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Newzulu Builds Momentum, Signs Third Australian Media Company

Newzulu (ASX:NWZ) has further demonstrated the value and scale of its product suite by signing up a third major Australian media organisation within two weeks.

The identity of this media company will not be revealed during the trial phase of licensing and using Newzulu Platform and Newzulu Live at its request.

Licensing and subscription fees from the latest agreement are expected to be in the range of between $600,000 and $1,800,000 per annum and commencing in 12 weeks.

This has the potential for extension based on the success of the crowd-sourced news technology rollout.

The Newzulu Platform and Newzulu Live technologies enable the television broadcaster to crowd-source photos, videos and live video streams from its audience and from staff reporters.

Alexander Hartman, executive chairman, commented:

"Newzulu is excited by the momentum we are achieving with Australia's leading television broadcasters.

"Newzulu is helping change the media landscape through our innovative technology, enabling journalists to capture news and distribute it live in one seamless process, giving viewers improved news services and significantly enhanced experience and up to the minute live news feeds.

"Our technology will allow news events previously missed to be captured and shared with viewers live.

"We look forward to delivering a compelling and engaging crowd-sourced news platform for this leading national player in Australian television news.

"We also look forward to publically launching the initiative with the broadcaster in the near future.

"Through Newzulu's media and broadcast clients, everybody with can deliver the lead story, live on national news across Australia from their mobile device."

Agreement Details

Under the agreement, the client will initially provide up to 300 of its staff reporters with the Newzulu Live Reporter Kits apps on their mobile devices, with that number expanding based on success in the trial phase.

It also enables the broadcaster to deploy a customised crowd-sourced news platform which their viewers will be encouraged to engage in.

The platform leverages traditional media, social media, mobile and web technology that empowers anybody with a mobile device and a story to contribute to their leading news services across traditional broadcast and digital media platforms.

The agreement is subject to the following conditions:

- Further negotiation and agreement on specific commercial terms;
- It extends up to two years, subject to an initial 12 week trial period;
- Initial licensing of Newzulu Live user-generated content capabilities for up to 300,000 active monthly mobile installations.

Quarterly Results

In its report for the fourth quarter ended 30th June 2015, the company reported a 29% increase in revenue over the previous quarter to $0.7 million.

Net operating cash outflows were reduced by 16% to $2.6 million. This cost base is expected to support numerous major client signings.

Based on forward projections, run rate revenues are expected to increase to total approximately $8m with clients signed in July, 2015.

Other highlights of a strong June Quarter include:

- Significant increase in cash receipts from customers by 63% in Q4 compared with Q3;
- Significant growth in Newzulu contributor community (Social network engagement up 180% on Q3), mobile app downloads and sale of images and videos through news agency partnerships;
- Establishment of global infrastructure to support major media outlets, broadcasters and brands as clients;
- Software license and reseller agreement signed with leading live video solutions provider, LiveU, to integrate mobile live video streaming technologies and collaborate on global sales opportunities for Newzulu Live products: Newzulu Live Reporter Kits and Newzulu Live TV;
- Significant strategic partnerships secured with Getty Images, Tribune Content Agency and Alamy with a focus on high quality, crowd-sourced videos from the Newzulu Live platform;
- Video syndication agreements signed with ZoominTV, Wikino and Shami Media to syndicate video content from Newzulu Live TV, the crowd-sourced news, entertainment, sports and weather content platform, to television and broadcast partners in the USA, European, Spanish, and Latin and South American markets;
- Global reach expanded with content syndication partnerships extending to Japan (OTC:AFLO), the Czech Republic (NYSE:CTK) and Germany (ddp Images);
- $2.6 million placement to institutions and sophisticated investors completed, heavily oversubscribed.

Analysis

Newzulu continues to demonstrate the scalability of its Newzulu Platform and Newzulu Live product suite, signing up its third major Australian media company within just two weeks.

This follows on other agreements including a licensing agreement with Vietnam's Lasta Multimedia, a partnership agreement with Russian national news agency TASS as well as deals with Ooyala, Videoplugger and Gtres Online.

The three Australian agreements could deliver projected revenues of between $1.7 million and $4.9 million from licensing and subscription fees.

Proactive Investors understands that a number of major U.S. and European media companies could sign as clients in the coming months.

The company had $3.80 million in cash as at 30th June 2015.

With a run rate revenue of $2.9 million based on June, 2015, this would equate to estimated run rate revenues increasing to $8 million with clients announced as signed in July.

Revenue is further expected to grow quarter on quarter as major editorial partnerships commence generating revenues.

The associated revenues will largely drop to the bottom line with minimal variable cost per client leading Newzulu to a cashflow positive position within 18 months.

We estimate at this revenue run rate, attractiveness of the platform and cash outflows (reducing significantly upon each client signing and low additional variable costs per client signing), the current market cap. at $35 million undervalues Newzulu.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.