In recent times, I've been reconsidering my shareholding in Newzulu Ltd (ASX: NWZ).
I felt that the company has been delivering loads of market-sensitive updates about partnerships with foreign media agencies and video streaming companies, but no tangible evidence of growing sales.
Recent announcements have bought the company more time in my portfolio however, with yesterday's release for me representing the most visible evidence yet that Newzulu is moving towards profitability.
Here's what you need to know:
- Newzulu signed an agreement with a 'leading Australian media company' for licensing and usage of the Newzulu Platform and product suite
- Up to 300 reporters will be given Newzulu Live Reporter Kits on smartphones so they can post and file live video and photos into the clients' news services
- The terms of the agreement are confidential, but it is expected to deliver between AU$0.5-1.6 million revenue per annum for two years
- The Agreement is "subject to further negotiation and agreement on specific commercial terms", AND "an initial twelve week trial period"
First, the negative. It appears as though the 'Agreement' is still up in the air at this point, as it is still subject to further negotiation and agreement on specific commercial terms. With the terms held as commercial in-confidence, it looks as though shareholders will continue to be in the dark on this one.
Secondly, investors will be hoping the company sails through its twelve-week trial period. While Newzulu has partnered with a number of other news agencies, this agreement with an Australian media company looks especially important.
Readers who saw the 'Newzulu by Numbers' growth update a few months ago will have noticed that Australian subscribers look distinctly thin on the ground compared to US, UK or French users. There is plenty of Australian user-generated content on the Newzulu website but without more information on the customer and lacking experience in the media industry, I find it difficult to evaluate Newzulu's offering in this regard.
On a more positive note, this is the third update in recent times that carries the promise of more revenue, including the deal with Videoplugger, acquisition of Octiplex and yesterday's update. It appears as though the company will be delivering meaningful revenue growth to shareholders and I intend to hold my shares into the future.
