Thursday, November 19, 2020 9:37:11 AM
Earnings Call Transcript
Company Participants
Fred Vandenberg - Chief Executive Officer
Sam Ritchie - Chief Financial Officer
Glenn Mattern - Director, Business Development
Conference Call Participants
Craig Johnson - Private Investor
Brian Boyd - Brandes Investment Partners
Andrew Taylor - Private Investor
Gerry Wimmer - Investorfile
Lawrence Goldstein - Private Investor
[Abrupt Start]
$437,000 from $310,000 in the same period in 2019. Annually, U.S. independent revenue grew by 15% to approximately $1.43 million from $1.243 million for the year ended August 31, 2019. In the quarter, global independent revenue increased by approximately $152,000 from $358,000 for the same period in 2019 to $525,000 in 2020, an increase of 45.7%. Year-to-date, global independent revenues increased by 16.3% or $239,000 to $1.71 million from $1.471 million in the prior year. Gross margin for the fourth quarter and for the fiscal year remained consistent at 92%.
Overall, expenditures increased by 15.3% for the year ended August 31, 2020. Of this increase, $280,000 or 9.6% is a result of one-time restructuring costs and $163,000, or 5.6% relates to our increased investment in our technology and business development. Adjusted EBITDA for the fourth quarter grew by 27% to $210,000 compared to $159,000 for Q4 2019. For the year ended August 31, 2020, EBITDA increased to $329,000 due to one-time restructuring costs and investments in product development for longer term accelerated growth.
Working capital has declined due to the completion of the normal course issuer bid, totaling approximately $533,000 and also due to the adoption of a new lease accounting standard, which required the recognition of obligations under capital leases. As at August 31, 2020, we had cash reserves of $2.622 million and had working capital of $2.424 million.
I will now pass you over to Fred.
Fred Vandenberg
Thanks, Sam. Before Glenn gets into our business development activities, I am going to take a step back and talk about our goals, a little bit of the forest before the trees discussion and I will talk about our goals and how we plan to get there. And I think this will set a context on why I think 2020 was a really successful year.
Our first goal is to acquire a much larger market share to expand globally do what we do, but do it in more territories. As we do that, our product, people and myself, are investigating ways to expand services, to expand what we see is our addressable market. This is really our second goal. We think there are tremendous opportunities. But for the most part, over the last little while we have prioritized on positioning for growth of our core platform. We focused the company’s efforts back on Play MPE at the beginning of 2018 with this first goal in mind. Since that time, we have grown revenue by 11.5%, but that growth really has preceded all the various things we are doing to accelerate growth and expand to new territories.
There are really two distinct ways to grow the current Play MPE platform. That’s growth in areas where we have a significant presence, what we call, a network of use and the second is to acquire new territories and how we approach those are quite different. So, I would like to explain a little bit more about that. Growth in areas where we have – excuse me, growth in areas where we have an established presence comes from your block and tackling sales, better marketing, greater lead generation, greater lead conversion, good customer service. And later on as we add more services we will have more saleable products.
We have seen independent growth in the U.S., for example, grow by an average of 10% – more than 10% quarter over quarter over the last 10 years and has in fact grown in every quarter, but three. To grow in areas where we have a presence we create and sell recipient lists. We do this in every territory where we have significant presence. You will see that our Indies revenue is up significantly in Q4 and pardon me, Glenn will talk a little bit more of the wireless. We have made significant improvements to our marketing efforts and to scale this market efficiently, we are moving towards a very user friendly self-serve checkout system.
Adding a new territory is a little different. It requires a specific strategy catered to each market, a more thoughtful strategy and a little bit more patience. Within each territory, typically a country, that strategy is catered, but it has some commonalities. A market generally lends itself to a single dominant system as recipients generally want one place to go. While this is true, this is not always what we encounter. Sometimes we encounter a significant competitor, sometimes it’s a very fractured market. But generally, our strategy is to engage customers, demo the system, obtain trial use, engage recipients and obtain activity and then we just rinse and repeat and grow that network of use until we can commercialize it once we have demonstrated value.
To do that, it requires a few things: a good system, quality business development people and marketing tools and the internal collaboration between operations, marketing and business development. These things are where I think we have made a tremendous step forward this year. In 2018, when we refocused our efforts on Play MPE, Play MPE was a very feature-rich and powerful platform, but it was PC-only based and required training to use. So, it was powerful, but not user friendly. This limited our ability to add territories. Since that time, we moved to an internet-based platform and just in October this year, so actually, after year end, we released a new version of a release creator that is more intuitive and accessing the more powerful features is readily available to nascent users.
To get here is not an accident it requires a great product team. 17 months ago, we hired a new product – director of product. In September of 2019, we hired a new Director of Engineering and in February of 2020, we hired a new Senior Product Manager. Collectively, we are getting much more current technical knowledge, better development processes to improve our output and a great collaboration within our team. Our business development group underwent a significant restructuring. Glenn will talk a little bit more about that. But part of that reorganization was hiring our first Director of Business Development, which is Glenn and he joined us in April this year. We also hired a new Marketing Manager. And we are working to develop tools to assist in demonstrating the values of Play MPE. So our lead conversion will increase.
When adding new territories, we have several advantages. We can say confidently that we are the best platform out there. We just need to execute on sales. In new markets, universal use generally opens the door. A great system is internally reinforcing. For example, in Canada, we have an entrenched competitor, but we started with universal use in January of 2020. We have seen that use expand and now we are seeing recipients voice their preference for our system. But I will let Glenn get more into that and I’ll turn it over to him.
Glenn Mattern
Thanks, Fred. Hello, everybody. As you may recall from the Q3 call, there was a major restructuring of the business development group in the middle of the year as Fred was just mentioning. I was hired in the role of Director of Business Development in April, early in the pandemic restrictions and we began to build up a team with additional inside sales staff and added a reseller in South Africa. I should also note that in Q1 of 2021, we hired a Miami-based senior account executive to continue to expand our Latin initiative, which I will speak to in a few minutes. Moving forward, we would like to expand our sales efforts and add new territory to the strategic recruitment of business development staff and/or adding additional reseller agreements.
The pandemic has changed how we approach customers as we have shifted to a virtual customer engagement strategy to establish and strengthen relationships with industry promoters, record labels and other key industry contacts. I am proud of our team for embracing and flourishing in what feels like the new normal. We know artists touring is on hold, but in fact, the COVID-19 restrictions may actually be increasing content production as we saw notable growth in Q4 on several fronts. A send within the Play MPE platform is defined as a song or a group of songs, say bundles, albums sent to an individual recipient. We saw an over 15% year-over-year increase in sends in fiscal year ‘20, with an increase of almost 20% in Q4. This improvement in sends comes from an increase in commercial use and adding seeding use, which should have a positive impact in revenue over time.
We have seen an increase in prospective customer inquiries of almost 9% over the previous fiscal year, with a notable increase of 24% in Q4. And as Sam mentioned, Q4 currency adjusted revenue was up 5.3% year-over-year. A little over 45% of our revenue comes from independent record labels and artists from new territories like South Africa, the UK and Canada, but also in existing territories where our usage is strong. Our indie revenue continues to show impressive growth, particularly in the U.S. Since Play MPE commenced U.S. independent revenue in fourth quarter of 2007, it’s grown, as Fred mentioned, an average of 10.4%. Q4 of 2020 produced over 40% year-over-year increase in revenue from such U.S. independents.
So why is this? What we do know is that we have better lead generation lead conversion. What’s a little more challenging is to figure out what we are doing right. We are looking at this in detail so we can consistently repeat. What we do know is that we are improving our business development team. We are improving marketing efforts with a more logical and systematic approach. We have an improved product on both the Caster and the player side of our platform. We have longer established use in new territories like Canada and South Africa and there could be market-related issues like COVID where artists is simply creating and putting out more content. The upshot is that I think all of these are true and the impact on our indie revenue and the impact on our indie revenue growth. We are continuing to recruit business development resources, whether as resellers or staff and we are continuing to enhance our marketing efforts. Our reorganized Biz Dev group is well trained, driven and coordinated with our operations, product finance and engineering teams. As Fred mentioned, we are leveraging more senior business development staff to aid in the new territories.
In 2020, we launched a few new initiatives. Canada has been serviced by a local system primarily in English for a number of years. Play MPE saw an opportunity to displace this ingrained system that suffered from a lack of investment and user frustration with our stronger, easier to use distribution tool. Our list management team completed an in-depth review and update of our recipient list to include all relevant radio personnel. We formally launched our Canadian initiative in January 2020 as Universal Music Canada commenced distribution of all releases within Canada, some of which are exclusive to our platform. In March, we expanded this use to a second major label. Throughout the year, we continued to add usage by major independents and recipients at major conglomerates such as Bell Media, Corus, Pattison, Stingray and others. Whether Play MPE will be successful in the Canadian market or not will depend on whether the superior user experience and functionality of the Play MPE platform and our customer relationships will outweigh the effort of changing established customer and recipient behavior. We are very optimistic. And we have seen consistent growth of users throughout the year and in particular in Q1 of ‘21.
We are very excited about a Latin music segment, which is huge, active and lacks an entrenched competitor. In 2020, we restructured and expanded our U.S. recipient lists and launched our list in Mexico. We translated our Caster platform in Spanish to compliment our Spanish language player. Over the course the year we began seeding content from Universal Music Latin entertainment and several independent record labels. We introduced our player platform to various recipients of key radio groups to begin engagement. We expect this market to add significant revenue. And we believe that the recent hire of our senior account executive in Miami will expedite our systems adoption and help us move quickly into Latin territories beyond the U.S. and Mexico in 2021.
We continue to focus attention to South Africa, a country with a population of over 60 million, 11 official languages and a flourishing music scene. Play MPE added Warner Music South African trial usage to the existing use of Universal South Africa. Lately, we formed a reseller agreement with Johannesburg based Stamp Communications who bring a depth of industry context and regional knowledge. We are very pleased with the progress and in August commenced our first independent label sales in South Africa. We expect this revenue to grow significantly in ‘21 and again, leveraging our Universal Music usage to expand further into sub-Saharan market.
