YOO is featured in my latest blog. Here's a link:
And here is what I wrote about YOO:
Yangaroo Inc. (YOO on the TSX-V) – First Time on the Blog!
YOO 5-year chart - http://www.stockhouse.com/companies/overview/v.yoo/yangaroo-inc
I am a big fan of Yangaroo (YOO on the TSX-V). IMHO, after a long and very tough period developing its technology and business, it is now ready to fly. And it has some very well pedigreed and high powered pros that have recently come on board (i.e. the President is the ex-COO of IMAX). I always find that who exactly is betting their time and careers on a company, is always a great test of that company’s worth.
As an aside, I was initially told about YOO by a stockbroker buddy of mine. This guy is definitely one of the shrewder market guys I know, and was in on the initial IPO ten years or so ago – and has made good money for himself and his clients since, owning and trading the company. My friend knows YOO through and through and has decent amount of the float in his book of business. With the amount of DD, institutional knowledge and trading history I know he possesses - and seeing that he was a strong believer (and has been buying with his own money) – IMHO, it definitely warranted a very thorough kick of the tires. So...I did my DD.....and I love it at this price.
Below is a description of what YOO’s patented technology and what the company does (I lifted it directly from their website):
“YANGAROO is a company dedicated to digital media management. YANGAROO’s patented Digital Media Distribution System (DMDS) is a leading secure B2B digital cloud based solution focused on the music and advertising industries. The DMDS solution provides more accountable, effective, and far less costly digital management of broadcast quality media via the Internet. It replaces the physical, satellite and closed network distribution and management of audio and video content, for music, music videos, and advertising to television, radio, media, retailers, and other authorized recipients.”
“The YANGAROO Awards platform powers many of North America’s major awards shows.”Named one of Canada’s Top 100 Tech Companies by Canadian Business, YANGAROO has offices in Toronto, New York, Los Angeles, and Dallas.”
Huge Client List:
Yangaroo’s list of Clients and Partners in the realm of advertising, music and technology is quite impressive. They have landed clients from the likes of MTV, BET, CBS, A&E, Corus, CMT, SoulTrain - and many, many more. The depth and breadth of these relationships shows why their revenue and revenue projections looks like the proverbial “hockey stick.” YOO had to gain these business relationships in order to make their business model work – and to attain scalability.
YOO have three key multi-year agreements driving each of their divisions:
- Advertising: They are partnered with NY based Horizon Media, the largest privately held media buyer in the world, with billings last year over $3.5 billion.
- Music Video Delivery: They have a multi-year contract with MTV Networks, a division of Viacom Int’l, to deliver all music videos and power their internal workflows
- Awards Management: They have a 5-year agreement with The Recording Academy (The Grammys) to provide electronic voting, review and submissions.
Here is a link to YOO’s Advertising Partners, Advertising Clients and Broadcasters.
Here is a link to their Music Partners, Record Label Clients, Video Destinations and Broadcasters:
Here is a link to their Technology Partners:
Why, IMHO, did the YOO SP get so low/oversold, (it closed at 3.5 cents today)?
- YOO were in a very detrimental lawsuit up until a year and a half ago with a competitor, Destiny Media. This was not good for their SP.
- YOO was facing a problem with their debenture holder. That problem has been solved – and with much better terms. This amicable solution would not have happened had the debt holders not been convinced of the depth of their turnaround.
- Look at the 5 or 10-year chart. YOO has raised money at much higher prices and has burned through upwards of $30 million. It has taken that type of capital to develop the money-making rocket that it appears to have now become.
- Plain and simple, “deal fatigue” has made a lot of early investors immune to the fact that this company is now about to achieve what they originally set out to do.
- Yangaroo has dealt with a name change, a revolving door for CEO's, financing concerns, and patent litigation, among other challenges.
Why Does YOO Look So Attractive Right Now, IMHO?
- Monies were raised above the market price – and Management put in $370k of their own personal monies.
- The next quarterly should be coming out this week. This should give a very strong indication that the company is just about in the black – and should be profitable next quarter.
- Their technology is world-beating.
- Industry acceptance for their product is just getting stronger and stronger.
- IMHO, some strong NR/s should are on the horizon.
- YOO has a good amount of shares out. With the way I see the next couple of quarters developing, I would not be surprised to see them institute a share buy-back program – IMHO, a real positive for the company.
Revenue and Potential
- Revenues are growing very, very strongly in the advertising industry application.
- On their most recent financial report, Yangaroo indicated 104% year over year revenue growth, an EBITDA increase of 59%, and a reduction in net loss of 68%.
- YOO has huge margins - i.e. over 85%.
- There is a $350 mil market in the US alone for their technology.
- There is no money in audio, but a lot of money in video – which is music video and advertising.
- DG (DGIT on NASDAQ) is their biggest competitor – i.e. $350 revenue worldwide
- Head of advertising for YOO, Karen Dealy, was DGIT Senior Vice President.
- The company needs to hire a couple of key sales people. Every person hired should make their revenue multiples higher than they are paid in salary.
- YOO has an accelerating growth curve and double digit growth over the last 5 quarters. If that continues the company will be very profitable.
- The HD Ads market is an exploding new space.
- DGIT may have lost a little bit of market share to YOO and Extreme Reach for distributing TV ads in its most recently reported quarter, as TV revenue dropped 1%.
- If YOO gathers up to 5% market share, they are huge winners.
