We upgraded our Industry View to Attractive going into 2H25, and reiterate our preference of AI over non-AI. With semi tariff and FX impact concerns behind us, we expect the sector to further re-rate. It is also a good time to preview key investment themes in 2026. See our report for details: Greater China Semiconductors: AI semi strength continues; upgrading Industry View to Attractive (13 Jul 2025) | M | | Foundation | | --- | --- | --- | | August 18, 2025 10:13 AM GMT | | | | Investor Presentation Asia P ...

Universal Adds ‘No AI Training’ Warnings to Films as Midjourney Claims ‘Fair Use’► https://t.co/45q8xIhGAu https://t.co/45q8xIhGAu ...

Financial Data and Key Metrics Changes - Quarterly revenue grew by 53% year over year from $12.4 million to $19 million, exceeding guidance [6][27] - Net income improved by nearly $3 million year over year, reaching $800,000 or $0.01 per share [7][28] - Adjusted EBITDA increased by over $4 million year over year from negative $1 million to positive $3 million, marking the highest adjusted EBITDA in company history [7][28] - Adjusted free cash flow was $2.9 million, representing the sixth consecutive quarter of positive adjusted free cash flow [29] Business Line Data and Key Metrics Changes - Subscription revenue was $9.3 million, a decline of $1.7 million from last year but a sequential increase from Q1 [29] - Content licensing revenue was $9.3 million, an increase of over $8 million driven by significant new business from AI licensing [29] - Gross margin improved slightly to 53% from 52% a year ago, with reductions in content amortization [30] Market Data and Key Metrics Changes - The company has entered into new and expanded multiyear wholesale distribution agreements in Asia, Latin America, and the U.S., which are expected to boost subscription revenue [8] - The dataset licensing for AI training has grown substantially for three consecutive quarters, including licensing about 9 million tokens of code for the first time [10][11] Company Strategy and Development Direction - The company aims to have three solid revenue pillars: subscription business, licensing business, and advertising business, with expectations for steady growth in subscriptions and rapid growth in licensing [37] - The company is focused on becoming a dominant AI video licensor, with plans to license more video and data than in 2025 [24][25] - The company emphasizes the importance of its extensive library of over 1 million hours of content and its ability to structure data effectively as competitive advantages [19][21] Management's Comments on Operating Environment and Future Outlook - Management believes the market for high-quality, ethically sourced video and audio content is durable and growing, with estimates of industry-wide needs ranging from billions to tens of billions of hours [14][15] - The company is confident in its ability to navigate the evolving landscape of AI and media, focusing on meaningful information while disregarding distractions [22][23] - The company maintains a strong balance sheet with $31 million in liquidity and no debt, positioning itself as a high-performance outlier amid technological revolution [25][31] Other Important Information - The company paid dividends of $10.4 million in June, including a special dividend of $5.8 million, resulting in a dividend yield of about 6.5% [31] - The company expects third-quarter revenue in the range of $15 million to $18 million and adjusted free cash flow for 2025 in the range of $11 million to $13 million [32] Q&A Session Summary Question: Why is the company in the core media business? - Management stated that the subscription video on demand business is strong and global, representing the core of the company, and that all revenue streams work together synergistically [36][37] Question: What are the expected cost increases as the company pivots towards high-growth licensing? - Management indicated that the primary costs would be related to storage and delivery, but overall costs would remain manageable due to existing revenue-sharing arrangements [40][41] Question: What is the significance of licensing code for AI training? - Management explained that while video is the primary focus, the inclusion of code in licensing is a unique opportunity that reflects the value of owning and controlling intellectual property [49][50] Question: Is the company exploring other types of video content for licensing? - Management confirmed that while the focus remains on building a factual entertainment library, there is potential value in other types of video content, particularly if they are not freely available [53][55]