Late in the year, we focused more efforts on expanded use from major independent record labels. These differ from the three major record labels due to their size and from this – and from smaller independent labels to their international footprint. Many of these major indie labels use Play MPE in established territories. Our approach is to obtain introductions through satisfied customers and leverage plan to use global label features. The superior features of our platform such as release sharing and permissions are attracted to these major indies who lack the resources to develop their own internal systems. We have seen positive results, getting numerous introductions, training sessions and some trial use.
While we believe we currently have the largest worldwide market share for promotional distribution of music, we estimate Play MPE holds less than 10% of the addressable market. In 2021, we will continue to work strategically to increase this market share and establish reasons and look to expand our reach to new territories such as Latin American markets in Central and South America and potentially into sub-Saharan Africa. In conjunction with our product team, we are refining our strategies and relationships in other verticals such as DSP distribution, which stand for digital service provider distribution and reporting tools. The company sees tremendous opportunities in ancillary and complimentary services such as these.
And with that, I will pass the call back to Fred.
Fred Vandenberg
Thanks, Glenn. Because we release our results early in the morning, I get the opportunity to receive a lot of questions throughout the morning. And I thought I would before we turn it over to questions, I thought I would preempt some of them. So, one of the questions we got was to shed a little bit more light on what happened in Q4, specifically with respect to we saw indie label revenue grow by more than 40%, but total revenue grew by 5%. Sam shed a little bit of light on this and we have talked about this in previous quarters, we did have a loss of one customer in Australia and we adjusted pricing for a major label customer in the U.S. And this is kind of long overdue pricing restructure in the U.S. that was to be to be more in line with commercial rates.
The loss of the customer in Australia was because they have an internal champion for a system that is used only by this customer. We hope to retain that that adjustment will work its way through Q1. So beyond Q1, I think our major label revenue will grow from there. We see other major label use growing and we see a lot of trial use with that same major labeling in other territory. So it’s not something that I am particularly concerned about. We do see the indie market growing faster though that’s where we I think we can really grow revenue.
Another question is talking about churn. Churn is how quickly you lose customers or whether you lose customers. And that’s difficult for us to measure, because we are – we differ from a lot of SaaS-based companies in the sense that we don’t have monthly recurring fees from a customer necessarily or not all of our customers. We get fees when they use the system when they have a particular release, it doesn’t at least with the services we currently provide monthly recurring fees are isolated to our enterprise customers. S, trying to figure out what an average customer pays us and what our churn rates are is not something that can be easily applied to us. Suffice to say, we received a lot of new customers this year. But I think we will have to provide better metrics on that or metrics that will allow people to figure out whether our indie label revenue will continue. We are seeing really strong growth and I think as we can expand that strategic use in a new territory, we will continue to grow indie revenue.
Another question was on the self-checkout system. That’s where we can really scale indie label revenue. Right now, they are primarily serviced by our operations team. We will – we are still working on priorities of which product features we build first. I don’t see this on the – within a year, but we will plan that to be finished at the same time. We are really scaling up using new territories. So, I think they will meet each other quite nicely.
Another question was on director nominations. Some of you may have noticed that a new slate of directors was nominated by the former CEO. The company and our external counsel is still reviewing that nomination to see whether it was done properly. The former CEO says he owns 12% – sorry, sold 12% and retains 9% of the outstanding stock. I don’t believe this. It appears that he has sold substantially more than that, but his motivations, he has been pretty clear about what his motivations are, and they are very self-serving. So, we will likely articulate those facts if at times – at the appropriate time. Regardless, I think it’s highly unlikely that those nominations will be successful.
Probably the most frequent question I get asked is about the buyback. Some of you may be aware that we repurchased 5% of outstanding shares last year. And I want to articulate about how we approached this decision. We evaluate the use of cash the same way no matter what the investment is, whether its acquisitions or hiring new staff or doing a buyback. We – at the end of the year, we had approximately $0.25 per share, when we are trading at $0.60 it’s a substantial amount of our market cap and our work were profitable and our revenue is growing. So, our cash balance is growing. I view the best return on investment right now is to grow staffing to increase use, which will lead to greater revenue, that’s easily our best return on investment and a buyback might send the wrong signal in that, but we are recruiting. And as Glenn said, we added executive in Miami to assist in the Latin music. These investments take time to achieve a return. We are currently investing a significant portion of our overall expenses in growth, whether that’s product growth or business development resources. So, given the choice, this is our best use of cash.
Having said that, we need to make these investments in a responsible and coordinated way, we need to hire the right people at the right time in the right area. So there are some limits on how quickly we can expand these expenditures, while ensuring that they are done effectively. And at the same time, our revenue is growing. And we are already profitable. So, I think we can continue to grow that investment and staffing without creating a burn in on existing cash. And I think that will show up in revenue. Also, as it was obvious with the addition of the reseller in South Africa, we can get an alternative to investing in staff is to hire resellers or come to reseller agreements. And we can do that without upfront cost. Admittedly, I like having a lot of cash in the bank, but it’s not doing any work for us. 1% or 2% return isn’t that what we are going for. So without committing to anything, I think we will have a public announcement on the buyback very shortly.
Another last – the last typical question I get is where – do we see significant revenue growth or what is our – where do you want to be in 5 years, those kinds of questions. And I think that we have seen some growth over the last few years, averaging about 3.5% or something like that. And that has a danger of misleading people into thinking that’s what we are going for. We have grown revenue in spite of the things that we are doing to accelerate growth, we have, really done a great job I think, improving our, our staffing, and that is starting to show up in improved product improved lead conversion. And that is the thing that I think will start to accelerate growth. We are not here to achieve single digit revenue growth, I don’t really like predicting where we will be in a year or five years or whatever could sometimes checking over territories takes time. And it’s, it tests the patience the Canadian market we have been in trying to turn over. And starting really about a year ago with where we started delivering with Universal, I think that will come to fruition very quickly. And once those efforts are typically binary, we are either successful or not. And I think we will be. So it takes time to, really add a new territory and grow a lot. But single digit revenue growth is not is not what we are here for. It’s to grow by a substantially larger amount. And so I think that’s all the questions that I had from this morning, so I will turn it over to anything that I may have any other questions that I may have missed?
Question-and-Answer Session
Operator
[Operator Instructions] Your first question will be from Craig Johnson. Please go ahead.
Craig Johnson
Hello. I just wanted to ask a question about general admin, it seems that for Q4 that number is considerably less than what it normally is of $200,000 or more it is down at $89,000. And when I look at the MD&A, it looks as though wages and benefits have changed have only gone up by about $5,000 or actually gone down by about $5,000. I am just wondering if you could give some color on the reason why that’s so low in Q4? Thank you.
Fred Vandenberg
Sam might be able to provide a bit more color on this general and admin is definitely something that can fluctuate a little bit based on foreign exchange gains or losses, we have accounts receivable. And if exchange rates go against us or for us, the general and admin can fluctuate based on that. Sam, do you have any?
Sam Ritchie
Yes definitely like the Q4 for MD&A costs are lower. It’s, it’s from the allocation of wages and salaries to the various parts of our business. So in Q4, that allocation was a little different than it had been previously. I think in Q3 the amount was a little higher. So that in Q4, the amount was just – is lower. There is no change to the number of positions in that, but it’s just the focus of their time, so just a little more to operations or to sales and marketing.
Craig Johnson
I see, okay. So I see that sales and marketing went up a bit from a lower number in Q3 as R&D is just up at – so that’s where it is, it’s not anything, specifically one time, it’s just a reallocation?
Sam Ritchie
Just reallocation of people’s time in the fourth quarter.
Craig Johnson
Okay, thank you.
Fred Vandenberg
We do have – it’s probably worth mentioning, on the call, but we have a – it’s in the 10-K. And I would actually like people to – if they have some time take a read of the 10-K because we think it reads a little bit more easily and describes what we are trying to do a little bit better than it has in the past. And I think describing what we do and why we are good at it, it sometimes is a little challenging, but this was the 10-K really describes what our strategies. It also tells little bit about one-time cost as well. So, you get a bit more flavor on that.
Operator
Thank you. And your next question will be from Brian Boyd. Please go ahead.
Brian Boyd
Hi, just great job on the past quarter and over the past couple of years. I just had a quick question around kind of your first comment about the restructuring of the agreement with one major label. How has the usage for that major label compared year-over-year? I know revenues are down because of the pricing, but how is the usage compared? That’s it. Thank you.
Fred Vandenberg
The case of the pricing for that was completely linear, so they wouldn’t get any economies of scale. And that’s really something that we tried to engage them with to increase use. I think their use is relatively stable. I don’t know that I don’t know that off the top, but I know the releases are still going through and we are still getting the same engagement with them. The impact – the one of the sub-labels signed a 2-year agreement with us that sort of gives us a little bit of certainty on revenue.
Brian Boyd
Okay, sounds great. Thank you.
Operator
Thank you. [Operator Instructions] Thank you. And your next question will be from Andrew Taylor. Please go ahead.
Andrew Taylor
Yes, hey, Fred. Just on the cash that’s on hand, has there been any thought about maybe having like a small dividend at all?
Fred Vandenberg
It’s an idea that’s been brought up. I think that it likely not – doesn’t make sense for us to do that because of the decline in the share price, the – I think the last thing we would want to do is create a taxable dividend when you have a capital loss. I think, the value of the stock is, I think artificially low. And it’s kind of goes back to my earlier comment about the former CEO selling a lot more than I think he has disclosed. I mean, this is a question I get quite a lot. Isn’t he supposed to disclose? And the answer is absolutely, but he doesn’t. So, what the – what our investors don’t see, don’t have transparency on is that when you have 20% of the stock being sold over a very short period of time, and I am talking a substantial amount this year, you don’t get the sense that the decline in stock is caused by anything less than your typical demand and supply type scenario. I think ultimately, the revenue growth is going to be a real driver in the value of the stock. So, we hope to and our target is to accelerate revenue growth. That’s everything we were working towards. So, I think maybe like the stock is temporarily low and I think that will appreciate, but I don’t think it makes sense for us to do a dividend. Well, the stock is at a low price point.
Andrew Taylor
Okay, that’s fair. Now, just when you – when Destiny tries to go to acquire or move into a territory that you are not, you want to be involved with initially or you are involved, but not to the extent that you want to be how long or what timeframe do you – does your business unit typically say, okay, we are going to allocate X amount of resources and time and if we don’t see the type of results that our expectations are, we are going to get out of that market. Do you factor that into your business development at all?
