Member Info for TYLO

As European markets go lower, this company gets dragged down with it. however with all the negatives converging all at once its seems clear that volatility will spike higher, both spreads and trading volumes should increase and this company should make more money. the vix which is a good pulse for how this company is doing has been very subdued considering all the potential negatives things, higher rates, tighter bank lending, government debt, student loans, pension funds and banks under water, m1 money supply decline, rise in auto loan defaults, rise in credit card defaults. CRE crashing. china and saudi selling down there treasury holdings. china real estate issues, Germany industrial issues. the list goes on. we should be i for more volatile times, higher vix higher spreads higher trading volumes as everyone rushes for the exit. this is my general thiking

Cheap for a reason. They have rules on the debt. If debt goes above 2.5 ebitda the bank pulls funding and they go bankrupt. So if they have a bad year they are gone.

Musicmagpie started both the rental and the kiosks two years ago when rates were much lower. They would have made models based on historic low rates. Rates are now at 5.25 meaning they’re probably paying a minimum of 1.25% above that. Even if they don’t go bankrupt these interest rates will eat into the growth along with disc media declining. Not to mention all the other competitors coming up. They used to have a little niche now even the likes of apple does refurbish products and back market now allows you to both buy and sell products. Both of these will eat into margin.

also go look at the reviews on YouTube about the kiosks they are very bad. I’ve never used one would like to know if anyone has used them before?

This is what I meant guys. I’m not negative on this business but news of three new kiosk does not justify a 30% share price rally. Interest rates are still high and will stay high and the business still has a big ebitda figure to hit by the end of year. With no news likely until the end of year trading update I see this going back down on negative sentiment to the 13-15 p range. I’ve slightly exited my position at the unjustified 20p range and will be looking for a lower entry.

Im usually the positive voice but this recent news was nothing but fluff . 3 new kiosks, a whopping 1% increase after also saying a little over a month ago that there wasn't a plan for any new kisosk this year. seems forced to try and get some good news out. wouldnt even call this good news. its the bear minimum ffs.

https://pro.similarweb.com/#/digitalsuite/websiteanalysis/overview/website-performance/*/999/3m?websource=total&key=musicmagpie.co.uk

looks like website visits are still elevated in july. looks like they have been able to direct traffic to the mm store which is a positive. the analyst consensus is around 8 million ebitda for the full year. 2.7m made in the first half leaving 5-6 million to be made in the second half. that abit of a stretch ill admit but the website analytics gives me hope.

as for the legacy side of the business its very unlikely that it will be gone by next year, it will slowly filter out over the next 3-5 years imo. with warehousing space and staff being transition over to the consumer tech side as the ceo has already mentioned in one of his interviews. interest rates and debt are the main issue here however they seem to be very liquid and cash generative so bankruptcy is unlikely. this will likely be a case of sitting and waiting for better times. interest rates are unlikely to go much higher and should start to come down by late next year. likely due to some kind of mortgage crisis either domestic or commercial or maybe a mix of both. driving through city centres im seeing more and more offices to let. all mmag has to do is outlast this ****storm which they appear well positioned to do.

https://musicmagpiecircular.co.uk/

this also gives some information on there corporate side they are building in the back ground. for a 17millon valuation this business has many opportunities that could lead to big things in the future. seeing the forest within the acorn. but... not every acorn ends up seeded so could also end badly in chapter 11. so risk is losing all your money reward is likely a 10x.

hey guys, just thought id comment my current feelings on this company. im still invested with an average of 16p per share.

the interview with the ceo and cfo wasn't as bad as i first thought, the last 10 minutes gave me all i needed, rental is profitable, kisosk are doing well with other partnerships and roll outs to likely come and continued focus on selling mid tier product for improved margins. revenues and cash down but disc media and change in product mix appears to be dragging down consumer tech. if you just value consumer tech yoy it looks pretty good. was the ceo talking about his political opinion and beer good...no, but his political opinion has no real affect on the underlying business and the beer comment seemed like he was just trying to be funny and even if it wasnt a joke it was a friday afternoon cut the guys some slack he can have a beer.( maybe dont talk about it on the company presentation though) . the cfo seemed switch on which is nice to see.

my out look for the end of year is rentals will likely be around 45k as they push bnpl and implement tighter credit checks for rental, this will improve the short term cash position but slow the rental growth however the growth that does come will be of higher quality hopefully lowering impairments. revenue from rentals should be around 9-10 million (4 millio h1, 4 million commited h2 with renewals and new customers adding another 1-2 million in h2) if you adjust for depreciation and impairments rental still looks good but not great. the debt isnt a problem at all in my opinion, in the worst case they could just pause rentals and push out right sales (consumer tech inventories turn over in 10 days or less and committed income from the rentals they already have should generate enough cash to pay interest) inflation data came out for the uk and it was lower giving hope for a rate pause as well. i expect them to hit the 8 million ebitda for the end of year, i also think alot of the risk is priced in so any positive news like a corporate rental partner, kiosk expansion etc will cause this stock to jump but it could still go abit lower in the short term maybe to the 13p range. i mean its just phones guys how can they **** this up, he says before they file for chapter 11 haha. have a great day people.

