LiveOne, Inc. LVO recently announced an updated partnership with Tesla, Inc. TSLA. As part of this agreement, which was inked at the beginning of this month, Tesla has permanently replaced its streaming button with LiveOne’s service, marking a significant shift in the user experience for Tesla owners.
In conjunction with this partnership, LiveOne is set to launch its LiveOne 2.0 platform, which will grant subscribers access to music across all devices. This development will benefit the current 1.9 million LiveOne subscribers, who will have the option to upgrade to Premium or Plus services, potentially tripling the company’s average revenue per user (ARPU).
However, beginning Dec. 1, 2024, Tesla will stop subsidizing LiveOne products for some customers. Despite this change, LiveOne plans to offer discounted music packages specifically for all Tesla owners. Moreover, TSLA has committed to pay LiveOne on a monthly basis for users who are retained in the old service, ensuring a smooth transition for existing customers.
LVO Lowers Guidance for Fiscal 2025
In the short term, the amended partnership is expected to negatively impact LiveOne’s financial performance. The company has revised its guidance for consolidated fiscal 2025 revenues, lowering the forecast to between $120 million and $135 million from the previous estimate of $140 million to $155 million.
LiveOne, Inc. Price and Consensus
LiveOne, Inc. price-consensus-chart | LiveOne, Inc. Quote
The company also adjusted its earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance to the range of $8 million to $15 million from the earlier forecast of $16 million to $20 million. Despite these setbacks, LiveOne remains committed to its $12 million buyback program and has officially retired 4.2 million shares, reducing the total outstanding shares to approximately 94 million.
Will LVO Stock Gain From the Extended Partnership?
LVO is strategically focusing on expanding its B2B deals, having recently established four significant new agreements and identifying 63 potential partnerships in the pipeline. One of LVO’s notable achievements is securing a $24 million contract with a leading streaming network, which is projected to generate approximately $2 million in monthly revenues. This contract not only boosts LVO’s immediate revenues but also enhances its reputation in the industry, attracting further business opportunities. Moreover, with an expanded B2B team that has grown from six to 10 employees, LVO is well-equipped to pursue and manage these new partnerships effectively.
The company reported first-quarter fiscal 2025 revenues of $33.1 million, marking a 19% increase year over year. This growth was driven by the Audio Division’s success, a robust pipeline and four new partnerships. The extended collaboration may boost LVO’s near-term revenues, but uncertainties about its long-term viability pose risks. Nonetheless, it currently offers a stable revenue stream that could boost the company’s stock.
LVO’S Zacks Rank & Stock Price Performance
LVO currently carries a Zacks Rank #3 (Hold). Shares of the company have lost 32% in the past year against the sub-industry’s growth of 11.2%.
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Stocks to Consider
Some better-ranked stocks from the broader technology space are Seagate Technology Holdings plc STX, OptimizeRx Corporation OPRX and SS&C Technologies Holdings, Inc. SSNC. Both STX & OPRX presently sport a Zacks Rank #1 (Strong Buy), whereas SSNC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seagate Technology delivered an earnings surprise of 80.9%, on average, in three of the trailing four quarters. In the last reported quarter, STX pulled off an earnings surprise of 40%. The Zacks Consensus Estimate for its earnings has increased 18% to $7.41 in the past 60 days.
OptimizeRx delivered an earnings surprise of 159.5%, on average, in three of the trailing four quarters. In the last reported quarter, OPRX pulled off an earnings surprise of 128.6%. The Zacks Consensus Estimate for its earnings has increased 38.5% to 36 cents in the past 60 days.
SS&C Technologies Holdings delivered an earnings surprise of 3.1%, on average, in the trailing four quarters. In the last reported quarter, SSNC pulled off an earnings surprise of 4.9%. The Zacks Consensus Estimate for its earnings is pegged at $5.18.
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