Moovly Media has a 126 per cent upside, says eResearch

Moovly Media (Moovly Media Stock Quote, Chart, News, Analysts, Financials TSXV:MVY) has received a coverage initiation on Monday from eResearch analyst Chris Thompson, who initiated coverage MVY with a “Buy” rating and $1.40 target. Thompson said Moovly’s leading-edge video production software has a large and growing global market in online video and the company represents a strong takeout target.

Vancouver-headquartered Moovly Media has a cloud-based platform that allows users to create professional-level videos, picture-based videos and whiteboard animation without required expertise in video creation. The company generates revenue from subscription fees, with different plans for business and education users, while the free version of the platform houses basic features and functionality. Above Moovly Free, the company has Moovly Pro, Max and Enterprise.

Founded in 2012, the company began in Belgium and currently has over 3.7 million users worldwide, with fiscal 2020 (year end September 30) revenue of $1.5 million and an adjusted EBITDA loss of $1.5 million.

Moovly was listed on the TSX Venture starting in 2016 but has only really come to life in the past couple of months, zooming up from $0.11 per share at the start of 2021 to as high as $0.89 by mid-February. The stock has pulled back in more recent weeks but is still up plenty, with more to come, according to Thompson.

“Moovly is positioning itself as the leading video content creation technology provider and thereby the supplier of choice to businesses seeking advanced video tools for their own use or to embed and resell to their client base,” said Thompson in his report.

Thompson pointed to the growing need for online video creation capabilities, where there will be 5.3 billion internet users by the year 2023 and where over 90 per cent of marketers saying in a 2020 survey that online video is an important part of their strategy.

Thompson said video remains a key tool for marketing messages and content distribution, with a recent study showing that US businesses intend to spend US$135 billion on digital video in 2022 versus US$83 billion on digital ads and US$71 billion on TV commercials, while the global e-learning market is expected to grow by 14.6 per cent annually to 2026 where the market could reach $374.3 billion.

“The online video industry is transforming the presentation of information and entertainment across various industries including advertising, education, entertainment, financial, and health. The industry has attracted many companies competing for a slice of the market with startups and mature tech companies trying to shape the future of how digital video is created, stored, distributed, and analyzed,” Thompson wrote.

Competitors include large caps such as Adobe, Microsoft and Apple, while a number of private companies are also focused on video. But Thompson said Moovly’s competitive advantage lies in its focus on small business and lay users as video content providers along with companies making or exploiting content creation that don’t have their own video editor and platform. Moovly’s platform employs a simple “drag-and-drop” interface and integrates with applications ranging from AWS, Dropbox and Getty Images to Facebook, Microsoft Azure, Twitter and YouTube.

“Moovly has developed one of the best-in-class, function- and media-rich, proprietary cloud-based platforms that transforms video creation and is unique in a massively growing marketplace,” said Thompson.

Thompson said cloud-based video editing software is becoming more popular due to the lack of additional software to download and maintain and the ability to upload videos and edit files remotely as well as link different social and web accounts to share their videos. The analyst said Moovly’s SaaS model is scalable to handle growth, with the company earlier this year announcing an increase in bandwidth and enhanced support to its platform to assist its users and handle growth in demand.

On that demand, Moovly saw a greater uptick in usage over 2020, with the stay-at-home economy playing a role in the growth. Last month, the company reported a 302-per-cent growth in education subscriptions over the previous 12 months, citing an “urgent need” for its services due to the pandemic.

“Moovly is ideally positioned to benefit from the explosive growth in the education technology sector. The sector is growing rapidly and the changes that we are currently seeing due to the particular demands of the pandemic are expected to continue long after this current crisis is over,” said Moovly CTO Geert Coppens in a February 9 press release.

On Moovly’s growth prospects, Thompson has estimated fiscal 2021 revenue and adjusted EBITDA at $2.5 million and negative $0.1 million, respectively, and fiscal 2022 revenue and adjusted EBITDA of $8.0 million and $4.9 million, respectively. At the time of publication, Thompson’s $1.40 target price represented a projected 12-month return of 125.8 per cent.

Thompson added that Moovly represents an acquisition target, saying, “Moovly would fill an important gap for any company making or exploiting video content, such as video aggregators or agencies, that does not already have a leading-edge video editor.”