Smaller Digital Signage SaaS Providers In Death Spirals: STRATACACHE CEO

January 25, 2023 by Dave Haynes

My good friends and content partners at the German language publishing and consulting firm invidis have an interesting post up built around an extended interview with STRATACACHE CEO Chris Riegel, who runs what is very likely the largest digital signage software and solutions business in the industry.

There may be a Chinese company with more licenses, for all I know, but China is something of a mystery.

Here’s part 1 of what Riegel had to say. It is Google-translated so there may be the odd kooky phrase.

The digital signage industry would be a few facets poorer without Chris Riegel and STRATACACHE. We were able to notice this again on the occasion of our almost traditional exclusive interview on the ISE: the founder and CEO works through current topics and developments in chords.

In contrast to competitors, Chris Riegel does not have to consider shareholders and investors and calls things by their proper name. Irrespective of political requirements, interviews with the STRATACACHE CEOs are always a refreshing change from the “corporate talk” of the market competitors. Even if the conversations usually end for us with more questions than answers.

The demand in the retail market is unleashed

The invidis talk came right after NRF 2023, the annual rendezvous for retail tech vendors in New York City. STRATACACHE was there with a large booth right next to Google and Intel in the New York Convention Center right on the Hudson. “This year has been the busiest NRF in 25 years. In North America there is an immense backlog demand for retail projects after the pandemic. The market is unleashed,” says Chris Riegel.

While CES took place without STRATACACHE, the company will also be present at ISE 2023 with its subsidiary Scala – but without Chris Riegel. Scala has two stands in Barcelona: 2Q450 and 6K150.

For Riegel, these are very good prerequisites for strong growth with STRATACACHE in the coming years.

In the first few weeks of the new year, the STRATACACHE Group has already booked orders in the hundreds of millions of USD. Several major customers have extended existing contracts over the long term. “The order volume in the first weeks of January amounts to USD 300 million,” Riegel told invidis – without giving any details.

For 2023 as a whole, he expects sales growth of 35 to 40 percent.

In the past year, STRATACACHE was able to increase worldwide sales by 15 percent to USD 1 billion. The sprawling Stratacache group – which Chris Riegel says he owns 100 percent – is a private company that does not publish official financial figures, so we are unable to independently verify the figures.

With annual sales of $1 billion, STRATACACHE would be in the same group as its two US competitors, Diversified and AVI-SPL ($1.2 billion each in 2021).

My Note: Those companies are not software-led and a healthy chunk of their revenue comes from outside the signage industry – like broadcast studios, workplace and a lot of deployment jobs.

Stratacache has been watching the digital signage market consolidate at an accelerating pace for some time. According to Chris Riegel, there is little room for small providers in a mature market – as Stratacache’s dedicated M&A department notes, for example: “Since October 2022, the number of sales offers from Dirk Huelsermann and his team at STRATACACHE Capital has increased rapidly.”

Problems for tech companies in the capital market would also affect the digital signage industry. “Investor money is gone for loss-making digital signage companies,” emphasizes Riegel.

Stratacache is still looking for interesting investments, as the CEO states. “We are looking for takeover candidates that are of sufficient size. Typical digital signage providers with between 1 and 3 million annual sales are too small for us, we prefer companies with a sales potential of $50 to $100 million USD.”

My Note: There are not many companies in this business generating $50M+.

According to Riegel, companies that only charge $2 to $3 per month for a digital signage SaaS subscription in North America cannot survive. “The industry has a habit of consuming itself and small suppliers are on a death spiral. $2 to $3 a month doesn’t even cover cloud infrastructure costs.”

Riegel also expects a market change with the withdrawal of the Korean display manufacturers – Samsung and LG – from LCD production. “With the advance of the Chinese, the (competitive) landscape is shifting.”

Part 2 of this interview gets into Riegel’s plans and status for that microLED plant he is spinning up in Oregon.