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QYOU: Setting Up for a Record 2024

What you need to know:
• QYOU Media announced the launch of two new channels for its Connected TVs business as well as a distribution agreement for QPlay+.
• On its March 7th townhall, QYOU USA highlighted that it is currently having its best quarter ever, bouncing back from the Hollywood strike.
• This sets up QYOU for a record 2024, as seen in our model and Q1/24 preview section below.

This morning, QYOU Media (QYOU:TSXV) provided an update on its Connected TVs (CTVs) business including the launch of two new channels and a distribution agreement. We view this as a significantly positive development given the strong growth expected in both Connected TV sales in India as well as marketing dollars allocated to these devices. QYOU USA hosted a townhall meeting on March 7th where we learned that QYOU USA is having a record quarter as it develops its reputation with global brands. We continue to view the pullback in the stock as a material buying opportunity ahead of major revenue growth and profitability improvements in 2024. We are maintaining our BUY rating and $0.15/share target price on QYOU.

Connected TVs Announcement
QYOU announced the launch of two new channels along with a distribution agreement for Connected TVs. The two new channels, QToonz and RDC Movies will feature premium animation series and South Indian movies respectively. QToonz is a partnership with Indian animation producer, Toonz Media Group which has created animation productions with major studios such as Disney, Paramount, Marvel, and the BBC. RDC Movies will feature megastars in hundreds of movies from South India that have been dubbed into Hindi.

QYOU Media India now has seven free ad-supported channels on CTVs which drive revenue growth based on leveraging deep advertiser relationships with global brands. As mentioned in our initiation report, connected TV sales are expected to grow rapidly in India and globally with 9 out of 10 TVs sold in India last year being Smart TVs. Exchange4Media expects CTVs to be in 40M homes in India by 2026 compared to 19M in 2024, pairing well with the trend in increased internet access in India. Management highlighted that ad revenues for CTVs and smart TVs reached $25.9B, growing at 13% in 2023.

QYOU also announced that new and existing channels will be supported with its new CTV distribution agreement for QPlay+ with ZEASN, the world’s leading smart home ecosystem operator. ZEASN operates the leading independent CTV operating system known as Whale OS. In the press release, management mentioned that the U.S. has already seen a seismic shift of ad dollars into the CTV business and that QYOU is expecting the same shift to begin in India.