VINYL GROUP LTD (VNL) - Culture Meets Commerce At Vinyl Group

If you’ve ever wondered what a modern media business looks like when it’s built to sell outcomes, not just impressions, this chat with Josh Simons from Vinyl Group Limited (ASX: VNL) lays it out in plain language. We talk through how Vinyl is wiring together trusted cultural publishing brands with music technology platforms to “connect culture with commerce”, and why that strategy is changing the way advertisers and creators can work with a single network.

Josh breaks down the two halves of the business: Vinyl Media’s portfolio of recognizable mastheads across music, entertainment, lifestyle and youth culture, plus a platform division that includes Vampr’s creator network, vinyl.com e-commerce, and Serenade music collectibles. We also tackle the Q4 headline numbers and the real story underneath them: acquisitions that completed late in the quarter, 60-day billing cycles, operating costs that start immediately, and a $4.1 million surplus working capital position that helps explain why revenue and cash receipts temporarily disconnect.

From there we look ahead to the operating leverage plan for FY27: consolidating duplicated systems, integrating commercial teams, and embedding an AI first operating strategy that speeds up research, transcription, metadata, audience intelligence and campaign activation without replacing journalists. We also cover the centralised content management system rollout, why it improves site performance, SEO and security, and how new products like Vinyl Shelf and Workshop by Vampr aim to turn discovery into commerce. Guidance of more than $7 million in Q1 customer receipts and $38 to $40 million in FY27 revenue frames the target, but the focus stays on revenue quality and sustainable cash profitability.

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Transcript

Andrew Musgrave

Welcome again to ASX Briefs, and today we welcome back Josh Simons, the CEO of Vinyl Group Limited, an adaptive media and music technology company connecting culture with commerce through its publishing and platforms divisions. Josh, great to have you with me again and welcome back to the ASX Briefs podcast.

Josh Simons

Thank you, Andrew.

Andrew Musgrave

Now, Josh, for listeners that may be new to the Vinyl Group, can you give us a brief overview of the business, your core divisions across publishing and platforms, and your key titles and platform offerings?

Josh Simons

Well, yeah, as you say, Vinyl today really sort of exists in two connected halves with the publishing and platform side. The publishing side is vinyl media. So, it's now what I describe as a substantial portfolio of cultural media brands, including things like Concrete Playground, Media Week, Pedestrian, more recently, and Time Out, alongside major international brands like Rolling Stone, Variety, Lad Bible, BuzzFeed, Refinery29, and so on and so forth. So, it gives us a significant reach across music, entertainment, lifestyle, cities, and really youth culture. So that's one side of the business. And then we've got this platform side where we've got businesses like Vampr, which is a global professional network and talent marketplace, about 1.6 million creators on there. Vinyl.com, which is an e-commerce store featuring one of the largest catalogues of physical music online. And also Serenade, which is a B2B2C music collectibles place. So historically, these sort of two sides, I suppose you describe them as being relatively distinct, but the strategy is to increasingly connect them. So, our publishing brands obviously sort of create audience trust and cultural relevance, while the platform side gives us the technology, that infrastructure for creators, data and our commerce capabilities. So that's really, I suppose, the thesis behind vinyl is connecting that culture with commerce through one ecosystem.

Andrew Musgrave

Looking now at the financials, Q4 revenue came in at $4.6 million with $3.1 million in cash receipts. But you've noted that billing cycle lags across new acquisitions, delayed collections into Q1 FY27. How did acquisition timing affect cash flow? And what does the $4.1 million surplus working capital position reflect?

