7digital Share Discussion Threads

[monte1] 19/1/2017 15:13

Aye, it is called the Titanic.

[pet lover] 19/1/2017 15:11

As per yesterday non stop buying again.

As monte says be careful you don't miss the boat.🛳

[monte1] 19/1/2017 07:58

I note that phase 2 of teh p&d appears to have commenced.

Be careful out there.

[pet lover] 19/1/2017 07:17

This is why I have invested in 7Dig.

RECURRING REVENUES.



RECURRING REVENUE COUNTS IN INDUSTRIES FAR BEYOND SOFTWARE
Posted by Alan Fullerton in Advice for Entrepreneurs, Government/Defense/Aero, Healthcare, Industrial, Mergers and Acquisitions, Selling a Business, Strategic Advisory, Telecom & Networking, Valuation Services

The recurring revenue (“RR”) business model gets a lot of attention in software M&A and growth investment, and for good reason. Most growing subscription/ software-as-a-service (SaaS)-based software companies trade in the public markets for north of 6x revenue and many of those fortunate few with annual revenue growth over 40% trade for over 10x revenue. The value of the recurring revenue service model in the software industry is indisputable. But what about other industries? Telecom, healthcare, distribution, banking, music and video, even large capital businesses such as jet engines, have all incorporated recurring revenue in their “business-as-a-service” model.

The predictability of revenues and earnings is inherently better in a business with recurring revenues. Subscriptions, razor / razor-blade models, rentals, leases, monthly fees, ongoing maintenance and support contracts, customized consumable products, etc. all drive more predictable revenues than, say, capital equipment sales. The RR business starts each year with a set of returning customers, purchasing a contracted or otherwise predictable level of products or services. These customers return for reasons well beyond mere convenience – they rely on the RR business for their own operations and cannot easily switch to another vendor or service provider, or are contractually obligated to continue with the vendor for a period of time. For virtually all elements of competitive advantage that relate to customers, the recurring revenue business model enhances that advantage, creating more value for the RR business’s shareholders.

Examples of recurring revenue models outside software include:

contracts for IP phone services,
healthcare regulatory-driven services and products consumed in GMP environments,
vendor managed inventory,
wealth management,
Spotify and Netflix, and
GE Aviation’s parts, maintenance, financing and service contracts.
These are all examples of recurring revenue business models applied to industries beyond software.

It’s our experience that businesses incorporating recurring revenue in a significant way can trade for multiples well above those in their respective industries that do not. While the software industry may trade on multiple of revenues, much of the rest of the word focuses on some combination of EBITDA, free cash flow, and growth (and cost of growth). The value from a RR model can be seen in the more modest sales effort necessary to maintain and grow the business, and the better margins that can be achieved for the same level of growth. The company with little in the way of recurring revenue starts each year at $0 and builds from there; 100% of the sales effort is aimed at bringing in new customers and perhaps the first 11 months of the year are spent getting to the same revenues as the prior year, so that the last month generates 8% annual growth. The RR business starts with a base of business. For some of our clients that has meant zero or negative churn – the expansion of returning customers – with a modest sales effort aimed at those clients – more than makes up for any customer attrition. It’s our experience that these companies grow faster with less sales effort, and therefore drive more profit margin, than companies lacking a recurring revenue component. For closely-held companies, this can mean achieving double-digit revenue growth while maintaining 20%+ EBITDA margins, something only about one in sixteen public companies has managed (without acquisitions) in non-tech, non-financial industries this past year.

[pet lover] 19/1/2017 05:49

To think you can buy a 1% slice of the worlds largest independent global B2B music streaming platform for £80,000 👌👌

INDEPENDENT:

That opens the door to some form of takeover be it in 3 days or 3 years.

This is what your buying into today.

A company with exclusive rights the worldwide Radioplayer.

The leading partner (B2B) with MQA. The new streaming platform.

Working with Sony Universal and Warner to bring Hi Res Music streaming music to the masses.

Very high margins on new licensing deals

Turned profitable in last quarter.

😀😀

[11smith] 18/1/2017 22:22

I have been invested in 7Dig for 18 months and following closely. They are doing all the right things. The big sell off this morning was just on the expectation that the share price would fall. I nearly went for it myself. The same happened in Jan. 16 on a larger scale.

