Destiny Media Technologies Inc. (OTC:DSNY) Q3 2025 Earnings Call Transcript

Destiny Media Technologies Inc. (OTC:DSNY) Q3 2025 Earnings Call Transcript July 14, 2025

Rebecca Collins: Good afternoon, everyone. Thank you for joining us on today’s webinar. Before we begin, I would like to announce that we will be referring to today’s earnings release, which was sent to the newswires earlier this afternoon. I’d also like to remind you that the conference call could contain forward-looking statements about Destiny Media Technologies within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current beliefs and expectations of management and are subject to risks and uncertainties, which could cause actual results to differ materially from those forward- looking statements. Such risks are fully discussed in the company’s filings with the SEC and SEDAR.

The company does not assume any obligation to update information contained in this call. During the webinar, we will discuss certain non-GAAP financial measures. The non-GAAP financial measures are presented in the supplemental disclosures and should not be considered in isolation of or as a substitute of or superior to the financial information prepared in accordance with GAAP and should be read in conjunction with the company’s financial statements filed with the SEC and SEDAR. The non-GAAP financial measures used in the company’s presentation may differ from similarly titled measures presented by other companies. A reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures can be found in the earnings press release.

[Operator Instructions] With that, I’d like to turn the call over to your host, Fred Vandenberg, Chief Executive Officer.

Frederick Vandenberg: Thanks, Rebecca. Thanks to everyone joining the call. I’ll just get into the quarterly results. Year-to-date revenue is up 2.5%. Still, there was a slight decline in Q3 of 1.9%. Total year-to-date customers have increased by 4.9%. And there’s, at 1 point — sorry, there’s a 4.9% increase in new customers. There’s a 1.4% increase in total customers. The decrease really in Q3 is a result really of a small decline in U.S. independent spending per release rather than the total number of customers. Expenditures increased by 21%, about half of this increase is non-repeating litigation costs and about half of it is noncash amortization. There’s also a 3.5% increase associated with R&D infrastructure that isn’t currently revenue producing.

It’s associated with some of the investigations that we’re doing, some of the analytics that we’re doing, and I’ll talk about. These costs are not necessary for the core business as it stands and are really undertaken to have a longer-term revenue increase. EBITDA is just about — it’s a little bit positive, $37,000, and it’s — we’re really operating at a positive cash flow, slightly positive cash flow at the current time given our spending on the litigation and capital investments. We continue to invest for scalable growth. If we break our target markets down, there — we really break them down into new markets and established markets and then we separate those markets into larger business development focused clients that we invest in the platform to address and then the smaller clients that have more programmatic sales.

Q&A Session

We’re very close to providing an automated — fully automated release preparation and payment process for the smaller clients where we’ll just support those with localized websites, local ads, local recipient lists and combined with some platform investments. I think 1 of the things that we’re really quite excited about is during the quarter, we’ve launched a new product called MTR, and that’s really the radio tracking service. We’ve begun during the quarter to combine the data that is received within MTR and the data that we have with Play MPE. And we’ve got some really good insights. There’s a bit of a challenge in doing that because Play MPE is recipient-focused in contrast to MTR, which is station-focused, Play MPE distributes to many more people than just radio and these people at radio represent different stations, maybe more than 1 station or maybe there’s more than 1 person per station.

But we’re connecting that data. We’ve created some really interesting analytics that we want to use in 2 different ways. But it seems like we’ll know what time a release is made and its impact on whether it’s successful or relationships to success, there’s some inferential analytics that show how Play MPE impacts the release. So you’ll see some greater success with announcements within Play MPE. Each Play MPE release has approximately 3.5 social media links. We also implemented during the quarter, a tracking of those — the clicks on those links. So we’ll be able to report on that and then demonstrate relationships between that announcement and social media impact. We’re not aware of anyone else that does this or can do this. Same thing with Meter.

There’s not a promotional platform that also tracks the airplay data, at least we’re not aware of one. And so I think this is really valuable information to our customers that we think will play a part in our revenue growth going forward, at least that’s the hope we’re talking with our clients to see what information they would really find useful or valuable. So it’s potentially something that will grow. So we’re addressing those larger critical clients that the walnuts in the mall kind of clients, and also, I think we can package it up as a salable product. But we’re just building out these case studies. And MTR connected data with Play MPE is, I think, a very valuable source of information. MTR itself is growing, but the revenue is immaterial at this stage.

It’s potentially a very disruptive technology we have larger clients that provide charting type services that have a smaller coverage base, like they provide reporting on fewer stations and — but they — what they do is they provide charting stuff — charting information that shows a relative performance, how your track is doing relative to other tracks out in the market. So you’ll see like the billboard to have 100 kind of information. We don’t have that at this stage. We don’t have the content to do that, but MTR could do that and could do that on a global basis. It’s just — it would be a matter of investing in that to do that. And that’s really our plan to grow at this stage. We’re reinvestigating what it takes to grow. And so we’re going to be critically looking at investments going forward and whether we pursue these things.

