Tech Co.'s Consumer Cloud Platform Taps Unrealized Revenues

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The quoted article represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.

As we spend more time looking into the virtual world on our phones, screen and storage space are turning into valuable real estate, and one New York company says some of it is still up for grabs.

Made up of servers around the world, "the Cloud" is the new virtual storage space for our photos, messages, and important data.

According to MiMedia Holdings Inc. (MIMDF:OTC; MIM:TSXV; KH3:FSE), the largest tech companies like Google and Apple have been reaping most of the benefits while most telecommunications companies ("Telcos") and smartphone makers (original equipment manufacturers or "OEMs") are missing untold revenue opportunities in the Cloud, which is expected to grow at a CAGR of 16.4% to be a US$1.44 trillion market by 2029, Mordor Intelligence reported.

"Telcos and OEMs have completely missed the consumer cloud market opportunity, even though they service hundreds of millions of consumers worldwide," said Chief Executive Officer and Director Chris Giordano. "Typically, telcos are 'network people,' and OEMs are 'hardware people.' Network people and hardware people typically don't do software very well, and they're also facing a ton of challenges in their own markets that distract them."

Meanwhile, Google and Apple are collecting millions from the Cloud and "riding on top of the assets for free that these telcos and OEMs own, such as the consumers and built networks," he said. "They're never going to share revenue or profits with the telco or OEM, and they're never going to share consumer data, which could be the most valuable asset."

Technical Analyst Clive Maund rated the stock as an Immediate Strong Buy.

MiMedia's solution is a platform that serves as a complete end-to-end solution for getting these players (Telcos and OEMs) into the market to give improved Cloud functionality to their customers while giving their partners access to multiple revenue streams, including mobile advertising and storage subscriptions.

MiMedia's seven apps are seamlessly integrated into one platform to work on smartphones, tablets, PCs, and all Web browsers. The platform is device agnostic, which means it works on all operating systems (Android, IOS, Mac, PC) and can be loaded directly into Android phones' core code as the default media gallery before shipment to consumers (Android makes up 85% of the global smartphone market).

"The company has spent US$50+ million developing the platform, which took six+ years to build and also has 16 issued patents," noted Technical Analyst Clive Maund on August 14. "MiMedia's platform is offered at no upfront cost to OEMs and Telcos, and the company and its partners share in the revenues generated by MiMedia's multiple revenue streams. MiMedia has made the platform very easy to implement and can be up and running in a few weeks."*

 The Catalyst: Large Upside to Market

According to MiMedia, the Cloud is still very early in its development and has big potential for usage increases. Not only can its platform help telcos and OEMs take advantage of these new markets, it also is the first to monetize galleries with multiple revenue streams. The company projects hundreds of millions of dollars of revenue over the next several years, with margins as high as 80%.

"We're the first ones to monetize this highly strategic piece of real estate on the smartphone where consumers spend 50% of their time playing or addressing every day on their smartphone," Giordano said. "And so, we're the first ones to actually monetize the media gallery and bring mobile advertisers into this space, where they've never been brought (into) before."

The large tech companies take full advantage of this market and capture key direct and indirect revenue, MiMedia said. Companies like Apple trap or lock consumers into using their devices and operating systems. Meanwhile, iCloud subscription revenue is set to reach US$11.5 billion by 2025, up from US$4.5 billion in 2019 for Apple, the company noted.

According to a report by Stats N Data, "As businesses and consumers increasingly seek more efficient and flexible phone solutions, the integration of cloud technology in the mobile landscape has gained immense traction, positioning the Android Cloud Phone as a vital player in the broader telecommunications industry."

The report said that the market is expected to grow at a CAGR of 24.36% from 2024 to 2031. Markets and Markets reported that the global private cloud market will grow from US$124.8 billion this year to US$190.9 billion by 2029 at a CAGR of 8.9%.

According to MiMedia's investor presentation, the "others" category of leading OEMs (i.e. players outside the top 5 globally) is made up of as many as 40 companies and that deliver up to 451 million new smartphones into the market every year, or 32% market share of the world's new phones every year. A small conversion of the "others" category would "deliver a massive revenue opportunity for the company," Giordano said. MiMedia's core target markets of Latin America, Southeast Asia, India, and Africa is projected to represent 1 billion of the next new smartphones in the market over the next three years.

Analyst: 'A Considerable Improvement' on Larger Competitors

MiMedia said its platform is an all-in-one, easy-to-use Cloud solution for its partners and their customers' photos, videos, music, docs, SMS, and contacts.

The data is secured with multiple encrypted copies in the Cloud, the software works on any smartphone, tablet, or browser, and presents a highly visual, engaging media experience.

"The company's solution is arguably a considerable improvement on Google Photos and iCloud," Maund wrote. "The platform sports a unique superior gallery with adverts on Android phones, which constitute 85% of the world's phones, and the company is the first to bring advertisers into this space and monetize it."

The platform integrates into the operating system at a system level as the default smartphone gallery and cloud. It is the first software to replace the Android stock gallery in such a way.

MiMedia's platform is already contracted to deploy on 35 million phones globally, which could double over the next year. The company recently formalized a distribution agreement with Texas-based Schok Wireless in June to integrate MiMedia directly onto 5 million mobile devices over the next two years, including smartphones and tablets, which represents MiMedia's first entry into the US market.

"MiMedia fits right into our strategy of providing exceptional software, important and high-value propositions, and high-quality smartphones at a great price," said Schok Chief Executive Officer Sam Gutiérrez. "We love what MiMedia has built and we believe our consumers will also love it."

Could Stock Double?

Maund noted that "although the stock price has been stuck in a large trading range all this year and has been reacting back in recent weeks, its charts show internal strength."

"Its volume pattern has become increasingly bullish this year, which has driven its volume indicators higher, especially On-balance Volume, which has been making new highs over the past month or two despite the price still being way off its highs — this is bullish," Maund wrote.

"Positive volume action indicates a high probability that the stock will advance from the base that it is now putting in, especially as it is still heavily oversold, having just bounced off an important support level," Maund continued. "An important point to note is that even if the stock only makes it back up to the top of the trading range, we are talking about it almost doubling from here, and it should go on to do much more than that."

The analyst rated the stock as an Immediate Strong Buy.

Ownership and Share Structure

According to the company, it has 73.7 million basic shares and 99.9 million fully diluted shares outstanding, with 8% of the company owned by insiders and management and the rest is retail.

Its market cap is CA$17.7 million (based on basic shares), and it trades in a 52-week range of CA$0.50 and CA$0.20.