Linius Technologies Limited (ASX:LNU) CEO and Executive Director James Brennan discusses the company’s quarterly performance and its technology for rendering video files as flexible as other forms of data.
Paul Sanger: I’m Paul Sanger for the Finance News Network, and today I’m talking with Linius Technologies (ASX:LNU). They have a market cap of around $10m. Linius is a global software-as-a-service company headquartered in Australia with operations in London, New York and Europe. Linius invented and patented the Video Virtualization Engine, which indexes, analyses, and tags each frame in a conventional video file. This makes videos fully searchable and as flexible as other forms of data. We welcome back today Linius CEO James Brennan. James, welcome back to the network.
James Brennan: Thanks, Paul. Pleasure to be here.
Paul Sanger: James, let’s kick off. You recently released your quarterly. It certainly looks like it’s been a strong start. What has driven this strong performance?
James Brennan: Yeah, look, the start of the year was really driven by a couple of things. Primarily, the hard work that we put in through FY23. We brought on board a lot of amazing customers during the last six to nine months of that year, some customers that have really raised our level of validation in the market or awareness in the market. So, customers like Cricket Australia and IMG in particular, those really brought a lot of awareness and validation to what it is that we’re doing and have opened quite a few doors. And then deployments with companies like Inverleigh Media here in Australia, working with SANZAR rugby and New Zealand rugby. You know, getting all of those on board in FY23 were really important to us, and getting those deployments progressed and done and live in the market that we can show, that was absolutely critical to, you know, setting up the start of the year.
And then right away out of the gate in Q1 of FY24, brought onboard an amazing new customer with Hockey Technology Partners. It’s our first customer in the US. We signed that deal in July and we were able to get that deployment up and live in just three weeks. So, that customer came on board, made the decision to build their own user interface and use our core technology. We had them up and running and that product went live in September. So, we now have our first live service with end-users in the US, which is again driving great validation and opening that market in the US.
And the last thing I’ll bring up is that, at the end of the quarter, we announced a new product or an extension to our product, called Whizzard Highlights. And this is an automated highlights product that uses the base of Whizzard to then, you know, automatically publish and curate automated highlights, which is a large existing market that our customers are well aware of. Every one of our customers is buying and using products in this segment.
So, a combination of those things have really set us up for a great year.
Paul Sanger: Fantastic. And the fast start has put the company on a trajectory for a strong billings growth into FY23. What sort of growth to revenues can we expect to see by the end of the financial year?
James Brennan: Yeah, so that’s the other thing that we announced in our quarterly is that, you know, just based on the contracts that we have in hand and the contracted revenue, which includes kind of the setup fees and the monthly recurring fees, that’s given us a baseline of $725K for the next 12 months. And that’s a nearly 50 per cent growth over our billings and invoices from the prior FY. So, that’s really set us up. So, immediately out of the gate, we know that we’re going to have a 50 per cent growth for the year, but that doesn’t include things like variable revenues that are built into a number of our contracts, any upsells and additional products that we’re bringing to our existing clients. We very much see a strong potential to double the revenue from our existing contracts alone. So, existing customers taking new products, the variable upside revenues from those existing customer contracts. And then, on top of that, we’ve got all the new contracts that we’re working on. So, that doesn’t include anything that we bring on board from kind of today forward. So, we’ve got a great pipeline, which we’ll talk about in a little bit as well.
Paul Sanger: Great. And the Cricket Australia contract is now really starting to ramp up. How important will this contract be to Linius in the coming quarters?
