Linkfire is also talking to industry players aiming at consolidating the industry further

Podcasts and Audiobooks are next

  • LInkfire had a 70% market share in smart music links even prior to the smartURL acquisition.
  • The goal for the coming quarters is to replicate this in the next areas. In the IPO materials, Linkfire indicated they will want to enter Podcasts, Audiobooks, Movies and Games.
  • On the call, Linkfire management indicated that Podcasts and Audiobooks should be next on the agenda.
  • Linkfire has active dialogues with partners in Podcasts and Audiobooks area. Announcements on those should be made already next year.

Improved communications with investors

  • Linkfire started to communicate actively with its investors. The company set up FB, Twitter, and Linkedin pages where it shares news regularly.
  • Linkfire hired a PR team, and its investor relations representative should be coming along in a month’s time.
  • All the above shows that the management wants to communicate and does care about its investors.

Strong newsflow

  • The management indicated that there is very strong newsflow coming based on solid partner development
  • There will be plenty of newsflow related to new partnerships, M&A activities, both in the music area as well as in the new areas, such as Audiobooks and Podcasts.

Link to the Q3 presentation

Investors Relation – Linkfire

Link to the investment thesis

Linkfire: A Unique Play On Music Streaming Through Market Leader Growing At 50%+ CAGR | Seeking Alpha

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Disclosure: 

The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice.

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