So with that, I will turn over to questions.

Rebecca Collins: [Operator Instructions] There is a question from Thomas.

Unidentified Analyst: First question is, I think you guys forgot to upload the Q2 video on the website for investors. I wanted to look at it and never found it.

Frederick Vandenberg: Okay.

Unidentified Analyst: Will the CFO participate in next earnings calls? Or like what’s your objectives in the company? I know you haven’t really touched a subject, she is kind of new, but can you just give us a little bit of information on her background or what you hope she’ll bring to the team?

Frederick Vandenberg: Well, this — I mean the investment in the CFO is designed to provide critical financial information. We’ve already been catching up on some tax-related issues that we’re dealing with or in compliance-related information. But where Assel will be working on strategic financial information to help us grow. I haven’t really thought of bringing her on the calls going forward. I actually would probably bring in Andrea Mundie, who is our — heads up our operations.

Unidentified Analyst: Is it Andrea supervised sales and marketing as well? Or I can’t remember?

Frederick Vandenberg: That’s right, yes.

Unidentified Analyst: So you think sales and marketing line item will increase or?

Frederick Vandenberg: So we have recruited — we invested into a more business development staff during the quarter. I suspect that there’s going to be a small increase in the costs associated with that. But it’s really just finding the right people to reach out to the critical clients. The way we grow, it’s kind of in 2 ways. And I tried to explain that. There’s the programmatic marketing-related sales that we’re supporting with the self-serve checkout feature that we’re working on. So that’s really the smaller sales in all the markets where we’ll have — we can address independent use. The business development people are really focused in on your strategic content, the larger customers, the major labels that in itself will drive use of the platform.

So for example, we’re — a new market for us or a market where we can expand would be into rock or rhythmic or urban music in the U.S. We have some presence there, but that’s an area where we really want to target and having the right business development people to address and reach out to those people is critical. We also think the investments that we’re making into reporting and the really interesting analytics that you’ll see within the platform will help drive sales there. We think there’s a lot of things that we can add reasonably easily. And it’s a matter of just trying to figure out what those clients really need to see.

Unidentified Analyst: So what proportion of sales and marketing is more like business versus trying to like?

Frederick Vandenberg: That’s a good question. I mean, business development is really, I would say, 3 different things, it’s marketing, business development and then sales. And I mean, I think we’re probably evenly split on the investment between sales and in marketing.

Unidentified Analyst: Or like — if I could rephrase, how much is — like what proportion is dedicated, if I can say, to major labels versus independents are?

Frederick Vandenberg: Like I said, it’s probably half and half, yes.

Unidentified Analyst: Okay. Yes. Okay. Can you remind me how much was invested to build out Meter total or like in CapEx or?

Frederick Vandenberg: I don’t know that number off the top of my head. I would guess it’s around — no, I don’t want to speculate on how much that was off the top. I can get that number to you.

Unidentified Analyst: I guess I can reconcile myself.

Frederick Vandenberg: You’ll see capital investments that — but it will include a number of investments that have nothing to do with Meter.

Unidentified Analyst: Yes.

Frederick Vandenberg: Meter certainly has not shown revenue to date that would justify its capital investment, at least not directly. The benefit of it though, I think, is more prospective it provides support for Play MPEs, the relevance itself. So it will help in sales of Play MPE. It is a potentially disruptive product itself. So if we could do charting on a global basis, that would be a very significant high-margin business. But there’s — the landscape there is getting quite competitive. Apple even launched a free — it’s very rudimentary reporting service for it, but we’re a small company. And I mean, our MTR is — provides a bit more and different information, but its — Apple’s version is free. So there’s a little bit more competitive landscape with Meter. But it does help us with Play MPE sales, and I still think that there is some potential to be disruptive in the marketplace for MTR.

Unidentified Analyst: But the momentum, if I can say, is it really quite there yet, but was Meter built on what we thought would be useful or like based on customer requests and like what the customers were involved in just choosing at least the basic features to start off with?

Frederick Vandenberg: Both. So I mean it’s both based precisely on customer requests. We listen to — we don’t build things without customer feedback without looking into what customers really want. And that’s going to be true with reporting within Caster itself. We really need to know what’s going to make a difference to their daily lives to grow their use of their value of Play MPE. Same we held through with Meter. It is — our customers were customers that wanted this type of service that had no option for it. That is really — it’s not a really a competitor. I think media-based thinks we’re a competitor, but media-base is the charting provider. They provide a very expensive review of airplay. It’s very detailed. It’s very expensive, but it provides detail that isn’t really necessary for a lot of the smaller clients, and that’s what we built Meter for.