James Brennan: Look, it has been critical for us and will continue to be critical for us, both from a validation standpoint, a great use case of our Whizzard platform and our product. But, from a revenue standpoint, Cricket Australia’s currently our largest customer and continues to grow with us. So, the great news is that they took on board the new Whizzard automated highlights product. So, they were the first customer to launch and go live with that. So, we are generating additional monthly recurring revenues from them on that. But the other great thing is that, with our variable revenue share in the Cricket Australia contract, the automated highlights are going to be a huge portion of that. So, as, you know, the new Big Bash series starts and as they go into the holiday period, where they’ve got lots of games being played, we’re going to be automatically publishing highlights that are being pushed out. And those automated highlights are one of the biggest things that fans watch. So, obviously the revenue share opportunity for sponsors and advertising dollars is great. Cricket Australia just announced that they launched their first FAST Channel, which is a 24-hour… FAST stands for “Free Ad Sponsored Television”. So, that’s a 24-hour channel that’s available on Samsung TVs that’s powered by Whizzard. So, they’re taking all this great historical content and just publishing 24 hours of amazing historical content. And Whizzard is supporting them in doing that.
And then, the last piece, Cricket Australia, when we initially started speaking with them, their first focus was on our fan engagement products, putting the archive directly in the hands of fans. They then pivoted to do more of an internal use case, where they’ve now deployed and launched lots of tools for their internal staff. But the long-term goal with them is to absolutely get that amazing content directly in the hands of fans, where fans can literally search the entire archive and pull up their favourite highlights. And then, the last piece, they’re helping us leverage that deployment into other cricket bodies all over the world. So, we’re talking in Europe and Asia, and even in the US to the major cricket bodies, who are now kind of looking at Cricket Australia as an example of what to do.
Paul Sanger: Well, I have a Samsung TV, so I’ll be checking out that footage when I get home tonight.
James Brennan: Absolutely, please do.
Paul Sanger: Now, James, I understand you’ve been on the road for the last three weeks, in Europe and the US. How is the pipeline of new contracts looking and what are some of the key broadcasters, sport federations and geographies you are targeting for the remainder of the financial year? And talk to us a bit more about the trip and who you met up with.
James Brennan: Yeah, it was an absolute whirlwind three weeks, and we met with a ton of different customers in different segments. I can’t really give details on exactly who we met with, but we attended the SPORTEL conference in Europe, which is one of the largest sports and technology conferences each year. We had some amazing opportunities that came out of that, and we drove some of our existing pipeline opportunities further along in the sales cycle. This was really about getting us in front of some new market segments that we’re pushing into. So, the first is in the broadcast segment. So, we met with quite a few broadcasters, and we’ve got opportunities that we’ve been developing for the last couple of quarters here in Australia, in the US, in Europe, the UK, and even in the Middle East. So, we’ve got a number of broadcast opportunities in our pipeline that we hope to be able to talk about soon.
We continue to work with other federations, both in sports that we’ve done before, like cricket and football and rugby, as well as new sports that we’re just starting to get into, in terms of like golf and tennis and others. One of the big ones that we’re looking to break into soon is the US football market. So, not European football, but actual US football. And one of the ways that we hope to do that is through the US collegiate sports market. So, we’ve met with a number of different college divisions and big schools, and we’re looking to really break into that US college market, which is huge. So, if you’re not from the US, you may not understand the scope and scale of it, but there’s thousands of schools, and some of those schools have stadiums that hold a hundred thousand people that sell out every weekend. So, the level of opportunity in US college sport is huge.
And then the last thing is that we met with a number of technology companies, anything from data providers to OTT platform providers, and we’re looking to integrate our technology into products that they’re then bringing to market. So, very similar to what we’ve done with Inverleigh, where they’ve embedded our Whizzard product and technology into their platform and services, which they’re now out and selling. That gives us a level of scale that we can’t do on our own. So, we’re looking to do that with a number of different technology providers. And, to help us do that, we’ve brought on a number of additional commission-based contractors kind of to amplify our sales engine. We’ve brought on contractors in India, the Middle East, Europe, and the US as well. So, we’re really now at a point where we’re putting the pedal down and, you know, using the validation that we’ve got in the market to drive that pipeline.
Paul Sanger: James Brennan, thank you for your time. It’s been an absolute pleasure.
James Brennan: Thanks, Paul.