EN1 more than doubles gross profit and delivers engaging 2019 result

By Trevor Hoey. Published at Mar 2, 2020, in Technology

On Friday, engage:BDR (ASX:EN1) released its financial results and business update for the 2019 calendar year.

It was an impressive result with revenue up 50% to $17.1 million and gross profit more than doubling to $9.3 million.

One of the most encouraging aspects of the company’s performance was the significant uptick in margins from 38% in 2018 to 54% in 2019.

With a number of non-cash one-off and/or non-operational factors occurring in 2019, earnings before interest, tax, depreciation and amortisation (EBITDA) is a good indicator of the company’s financial performance.

EBITDA increased from a loss of approximately $6.3 million in 2018 to an operating profit of $1.6 million in 2019.

Management initiated a Strategic Plan to Profitability in February 2019, and the company has delivered on the milestones it committed to at that time, ticking the rest of the boxes indicated below as the second half unfolded in 2019.

Consequently, the strong earnings result has been both a function of a robust operational performance and management’s business acumen in making necessary structural changes.

More specifically, the company was able to reduce staff costs by 43%, while also driving down operating and administrative expenses by 26% during the period.

EN1 enters 2020 with a significantly strengthened balance sheet featuring a positive $10 million turnaround in net assets and a marked increase in cash from $320,000 in 2018 to $1.8 million in 2019.

Foundations laid for growth in 2020

Management’s take on EN1’s 2020 prospects is that the company has never been positioned better for exponential revenue, profitability and market share growth.

Supporting their upbeat view of the company, management pointed to the group’s healthy balance sheet, profitability, scaling revenue and margins, as well as its increased access to significant capital.

More importantly, EN1 has the partnership integrations which differentiate the company from many US peers.

Management expects revenue, gross margins, EBITDA and NPAT to continue to increase in 2020 as a result of the company’s client and partnership mix.

On a year-to-date basis EN1 has generated income equivalent to about 300% of 2019 revenue compared with the previous corresponding period.

In January 2020, EN1 generated about 281% of income compared with the previous corresponding period in January 2019.

February revenues look to have exceeded January 2020, representing nearly 300% of February 2019.

Key focus areas going forward are NetZero publisher boarding, AdCel growth and new integrations for the company’s programmatic ad exchange.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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