Fred Vandenberg
Absolutely. Yes – the – that’s not an easy question to answer but – and it really is contextual. So in Canada, we have really – we hired a person to help us move into Canada. This is an example of how we approach the decision. And that it’s acquiring Canada’s market, we could potentially buy the market and acquire it or we could take it over. And so we go into what decision tree? Well, we think that the cost of buying it is far outweighs our cost of acquiring it through your strategy of business development. There is always a speed of acquisition as well. But through the course of the year, it took a while, but through the course of the year, we added universal and another major label shortly thereafter and we have grown use by adding major independents. And I think that will shortly expand to include the third major and then I think, the Canadian market will switch over when that occurs. That is – it’s always – it’s never as fast as we want it to be, but changing the way people operate is sometimes a little bit, it’s nuanced, it takes some time and you build up relationships, you demo the system, those things will help turn the market over. There is nothing a night. When I say we can quite confidently say we have the best platform in the world, there is no doubt in my mind about that. It’s whether or not we can convince other people about that and be effective business developers, whether the price point is right, but I think once we reach a certain stage, there is nobody that can compete with us in terms of the investment in the system. And in the quality of the system, there is literally when we go through our competitive analysis, there is nobody that would ever compete with us in terms of ease of use in terms of functionality. And I think sometimes it just takes some patience. But once the market has acquired it, we very rarely like we don’t lose it to – we have bumps in the road, but that’s I think in the hindsight, when we didn’t invest in the business development relationships and/or the product, but that’s changing. And I don’t foresee us to having downside risk. So, once you – I guess what I am saying in marketing terms is our customer acquisition costs can be large when it comes to acquiring a new territory, but the average lifetime value of a particular territory or quarter of a client is much larger.
Andrew Taylor
Okay. So with the – I believe the comment made earlier in this session was that there is a – we currently have about 10% of the market. So what’s sort of, like what’s holding the other 90% of the market back from moving towards us or and I am not even going to say 90%, I would say, if I cut down in half to 45%, what – like what would it take for that 45% to come on board?
Fred Vandenberg
Well, I don’t want to rehash the history of it too much, but if you – we grew at a very rapid pace, percentage wise anyway, we grew through 2004 to 2007. We had that time to establish use. We were – at the time we were converting people from CD deliveries to digital delivery and that required patience and building up that network of use. And then all of a sudden in 2008 through 2012 or whatever, we grew from virtually nothing to $4 million in revenue. But also during that time, we – even though our revenue was growing, we were – we stopped developing the platform, we move to all sorts of different ideas. That had nothing to do with plan B. There was a lot of nepotism that went on and inappropriate skill sets, lack of collaboration. And I just want to rehash all the history of it, but looking forward, if you go into say the Latin market, for example, you go there with good quality business people, good quality business development people that can build up relationships. And you go there with a good product. If you look back, even only a few years ago, we had a PC only based platform that was challenging to train people on the use, it was very powerful for major record labels that established that use. And they could do all the things that they need to do. But we also needed to make it easy for people to use and that’s what we have done now. And that’s why I think we will grow now. That’s why I think adding these business development people now, is going to end up in results. You will see that’s fair. You will see that our uses, is starting to really grow in a lot of those trials, but that will eventually turn into revenue, just similar to what we were doing in the past. It’s really we are repeating what we did in the past when we were successful and I think we will be.
Andrew Taylor
Okay, thanks a lot Fred. Appreciate it.
Operator
Thank you. Next question will be from Gerry Wimmer. Please go ahead.
Gerry Wimmer
Hi, Fred. First of all, in the most recent quarter, is there any seasonality still in your revenues or look at that your revenues being higher quarter to quarter as well as more business in terms of seasonality?
Fred Vandenberg
Yes, the seasonality is always shows Q1 as our best quarter, which is the quarter we are in right now. Q2 is our lowest quarter and then Q3 and Q4 tend to be relatively static. The – I think, as we look forward, as we develop more true SaaS-based services that we can layer on into the platform, you will see that we develop more recurring monthly fees, which will kind of smooth it out a little bit. So, percentage wise, we will – you will see less of the seasonality, but it’s not really something that we worry about too much.
Gerry Wimmer
Okay. In looking at Q4, your 20% EBITDA margins as the revenues grow, would do you think that EBITDA margin sticks, rises or falls or like what can you give me on the way that EBITDA margin will be right now at 20%?
Fred Vandenberg
Okay. So, that margin is after you consider one-time cost associated with restructuring. I know you are probably looking at Q4, but so there might not be that much in Q4 with respect to that. There is also a fairly significant amount that we are investing in growth. So that sort of hides what our true margins – true total margins are. For example, we talked about Canada, and how we are going to acquire Canada, I think, we will do that is all acquisition based cost so. And I think one other things we are thinking of articulate a little bit more clearly to our investors is, is really what when we take on salaries and wages, is it dedicated to growth or to revenue maintenance. And, there is some judgment that comes into what that allocation is, but it’s a significant portion. So, looking forward, we are recruiting, development resources, so like software engineering costs, so we can we really vastly improved our product team and I say that and I think our investors would not see that until we start to show a great cadence of new really cool products. And but trust me when I say that we have improved our product development team. And so to make use of those resources, we are adding engineering costs as well. And then we are also adding business development resources to further sale. So I think as we grow the long answer to your question is as we grow our revenue, we will also be growing our costs too for growth. So, our margins while I still think we will be cash flow, positive and growing, the cash balance we will be growing our costs to accelerate our revenue growth.
Gerry Wimmer
Should somebody not be more than 20% EBITDA margins or what?
Fred Vandenberg
Sorry that was probably too long of an answer to your question. I think that’s probably conservative.
Gerry Wimmer
Okay, so I shouldn’t expect EBITDA margin to drop significantly. If they go up, it’s a bonus as revenues rise.
Fred Vandenberg
I think that’s probably, I think, overtime, you will see higher margin
Gerry Wimmer
$0.02 a share on 2020 EBITDA margins 1 million in revenues. if the ratios are consistent, obviously profitability is going to grow as revenues go up. Okay, my second question is, is and I know, somebody already touched on it in the questions, prior questions on can you give me a little more color on how you expect to grow revenues into the double digits, you have done a nice job. It’s a profitable company, but it’s a public company with CAD5 million or $3.7 million revenues. So obviously on a very small base, you need at least double digit revenue growth to track any currency to your stock price as a public entity. Over the next 12 months, 24 months, we are going to see on what business development wins to increase to double digit more significant. Are we going to see acquisitions? Because I dealt without those, without that it’s difficult to get interest in a public entity with such a small revenue base?
Fred Vandenberg
Yes, I completely agree with you. The accelerated revenue growth is something we are targeting, how do we do that? Like, for example, if we were to acquire the Canadian market, I think that probably puts 10% to our, revenue growth right there. The timeframe over acquiring that market is I don’t know when we will do it, but it’ll be I think in the short term, I still predict that. I am sure our friends in Toronto don’t want to see that. But I think that’s just a foregone conclusion. But that would drop. So our revenue growth, I think is it will come in chunks like that, as we acquire new territory the Latin market is huge. It’s in the states, it’s in Mexico, it’s in Central America and South America and we have advantages to grow in those territories. And I think investing in resources to acquire that market is going to pay dividends for our investors, whether the timeframe on acquiring that is something that I find really challenging to predict, I would have thought the Canadian market would have switched over to us already, but we are – everyday we are going in the right direction. Our usage numbers are up. We are getting more platform users that are really happy about the system. We are clearly a much better system. So, I think seeing that revenue growth accelerate is something we see in the relatively short-term. And I agree that that’s something that will attract investment. I mean, I think we are tremendously undervalued as it is. I mean, we have almost 50% of our market cap in cash and we are growing. We have got – we have made really good acquisitions of staff. I think our product is better and better everyday. And I think the business development group especially is going to be more effective. I mean, Glenn only joined us in April, but there is a lot of good things that have happened already.
Gerry Wimmer
My final question I am not sure if you can answer this or not, but in significant buying by one of your directors of stock on the open market, especially on the U.S. side, maybe that’s the stock coming from your former CEO, but those defenders are getting large ownership I just wonder if what should somebody need to think about that?
Fred Vandenberg
Was actually not one of our directors, it’s one of our director’s brother.
Gerry Wimmer
Okay.
Fred Vandenberg
That just happened to have the same last name, obviously. He has been buying a lot to make of it. Well, I think he has confidence in our approach. I mean, he probably puts a little bit more eyes on the ball. I think he is patient. I think he agrees with the plan. I mean…
Gerry Wimmer
The concentration ownership is not something that investors should keep an eye on, I guess.
Fred Vandenberg
In a way that’s concerning, you mean or…
Gerry Wimmer
Concerning – I don’t say concerning, people can file the ties and things like that. It’s a small company, just I see the filings almost everyday, I am not complaining about it and I probably know where the stock is coming from just curious?
Fred Vandenberg
Well, I think. I mean, I think the thing that’s hidden from a lot of investors is that the former CEOs, I believe and his filings don’t show this, of course, but I believe he is selling a massive amount and that supply is absent a whole lot of great accelerated revenue either. Until that happens, I think people with that demand, it’s going to be a little softer, but that supply is what’s really hurting us. And I think he is just taking advantage of a low stock price. I mean, he sees the cash. It’s the most I have ever made on stocks have been when you wonder what the heck you are missing, because it’s so cheap. And I think that’s what people should see with us right now. There is nothing you are missing aside from the big supply of stocks from the former CEO. There is no – our downside risk is nonzero, but it’s I would say pretty low and I think our upside is just tremendous.
Gerry Wimmer
Okay. Thank you very much. Appreciate it.
Operator
Thank you. Next question will be from Lawrence Goldstein. Please go ahead.
Lawrence Goldstein
How do you do? I have got several questions. Absent in all of your discussion are words such as Far East, Middle East, can you comment on that? Is that your market? Are those are your markets?
Fred Vandenberg
Yes, I think so. It depends on the territory, we will grow. We have the universal use in a lot of different territories. And I think that’s our foot in the door. So we are concentrating on those territories first, but the – I mean, we did translate our distribution side software into Japanese, we hope to make use of that.
