Twelve months on, James Brennan led Linius has progressed well beyond signs of life. It's now showing clear signs of its roots spreading and visible above surface growth both at home and abroad. Moreover, shareholders can observe a much-underappreciated cultural shift within the company.
Only a few short years ago, ex-CEO Chris Richardson spoke of billions in potential revenues and global patents protecting it from competition – it painted a rosy picture of world domination as if it were the futuristic technology used in Bruce Willis’ movie ‘the Fifth Element’.
Ultimately, in the most perfect of economic conditions for speculative stocks, the market finally saw through Richo’s sweet talk and arrived at the conclusion Richo had as much credibility as his shareholdings as CEO – exactly zero.
Today, JB speaks of hundreds of thousands ($750k) in predictable recurring annual revenue with the potential to double this in variable revenues. It’s quite a big step down from the billions of yesteryears.
JB has also led Linius to 3 much larger domestic contract wins where the company can credibly market itself overseas and is already seeing tangible international contract wins in both Europe and North America.
Most of all, JB transformed Linius' scattergun multiple vertical approach by honing in on the sports market until the company becomes self-sufficient. This might not be so far away either as current expenditure suggests break even is around $4 million dollars a year.
The domestic market is done unless the AFL and NRL have a change of heart, and even so it still wouldn’t be enough. Overseas deals are where the company’s larger growth will come from and JB has assembled a one-stop-shop for sports broadcast rightsholders to maximize advertising dollars by redirecting traffic away from YouTube and back to their own websites.
Linius has positioned its ducks in a row – 3 quick and easy to implement, cookie cutter product offerings each backed by noteworthy clients:
Archives (IMG Replay, Cricket Australia, All Blacks, SANZAAR)
Personalized highlights (A-Leagues, Wolves, Club Brugge)
Automated highlights (Cricket Australia)
It’s the recent entrance into the more lucrative world of automated highlights that raises an eyebrow.
Automated highlights is dominated by industry behemoth WSC Sports. WSC Sports has over 350 employees, cream of the crop clientele and raised USD$100 million last year. Not bad for a private company in unfavorable economic conditions. Their revenue early last year was hinted in the tens of millions.
This is a smart move from JB for two reasons. Firstly, it opens the door to a much larger revenue pie and, secondly, it positions Linius as a threat to WSC Sports' revenues and thereby a potential takeover target.
Indeed, WSC Sports’ history serves as a lesson of what Linius may become. WSC Sports started out very small in the basketball lower leagues. They initially provided a service for basketball talent scouts to help them prepare for future games, identify future stars in the process, and find players' and opponents' strengths and weaknesses via video.Their company took off by fluke when some big NBA industry names were impressed and wanted to become investors.
The most important takeaway from Linius’ last deal is not the size of the NAHL. It’s one of the top junior hockey leagues in America and has been around since 1975. It’s a pathway to the NHL. Over 100 NHL scouts attended the NAHL showcase last year. This is a chance to replicate the major leg up WSC Sports got when industry insiders saw the value their product offered and wanted to get on board for the ride.
WSC Sports are already on the record stating ice-hockey and soccer are the two most challenging sports for their technology. Ironically, soccer is a sport that Linius does well and now there is an opportunity to see what Linius can do for ice-hockey fans.
Linius is not yet growing at Chinese bamboo like speed that many here would like, but Linius is clearly growing. This thread has demonstrated that Linius has a sticky register of sophisticated investors, many of whom have continued to increase their holdings to date; these are investors who do deeper research, have better connections, and access to higher quality information.
What the register is glaringly missing is institutional investors and big-name investors that could move the dial, especially with on market buying and establish an uptrend that will help Linius raise at higher prices, engage the masses and thereby lessen this dilutionary albatross around shareholders’ necks.
Linius is not quite there yet, but with a growing and impressive list of clients in 15 sports covering 40 federations in 3 geographical locations, this day is getting closer.
Imho & Glta
LNU Price at posting:
0.3¢ Sentiment: Buy Disclosure: Held
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