AI Infrastructure & Market Perspective - Oracle views AI at an inflection point, suggesting significant growth and change in the industry [1] - The discussion highlights that it's a great time to be an AI customer, implying increased options and competitive pricing [1] - Enterprise AI adoption is underway, but the extent of adoption is still being evaluated [1] - The future of AI training and inference is a key area of focus, indicating ongoing development and innovation [1] Technology & Partnerships - Oracle emphasizes making AI easy for enterprise adoption, suggesting user-friendly solutions and services [1] - AMD and Oracle have a performance-driven partnership, indicating collaboration to optimize AI infrastructure [1] - Cross-collaboration across the AI ecosystem is considered crucial for advancement [1] - Co-innovation on MI355 and future roadmaps between AMD and Oracle is underway [1] - Openness and freedom from lock-in are promoted, suggesting a preference for flexible and interoperable AI solutions [1] Operational Considerations - Training large language models at scale requires evolving compute needs and energy efficiency [1] - Operating in a scarce environment is a challenge, potentially referring to resource constraints like compute power or data [1] - Edge inference can be enabled with fewer GPUs, suggesting advancements in efficient AI deployment [1] Ethical & Societal Impact - Societal impact, guardrails, and responsibility are important considerations in the development and deployment of AI [1]

Investment Rating - The report indicates a positive outlook for the US Communications Equipment industry, with a significant increase in data center capital expenditures (capex) projected for 2025 [1][8]. Core Insights - The data center market experienced a growth of over 50% year-over-year in the first quarter of 2025, reaching $134 billion, primarily driven by increased server spending, which constitutes more than 50% of data center capex [1][8]. - The top four cloud providers in the US and China are expected to account for approximately 60% of the market, with a projected 39% growth in their capex for fiscal year 2025 [2][8]. - AI training is highlighted as the main focus of data center investments, with expectations for the deployment of over 5 million accelerators in 2025, significantly impacting infrastructure investments [2][9]. - Major companies like Microsoft, Amazon, Google, and Meta are anticipated to expand their general-purpose server units and data center projects, aligning with the growing demand for cloud services and AI capabilities [3][4]. Summary by Sections Market Overview - The enterprise segment saw a 21% year-over-year increase in the first quarter, driven by a server refresh cycle, although potential macroeconomic factors could pose challenges [7]. - The report revises the 2025 growth forecast to 30%, indicating a multi-year capex expansion cycle among the top cloud providers [8]. Company-Specific Developments - Microsoft is on track to deploy its Maia platform in volume later in 2025, contingent on resolving early technical issues [3]. - Amazon, Google, and Meta are expected to significantly increase their server units, with Meta planning to establish data centers in 14 regions over the next 2-4 years [3][4]. - Oracle is projected to grow its capex in double digits in 2025, with plans for new data centers in seven regions [4]. Investment Projections - The report forecasts that the shipment of high-end accelerators will reach 5 million in 2025, translating to an accelerated server capex of $205 billion, which represents 34% of total data center capex [9].

Core Insights - The demand for Enterprise SSDs remained stable in Q4 2024, with revenue reaching $7.34 billion, a slight decline of 0.5% from the previous quarter due to weak consumer product markets [1][2] Group 1: Market Overview - The Enterprise SSD market is experiencing a supply-demand imbalance, with an expected price drop of 18% to 23% in Q1 2025, leading to a projected revenue decline of nearly 30% [1] - The revenue for Enterprise SSDs in Q4 2024 was $7.34 billion, with Samsung holding a market share of 39.5%, followed by SK Group at 31.3%, Micron at 16.0%, Kioxia at 9.9%, and Western Digital at 3.3% [2] Group 2: Company Performance - Samsung's revenue in Q4 2024 was $2.9 billion, a decrease of 9.4% quarter-over-quarter due to production capacity adjustments [3] - SK Group's revenue increased by 11.8% to $2.3 billion in Q4 2024, benefiting from continuous shipment growth and the production of PCIe 5.0 SSDs [4] - Micron maintained its revenue at $1.17 billion in Q4 2024, with a market share of 16.0%, despite a slight slowdown in demand for 30TB products [5] - Kioxia's revenue grew by 13.8% to $724 million in Q4 2024, driven by expanded cooperation with North American CSPs [6] - Western Digital's revenue fell by 26.2% to $245 million in Q4 2024, attributed to a lack of progress in large-capacity product shipments [6]