[wh1spa] 18/1/2017 22:12

Same here 11smith - think the 400k offload shook a few punters out but there seems to have been plenty of support this afternoon - tomorrow should be interesting

[11smith] 18/1/2017 22:04

I can clear up any confusion about buys and sells today. I was quoted either 7.13p, 7.14p or 7.15p to sell, ticking up .01p slowly from about 12.30pm. Buy quotes over the same period were either 7.24p or 7.25p. Looks like a lot of interest in this. Hope that helps

[simon1955] 18/1/2017 20:30

Pot lover i would be interested to know how you think you know how many of todays trades were buys or sells?? The LSE do not declare if a trade is a buy or sell, it is merely indicative, just because a trade price was nearer to the offer than the bid does not guaranttee it was a buy or vice versa

[wh1spa] 18/1/2017 18:52

#1449 - we'll just have to see how big an offload is taking place. Perhaps a discounted fundraising is on the cards - perhaps the fairly brief trading update is indicative of a TO being worked out! Its tea-leaf stuff unless you have been taken inside. The one thing I feel comfortable with is that the likes of music.ly need 7dig as part of their offering. Even if these short snippets of music accrue no royalties they still need someone with a huge catalogue to service their needs. 7dig seem streamlined, focused and determined to make their model work and that is why I am invested here. Not quite sure why so many people seem to be hanging around on this BB if they have no stake here - surely there are better things to do in life ?

[pet lover] 18/1/2017 18:40

Record labels part owner of Spotify
A number of high-profile record companies holds a fifth of the Swedish music service Spotify, documents reveal.

[monte1] 18/1/2017 18:32

#1447 see #1443

[smithie6] 18/1/2017 18:32

je je...post 1445 !!


Wharghhhh !!

I think Pot Lover needs to find a new posting nick otherwise he might find that his ramps arent believed at all any more...& do more harm than good to the sp

---

( Im sure my many fans, je je, will be plsd to see that my tweet during the day about Pearson results turned to be what the mkt also thought, & price continued downwards. Very basic analysis, sadly many ppl dont seem to bother/try or have common sense)

[wh1spa] 18/1/2017 18:23

If buys outnumber sells and the share price doesn't move it means there is someone dumping stock!

[pet lover] 18/1/2017 18:11

"Reaching EBITDA profitability is a key milestone for the group and with 60% of revenues now from high-margin licensing activities, operational gearing effects should ensure a large proportion of future revenue growth is converted to profits. The market for streamed music is developing rapidly (+76% in 2016 in the US according to Nielsen) and as the largest independent global B2B music streaming platform, working with all three major record labels (Universal, Sony and Warner, with the third signing in Q416), and with clients in a number of strategic sectors including mobile, high res, automotive and radio, 7digital has the relationships and platform in place to benefit."


This is the reason I invested in 7Dig 3 months ago.

In the spring or early summer I expect the big 3 labels above will announce and implement their plans for MQA Hi Res Audio.

At that time suddenly the investment community will asking why they did not invest in 7Dig a few months previously.

Turnover growth of about 25% is forecast for this year as of today. During the next 12 months I expect that to be lifted substantially upwards with its associated high margins.

To think you can buy a 1% slice of the worlds largest independent global B2B music streaming platform for £80,000 👌👌

[pet lover] 18/1/2017 17:52

I would not be surprised if today's buying was down to any one of the following.

A: The market digesting yesterday's trading statement.

B: Possible director buying.

C: possible Milton fund or other institutions buying

D: The 3 big record companies have a habit of taking stakes in streaming music companies they supply content to.

E: My own deductions namely 7Dig now being in a superb position to exploit MQA and streaming music over the next 12 months producing very large fast growing recurring revenues.

[pet lover] 18/1/2017 17:37

I would point to today as being rather good on the trading front.

66 trades with buys outnumbering sells by a mile.

[monte1] 18/1/2017 17:36

Phase 1 of the p&d nears its conclusion.

[wh1spa] 18/1/2017 17:32

There's the reason for the big fall - someone dumping over 400k of shares this morning. Was kind of waiting for that to show up.We need some good solid institutional support here and if not it begs the question why no ones interested.

[simon1955] 18/1/2017 16:21

Pot lover, yes it may well tick up, don't forget this morning MM's were paying over 8p to sellers so they need to push the price back up to shift those to PI's who think this is a 'buy' and then they will drop the price back again to panic those same PI's in to selling at a loss and so it goes on......

[pet lover] 18/1/2017 16:01

L2 is on the move.

Any more buying will see a tick up.

[pet lover] 18/1/2017 15:59

Paying full offer tells you something.

[smithie6] 18/1/2017 15:55

(well I did say yesterday that more down to come imo..

uf 20% fall...I wasnt expecting such a big % in 1 go....was expecting slower drift...

..since the 7% annual turnover growth is too low imo

for a loss making company with imo money problems....(6.7M payables....with turnover around 11M....too high a %....whether 7DIG can get music file owners to agree not to get paid for say 1 year to give 7DIG a breather...remains to be seen...maybe they have already waited a year or a chunk of months....Spotify turnover is I think over 1,000 M$ so imo they might not be that fussed to wait too long to get paid....and assuming that some music file owners didnt get paid by Guvera in 2015...then they might not be so flexible with waiting in 2016)