A series of strategic acquisitions over the past year has led to a surge in revenue for Australia’s only ASX-listed music company Vinyl Group (ASX: VNL), but a blowout in net cash outflows to $3.96 million in the December half-year and a “deficiency” in working capital has raised material concerns whether the group can continue as a going concern.

While the concerns are predicated on several factors failing to occur, the Vinyl Group board says it remains confident that it can overcome each of the hurdles needed to drive the business forward and reach profitability by the end of this year.

Among the potential hurdles for the company, which is backed by WiseTech Global’s (ASX: WTC) billionaire founder Richard White, may be the need for a capital raising to meet its liquidity requirements and to provide working capital.

Vinyl Group - which owns The Brag Media and tech platforms Vampr, Vinyl.com, Serenade and Jaxsta - posted a $6.85 million bottom-line loss for the first half of FY25, up from a $4.7 million loss a year earlier.

This is despite revenue surging to a record $7.62 million from $876,211, an increase that was largely led by the 2023 acquisition of Vampr, the world's largest social media network for musicians.

While some of the loss for the period includes $1.89 million of fair value loss on financial liabilities, almost half of the loss was related to integrating The Brag Media, Mediaweek, Serenade and Funkified into the Vinyl Group business.

The profit announcement comes on the heels of court action last month from the vendors of The Brag Media taking the music media and technology company to court seeking a $2 million performance payment.

Critical to Vinyl Group continuing as a going concern is the successful completion of its $5 million acquisition of digital city guide Concrete Playground which the company announced last Friday has now settled.

The successful integration of the company’s recent acquisitions is also critical in leveraging synergies and providing “a comprehensive solution for customers across a myriad of solutions”. Vinyl Group says this will allow the full benefits of its Funkified Entertainment acquisition to support its growth plans.

“Our acquisition strategy has positioned Vinyl Group as a leader in music technology and media,” says CEO Josh Simons.

“With the integration of our latest acquisitions, Vinyl Media now houses some of the most influential music brands and digital publications in Australia, significantly amplifying our audience reach and engagement.

“By leveraging our media assets, we are driving substantial cross-promotional opportunities that directly benefit our e-commerce and technology platforms.”

In the notes accompanying Vinyl Group’s half-year profit result, which was released after the market closed last Friday evening, the directors say they believe the group is a going concern and that the financial statements “have been prepared on a going concern basis”.

Simons says that while 2024 was defined by “rapid change and expansion, 2025 is about optimisation”.

“We are focused on refining our portfolio, unlocking new opportunities for our sales team, and challenging every component of our business to operate as efficiently as possible,” he says.

“Our next phase will be centred on scaling profitably, improving margins, and continuing to execute strategic partnerships that enhance our competitive edge.”

Vinyl Group notes that in December, revenues from its technology assets exceeded those from the media division for the first time, which Simons says validates the company’s strategy of fuelling growth through “profitable media businesses”.

“This milestone underscores the synergy between both sides of our business - media and tech growing in parallel, reinforcing one another,” he says.

“Rather than choosing between being a media or a tech company, we are proving that a 21st-century media-tech hybrid can unlock entirely new market opportunities. We’ve started in Australia, but our ambitions are global.”

In the current half-year, Vinyl Group is focusing on developing AI-driven publishing products in-house to enhance content output and reduce the cost of user acquisition.

“This will not only reinforce our standing as a pioneering media-tech company but also unlock new opportunities for expansion and profitability,” says Simons.

“Meanwhile, organic revenue growth across all product lines continues to strengthen our financial position.”

On the company’s current trajectory, Simons expects a “significant decrease” in cash burn by the end of FY25 with plans to reach profitability by the end of the year.

“This is the culmination of years of strategic planning, disciplined execution, and an unwavering commitment to building a sustainable, high-growth business,” says Simons.

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