Lawrence Goldstein
Excuse me there is a bigger market called China and India and they do a lot of music in those places.
Fred Vandenberg
Yes, well, actually, I would say South Korea is actually a very big market as well. To help us in those markets, the way I think we probably need local business development people and resellers and or resellers. The one thing about South Korea that might be a little different is the level of independent label you see we talk about independent versus major labels and major labels are available the world’s largest artists and possess the largest market share, but that the character, that character depends on the country you are talking about in South Korea, for example, the major labels are much less present. So I think that actually helps us in South Korea. So if we move into those territories, although I understand that, China is a huge market, I think South Korea and Japan are probably easier targets.
Lawrence Goldstein
And what about the other countries and what about the Middle East?
Fred Vandenberg
Look, I mean, we do have actually a reasonable foundation of using Israel, but it’s all a matter of priorities. So I think as we grow, we will have we are starting off with a
Lawrence Goldstein
We start on your target for the time being is that it.
Fred Vandenberg
I don’t think there is anything that’s not on our target list. It’s just a matter of priorities. I think, as we, we just hired a new Director of Business Development this year. I think that that to grow, responsibly is, you had to start there. And, and I think, as we set up departments or business development groups, that we will be able to attack more territories. So it is on our target list. It’s just the world is on our target list. And I think that’s why I say our potential is, tremendous. It’s just a matter of prioritizing and growing responsibly.
Lawrence Goldstein
Okay. You just had a brief discussion that touched on margins. So is it safe to say that for the next year and maybe beyond that revenue growth is the focus. And I hate to put it this way, but to hell with margins. That’s not in the immediate future. The focus is on revenues, and you are going to spend whatever you need to, increase revenues at a most rapid pace. And so the bottom line is not of any importance to you, for the foreseeable future, which I am defining as the next year at least. Is that correct?
Fred Vandenberg
I think I should have used you to answer the question. But yes, that’s, a much more succinct way of saying what I wanted to say.
Lawrence Goldstein
Okay, I am just curious. Wrong choice of word I am not curious. As an investor, I don’t often hear somebody say the kinds of words you just used, “We are tremendously undervalued, our downside risk is, forgot the word you used, but you meant little of opportunity is great.” I never heard a top executive to say that, but it’s delightful here you say it. But what are you based at on? What are based at on having cash of a few cents a share? Having in front of you and your eyes tremendous growth potential, which you seem to be defining as 20%, having 90% of the market not being yours and the world being your voice, so although you don’t seem committed to saying that you think you will get to 20% doubling it anytime soon although you are optimistic about growing it and you don’t talk about profits. That seems like a dirty word. What makes you say those phrases were tremendously undervalued? What do you know about value? What do you know that undervalue or what makes you say that?
Fred Vandenberg
Well, I think then it goes into what we see as the future. I think my confidence comes from a few things. I think we have a worldwide agreement with – I know we have a worldwide agreement with the world’s largest record label. I think we are servicing their needs in a way that nobody else can. I am not saying that they couldn’t be duplicated or somebody else could build it, but it doesn’t exist now. And I think if we do a good job of addressing their needs, growing within their use, within universal’s staffing, we can leverage that into new growth. And I think with the improvements to our own staffing, we are really in a lot different place than we were a couple of years ago. And I think that’s where the source of my confidence comes from. I think the word I used for downside risk isn’t – it’s nonzero, which I mean there is always downside risks. Things can happen, but I don’t see our use declining. I think, we are the best system out there. It is a bit of a niche market, but we are the best at it. And I think we can afford to be, invest the most in it. I say we are less than 10% of the market, but we are also the largest, I think single serving supplier out there. It’s a very fractured market outside of certain areas. And so, I think the confidence comes from delivering a good quality product. I am not saying profit is not a dirty – profit isn’t a dirty word, it’s something I think that will – it will just be inevitable. As we grow, we will. Our margins are good. They are strong. And I think if we execute properly, we will – the profit will come.
Lawrence Goldstein
How many other players are there in the other 90% and how many of them are freestanding companies as opposed to being tiny plays a part of larger entities?
Fred Vandenberg
There is a lot. They range from – they are all smaller. You have very fractured markets. So you have one in Canada, for example, but they have really struggled to get outside of Canada. There is one in Germany. There is one in France. There is one in Spain. And they are generally isolated to these different territories. In the states there is a few, several probably and – but they have very niche presences. So the market is really fractured. Yes, I think and it does lend itself to consolidation. And I have seen the platforms that are used in these different territories and it’s not good. Ours is really slick, so you know when an easy to use and powerful and I think, as we – that’s always nuts. It’s something that I want to communicate to our investors a little bit and we are producing videos on what we do and you will see that we are good at what we do.
Lawrence Goldstein
Well, are the others all, you say you are the largest the others are all much smaller and so either 70 or 80 others that were all solely in this business?
Fred Vandenberg
I mean, I don’t know the answer that off the top. I haven’t counted, but if you really go through, you would see a lot of them and lot of – they range from an archival platform, like ourselves like a library of presentation of music library, or their delivery tools. And I think the former is much more effective tends to be a little bit more expensive, but you will see a lot of variety and competitors.
Lawrence Goldstein
But I still don’t understand are the bulk of them you say much smaller than you. So, whether it’s scores of them or dozens of them?
Fred Vandenberg
Well, I would say dozens. I don’t know off the top. I really don’t. I mean, I could probably name 30 of them in different territories, but…
Lawrence Goldstein
And are they solely in this business those 30?
Fred Vandenberg
Again, it would probably depend on where you are talking, but I think so, yes. For the most part that is the ones that I can think like the one in Canada has the when they couldn’t really move out of Canada they went into a different market where they do every other things they do ad deliveries and music, video deliveries and things like that, that we don’t do. But that’s the only one that I can think of that I know that does other things.
Lawrence Goldstein
I see. I am just surprised that you are very reticent to talk about how you can grow a hell lot faster. When you make it sound like the competitors are really not worthy competitors. I don’t understand why you don’t feel like you could grow doubling and tripling In a period of a short period, I don’t understand why it’s so I mean, 20% is a big deal. I recognize that, but against weak competition, and you keep indicating you are so much better. And I don’t, I failed to understand why you are, reticent to say you will grow, like 100% a year, I don’t, understand why it’s so difficult to get in a much bigger foothold much more rapidly. Why are you so reticent?
Fred Vandenberg
Well, okay, so first of all it’s changing people’s behaviors and that this concept of a network of use. So if you were to replace Facebook, for example, how would you do that? I mean, you could produce a better market.
Lawrence Goldstein
They own the market, they own the market you have a tiny fraction of the market that they created the market.
Fred Vandenberg
If you listen to the answer I think I will help explain it to you.
Lawrence Goldstein
Alright, alright.
Fred Vandenberg
So in Canada, there is somebody that is a Facebook, there is – they have the market. So we come in and we want to displace them. That is a insular market, that’s what I talk about the market being it lending itself to a single dominant player, it over in the globe, it will lend itself but even within a territory.
Lawrence Goldstein
Excuse me interrupt you just to ask this, the biggest market, I presume, is the U.S. is it not?
Fred Vandenberg
It is yes.
Lawrence Goldstein
So do you have a bigger competitor in the U.S.?
Fred Vandenberg
No.
Lawrence Goldstein
I am sorry did you say yes?
Fred Vandenberg
I said, no, we don’t have with a several competitors in the U.S. but they tend to be contextual. So it’s usually genre based in competition.
Lawrence Goldstein
So, on some genre you have larger competitors?
Fred Vandenberg
Sure. Yes. Like, we were starting to grow in the U.S. we are starting to grow more in, pop and dance, that kind of music that tends to be serviced by another competitor, we are growing our usage. But we think we can grow a lot more in the U.S. in that genre, for example.
Lawrence Goldstein
What is the biggest genre, something like Western music?
Fred Vandenberg
Country music is a huge genre and that’s where we are the dominant player, that’s why, if you don’t use us in country in the U.S. you are probably successful. I am not reticent going back to your comments about saying that we are going to grow revenue, it’s just a matter of when. And changing, for example, going back to Canada, changing that market is going to – it’s going to be over a short period of time, it’s not you don’t acquire 10% of the market, you acquire the market over a very short period of time. And I think that we will do that, it’s just a matter of when, I am a little bit reticent to tell you that because when you build up these expectations and people think of it as being catastrophic if you don’t meet them, when there is…
Lawrence Goldstein
No. Well, I just get an impression that you are saying, you have a better mousetrap than anybody and yet you don’t sound as optimistic as I would if I had a better mousetrap?
Fred Vandenberg
Well, that goes back to the network of use. So in the same way that our downside risk is low, because we have a network of use in territories, even if a competitor is inferior, they have a network of use. So recipients know where to go and senders know where to send. Now, that was true when we displace the CDs as a delivery tool. The promoters, the customers that are their promotions roles are hinge. They hinge on getting that song on the radio, for example or getting promotions in that song. Now, the last thing they want to do is risks, leaving a channel that could break that song. So, it takes momentum, it takes building up that faith that they are going to be successful in spite of using the inferior system.
Lawrence Goldstein
What do you worry about the most? Do you have half a dozen worries, concerns?
Fred Vandenberg
Staff retention is probably one. I don’t have any reason to worry about that. But it’s I think we have built up a great team and I would like to keep them. There is making sure that we can obtain major label use in different territories is something that I am concerned about. I want to keep that strategic use growing. That’s it.
Lawrence Goldstein
Well, that’s good if you only have two worries.
Fred Vandenberg
Well, yes, that’s all I can think of.
Lawrence Goldstein
Okay, good for you. What will change for the better or the worse when COVID ends if and when it ever does?
Fred Vandenberg
Well, it’s one of the things that we save a better mousetrap, I think sometimes it really helps to build relationships through. We are still building a sales especially when it comes to strategic sale. Strategic sale is building up relationships and that’s easier to do not on a Zoom call, in-person. So that’s really what will change.
Lawrence Goldstein
Very good. Well, thank you very much. Good luck in all.
Fred Vandenberg
Okay. Thanks.
Operator
Thank you. And at this time, Mr. Vandenberg, we have no other questions. Please proceed sir.
Fred Vandenberg
Alright. Okay. Well, I hope that was informative. Thanks for everyone for joining the call. Look forward to next quarter. Thanks.
