Cinedigm Corp (NASDAQ:CIDM) chairman and CEO Chris McGurk has told shareholders that the company’s share repurchase program of up to 10 million shares is evidence of the board’s confidence in the company’s future.
“Why are we doing this? Our balance sheet is very strong, with essentially no debt, and our recent upside performance has increased our cash on hand even further from the end of last quarter,” he said in a letter to shareholders.
“This gives us complete confidence that we can execute this significant stock repurchase program without hampering planned operating expenditures, such as key content acquisitions. Most importantly, we believe that purchasing undervalued Cinedigm shares is a superb investment strategy for the company,” he added.
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The repurchase program signals that the company fully agrees with the analysts who study and follow Cinedigm, and who have targeted the company’s stock at $2.25-$5.00 per share, he said.
“They are correct in doing so, given Cinedigm’s rapid growth, including the creation of dozens of new jobs, as we develop industry-leading new technology and bypass the major studios and streaming 'gatekeepers' to provide enthusiast audiences the films and TV programs they cannot find elsewhere,” he added.
Cinedigm, which recently acquired movie review and ratings service Dove.org and faith-based streaming platform Christian Cinema, will continue to look for other accretive M&A opportunities, McGurk added.
Turning to the company’s future, McGurk highlighted the following:
- The company is confident it will achieve its goal of over 50% per year streaming revenue growth and $150 million in annual revenues within 2-4 years while significantly improving margins to attain sustained profitability.
- The company has been focused on building one of the largest and most diverse film and TV libraries in the industry. It has close to 60,000 movies and shows under license, with nearly 25,000 added this year alone.
- At Matchpoint, the company’s streaming OS that powers content management, content preparation, content delivery, programming, video streaming apps, analytics and more, focus has been on leveraging the power of content processing at scale. By utilizing AI and machine learning, Matchpoint automates tasks that previously required a large army of employees to accomplish by hand.
- McGurk said he believes that Matchpoint is the key that gives the company a big competitive and operating advantage, dramatically reduces costs to achieve profitability and supports a much higher valuation
- Beyond Cineverse, Cinedigm continues to be a leader in the free, ad-supported streaming television (FAST) market, one of the fastest-growing and most profitable segments of the streaming industry.
McGurk also announced that the company will be rebranded to reflect its transformation to a streaming content and technology business this fiscal year.
"This branding will accentuate our position and narrative for today and the future," he said.
Contact the author at jon.hopkins@proactiveinvestors.com