While the growth of the video on demand (VoD) platform will likely take the plaudits, Pantaflix’s film production business has continued its strong run of ramping up both the quality and volume of content. Continued investment in both businesses saw net losses expand to €4.4m in H118. However, the film production business has a strong pipeline and the VoD platform is growing rapidly. Despite the premium rating, further improvements to the newly launched KPIs or the announcement of additional partnerships could drive upside.
Driven by strong performance in the film production business, Pantaflix reported revenues of €13.85m in H118, a y-o-y increase of 19%. However, a €6.3m charge due to the completion of various production projects combined with higher opex due to increased investment in both sides of the business (principally higher headcount) underpinned a net loss of €4.4m (H117: €1.8m loss).
Pantaflix has begun disclosure of KPIs for its eponymous VoD platform. At period end, it had 400,000 users (198% q-o-q growth), with a focus group indicating that each of whom had accessed an average of 1.6 titles, at an average price of €3.8. The content catalogue also stands at 23,000 titles, having been boosted by substantial partnerships (eg StudioCanal) announced during the period, with an additional deal with Warner Bros. announced post period end. The profitable film production business has a growing pipeline, the portfolio effect of which should alleviate the inherently ‘lumpy’ nature of revenues and cash flows associated with small film production businesses.
Due to the depressed levels of profitability as a result of investment in both sides of the business, Pantaflix trades at a substantial premium to the listed peer group. With the release of KPI information, it is achieving greater levels of transparency. Financial performance improvements aside, we believe that continued progress in delivering on these metrics could be supportive of the share price.