Operator
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
Company Participants
Fred Vandenberg - Chief Executive Officer
Sam Ritchie - Chief Financial Officer
Glenn Mattern - Director, Business Development
Conference Call Participants
Craig Johnson - Private Investor
Brian Boyd - Brandes Investment Partners
Andrew Taylor - Private Investor
Gerry Wimmer - Investorfile
Lawrence Goldstein - Private Investor
[Abrupt Start]
$437,000 from $310,000 in the same period in 2019. Annually, U.S. independent revenue grew by 15% to approximately $1.43 million from $1.243 million for the year ended August 31, 2019. In the quarter, global independent revenue increased by approximately $152,000 from $358,000 for the same period in 2019 to $525,000 in 2020, an increase of 45.7%. Year-to-date, global independent revenues increased by 16.3% or $239,000 to $1.71 million from $1.471 million in the prior year. Gross margin for the fourth quarter and for the fiscal year remained consistent at 92%.
Overall, expenditures increased by 15.3% for the year ended August 31, 2020. Of this increase, $280,000 or 9.6% is a result of one-time restructuring costs and $163,000, or 5.6% relates to our increased investment in our technology and business development. Adjusted EBITDA for the fourth quarter grew by 27% to $210,000 compared to $159,000 for Q4 2019. For the year ended August 31, 2020, EBITDA increased to $329,000 due to one-time restructuring costs and investments in product development for longer term accelerated growth.
Working capital has declined due to the completion of the normal course issuer bid, totaling approximately $533,000 and also due to the adoption of a new lease accounting standard, which required the recognition of obligations under capital leases. As at August 31, 2020, we had cash reserves of $2.622 million and had working capital of $2.424 million.
I will now pass you over to Fred.
Fred Vandenberg
Thanks, Sam. Before Glenn gets into our business development activities, I am going to take a step back and talk about our goals, a little bit of the forest before the trees discussion and I will talk about our goals and how we plan to get there. And I think this will set a context on why I think 2020 was a really successful year.
Our first goal is to acquire a much larger market share to expand globally do what we do, but do it in more territories. As we do that, our product, people and myself, are investigating ways to expand services, to expand what we see is our addressable market. This is really our second goal. We think there are tremendous opportunities. But for the most part, over the last little while we have prioritized on positioning for growth of our core platform. We focused the company’s efforts back on Play MPE at the beginning of 2018 with this first goal in mind. Since that time, we have grown revenue by 11.5%, but that growth really has preceded all the various things we are doing to accelerate growth and expand to new territories.
There are really two distinct ways to grow the current Play MPE platform. That’s growth in areas where we have a significant presence, what we call, a network of use and the second is to acquire new territories and how we approach those are quite different. So, I would like to explain a little bit more about that. Growth in areas where we have – excuse me, growth in areas where we have an established presence comes from your block and tackling sales, better marketing, greater lead generation, greater lead conversion, good customer service. And later on as we add more services we will have more saleable products.
We have seen independent growth in the U.S., for example, grow by an average of 10% – more than 10% quarter over quarter over the last 10 years and has in fact grown in every quarter, but three. To grow in areas where we have a presence we create and sell recipient lists. We do this in every territory where we have significant presence. You will see that our Indies revenue is up significantly in Q4 and pardon me, Glenn will talk a little bit more of the wireless. We have made significant improvements to our marketing efforts and to scale this market efficiently, we are moving towards a very user friendly self-serve checkout system.
Adding a new territory is a little different. It requires a specific strategy catered to each market, a more thoughtful strategy and a little bit more patience. Within each territory, typically a country, that strategy is catered, but it has some commonalities. A market generally lends itself to a single dominant system as recipients generally want one place to go. While this is true, this is not always what we encounter. Sometimes we encounter a significant competitor, sometimes it’s a very fractured market. But generally, our strategy is to engage customers, demo the system, obtain trial use, engage recipients and obtain activity and then we just rinse and repeat and grow that network of use until we can commercialize it once we have demonstrated value.
To do that, it requires a few things: a good system, quality business development people and marketing tools and the internal collaboration between operations, marketing and business development. These things are where I think we have made a tremendous step forward this year. In 2018, when we refocused our efforts on Play MPE, Play MPE was a very feature-rich and powerful platform, but it was PC-only based and required training to use. So, it was powerful, but not user friendly. This limited our ability to add territories. Since that time, we moved to an internet-based platform and just in October this year, so actually, after year end, we released a new version of a release creator that is more intuitive and accessing the more powerful features is readily available to nascent users.
To get here is not an accident it requires a great product team. 17 months ago, we hired a new product – director of product. In September of 2019, we hired a new Director of Engineering and in February of 2020, we hired a new Senior Product Manager. Collectively, we are getting much more current technical knowledge, better development processes to improve our output and a great collaboration within our team. Our business development group underwent a significant restructuring. Glenn will talk a little bit more about that. But part of that reorganization was hiring our first Director of Business Development, which is Glenn and he joined us in April this year. We also hired a new Marketing Manager. And we are working to develop tools to assist in demonstrating the values of Play MPE. So our lead conversion will increase.
When adding new territories, we have several advantages. We can say confidently that we are the best platform out there. We just need to execute on sales. In new markets, universal use generally opens the door. A great system is internally reinforcing. For example, in Canada, we have an entrenched competitor, but we started with universal use in January of 2020. We have seen that use expand and now we are seeing recipients voice their preference for our system. But I will let Glenn get more into that and I’ll turn it over to him.
Glenn Mattern
Thanks, Fred. Hello, everybody. As you may recall from the Q3 call, there was a major restructuring of the business development group in the middle of the year as Fred was just mentioning. I was hired in the role of Director of Business Development in April, early in the pandemic restrictions and we began to build up a team with additional inside sales staff and added a reseller in South Africa. I should also note that in Q1 of 2021, we hired a Miami-based senior account executive to continue to expand our Latin initiative, which I will speak to in a few minutes. Moving forward, we would like to expand our sales efforts and add new territory to the strategic recruitment of business development staff and/or adding additional reseller agreements.
The pandemic has changed how we approach customers as we have shifted to a virtual customer engagement strategy to establish and strengthen relationships with industry promoters, record labels and other key industry contacts. I am proud of our team for embracing and flourishing in what feels like the new normal. We know artists touring is on hold, but in fact, the COVID-19 restrictions may actually be increasing content production as we saw notable growth in Q4 on several fronts. A send within the Play MPE platform is defined as a song or a group of songs, say bundles, albums sent to an individual recipient. We saw an over 15% year-over-year increase in sends in fiscal year ‘20, with an increase of almost 20% in Q4. This improvement in sends comes from an increase in commercial use and adding seeding use, which should have a positive impact in revenue over time.
We have seen an increase in prospective customer inquiries of almost 9% over the previous fiscal year, with a notable increase of 24% in Q4. And as Sam mentioned, Q4 currency adjusted revenue was up 5.3% year-over-year. A little over 45% of our revenue comes from independent record labels and artists from new territories like South Africa, the UK and Canada, but also in existing territories where our usage is strong. Our indie revenue continues to show impressive growth, particularly in the U.S. Since Play MPE commenced U.S. independent revenue in fourth quarter of 2007, it’s grown, as Fred mentioned, an average of 10.4%. Q4 of 2020 produced over 40% year-over-year increase in revenue from such U.S. independents.
So why is this? What we do know is that we have better lead generation lead conversion. What’s a little more challenging is to figure out what we are doing right. We are looking at this in detail so we can consistently repeat. What we do know is that we are improving our business development team. We are improving marketing efforts with a more logical and systematic approach. We have an improved product on both the Caster and the player side of our platform. We have longer established use in new territories like Canada and South Africa and there could be market-related issues like COVID where artists is simply creating and putting out more content. The upshot is that I think all of these are true and the impact on our indie revenue and the impact on our indie revenue growth. We are continuing to recruit business development resources, whether as resellers or staff and we are continuing to enhance our marketing efforts. Our reorganized Biz Dev group is well trained, driven and coordinated with our operations, product finance and engineering teams. As Fred mentioned, we are leveraging more senior business development staff to aid in the new territories.
In 2020, we launched a few new initiatives. Canada has been serviced by a local system primarily in English for a number of years. Play MPE saw an opportunity to displace this ingrained system that suffered from a lack of investment and user frustration with our stronger, easier to use distribution tool. Our list management team completed an in-depth review and update of our recipient list to include all relevant radio personnel. We formally launched our Canadian initiative in January 2020 as Universal Music Canada commenced distribution of all releases within Canada, some of which are exclusive to our platform. In March, we expanded this use to a second major label. Throughout the year, we continued to add usage by major independents and recipients at major conglomerates such as Bell Media, Corus, Pattison, Stingray and others. Whether Play MPE will be successful in the Canadian market or not will depend on whether the superior user experience and functionality of the Play MPE platform and our customer relationships will outweigh the effort of changing established customer and recipient behavior. We are very optimistic. And we have seen consistent growth of users throughout the year and in particular in Q1 of ‘21.
We are very excited about a Latin music segment, which is huge, active and lacks an entrenched competitor. In 2020, we restructured and expanded our U.S. recipient lists and launched our list in Mexico. We translated our Caster platform in Spanish to compliment our Spanish language player. Over the course the year we began seeding content from Universal Music Latin entertainment and several independent record labels. We introduced our player platform to various recipients of key radio groups to begin engagement. We expect this market to add significant revenue. And we believe that the recent hire of our senior account executive in Miami will expedite our systems adoption and help us move quickly into Latin territories beyond the U.S. and Mexico in 2021.
We continue to focus attention to South Africa, a country with a population of over 60 million, 11 official languages and a flourishing music scene. Play MPE added Warner Music South African trial usage to the existing use of Universal South Africa. Lately, we formed a reseller agreement with Johannesburg based Stamp Communications who bring a depth of industry context and regional knowledge. We are very pleased with the progress and in August commenced our first independent label sales in South Africa. We expect this revenue to grow significantly in ‘21 and again, leveraging our Universal Music usage to expand further into sub-Saharan market.
