Shareholders Unite, a long-term contributor to Seeking Alpha, has posted an analysis of social entertainment umbrella The Meet Group.
The piece argues that MEET is performing well, but that the company could benefit from tackling “obvious flaws in the products and [a] lack of strategic direction”.
Among the group’s strengths are 4.6 million DAU (16.2 million monthly), around $200 million in annual revenue and over $35 million Adjusted EBITDA.
The revenue figure has increased massively, from an approximate $75 million in FY 2016. Much of the growth was driven by the acquisitions of top brands including Tagged and LOVOO.
One area of concern is a potential increase in the level of content creator expenses. The Meet Group bundles these costs with product development costs in its reporting, the author writes, so it can be difficult to tell whether this is burdensome or “benign”.
In Q3 2016, product development and content costs came in at 34% of revenue. By Q3 2018 this figure had risen to 57%.
Shareholders Unite concludes: “Rising content cost could be a problem, but perhaps it isn’t and the company simply spends a lot of money developing new products, which is fine given the cash flow the company generates.
“We tend to hold the latter view as we’re unaware of talent battles similar to those between the Chinese platforms, but we’re not entirely sure and are surprised no analyst inquired about this during the CC.”
The Meet Group’s CFO Jim Bugden appeared at the recent GDI London Dating Conference for a session on meeting and dating through livestreamed video.
Read more here.