My notes from the call are per below.
Have decided not to open a position as:
- I was looking for only 1 more position to open and decided to run with BOT as I think it has a much stronger problem to solve, offering and hence, moat
- The MXO moat is more “human-judgement driven” in terms of defining advertising match between customer and location vs my preference for stronger self-fulfilling network effects - it does feel that the moat could go when the people go ... that's an ongoing key person/s risk I think
Disc: Not Held
--------
NOTES FROM CALL
Very interesting business which takes advantage of “high dwell times” to create a niche advertising offering. Learnt a lot from the call.
MXO is an advertising company - the digital screens is the “digital place-based network” tech platform on which MXO pushes out dynamic and hyper-relevant advertising in “high-dwell time” locations (pubs, medical centres, sports facilities) where the audience is engaged with the advertising.
All its revenue streams are advertising-related.
MXO creates property-relationships with the bars, café’s medical centres etc - they supply, install and manage the screens, they manage the advertising content, and the property has the ability to access and put their own content on the screens - this addresses the issue of customers now knowing how to manage the tech around the digital screens and to keep the content fresh, on an ongoing basis.
Growth opportunities - other verticals, M&A and more locations in existing verticals.
Market size is tricky to estimate - is part of the Outdoor Advertising sector which has $1.3b in revenue, but this includes roadside billboards, bus shelters etc.
Long dwell time locations have not reached full maturity - still at 60-70% inventory levels, headroom to grow.
Contract durations vary by vertical - café contracts are 2-3 years as these are more transient businesses with 10-12% attrition rate, clubs, indoor spots have longer contract durations - usually includes the screens and ongoing service.
Moat - good at understanding who and where our customers are, their very specific audiences to ensure super-relevant advertising and the full service in maintaining the digital screens.
The tech stack comprises - (1) commercial grade digital screens, typically 5 year warranties (2) Broadsign - the content management software (3) 4G dongle for remote access - all low touch, once installed, setup typically takes ~3 weeks.
MXO owns the digital screens - $400k capex was recently spent to expand network.
Major competitors - (1) Tonic Health Media in the medical centre space, ~600 screens, similar revenue to MXO (2) Gyms - Val Morgan Outdoor, but not a head-to-head competitor (3) Pubs - no natural competitor other than what is streaming on Pub TV’s
MXO is now focused on cashflow and profitability following 2 prior phases (1) Inject Capital/Covid (2) Grow as fast as possible.