Late in the year, we focused more efforts on expanded use from major independent record labels. These differ from the three major record labels due to their size and from this – and from smaller independent labels to their international footprint. Many of these major indie labels use Play MPE in established territories. Our approach is to obtain introductions through satisfied customers and leverage plan to use global label features. The superior features of our platform such as release sharing and permissions are attracted to these major indies who lack the resources to develop their own internal systems. We have seen positive results, getting numerous introductions, training sessions and some trial use.
While we believe we currently have the largest worldwide market share for promotional distribution of music, we estimate Play MPE holds less than 10% of the addressable market. In 2021, we will continue to work strategically to increase this market share and establish reasons and look to expand our reach to new territories such as Latin American markets in Central and South America and potentially into sub-Saharan Africa. In conjunction with our product team, we are refining our strategies and relationships in other verticals such as DSP distribution, which stand for digital service provider distribution and reporting tools. The company sees tremendous opportunities in ancillary and complimentary services such as these.
And with that, I will pass the call back to Fred.
Fred Vandenberg
Thanks, Glenn. Because we release our results early in the morning, I get the opportunity to receive a lot of questions throughout the morning. And I thought I would before we turn it over to questions, I thought I would preempt some of them. So, one of the questions we got was to shed a little bit more light on what happened in Q4, specifically with respect to we saw indie label revenue grow by more than 40%, but total revenue grew by 5%. Sam shed a little bit of light on this and we have talked about this in previous quarters, we did have a loss of one customer in Australia and we adjusted pricing for a major label customer in the U.S. And this is kind of long overdue pricing restructure in the U.S. that was to be to be more in line with commercial rates.
The loss of the customer in Australia was because they have an internal champion for a system that is used only by this customer. We hope to retain that that adjustment will work its way through Q1. So beyond Q1, I think our major label revenue will grow from there. We see other major label use growing and we see a lot of trial use with that same major labeling in other territory. So it’s not something that I am particularly concerned about. We do see the indie market growing faster though that’s where we I think we can really grow revenue.
Another question is talking about churn. Churn is how quickly you lose customers or whether you lose customers. And that’s difficult for us to measure, because we are – we differ from a lot of SaaS-based companies in the sense that we don’t have monthly recurring fees from a customer necessarily or not all of our customers. We get fees when they use the system when they have a particular release, it doesn’t at least with the services we currently provide monthly recurring fees are isolated to our enterprise customers. S, trying to figure out what an average customer pays us and what our churn rates are is not something that can be easily applied to us. Suffice to say, we received a lot of new customers this year. But I think we will have to provide better metrics on that or metrics that will allow people to figure out whether our indie label revenue will continue. We are seeing really strong growth and I think as we can expand that strategic use in a new territory, we will continue to grow indie revenue.
Another question was on the self-checkout system. That’s where we can really scale indie label revenue. Right now, they are primarily serviced by our operations team. We will – we are still working on priorities of which product features we build first. I don’t see this on the – within a year, but we will plan that to be finished at the same time. We are really scaling up using new territories. So, I think they will meet each other quite nicely.
Another question was on director nominations. Some of you may have noticed that a new slate of directors was nominated by the former CEO. The company and our external counsel is still reviewing that nomination to see whether it was done properly. The former CEO says he owns 12% – sorry, sold 12% and retains 9% of the outstanding stock. I don’t believe this. It appears that he has sold substantially more than that, but his motivations, he has been pretty clear about what his motivations are, and they are very self-serving. So, we will likely articulate those facts if at times – at the appropriate time. Regardless, I think it’s highly unlikely that those nominations will be successful.
Probably the most frequent question I get asked is about the buyback. Some of you may be aware that we repurchased 5% of outstanding shares last year. And I want to articulate about how we approached this decision. We evaluate the use of cash the same way no matter what the investment is, whether its acquisitions or hiring new staff or doing a buyback. We – at the end of the year, we had approximately $0.25 per share, when we are trading at $0.60 it’s a substantial amount of our market cap and our work were profitable and our revenue is growing. So, our cash balance is growing. I view the best return on investment right now is to grow staffing to increase use, which will lead to greater revenue, that’s easily our best return on investment and a buyback might send the wrong signal in that, but we are recruiting. And as Glenn said, we added executive in Miami to assist in the Latin music. These investments take time to achieve a return. We are currently investing a significant portion of our overall expenses in growth, whether that’s product growth or business development resources. So, given the choice, this is our best use of cash.
Having said that, we need to make these investments in a responsible and coordinated way, we need to hire the right people at the right time in the right area. So there are some limits on how quickly we can expand these expenditures, while ensuring that they are done effectively. And at the same time, our revenue is growing. And we are already profitable. So, I think we can continue to grow that investment and staffing without creating a burn in on existing cash. And I think that will show up in revenue. Also, as it was obvious with the addition of the reseller in South Africa, we can get an alternative to investing in staff is to hire resellers or come to reseller agreements. And we can do that without upfront cost. Admittedly, I like having a lot of cash in the bank, but it’s not doing any work for us. 1% or 2% return isn’t that what we are going for. So without committing to anything, I think we will have a public announcement on the buyback very shortly.
Another last – the last typical question I get is where – do we see significant revenue growth or what is our – where do you want to be in 5 years, those kinds of questions. And I think that we have seen some growth over the last few years, averaging about 3.5% or something like that. And that has a danger of misleading people into thinking that’s what we are going for. We have grown revenue in spite of the things that we are doing to accelerate growth, we have, really done a great job I think, improving our, our staffing, and that is starting to show up in improved product improved lead conversion. And that is the thing that I think will start to accelerate growth. We are not here to achieve single digit revenue growth, I don’t really like predicting where we will be in a year or five years or whatever could sometimes checking over territories takes time. And it’s, it tests the patience the Canadian market we have been in trying to turn over. And starting really about a year ago with where we started delivering with Universal, I think that will come to fruition very quickly. And once those efforts are typically binary, we are either successful or not. And I think we will be. So it takes time to, really add a new territory and grow a lot. But single digit revenue growth is not is not what we are here for. It’s to grow by a substantially larger amount. And so I think that’s all the questions that I had from this morning, so I will turn it over to anything that I may have any other questions that I may have missed?
Question-and-Answer Session
Operator
[Operator Instructions] Your first question will be from Craig Johnson. Please go ahead.
Craig Johnson
Hello. I just wanted to ask a question about general admin, it seems that for Q4 that number is considerably less than what it normally is of $200,000 or more it is down at $89,000. And when I look at the MD&A, it looks as though wages and benefits have changed have only gone up by about $5,000 or actually gone down by about $5,000. I am just wondering if you could give some color on the reason why that’s so low in Q4? Thank you.
Fred Vandenberg
Sam might be able to provide a bit more color on this general and admin is definitely something that can fluctuate a little bit based on foreign exchange gains or losses, we have accounts receivable. And if exchange rates go against us or for us, the general and admin can fluctuate based on that. Sam, do you have any?
Sam Ritchie
Yes definitely like the Q4 for MD&A costs are lower. It’s, it’s from the allocation of wages and salaries to the various parts of our business. So in Q4, that allocation was a little different than it had been previously. I think in Q3 the amount was a little higher. So that in Q4, the amount was just – is lower. There is no change to the number of positions in that, but it’s just the focus of their time, so just a little more to operations or to sales and marketing.
Craig Johnson
I see, okay. So I see that sales and marketing went up a bit from a lower number in Q3 as R&D is just up at – so that’s where it is, it’s not anything, specifically one time, it’s just a reallocation?
Sam Ritchie
Just reallocation of people’s time in the fourth quarter.
Craig Johnson
Okay, thank you.
Fred Vandenberg
We do have – it’s probably worth mentioning, on the call, but we have a – it’s in the 10-K. And I would actually like people to – if they have some time take a read of the 10-K because we think it reads a little bit more easily and describes what we are trying to do a little bit better than it has in the past. And I think describing what we do and why we are good at it, it sometimes is a little challenging, but this was the 10-K really describes what our strategies. It also tells little bit about one-time cost as well. So, you get a bit more flavor on that.
Operator
Thank you. And your next question will be from Brian Boyd. Please go ahead.
Brian Boyd
Hi, just great job on the past quarter and over the past couple of years. I just had a quick question around kind of your first comment about the restructuring of the agreement with one major label. How has the usage for that major label compared year-over-year? I know revenues are down because of the pricing, but how is the usage compared? That’s it. Thank you.
Fred Vandenberg
The case of the pricing for that was completely linear, so they wouldn’t get any economies of scale. And that’s really something that we tried to engage them with to increase use. I think their use is relatively stable. I don’t know that I don’t know that off the top, but I know the releases are still going through and we are still getting the same engagement with them. The impact – the one of the sub-labels signed a 2-year agreement with us that sort of gives us a little bit of certainty on revenue.
Brian Boyd
Okay, sounds great. Thank you.
Operator
Thank you. [Operator Instructions] Thank you. And your next question will be from Andrew Taylor. Please go ahead.
Andrew Taylor
Yes, hey, Fred. Just on the cash that’s on hand, has there been any thought about maybe having like a small dividend at all?
Fred Vandenberg
It’s an idea that’s been brought up. I think that it likely not – doesn’t make sense for us to do that because of the decline in the share price, the – I think the last thing we would want to do is create a taxable dividend when you have a capital loss. I think, the value of the stock is, I think artificially low. And it’s kind of goes back to my earlier comment about the former CEO selling a lot more than I think he has disclosed. I mean, this is a question I get quite a lot. Isn’t he supposed to disclose? And the answer is absolutely, but he doesn’t. So, what the – what our investors don’t see, don’t have transparency on is that when you have 20% of the stock being sold over a very short period of time, and I am talking a substantial amount this year, you don’t get the sense that the decline in stock is caused by anything less than your typical demand and supply type scenario. I think ultimately, the revenue growth is going to be a real driver in the value of the stock. So, we hope to and our target is to accelerate revenue growth. That’s everything we were working towards. So, I think maybe like the stock is temporarily low and I think that will appreciate, but I don’t think it makes sense for us to do a dividend. Well, the stock is at a low price point.
Andrew Taylor
Okay, that’s fair. Now, just when you – when Destiny tries to go to acquire or move into a territory that you are not, you want to be involved with initially or you are involved, but not to the extent that you want to be how long or what timeframe do you – does your business unit typically say, okay, we are going to allocate X amount of resources and time and if we don’t see the type of results that our expectations are, we are going to get out of that market. Do you factor that into your business development at all?
