Company Generates Record Subscriptions Sales for 2023 Holiday Season

Rhea-AI Summary

The Singing Machine Company, Inc. reported a significant increase in sales, with their karaoke subscription service generating $3.28 million in gross sales in 2023, marking a 34.8% rise from the previous year. The partnership with Stingray Group, Inc. has been instrumental in this success, with the Company's profit share calculated at a 100% gross margin after deducting costs of goods sold and expenses.

Insights

Market Research Analyst

The reported 35% year-over-year growth in subscription sales for The Singing Machine Company's partnership with Stingray Group indicates a robust uptrend in consumer demand for karaoke subscription services. This performance reflects favorably on the company's strategic expansion and product placement in global retail locations. Moreover, the projection that Wi-Fi streaming products will double in sales mix to 10% suggests a significant shift in consumer preferences towards higher-priced, feature-rich karaoke products.

From a market research perspective, the company's ability to maintain a 100% gross margin on net sales of music subscriptions is exceptional, as it indicates a strong pricing strategy and cost control. The integration of this service with their hardware sales could create a recurring revenue stream, enhancing customer lifetime value and potentially increasing investor confidence in the company's future profitability.

Financial Analyst

Considering the financial implications of The Singing Machine Company's announcement, the significant increase in sales and the high gross margin on subscription services are likely to have a positive impact on the company's bottom line. The fact that the net sales on music subscriptions are recorded at approximately 100% gross margin, due to negligible COGS and SG&A expenses, is particularly noteworthy. This indicates a highly profitable segment within the company, which could lead to improved earnings and potentially a more attractive valuation.

Investors should also note the company's forecast that the growth in subscription sales will be proportional to the increase in unit sales. This could suggest a scalable business model that may result in increased market share and revenue growth. However, it is crucial to monitor the company's ability to sustain these margins and manage expenses as they scale.

Consumer Technology Analyst

The integration of a Wi-Fi streaming music subscription service with 5% of hardware sales and the expected increase to 10% in 2024 indicates that The Singing Machine Company is effectively leveraging technology to enhance product offerings. The mention of features such as ad-free content, vocal controls and a companion app suggests a focus on product differentiation and user experience, which is critical in the competitive consumer technology market.

Furthermore, the extensive library of songs in multiple languages positions the company to appeal to a diverse, global customer base. This strategic move could potentially disrupt the karaoke market, as it aligns with broader trends in the entertainment industry towards personalized and convenient user experiences. The long-term success of this strategy will depend on the company's continued innovation and ability to adapt to changing consumer behaviors.

Karaoke Subscription Service Generated $3.28 Million in Sales, 35% Increase Year-Over-Year

Fort Lauderdale, FL, Feb. 27, 2024 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. (“Singing Machine” or “the Company”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products, today announced a significant new milestone in its partnership with leading music, media and technology company, Stingray Group, Inc. (“Stingray”), for their shared karaoke subscription service. For 2023, the Stingray-Singing Machine subscription service generated a record $3.28 million in gross sales, representing a 34.8% increase over the prior calendar year subscription sales. As part of its agreement with Stingray, the Company’s profit share is calculated after deducting all costs of goods sold (COGS) and expenses associated with maintaining this service. Consequently, the Company records net sales on music subscription sales at approximately 100% gross margin.

“We are excited to report that subscription sales generated very strong results for the Company in 2023,” commented Gary Atkinson, CEO of the Singing Machine. “We launched the first subscription- based music service in a pilot product offered only at Costco for the Christmas of 2021, and we have been very encouraged by the rapid acceptance of this service by consumers as we expanded the product placement in more retail locations globally.”

Atkinson added, “I’m pleased with the adoption of our karaoke music subscription service, powered by our strategic partner, Stingray. This milestone in subscription revenue supports our belief that consumers are willing to pay for high quality ad-free karaoke videos and unique karaoke features like turning lead vocals on/off, a companion-app to remotely control your karaoke party, and access to over 100,000 songs across 25 different languages.”

“In 2023, approximately 5% of our hardware unit sales included this integrated Wi-Fi streaming music subscription service. In 2024, we see the mix of Wi-Fi streaming products doubling to approximately 10%, led by stronger retail demand for higher-priced, higher-featured karaoke products. With the expansion of our Wi-Fi streaming line, we project our net music subscription sales, which have virtually no COGS or SG&A expenses associated with it, to grow proportionally with the forecasted increase in unit sales,” concluded Mr. Atkinson.

About The Singing Machine

The Singing Machine Company, Inc. is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry's widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.

Investor Relations Contact:
investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors

About Stingray

Stingray (TSX: RAY.A; RAY.B), a global music, media, and technology company, is an industry leader in TV broadcasting, streaming, radio, business services, and advertising. Stingray provides an array of music, digital, and advertising services to enterprise brands worldwide, including audio and video channels, over 100 radio stations, subscription video-on-demand content, FAST channels, karaoke products and music apps, and in-vehicle and on-board infotainment content. Stingray Business, a division of Stingray, provides commercial solutions in music, in-store advertising solutions, digital signage, and AI-driven consumer insights and feedback. Stingray Advertising is North America's largest retail audio advertising network, delivering digital audio messaging to more than 20,000 major retail locations. Stingray has over 1000 employees worldwide and reaches 540 million consumers in 160 countries. For more information, visit www.stingray.com

FAQ

What was the total sales generated by the Singing Machine Company's karaoke subscription service in 2023?

The Singing Machine Company's karaoke subscription service generated $3.28 million in sales in 2023.

What was the percentage increase in sales year-over-year for the Singing Machine Company's karaoke subscription service?

The sales for the Singing Machine Company's karaoke subscription service increased by 34.8% year-over-year.

Who is the strategic partner of the Singing Machine Company for their karaoke subscription service?

Stingray Group, Inc. is the strategic partner of the Singing Machine Company for their karaoke subscription service.

What percentage of hardware unit sales included the integrated Wi-Fi streaming music subscription service in 2023?

Approximately 5% of the Singing Machine Company's hardware unit sales included the integrated Wi-Fi streaming music subscription service in 2023.

What is the projected increase in the mix of Wi-Fi streaming products for the Singing Machine Company in 2024?

The Singing Machine Company projects the mix of Wi-Fi streaming products to double to approximately 10% in 2024.