Vinyl Group (ASX:VNL) is finding its groove in 2025

Vinyl Group (ASX: VNL) is the only ASX-listed company offering exposure to the music technology and media industries. It has undergone a major transformation in 18 months, now a business with a curated portfolio of interconnected brands that empower everyone in the music ecosystem.

 

Vinyl Group’s brands

Vinyl has several brands. The most important are:

– Jaxsta: The world’s largest and only official music database with over 380m verified credits,
– Vinyl.com: An online record store with over 50,000 vinyl record titles,
– Vampr: A “LinkedIn for creatives”, in other words a social-professional networking platform that aids 1.3m musicians, creatives and artists; and,
– The Brag Media: A publishing company behind several music brands including Rolling Stone, TheBrag.com, The Music Network and Tone Deaf. Together, its network of brands reaches 11.5m users per month and over 35m monthly page views.

All these businesses are valuable in their own right, but having these brands together offers the company significant scale and appeal. When the company first listed, it only had Jaxsta, but it has bought Vampr and The Brag Media during the last 12 months, and established Vinyl.com.

In recent weeks, it has acquired:

• Serenade: a Web3 pioneer of physical and digital collectibles;
• Mediaweek is a leading media trade publication in Australia, boasting 300,000 unique visitors. It reports on the business of media, marketing and advertising in Australia;
• Concrete Playground, a digital ‘city guide’ that curates the most engaging events, experiences, and trends in Sydney, Melbourne, Brisbane, Auckland and Wellington; and
• Funkified, Brag Media’s in-house events arm

Some high-profile shareholders

Vinyl’s shareholder register includes Songtradr (an American song licensing company) and WiseTech (ASX:WTC) CEO Richard White. Songtradr first invested in the company in 2020 and has bought more shares since then (most recently in April 2024), now owning 19.95%. As for Richard White, he invested in the company twice in 2023, with the latter capital raising enabling The Brag Media’s acquisition. Vinyl shares have increased substantially in the past couple of years, buoyed by the most recent investments from these major shareholders, and the acquisitions beginning to be reflected in the company’s results.

 

We believe the opportunity for Vinyl is very lucrative

With the rise of self-releasing artists, estimated at 6.4m (including full-time professionals as well as part-time amateur musicians), and an increase in average creator spending, which is estimated to exceed $600 annually on music creation, promotion, distribution, and commercial tools, the potential market size for Vinyl Group’s platforms is substantial. The barrier to entry for music creation and release has significantly lowered, enabling more individuals to pursue music as a passion rather than a career. The revenue potential of self-releasing artists lies more in their spending on tools and services rather than their earnings from music streams, herein providing the opportunity.

Additionally, there has been a notable resurgence in the popularity of vinyl records among both music lovers and contemporary artists, once again establishing them as a cherished medium for music production. Although the glory days of Vinyl records (i.e. the 1970s when over 300m records were sold globally) are gone, talk of their demise have been greatly exaggerated. Indeed, they are resurging in popularity, growing for 17 straight years in the US and UK, with new releases among the most popular sellers. Even for those who don’t have technology to play the records, they can serve as a kind of collectors’ items for fans of particular artists.

 

The company’s growth is expected to accelerate in the months ahead

With every result from Vinyl Group, the momentum continues to build. Obviously this is partly because the company is now a combined portfolio of brands, rather than just being Jaxsta, but all of the individual brands have been performing well, and this will be reflected in future results.

Vinyl had told investors that it anticipated becoming cash flow positive by the first half of FY26 (or the second half of CY25). After the acquisition of Concrete Playground, the company has told shareholders that its timeline has been brought forward by six months. Moreover, it has also told investors it is aiming for a $20m+ revenue run rate, thus achieving organic and sustainable growth.

The company’s cash reserves roughly doubled over the quarter, coming in at $7.1m by the end of the period, even with increased product costs for holiday sales, increased staff costs (due to acquisitions) and the Funkified acquisitions. Even though the Entitlement Offer was partly responsible some of the proceeds will not be received until 3Q25 – improved collections from customers and sales during the holiday period helped too. Of the company’s $7.3m receipts from customers in FY25 to date, $5.3m (73%) came during 2Q.

 

A high-potential aggregation of music brands

In FY23 Jaxsta had reported relatively lower revenue with high customer concentration. There were five customers that accounted for 70.3% of the total revenue (2022: 75.6%). The acquisition of Vampr has paved the way to significantly boost the group’s customer base and will aid in resolving the customer retention concern. In Q3, Jaxsta’s B2B signups have accelerated +90% YoY, whereas the average order value on Vinyl.com has jumped +37% QoQ.

After Vampr was acquired in CY23, the company acquired The Brag Media in January 2024. The Brag Media has recorded an average revenue growth of 125% over the past two financial  years and has delivered A$8.5m in revenue and A$350k in profit in FY23. Consequently, the reach and sales opportunities for Vinyl is expected to accelerate in both magnitude and scope with The Brag Media’s impressive audience reach of about 11.5m users per month in Australia.

As the integration gets completed, Vinyl Group’s operations will witness new product launches, synergies across our tech platforms and cross-promotion of display advertisements across media properties.

 

Growth through acquisitions

Our friends at Pitt Street Research just published a research update on Vinyl, discussing the recent acquisitions the company has made, specifically the Serenade and Funkified Entertainment deals. We expect more such deals in the future, which will help build VNL into a music industry powerhouse. The company has the audacious goal of connecting 1,000 leading brands, 100m music creators and 1b fans!

Pitt Street has valued VNL at $233.7m in a base case and $311.8m in an optimistic (or bull) case scenario. Under the current number of shares on issue, these amount to $0.188 per share and $0.250 per share respectively.

 

Conclusion

The company has a bright future ahead as the number of artists and creators, their spending on content creation, not to mention music fan expenditure on merchandise (namely vinyl records and music publications) are all expected to increase in the months and years ahead.

 

Disclosure: Pitt Street Research directors own shares in Vinyl Group.

 

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