Pareto: Linkfire Deal With Amazon Music Can Double Commission-Based Revenues in 2022

Linkfire, announced partnership with Amazon Music, that in Pareto view has the potential to double commission-based revenue in 2022. It is a major news. Linkfire is the global market leader in smart links for music streaming companies with a 70% market share.

Five bullet point summary on Linkfire opportunity:

  • Linkfire connects consumers on social platforms who wanted to download a song to music streaming companies that provide the content. Linkfire collects revenues from both.
  • Linkfire has 70% market share in its segment. The penetration is still very low.
  • Linkfire revenues have grown at 40%-60% CAGR with a stable 76% gross margin. The growth is accelerating further in 2022 to 50-70%.
  • Linkfire managed to dominate music industry. They will now enter with the same product podcasts, movies and games. These new areas will multiply the revenue opportunity.
  • Very strong catalysts in the next six months.

Pareto summary of the Amazon Partnership:

Amazon Music becomes an affiliate partner to Linkfire

Linkfire enters a multi-year marketing and affiliate agreement with Amazon Music. This agreement will further fortify Linkfire´s position as the leader in its market niche, and will help Linkfire greatly strengthen the monetization of its traffic. We believe the agreement will have a significant positive impact on commission-based revenues, and will help Linkfire reach its mid-term financial target of 50-70% annual organic revenue growth over the FY2021-FY2023 period.

Linkfire announced on Friday evening (22/4/2022) that the company has just signed a multi-year marketing and affiliate agreement with Amazon Music. The agreement will entail a custom strategy for user acquisition tailored for
Amazon Music and will leverage the vast traffic flows of Linkfire. The agreement will monetize Linkfire’s traffic when a consumer clicks through a Linkfire smart link and then signs up at Amazon Music or makes a transaction within Amazon’s ecosystem.

We had suspected that Linkfire were coming close to signing a new affiliate partner, and expect this new deal to give a significant revenue boost to the company. Amazon Music has an estimated market share of around 13% of the
global music streaming market, and given that Linkfire, according to our estimates, currently monetizes ~15% of its total traffic, this new affiliate deal can potentially almost double the company’s monetization rate on its traffic. All things equal, assuming the same amount of consumer connections as well as RPM as in 2021, this deal could result in the commission-based revenue close to doubling in 2022. Given this, our confidence that Linkfire can reach its
mid-term target of growing revenue organically at an annual rate of between 50-70% over the 2021-2023 period has increased.

See the previous blog posts on Linkfire for more details

Link to the 2022 annual report presentation – very good document

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. Please do your own research before making any investment action.

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