- YOO is only months away from profitability – their recent financing takes them beyond this point, IMHO.
YOO vs. Destiny Media (DSY-on the TSX-V, last at 77 cents, with a year high/low of $1.03/$0.38), a competitor:
- Destiny Media has made some nice moves due to the Clipstream format and the ability to move stuff onto your handheld – but, IMHO, the model is flawed and they won’t make as much money as people believe. IMHO, the YOO model is better.
- DSY has just audio delivery now, which is in market in decline in North America – and is competing with flash and adobe – i.e. streaming software is common. They do not compete with YOO in broadcast video delivery!
- YOO delivers High Definition (HD) music videos and advertising to television broadcasters throughout North America.
The appointment of the following three senior people, IMHO, is quite telling - both operationally and in sales:
YOO’s New President:
I don’t see Gary Moss, the President and CEO since Feb 29 of this year, as stepping up and taking the YOO helm unless he was absolutely sure it was going to be an extremely attractive turnaround play. This is a guy, who sports a very enviable C.V... He went from the COO position at IMAX, with its high profile and $350 million in annual revenue (when he left), to the Presidency of a company (YOO) that is not yet in the black – and that has a market cap of a mere $5.49 million.
Here are a few paragraphs from the NR announcing his taking over of the YOO leadership:
“Gary Moss brings significant expertise and experience to the role of CEO. Mr. Moss was previously Chief Operating Officer of IMAX Corporation (IMAX-NYSE) where he was responsible for global operations, strategic planning, corporate development and innovation in a high growth, results driven environment. His specific areas of responsibility were sales, marketing, theatre operations, technology, HR, strategic planning and post production. Implementation of company-wide policies and procedures (including the selection of SAP to replace out-dated systems), coupled with creative deal structures, resulted in record revenues and profit, particularly from emerging markets. Moss was the lead business negotiator for cutting edge technology deal licensed from Kodak, which will enable competitive differentiation for the next generation of laser projection equipment.”
“Prior to IMAX, Moss was Chief Operating Officer and Chief Financial Officer of Live Nation Artists, the successor to Concert Productions International (CPI), a major world-wide concert promoter. He was also Vice President of Finance with EMI Music Canada Inc. for nearly a decade, and Vice President of Finance with Sega of Canada Inc. Mr. Moss is a Chartered Accountant and received his Bachelors of Commerce from the University of KwaZulu-Natal in South Africa."
YOO’s New Chairman:
Like the appointment of Gary Moss, the move up by Anthony Miller to the Chairman’s role on June 26, 2012 (he had been a BOD member for almost two year prior), indicates that YOO is finally about to achieve its potential. Miller is a guy who can get the crucial advertising industry dollars – but I don’t see him taking on the position unless he was suitably impressed that YOO was going to knock it out of the park. Here is some info on Miller:
“Anthony Miller was Chairman Emeritus of MacLaren McCann, one of Canada’s leading advertising and marketing communications companies. He previously served as Vice Chairman of the global parent, McCann Worldgroup, based in New York, and has held a number of senior positions in advertising agencies in both the United States and Canada for more than 40 years. Miller is a former chairman of the Canadian Institute of Communication and Advertising, a past chairman of the Young Presidents Organization (Ontario), and a member of the Chief Executive Organization...”
YOO’s President of US Advertising Operations:
Karen Dealy, came on Board in mid-August, 2010 as the Head of US Advertising. She was a main player at the biggest company in this space, DG Systems, and helped build out their advertising business. Under her leadership, Yangaroo has an installed base of over 2500 North American TV stations.
More info on Karen Dealy:
- “She has also held senior management positions at AMFM Radio Networks, and ABC Radio Networks. Ms. Dealy received her MBA from the Simmons School of Management, as part of a special ABC-sponsored executive management program. She received her Bachelor of Arts degree from Texas Tech University in advertising and marketing.”
These newish YOO Exec’s and Chairman are very impressive in their own right. Clearly, they would not be with such a tiny player if they didn’t envision a huge upside.
YOO a Potential Takeover Target?
Yangaroo has a solid position in an industry with high barriers to entry, and their loyal client list reads like a media who’s who. YOO’s attrition rate with their clients is practically zero, and the customers they do have are increasing the amount they use them. Add to that, their customer base is growing very rapidly.
- IMHO, it is quite likely that a large company may be encouraged to engage in a hostile takeover of Yangaroo. To gain Disney, CBS, ABC, and ESPN as customers in one move makes YOO a very attractive acquisition? While a takeover would be very good for YOO shareholders in the short term, it could curtail the longer term gains that should be possible, IMHO.
- YOO has a shareholder rights plan in place, which is intended to discourage takeover attempts, and make the company more costly to potential purchasers.
Shares Issued Mkt Cap. S/P 52 Wk High/Low
Digital Generation Inc. 27.6 mil $269.2 mil 9.74 15.65/7.51
(DGIT on NASDAQ)
Destiny Media Tech. Inc. 50.2 mil $39.1 mil 0.78 1.03/0.38
(DSY on TSX-V)
Yangaroo Inc. 156.9 $5.5 mil 0.035 0.05/0.02
(YOO on the TSX-V)
In Conclusion – And Why I Love YOO at This SP:
The fundamentals of YOO are improving quite rapidly – but we haven’t yet seen a correlation in the SP. A good argument, IMHO, can be made that the market cap is grossly undervalued. IMHO, a very nice move north is coming.