I understand the debt isn’t as bad as it first appears. I knew this before the company even broke it down for us as part of their presentation. however a real cost is the interest payment on the debt. this interest payments has doubled and now sits around 0.8 million per half year or around 1.8 million in interest payments per year. this will have an affect on cash and future growth. I understand Steve couldn’t have predicted interest rates to go so high and for the uk to be the worse of the g7 in terms of economic contraction and inflation but I think he needed to answer some serious questions. How has revenue for consumer tech declined so heavily ( my guess is competition is eating into growth ie curry’s now does refurbished products, apple does refurbished products, back market is every where etc etc) musicmagpie used to have its own niche but it’s not much of a niche anymore when everyone is doing it. the decultrr statement by the ceo was always extremely worrysome. America should be a huge opportunity but they are clearly not taking it seriously or competition is too much to handle.

Cash flow yoy was up just 0.1 million. They finish the year (nov22) with 30,500 rental subscribers but this hasn’t seemed to be reflected in the cash flow statement. debt sky rocketing yoy with rising interest rates will eat into any of the growth that is coming from the rental. The management interview also left something to be desired. The three pillar strategy of buying more, selling more and renting more buy more and rent more seems to be going as planned but sell more has not with both revenue decline and gross profit flat management also didn’t give any indication on how they are planning on improving this and “SELLING MORE” more revenue more profit. Weird comment made by ceo about decultrr as well. I really do like this business and it appears to be poisoned to do well but is kinda failing. Time will tell and the end of year will paint a clearer picture. price is still cheap but very clear riskes aswell.

Wow the kisoks are looking like a fantastic investment from music magpie. a little over 2m spent on the roll out while they have spent 15m so far acquiring products from consumers, stands as a big flashing billboard/advertisement in Asda and giving a two for one marketing effect (people who sell to the kiosks are more likely to buy from music magpie, people who buy from musicmagpie are more likely to sell to the kisoks) now with the additional service fee they have added for the convenience of using the kiosks great return on invested capital . hopefully they can bring this to the USA

finally we see some corporate rental numbers, its going to be very interesting to see where that goes from here.

From what I can see, revenue declined for both consumer tech and disc media. Disc media revenue fell by around 20% and consumer tech revenue fell by around 10%. now disc media is the legacy side of the business that has around 36% margins and contributes heavily to the EBITDA numbers. what’s interesting is that even with such a large decline in disc media, we have still seen improvements in EBITDA of around 8% which on the surface doesn’t seem like much but when you account for the decline in disc media an 8% gain is huge. IMO this shows 2 things. 1 that rental is now starting to materially contribute and that the kiosks worked to allow the company to acquire phones for better prices. lower revenue for consumer tech isn’t concerning because they are likely selling more mid tier phones for lower outright sales prices but with better margins for the business. another thing to note about the kiosks is that they have spent a little over 2 millions on the roll out while they have already paid 10 million out (stated in the full year report for 2022). this year we should see the full strength of these kiosks for two reasons 1 they have completed the full roll out of around 300 kiosks, this means collecting from the machines will be more profitable and selling to the machines will be more convenient and 2 marketing spend should be more effective due to the scale effect.

The debt is becoming a slight issue and it is on a variable interest rate however the business does turn over consumer tech inventories very quickly so cash generation and repayments shouldn’t be a problem. however net debt at the end of the year was around 8m now it’s closer 14 million so that’s a 6 million increase. with them not having as high a capex this year due to lower spend on kiosks, lower spend on websites development and lower marketing spend how exactly has the net debt almost doubled? I’ll be looking closely at this during the full half year report coming in July.

Rental numbers for November2022 were 30,500 rental numbers for the the half year as at 31st of may2023 are 39,000 that’s an addition of 8,500 for the first 6 months or an average of 1416 per month. if that keeps up we’ll be looking at anywhere from 45,000 to 47,000 rental subscribers at the end of year. The current average payment is £20 a month so is that remains the same they should have revenues from the rental of around 900k- 940k a month or 10.8 -11.2 million a year. it’s an upfront cost and lowers the immediate revenue but it should pay off over time with improved margins and stable cash flows.