So you’ll get in Meter in contrast to something like media base you’ll get airplays of your track and your track only whatever you are subscribing to, whereas media base provides airplays of the whole panel, the whole chart. We also provide a larger set of radio stations, so a much broader coverage of the United States, for example, than media base would. And this is in direct support of those smaller clients. But in the process of building out Meter, there are — the competitive landscape has increased. It wasn’t just us that identified this as a target market or addressable market. Our revenue is growing, it’s small, but it also provides some really fantastic information that combines the promo part of Play MPE with its success at radio. So you’ll be able to identify like what I said earlier, is when if you release a song at 9:00 p.m. on Tuesday, that seems to be the greatest success so far.

It also shows — it highlights that there’s a very high correlation between downloads and airplay downloads from Play MPE and airplay, really high impact of secondary announcements. And high impact of including metadata within your release in Play MPE. So there’s all sorts of really interesting data points that we can leverage at least into sales of Play MPE and that we just created those this quarter. In fact, after the quarter, it was completed, but we’re still working out on the data on that. But — so it will help — it should help Play MPE revenue.

Unidentified Analyst: Yes, I guess I just have a hard time reconciling like total — if I just circle back to your sales and marketing, like total amount that was spent in like last 4 years versus the incremental revenue that it generated. I know things take time, and I know on the product development side, it takes time to develop things and sell it. But I don’t know, I feel it’s hard to convince other investors to look into the story when it feels like there’s a ton of costs that are being shelved in — not shelved, but like invested in sales and marketing, but that there’s not much incremental revenue that’s being generated out of those.

Frederick Vandenberg: I mean, there is a certain amount of sales and marketing that is necessary to maintain the revenue. But I think it’s a fair comment. We haven’t seen the growth that we have wanted. We have adjusted our investments there. The — I mean, I think your comment is, it’s one I feel myself, but we’re trying to improve that. The — I think the analytics, the reporting features that we’re working on in platform is something that it is new, we hope to channel that into a higher revenue growth, I mean, ultimately, the proof will be in the pudding in the next little while about whether those investments will pay dividends. We’ll make that assessment. We’ve engaged an outside consultant to take a critical look at our strategy, and we’ll be receiving a report later this year, this calendar year and just to see if there’s anything we’re missing or different approaches or whether investments — we should reduce investments for growth.

Unidentified Analyst: I see. Is it on the whole business or just?

Frederick Vandenberg: Yes. It’s on the whole — it’s holistic.

Unidentified Analyst: Yes. I see. Yes, I just — it feels like it’s more like the product is most often the bottleneck and that — it’s always on — the hope is always based on the next couple iterations of the product.

Frederick Vandenberg: Yes. I mean, I think that’s fair. We were a bit long-winded in addressing those product features. There’s — I mean I don’t want to bring up too much from the past, but there was a fair amount of technical debt in moving program languages that has — that’s an investment that’s required that we were behind on. The — so there’s technical debt, we also really built out the platform for — to be online for Universal. And that — those 2 things really were required to maintain our business. And they’re not — they didn’t do a tremendous impact on growth. And I think we were recently able to invest in the automated self-checkout portion of the platform, which we’re — we believe will help us in that smaller sale in markets where we don’t have a lot of independent usage.

For example, there’s a lot of markets where we have that cornerstone of content that drives use. So we have — just take Portugal, for example. That’s one I’ve mentioned before, I think. But we have very strong active recipient use. We have a curated list for that. We don’t have any independent sales in Portugal. Now, that’s just 1 market. It’s not a big market. So you don’t want to invest in business development to go and attack that market with the possible exception of the majors in that market. But with the self-serve checkout, you can localize website, local ads, you can hopefully programmatically sell to that. And that’s true with a lot of different territories. So you’ll see that in a lot of a variety of territories. So it’s, again, platform investments that — I mean I think it’s a fair comment that does seem to be the bottleneck on a little bit of growth, yes.

Rebecca Collins: It doesn’t look like there’s any other raised hands, but there is 1 question in the Q&A box, so I can read it out, Fred. You’ve been talking about revenue snowballing for at least 5 years now, yet performance remains stagnant and there is no price support for shareholders. How do you explain this disconnect at this stage?

Frederick Vandenberg: Well, I think we’ve covered that with the — our investments in the platform itself and Biz Dev, I mean, where are you going to take a hard look at it, snowballing or accelerated revenue growth is something that we’re targeting. But if — ultimately, if we can’t do that, then we’ll have to find a different way to provide a return to our shareholders.

Rebecca Collins: Okay. I think that is all the questions for today.

Frederick Vandenberg: Thanks, everyone. I’ll speak to you in the fall.