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QYOU: Unleashing the Power of Social Media Influencers

What you need to know:
• QYOU Media has posted nine consecutive quarters of YoY growth, representing a 33% CAGR using its repeatable content strategy.
• QYOU has shifted its focus to increasing profitability and we expect the Company to reach positive EBITDA by Q4/24.
• The Company has strong tailwinds from the creator economy and social media adoption in India.
• QYOU trades at 0.7x 2024E sales, a sizeable discount to its peer group.


QYOU Media (QYOU:TSXV) produces and distributes broadcast and digital media content featuring leading social media influencers in India and the U.S. Across its platforms, QYOU’s content is viewed by over 125M people each week, providing major brands access to loyal fanbases. QYOU has been posting consistent revenue growth and improving profitability, led by significant tailwinds in the creator economy and the adoption of social media in India. We are initiating coverage on QYOU Media Inc. with a BUY rating and target price of $0.15/share.

Investment Thesis Summary
Consistent Topline Growth. QYOU has posted nine consecutive quarters of YoY revenue growth going from $4.7M to $7.7M, representing a 25% CAGR. We attribute the significant growth to QYOU’s repeatable content strategy utilizing localization and “best of” content, in addition to industry tailwinds across social media in its key markets.

Improving Profitability. Over the last year, QYOU has shifted its focus from growing its topline to reaching EBITDA profitability and positive cash flow. EBITDA margin reached a low of -181% in 2020 and has progressively improved over the years and we expect this to continue while maintaining strong growth. We believe EBITDA margins will settle in the high-single-digits.

Playing in the Right Geography. India has the largest youth population in the world with over 650M people under 25 years old and 850M people under 35 years old. Furthermore, internet and social media adoption has grown massively in India over the past five years and we expect this to continue. These factors together have translated into a rapidly growing digital advertising industry, which has grown at a 23% CAGR over the last six years.

Tailwinds in The Creator Economy. Short-form video across social media has amassed large viewership from the youth globally. This is driven by the creator economy, led by digital influencers that can connect with the youth demographic. As such, marketing dollars allocated to influencer marketing have been rising rapidly over the last few years, playing into QYOU’s influencer marketing divisions.

Team of Media Veterans. The QYOU Media management team and board are made up of industry veterans from leading media firms such as Disney, Fox, Sony, and many more. The Company is led by CEO & Co-Founder Curt Marvis who brings leadership experience from Lionsgate, CinemaNow, and Powerhouse Entertainment.

Fair Valuation. QYOU currently trades at 1.0x 2023E sales and 0.7x 2024E sales. This compares to Canadian-listed media firms that trade at 1.0x 2024E sales and Indian-listed media firms that trade at 1.7x 2022A sales. Given its superior growth, we value QYOU on 1.5x 2024E sales, translating to our $0.15/share target price.