Mandalay Digital Group
develops and publishes “branded” entertainment content for mobile phones. Using
software as a service-based platform, it provides mobile content distribution
as well as transaction services for mobile operators, end consumers and
original equipment manufacturers of mobile devices and tablets. It is just now
that the company is entering into its own as the mobile age starts to mature.
This is about the time the company will be increasing revenue on a grand scale.
The company has made a
series of acquisitions as it positions itself for the growing dependency upon
mobile devices.
During the summer of 2012,
it acquired the subsidiaries and assets of Logia Holdings Ltd., a leading
mobile content development and management solutions provider to top-tier mobile
operators and content providers.
In April 2013, Mandlay
purchased Mirror Image International Holdings (MIAH). Based out of Australia,
the company is a leading mobile solutions provider with extensive content
licenses with major brands as well as proprietary content management and billing
integration systems. MIAH enables carriers, media companies and brands to work
together. This acquisition will allow Mandalay to enhance existing products and
design new industry leading products
In December 2011, the
purchasing of the assets of Digital Turbine enabled Mandalay to provide an
end-to-end modular platform to the company’s existing carrier customers. With
the support of MIAH, Digital Turbine Content has become the company’s primary
revenue generating product. It enables distribution and licensing of content
across multiple categories, from music to wallpaper to games.
The 2013 Drop was Expected
While the stock dropped in
the summer of 2013, investors should have expected. In August 2013, the stock
had a huge drop in value because it announced it planned to raise $12 million
through a stock offering. In a move like this, stocks are expected to drop in
value to account for the additional shares. Mandalay dropped 24% to $2.38
following the offering.
Verizon Deal will Increase
Revenue
Recently, the company sealed
the deal with Verizon (VZ) for its Digital Turbine Ignite and IQ products. This
partnership is expected to start in the summer of 2014.
As mentioned earlier, the
acquisition of MIAH, out of Australia, has made the “Ignite” product the main
revenue producing product for Mandalay enabling carriers to regain the control
and monetization of application delivery and installation for their customers.
The IQ product is actually an interface that organizes “applications and
search” customized for the individual providing revenue potential for the
carrier and Mandalay.
Verizon is but one deal that
this company has been putting together with big carriers. In December, it
shared several new projects which include expanding its current relationship with
Telstra in Australia. These deals provide access to over 1 billion subscribers.
What to Look For
Mandalay’s model is
massively scalable through the cloud. Even though the company hasn’t been
profitable yet, it is quickly headed in that direction because of the growth of
the mobile market. Mandalay is targeting a break even EBITDA in 2014 and that
should continue to raise revenue.
The company’s 3Q of 2012
revenue was just over $2 million. The 2Q of 2013 saw the continued increase in
revenue recorded at $6.99 million. This will continue to grow. This rapid
growth has yet to include Verizon. So investors should expect these revenues to
continue to advance quickly.
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