Destiny Media Technologies Inc.

Revenue for the quarter increased 1.3% year over year, or 1.6% on a foreign-currency-adjusted basis. Adjusted EBITDA was about $252,500, down by less than $35,000 from the prior period, and cash increased by about $244,500, or 22%. Management said major labels decreased by $1,500, independent labels increased 2.5%, total releases/purchases increased 3.7%, and average spend declined 2.4% per customer. For the Universal renewal, the base fee is $1.6 million annually in year one with inflation indexes in years 2 and 3, and there is an additional $35,000 development fee already agreed for one project. Management said the new agreement will reduce 2026 revenue by about 6.5% and that it would take about 14% growth in independent-label revenue to offset that difference. Forward commentary centered on continued strength in November and December, with management saying December growth was stronger than the 15.5% November bump and that the company expects positive net margins if current cost savings hold.

Fred Vandenberg emphasized that the Universal renewal is a long-term anchor for the platform, even though it lowers near-term revenue. He framed the deal as a better strategic fit because it separates base platform fees from future development work, adds a 3-year term and inflation indexing, and could support future growth if the relationship expands. On the independent-label side, he said platform modernization, self-serve Caster/Caster+, improved marketing, and pricing changes are driving better lead generation and stronger momentum.

Assel Mendesh highlighted that revenue grew 1.3% in the quarter, or 1.6% adjusted for foreign exchange, with independent-label revenue up 2.5% and MTR still less than 1% of total revenue but up around 30%. She said adjusted EBITDA was about $252,500 and that the cash balance increased by about $244,500, driven largely by cost reductions. She also noted that 94.5% of revenue was U.S. dollar-denominated this quarter and reiterated that the company has no debt and no material capital expenditure commitments.

Analysts pressed management on the new Universal contract, especially the apparent 6.5% revenue headwind, the prior month-to-month premiums, and why the deal was not communicated earlier. Management said the contract was negotiated over a long period, that the premiums had been disclosed before, and that the new agreement provides a longer-term anchor even though it reduces revenue. Questions also focused on capital allocation, with management saying cash is invested safely, buybacks and dividends remain options, and acquisition opportunities are being reviewed; the company also said the 7.7% operating expense savings should be reflected in fiscal Q2 and that more cost savings may be available. Analysts challenged the optics of an insider sale near the contract signing, which management said was tax-loss selling and a coincidence.