Fred Vandenberg
Absolutely. Yes – the – that’s not an easy question to answer but – and it really is contextual. So in Canada, we have really – we hired a person to help us move into Canada. This is an example of how we approach the decision. And that it’s acquiring Canada’s market, we could potentially buy the market and acquire it or we could take it over. And so we go into what decision tree? Well, we think that the cost of buying it is far outweighs our cost of acquiring it through your strategy of business development. There is always a speed of acquisition as well. But through the course of the year, it took a while, but through the course of the year, we added universal and another major label shortly thereafter and we have grown use by adding major independents. And I think that will shortly expand to include the third major and then I think, the Canadian market will switch over when that occurs. That is – it’s always – it’s never as fast as we want it to be, but changing the way people operate is sometimes a little bit, it’s nuanced, it takes some time and you build up relationships, you demo the system, those things will help turn the market over. There is nothing a night. When I say we can quite confidently say we have the best platform in the world, there is no doubt in my mind about that. It’s whether or not we can convince other people about that and be effective business developers, whether the price point is right, but I think once we reach a certain stage, there is nobody that can compete with us in terms of the investment in the system. And in the quality of the system, there is literally when we go through our competitive analysis, there is nobody that would ever compete with us in terms of ease of use in terms of functionality. And I think sometimes it just takes some patience. But once the market has acquired it, we very rarely like we don’t lose it to – we have bumps in the road, but that’s I think in the hindsight, when we didn’t invest in the business development relationships and/or the product, but that’s changing. And I don’t foresee us to having downside risk. So, once you – I guess what I am saying in marketing terms is our customer acquisition costs can be large when it comes to acquiring a new territory, but the average lifetime value of a particular territory or quarter of a client is much larger.
Andrew Taylor
Okay. So with the – I believe the comment made earlier in this session was that there is a – we currently have about 10% of the market. So what’s sort of, like what’s holding the other 90% of the market back from moving towards us or and I am not even going to say 90%, I would say, if I cut down in half to 45%, what – like what would it take for that 45% to come on board?
Fred Vandenberg
Well, I don’t want to rehash the history of it too much, but if you – we grew at a very rapid pace, percentage wise anyway, we grew through 2004 to 2007. We had that time to establish use. We were – at the time we were converting people from CD deliveries to digital delivery and that required patience and building up that network of use. And then all of a sudden in 2008 through 2012 or whatever, we grew from virtually nothing to $4 million in revenue. But also during that time, we – even though our revenue was growing, we were – we stopped developing the platform, we move to all sorts of different ideas. That had nothing to do with plan B. There was a lot of nepotism that went on and inappropriate skill sets, lack of collaboration. And I just want to rehash all the history of it, but looking forward, if you go into say the Latin market, for example, you go there with good quality business people, good quality business development people that can build up relationships. And you go there with a good product. If you look back, even only a few years ago, we had a PC only based platform that was challenging to train people on the use, it was very powerful for major record labels that established that use. And they could do all the things that they need to do. But we also needed to make it easy for people to use and that’s what we have done now. And that’s why I think we will grow now. That’s why I think adding these business development people now, is going to end up in results. You will see that’s fair. You will see that our uses, is starting to really grow in a lot of those trials, but that will eventually turn into revenue, just similar to what we were doing in the past. It’s really we are repeating what we did in the past when we were successful and I think we will be.
Andrew Taylor
Okay, thanks a lot Fred. Appreciate it.
Operator
Thank you. Next question will be from Gerry Wimmer. Please go ahead.
Gerry Wimmer
Hi, Fred. First of all, in the most recent quarter, is there any seasonality still in your revenues or look at that your revenues being higher quarter to quarter as well as more business in terms of seasonality?
Fred Vandenberg
Yes, the seasonality is always shows Q1 as our best quarter, which is the quarter we are in right now. Q2 is our lowest quarter and then Q3 and Q4 tend to be relatively static. The – I think, as we look forward, as we develop more true SaaS-based services that we can layer on into the platform, you will see that we develop more recurring monthly fees, which will kind of smooth it out a little bit. So, percentage wise, we will – you will see less of the seasonality, but it’s not really something that we worry about too much.
Gerry Wimmer
Okay. In looking at Q4, your 20% EBITDA margins as the revenues grow, would do you think that EBITDA margin sticks, rises or falls or like what can you give me on the way that EBITDA margin will be right now at 20%?
Fred Vandenberg
Okay. So, that margin is after you consider one-time cost associated with restructuring. I know you are probably looking at Q4, but so there might not be that much in Q4 with respect to that. There is also a fairly significant amount that we are investing in growth. So that sort of hides what our true margins – true total margins are. For example, we talked about Canada, and how we are going to acquire Canada, I think, we will do that is all acquisition based cost so. And I think one other things we are thinking of articulate a little bit more clearly to our investors is, is really what when we take on salaries and wages, is it dedicated to growth or to revenue maintenance. And, there is some judgment that comes into what that allocation is, but it’s a significant portion. So, looking forward, we are recruiting, development resources, so like software engineering costs, so we can we really vastly improved our product team and I say that and I think our investors would not see that until we start to show a great cadence of new really cool products. And but trust me when I say that we have improved our product development team. And so to make use of those resources, we are adding engineering costs as well. And then we are also adding business development resources to further sale. So I think as we grow the long answer to your question is as we grow our revenue, we will also be growing our costs too for growth. So, our margins while I still think we will be cash flow, positive and growing, the cash balance we will be growing our costs to accelerate our revenue growth.
Gerry Wimmer
Should somebody not be more than 20% EBITDA margins or what?
Fred Vandenberg
Sorry that was probably too long of an answer to your question. I think that’s probably conservative.
Gerry Wimmer
Okay, so I shouldn’t expect EBITDA margin to drop significantly. If they go up, it’s a bonus as revenues rise.
Fred Vandenberg
I think that’s probably, I think, overtime, you will see higher margin
Gerry Wimmer
$0.02 a share on 2020 EBITDA margins 1 million in revenues. if the ratios are consistent, obviously profitability is going to grow as revenues go up. Okay, my second question is, is and I know, somebody already touched on it in the questions, prior questions on can you give me a little more color on how you expect to grow revenues into the double digits, you have done a nice job. It’s a profitable company, but it’s a public company with CAD5 million or $3.7 million revenues. So obviously on a very small base, you need at least double digit revenue growth to track any currency to your stock price as a public entity. Over the next 12 months, 24 months, we are going to see on what business development wins to increase to double digit more significant. Are we going to see acquisitions? Because I dealt without those, without that it’s difficult to get interest in a public entity with such a small revenue base?
Fred Vandenberg
Yes, I completely agree with you. The accelerated revenue growth is something we are targeting, how do we do that? Like, for example, if we were to acquire the Canadian market, I think that probably puts 10% to our, revenue growth right there. The timeframe over acquiring that market is I don’t know when we will do it, but it’ll be I think in the short term, I still predict that. I am sure our friends in Toronto don’t want to see that. But I think that’s just a foregone conclusion. But that would drop. So our revenue growth, I think is it will come in chunks like that, as we acquire new territory the Latin market is huge. It’s in the states, it’s in Mexico, it’s in Central America and South America and we have advantages to grow in those territories. And I think investing in resources to acquire that market is going to pay dividends for our investors, whether the timeframe on acquiring that is something that I find really challenging to predict, I would have thought the Canadian market would have switched over to us already, but we are – everyday we are going in the right direction. Our usage numbers are up. We are getting more platform users that are really happy about the system. We are clearly a much better system. So, I think seeing that revenue growth accelerate is something we see in the relatively short-term. And I agree that that’s something that will attract investment. I mean, I think we are tremendously undervalued as it is. I mean, we have almost 50% of our market cap in cash and we are growing. We have got – we have made really good acquisitions of staff. I think our product is better and better everyday. And I think the business development group especially is going to be more effective. I mean, Glenn only joined us in April, but there is a lot of good things that have happened already.
Gerry Wimmer
My final question I am not sure if you can answer this or not, but in significant buying by one of your directors of stock on the open market, especially on the U.S. side, maybe that’s the stock coming from your former CEO, but those defenders are getting large ownership I just wonder if what should somebody need to think about that?
Fred Vandenberg
Was actually not one of our directors, it’s one of our director’s brother.
Gerry Wimmer
Okay.
Fred Vandenberg
That just happened to have the same last name, obviously. He has been buying a lot to make of it. Well, I think he has confidence in our approach. I mean, he probably puts a little bit more eyes on the ball. I think he is patient. I think he agrees with the plan. I mean…
Gerry Wimmer
The concentration ownership is not something that investors should keep an eye on, I guess.
Fred Vandenberg
In a way that’s concerning, you mean or…
Gerry Wimmer
Concerning – I don’t say concerning, people can file the ties and things like that. It’s a small company, just I see the filings almost everyday, I am not complaining about it and I probably know where the stock is coming from just curious?
Fred Vandenberg
Well, I think. I mean, I think the thing that’s hidden from a lot of investors is that the former CEOs, I believe and his filings don’t show this, of course, but I believe he is selling a massive amount and that supply is absent a whole lot of great accelerated revenue either. Until that happens, I think people with that demand, it’s going to be a little softer, but that supply is what’s really hurting us. And I think he is just taking advantage of a low stock price. I mean, he sees the cash. It’s the most I have ever made on stocks have been when you wonder what the heck you are missing, because it’s so cheap. And I think that’s what people should see with us right now. There is nothing you are missing aside from the big supply of stocks from the former CEO. There is no – our downside risk is nonzero, but it’s I would say pretty low and I think our upside is just tremendous.
Gerry Wimmer
Okay. Thank you very much. Appreciate it.
Operator
Thank you. Next question will be from Lawrence Goldstein. Please go ahead.
Lawrence Goldstein
How do you do? I have got several questions. Absent in all of your discussion are words such as Far East, Middle East, can you comment on that? Is that your market? Are those are your markets?
Fred Vandenberg
Yes, I think so. It depends on the territory, we will grow. We have the universal use in a lot of different territories. And I think that’s our foot in the door. So we are concentrating on those territories first, but the – I mean, we did translate our distribution side software into Japanese, we hope to make use of that.
Lawrence Goldstein
Excuse me there is a bigger market called China and India and they do a lot of music in those places.