Josh Simons

Well, I think the important thing to understand about Q4 is that revenue and cash were temporarily quite disconnected. We completed Val Morgan Digital transaction in April, but Pedestrian didn't complete until the 15th of June, and I think Time Out was the 24th of June. So, these businesses, given they sort of generally operate on payment cycles of 60 days, means that we effectively inherited their operating costs immediately, but a significant proportion of the cash generated by that activity isn't due or won't be collected until this quarter. So that's why we have that $4.1 million surplus of networking capital, and it's why we flagged it. It's a meaningful amount of value at quarter end with sitting there in that working capital bucket rather than appearing as a cash receipt in Q4. There were also delayed campaign starts and some softer media training in June, which we flagged and were transparent about. But look, it wasn't the quarter we wanted from a cash receipts perspective, but there was an unusually large timing effect created by the completion of those several acquisitions later in the quarter. We expect much of that timing difference to resolve or unwind through Q1.

Andrew Musgrave

Looking at the full year, customer receipts grew 28% year on year to $18.4 million. On a pro forma basis, normalized operating cash burn was down to $400,000. What does this mean for the underlying profitability of the core platform?

Josh Simons

Yeah, for me, Andrew, these are probably the more interesting and important numbers. We grew full-year customer receipts by 28%, and that result included only about a month of cash collections from Val Morgan Digital and effectively no material cash contributions from either Pedestrian or Time Out. So, it paints a pretty accurate picture of organic growth overall. At that same time, that fourth quarter contains substantial one-off acquisition redundancy, integration costs as we combine the businesses. So, when you strip all of those one-offs out and look at the larger business on that pro forma basis, operating cash burn sits at approximately $400,000. So yeah, we've gone from investing heavily to build scale to having sort of a large business that's operating around break-even before the full benefit of integration and revenue synergies is realized from these acquisitions. So, in my mind, that makes our job pretty straightforward from here on out. It's sort of complete the integrations, maintain the commercial momentum that we've got, and convert that hopefully much larger revenue base into sustainable positive cash generation. So that's why we see FY27 as a very different financial year for Vinyl, and we're quite excited.

Andrew Musgrave

And touching on those acquisitions, you've completed three recently: Val Morgan Digital, Pedestrian Group, and Time Out Australia. So, how do these additions expand your audience reach? And what does reaching 55% of Australians online mean for your commercial proposition?

Josh Simons

Well, certainly it changes the scale of the company quite dramatically. It's more nuanced than sort of simply adding, you know, three new businesses. What we're assembled is a portfolio now of highly recognizable cultural brands across entertainment, lifestyle, food, cities, music, of course, and youth culture. So, on a deduplicated basis, Vinyl Media now reaches over half of Australians online. And at that scale, the commercial conversation changes quite profoundly. So where previously we would have had individual brands that were quite influential within particular cultural niches or communities, and those brands could go on to win, say, selective briefs. You now have a Vinyl Media that, as the whole, really has a seat at the table and the ability to sort of walk in through the front door with that the authority that comes from that scale. And also, our ability to still specialise despite the scale, like so like we previously were, but it's the combination of the two things that really changes things. And for an advertiser, what that really means is they can come to Vinyl with a problem now rather than simply asking to sort of buy impressions on one of our websites. We can potentially solve you know most briefs now through Pedestrian, Rolling Stone, Time Out, Concrete Playground, Lad Bible, you know, the craters on Vampr, we can put an event on, we've got our social distribution channels, we can create videos or any combination of all of the above. That's what we're calling adaptive media. And that's where that product, the adaptive media product, becomes certainly more powerful than any one of those things on their own because now we've got that audience and cultural breadth to execute on that at an at a national scale, I should say.

Andrew Musgrave
 
 And taking a look at AI, you've outlined an AI first operating strategy in your FY27 vision. How is AI currently being embedded across content creation, audience intelligence, and monetization across the expanded network?

