Migme Limited - Quarterly Operations Report
Global digital entertainment company migme Limited (ASX:MIG) has released its March quarterly operations report, which shows that Monthly Active Users of the migme service have grown to 39 million and revenue increased by 32% quarter-on-quarter to $7.1 million. Other significant developments during the quarter including the MoU and capital raising with Chinese photo and video app company Meitu and the agreement signed with leading entertainment and sport agency Creative Artists Agency.
Highlights - March 2016 Quarter (1 Q 2016)
- Monthly Active Users (MAU) exceeded 39 million at quarter end, up 22% on previous quarter
- Artist and entertainment partners increased fourfold (up 319%) to over 2,600
- Quarter on quarter cash receipts up 32% to $7.1 million
- Signed MOU and raised $7m with new strategic shareholder Meitu, one of the world’s leading photo and video mobile app. developers with 900m users globally
- Signed agreement with leading entertainment and sports agency Creative Artists Agency
migme is pleased to announce its 1Q2016 results which demonstrate strong quarter-on-quarter growth in key markets, as measured by its key metrics of Monthly Active Users, Artist numbers and cash receipts from customers.
Monthly Active Users increased by seven million for the quarter, a 22% increase. Over the last 12 months, Monthly Active Users have grown by nearly threefold and cash receipts by more than sixfold.
Nearly 2,000 new Artists and entertainment partners joined the platform during the quarter, compared to a growth of around 130 Artists in the previous quarter. This growth was driven by a number of factors including the acquisition of new Artists through various partnerships, the activation of Artists from agreements signed last year, as well as the integration of Artists from alivenotdead, which migme acquired in 2014. This growth is expected to accelerate in coming quarters as a result of the new agreement migme has with leading entertainment and sports agency Creative Artists Agency (CAA). CAA having access to some of the biggest artists and content creators in Hollywood and Bollywood and is providing both expertise and access to their vast resources and relationships.
During the quarter, the Company welcomed a new strategic investor, Meitu, one of the world’s leading photo apps. and main competitor to Instagram, with over 900 million users worldwide. Meitu subscribed for 11.65 million migme shares in March, raising $7m for the Company.
Building a platform to drive continued growth in users
migme is focused on building a platform business similar to businesses such as Line (headquartered in Japan), Kakao (Korea), WeChat (China), YY.com (China) and Weibo (China), where user engagement can be monetised. migme is focused on acquiring users and then encouraging those users to engage with other users, Artists, products and services in a way that delivers revenue back to the Company.
The Company intends to deliver a competitive platform for its targeted market, primarily India, Indonesia and the Philippines. In the short-term, migme aims to broaden user growth and sales, improve the quality of engagement and increase operating margins.
During 1Q2016, the Company continued to improve its user experience by completing updates to its website, mobile website and mobile clients. It also deployed a “big data” infrastructure to enable personalised recommendations and simplify alerts and notifications. This is also a precursor to being able to deliver a more contextually relevant activity feed later this year, which will help to further grow user engagement and monetisation.
Strategic partnerships with leading digital media companies and third party applications in the region will enhance migme’s user experience, including the MOU with Meitu which will see some of Meitu’s product range integrated into the platform during 2Q2016.
Other significant agreements signed during the quarter include Peppermint Innovation, a mobile banking, payments and remittance company which will help expand migme’s reach in the Philippines.
In addition, in April migme worked with CricBattle, the world’s only draft-based fantasy sport for cricket, to launch fantasy sports on the migme platform. The launch occurred just before the 2016 Indian Premier League (“IPL”) cricket season, with the aim of encouraging cricket fans in India and elsewhere to engage on the migme platform during the season and beyond.
Engaging more Artists and media
migme’s approach to artist engagement is key to its competitive advantage against the likes of Facebook, Twitter and Instagram, where new algorithms are alienating brands and artists, making it more difficult for them to reach their target audience.
migme is turning this social network business model on its head. Instead of a “pay to play” model where artists and influencers need to pay to reach their audience or the Facebook model where the algorithm limits audience reach and seeks to extract rents from advertisers or the content creators themselves, migme actively helps artists build a fan base, engage with them and generate revenue from this engagement.
The Company’s expanding relationship with CAA is expected to be a major growth driver for this part of the business. Bollywood is the largest movie industry in the world and the celebrity and entertainment ecosystem in India is unique. Partnering with the right players in the ecosystem is the key to bringing the right artists onto the platform, creating the right engagement and monetising that engagement.
This quarter saw the power of this business model come to the fore, with Artist and entertainment partners increasing fourfold to 2,600. Success cases include a successful result in Nepal with Mega Model, positive results from CAA, Qyuki and from blogger networks in Indonesia and the Philippines. The power of migme has enabled a shoutcaster in the Philippines to buy a car, another to pay for her brother’s hospital expenses and a blogger in Indonesia to take her family to Singapore for a holiday, to name just a few examples.
As the Company continues to build its Artist network in 2016 it will begin to improve the quality and efficiency of its operations and execution to accelerate growth.
The migme platform, combined with the artist and influencer engagement program described above, lends itself to the successful delivery of social ecommerce services as a means to drive engagement and sales. migme’s focus on social ecommerce will follow similar successful Chinese models, namely Mogujie and Meilishuo, which reported combined revenues of US$3 billion last year.
As part of this strategy, migme completed the acquisition of Indonesian ecommerce business Shopdeca, setting the framework for migme’s expansion into social ecommerce. As part of the acquisition, Shopdeca founder Andreas Thamrin has joined migme as Global Head of Ecommerce. His skills and experience will be a key factor in driving the delivery of migme’s social ecommerce experiences in the future.
Focus on key markets
migme’s three priority countries - India, Indonesia and the Philippines - have a combined population of more than 1.5 billion and an estimated active internet population of over 300 million and growing quickly. The Company is focused on establishing a strong presence in these markets as quickly as possible. During the quarter migme built out its organisation in India, started to deploy offices in the Philippines and grew its presence in Indonesia organically and through the acquisition of social news site Hipwee.
The Company made further progress with handset pre-installations, driving local content and audiences, especially in Indonesia and India. In the Philippines, migme has started to build a strong network of influencers and is in the process of building out its payment infrastructure.
The next few quarters will see a focus on improving local operations and building out local ecosystem relationships.
In early March, the Company raised $7m through a share placement with Meitu. The funds will be used for platform integration, cross marketing and general working capital.
Total operating cash outflows for the quarter included investments the Company made in building the in-country teams, product development, improving infrastructure and securing payment partnerships. This investment will support the Company’s plans to increase growth and revenue over the next three quarters.
We are excited about the progress of the Company and the platform, and the progress in the key markets of India, Indonesia and the Philippines. Over the next three quarters, the Company intends to:
- consolidate the growth momentum in the Company’s key markets;
- focus on growing MAU and revenues, as well as improving the operating margin through improvements in the platform and platform operations; and
- increase and improve engagement across the platform by growing the number of influencers and key opinion leaders on the platform, as well as the number of activities users can undertake via third party applications and games.
Investor Conference Call – Wednesday 27 April 9.15 am AEST
Investors are invited to join a conference call hosted by CEO Steven Goh on Wednesday 27 April at 9.15 am AEST.
To access the call please use the dial in details below:
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