Fred Vandenberg
Yes, well, actually, I would say South Korea is actually a very big market as well. To help us in those markets, the way I think we probably need local business development people and resellers and or resellers. The one thing about South Korea that might be a little different is the level of independent label you see we talk about independent versus major labels and major labels are available the world’s largest artists and possess the largest market share, but that the character, that character depends on the country you are talking about in South Korea, for example, the major labels are much less present. So I think that actually helps us in South Korea. So if we move into those territories, although I understand that, China is a huge market, I think South Korea and Japan are probably easier targets.
Lawrence Goldstein
And what about the other countries and what about the Middle East?
Fred Vandenberg
Look, I mean, we do have actually a reasonable foundation of using Israel, but it’s all a matter of priorities. So I think as we grow, we will have we are starting off with a
Lawrence Goldstein
We start on your target for the time being is that it.
Fred Vandenberg
I don’t think there is anything that’s not on our target list. It’s just a matter of priorities. I think, as we, we just hired a new Director of Business Development this year. I think that that to grow, responsibly is, you had to start there. And, and I think, as we set up departments or business development groups, that we will be able to attack more territories. So it is on our target list. It’s just the world is on our target list. And I think that’s why I say our potential is, tremendous. It’s just a matter of prioritizing and growing responsibly.
Lawrence Goldstein
Okay. You just had a brief discussion that touched on margins. So is it safe to say that for the next year and maybe beyond that revenue growth is the focus. And I hate to put it this way, but to hell with margins. That’s not in the immediate future. The focus is on revenues, and you are going to spend whatever you need to, increase revenues at a most rapid pace. And so the bottom line is not of any importance to you, for the foreseeable future, which I am defining as the next year at least. Is that correct?
Fred Vandenberg
I think I should have used you to answer the question. But yes, that’s, a much more succinct way of saying what I wanted to say.
Lawrence Goldstein
Okay, I am just curious. Wrong choice of word I am not curious. As an investor, I don’t often hear somebody say the kinds of words you just used, “We are tremendously undervalued, our downside risk is, forgot the word you used, but you meant little of opportunity is great.” I never heard a top executive to say that, but it’s delightful here you say it. But what are you based at on? What are based at on having cash of a few cents a share? Having in front of you and your eyes tremendous growth potential, which you seem to be defining as 20%, having 90% of the market not being yours and the world being your voice, so although you don’t seem committed to saying that you think you will get to 20% doubling it anytime soon although you are optimistic about growing it and you don’t talk about profits. That seems like a dirty word. What makes you say those phrases were tremendously undervalued? What do you know about value? What do you know that undervalue or what makes you say that?
Fred Vandenberg
Well, I think then it goes into what we see as the future. I think my confidence comes from a few things. I think we have a worldwide agreement with – I know we have a worldwide agreement with the world’s largest record label. I think we are servicing their needs in a way that nobody else can. I am not saying that they couldn’t be duplicated or somebody else could build it, but it doesn’t exist now. And I think if we do a good job of addressing their needs, growing within their use, within universal’s staffing, we can leverage that into new growth. And I think with the improvements to our own staffing, we are really in a lot different place than we were a couple of years ago. And I think that’s where the source of my confidence comes from. I think the word I used for downside risk isn’t – it’s nonzero, which I mean there is always downside risks. Things can happen, but I don’t see our use declining. I think, we are the best system out there. It is a bit of a niche market, but we are the best at it. And I think we can afford to be, invest the most in it. I say we are less than 10% of the market, but we are also the largest, I think single serving supplier out there. It’s a very fractured market outside of certain areas. And so, I think the confidence comes from delivering a good quality product. I am not saying profit is not a dirty – profit isn’t a dirty word, it’s something I think that will – it will just be inevitable. As we grow, we will. Our margins are good. They are strong. And I think if we execute properly, we will – the profit will come.
Lawrence Goldstein
How many other players are there in the other 90% and how many of them are freestanding companies as opposed to being tiny plays a part of larger entities?
Fred Vandenberg
There is a lot. They range from – they are all smaller. You have very fractured markets. So you have one in Canada, for example, but they have really struggled to get outside of Canada. There is one in Germany. There is one in France. There is one in Spain. And they are generally isolated to these different territories. In the states there is a few, several probably and – but they have very niche presences. So the market is really fractured. Yes, I think and it does lend itself to consolidation. And I have seen the platforms that are used in these different territories and it’s not good. Ours is really slick, so you know when an easy to use and powerful and I think, as we – that’s always nuts. It’s something that I want to communicate to our investors a little bit and we are producing videos on what we do and you will see that we are good at what we do.
Lawrence Goldstein
Well, are the others all, you say you are the largest the others are all much smaller and so either 70 or 80 others that were all solely in this business?
Fred Vandenberg
I mean, I don’t know the answer that off the top. I haven’t counted, but if you really go through, you would see a lot of them and lot of – they range from an archival platform, like ourselves like a library of presentation of music library, or their delivery tools. And I think the former is much more effective tends to be a little bit more expensive, but you will see a lot of variety and competitors.
Lawrence Goldstein
But I still don’t understand are the bulk of them you say much smaller than you. So, whether it’s scores of them or dozens of them?
Fred Vandenberg
Well, I would say dozens. I don’t know off the top. I really don’t. I mean, I could probably name 30 of them in different territories, but…
Lawrence Goldstein
And are they solely in this business those 30?
Fred Vandenberg
Again, it would probably depend on where you are talking, but I think so, yes. For the most part that is the ones that I can think like the one in Canada has the when they couldn’t really move out of Canada they went into a different market where they do every other things they do ad deliveries and music, video deliveries and things like that, that we don’t do. But that’s the only one that I can think of that I know that does other things.
Lawrence Goldstein
I see. I am just surprised that you are very reticent to talk about how you can grow a hell lot faster. When you make it sound like the competitors are really not worthy competitors. I don’t understand why you don’t feel like you could grow doubling and tripling In a period of a short period, I don’t understand why it’s so I mean, 20% is a big deal. I recognize that, but against weak competition, and you keep indicating you are so much better. And I don’t, I failed to understand why you are, reticent to say you will grow, like 100% a year, I don’t, understand why it’s so difficult to get in a much bigger foothold much more rapidly. Why are you so reticent?
Fred Vandenberg
Well, okay, so first of all it’s changing people’s behaviors and that this concept of a network of use. So if you were to replace Facebook, for example, how would you do that? I mean, you could produce a better market.
Lawrence Goldstein
They own the market, they own the market you have a tiny fraction of the market that they created the market.
Fred Vandenberg
If you listen to the answer I think I will help explain it to you.
Lawrence Goldstein
Alright, alright.
Fred Vandenberg
So in Canada, there is somebody that is a Facebook, there is – they have the market. So we come in and we want to displace them. That is a insular market, that’s what I talk about the market being it lending itself to a single dominant player, it over in the globe, it will lend itself but even within a territory.
Lawrence Goldstein
Excuse me interrupt you just to ask this, the biggest market, I presume, is the U.S. is it not?
Fred Vandenberg
It is yes.
Lawrence Goldstein
So do you have a bigger competitor in the U.S.?
Fred Vandenberg
No.
Lawrence Goldstein
I am sorry did you say yes?
Fred Vandenberg
I said, no, we don’t have with a several competitors in the U.S. but they tend to be contextual. So it’s usually genre based in competition.
Lawrence Goldstein
So, on some genre you have larger competitors?
Fred Vandenberg
Sure. Yes. Like, we were starting to grow in the U.S. we are starting to grow more in, pop and dance, that kind of music that tends to be serviced by another competitor, we are growing our usage. But we think we can grow a lot more in the U.S. in that genre, for example.
Lawrence Goldstein
What is the biggest genre, something like Western music?
Fred Vandenberg
Country music is a huge genre and that’s where we are the dominant player, that’s why, if you don’t use us in country in the U.S. you are probably successful. I am not reticent going back to your comments about saying that we are going to grow revenue, it’s just a matter of when. And changing, for example, going back to Canada, changing that market is going to – it’s going to be over a short period of time, it’s not you don’t acquire 10% of the market, you acquire the market over a very short period of time. And I think that we will do that, it’s just a matter of when, I am a little bit reticent to tell you that because when you build up these expectations and people think of it as being catastrophic if you don’t meet them, when there is…
Lawrence Goldstein
No. Well, I just get an impression that you are saying, you have a better mousetrap than anybody and yet you don’t sound as optimistic as I would if I had a better mousetrap?
Fred Vandenberg
Well, that goes back to the network of use. So in the same way that our downside risk is low, because we have a network of use in territories, even if a competitor is inferior, they have a network of use. So recipients know where to go and senders know where to send. Now, that was true when we displace the CDs as a delivery tool. The promoters, the customers that are their promotions roles are hinge. They hinge on getting that song on the radio, for example or getting promotions in that song. Now, the last thing they want to do is risks, leaving a channel that could break that song. So, it takes momentum, it takes building up that faith that they are going to be successful in spite of using the inferior system.
Lawrence Goldstein
What do you worry about the most? Do you have half a dozen worries, concerns?
Fred Vandenberg
Staff retention is probably one. I don’t have any reason to worry about that. But it’s I think we have built up a great team and I would like to keep them. There is making sure that we can obtain major label use in different territories is something that I am concerned about. I want to keep that strategic use growing. That’s it.
Lawrence Goldstein
Well, that’s good if you only have two worries.
Fred Vandenberg
Well, yes, that’s all I can think of.
Lawrence Goldstein
Okay, good for you. What will change for the better or the worse when COVID ends if and when it ever does?
Fred Vandenberg
Well, it’s one of the things that we save a better mousetrap, I think sometimes it really helps to build relationships through. We are still building a sales especially when it comes to strategic sale. Strategic sale is building up relationships and that’s easier to do not on a Zoom call, in-person. So that’s really what will change.
Lawrence Goldstein
Very good. Well, thank you very much. Good luck in all.
Fred Vandenberg
Okay. Thanks.
Operator
Thank you. And at this time, Mr. Vandenberg, we have no other questions. Please proceed sir.
Fred Vandenberg
Alright. Okay. Well, I hope that was informative. Thanks for everyone for joining the call. Look forward to next quarter. Thanks.
Operator
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
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