Josh Simons

Well, AI first for us doesn't mean AI-generated journalism replacing journalists, to be clear. That's definitely not the strategy. It means asking really across every part of the organization, what can technology now make dramatically faster, smarter, or more scalable? So, on the publishing side, that can be anything from research, transcription, content enrichment metadata, optimization, localization, helping editors understand how a story can live across multiple formats, those sorts of things. Then on the audience side, it's really more about taking an enormous amount of behavioural and contextual data across the network and making that useful so that we can understand audiences and cultural trends much better. Commercially, I suppose the opportunity is to reduce the distance between an insight and a and ultimately a campaign. So, we want our teams to be able to identify audience or a cultural opportunity, develop a proposition against it and activate across the network much faster than say a traditional media company can. I think the I'd say also just that the economic benefit is important as well. If we can materially increase the output and capability of our organization without the cost base increasing at that same rate, then the operating leverage becomes attractive. So, I mean I see it, yeah, I see our AI stack as less of a product in and of itself and more of a, for lack of a better word, an intelligence layer that sort of runs throughout the entire company.

Andrew Musgrave

Touching now on tech innovation, you've relaunched key mastheads like the Music Network and Media Week on Vinyl's centralized content management system while advancing products like Vinyl Shelf and Workshop by Vampr. How does this tech stack drive site performance and commercial opportunities?

Josh Simons

Yeah, one of the less glamorous but really important things that we're doing is rebuilding the infrastructure underneath our portfolio. So historically, when you or we when we acquire media businesses, one inherits completely different websites, CMSs, analytics stacks, newsletter systems, supplies, et cetera. And that's really expensive and it makes innovation frustratingly slow. So, we're progressively moving our whole portfolio onto a centralized vinyl infrastructure. And we've already done that with the Music Network and Media Week. So, the immediate benefits are, and you can check this out for yourself, but faster sites, better security, improved SEO and GEO readiness, and lower maintenance complexity. But of course, the big advantage is actually sort of what comes after you do that work. So once multiple brands share a single infrastructure, then you can build something once and deploy it across the whole network rather than rebuilding it seven times. And then you can begin connecting that publishing infrastructure with proprietary Vinyl products. So, you mentioned the Vinyl Shelf, which is a new beta product. And then that's an example of connecting sort of cultural discovery with commerce. And similarly, yeah, there's another product in early rollout called Workshop by Vampr, which also builds on that creator infrastructure and scale that we've spent over a decade amassing over there in Vampr world. So yeah, over time we're trying to turn what would traditionally be a collection of sort of separate publishing assets or into one underlying, I suppose, technology and commercial platform while keeping the brands themselves distinct. So that that's where the real, again, operating leverage, I think, really sits.

Andrew Musgrave

Now finally, Josh, with Q1 FY27 customer receipts expected at over $7 million and an FY27 revenue forecast of $38 to $40 million. What does Vinyl's growth and margin trajectory look like over the coming year?

Josh Simons

Yeah, FY27 is really about converting the scale we've already built into profitability. So, we've given that market expectation of more than $7 million in customer receipts in Q1, and obviously revenue between $38 million and $40 million for the full year. But I'm probably, to be honest, Andrew, more focused on the quality of that revenue than simply the headline number. So, we've spent, you know, the last few years, as I say, assembling the assets. We're now consolidating infrastructure, as we discussed, reducing some of the duplicated costs, integrating commercial teams, of course, and increasingly deploying our technology across the group. So that should create that operating leverage because revenue can grow without the cost base needing to grow at the same rate. So that's sort of my focus. And we enter FY27, you know, undoubtedly with a substantially larger business, a bigger national audience scale, and a normalized cost base that starts much closer to break-even than at any time in the company's history. So, the priority from here really is, as I say, disciplined execution, deliver the revenue forecast, complete the integrations, and demonstrate sustainable cash profitability. If we can do those things, I think FY27 probably becomes the year where the market can start to see the economic model behind that scale that we've already assembled.

Andrew Musgrave

Okay, Josh. Well, it's been great to chat again to get an update on where the company is at. So, thanks for your time, and we look forward to further updates in the upcoming months.

Josh Simons

No worries, thanks, Andrew.

Andrew Musgrave

That concludes this episode of ASX Briefs. Don't forget to subscribe, and we look forward to catching you on our next episode.