engage:BDR and AdCel poised to become run-rate profitable

By Trevor Hoey. Published at May 20, 2019, in Technology

engage:BDR Ltd (ASX:EN1) has provided a promising trading update midway through the June quarter.

The signing of important new contracts and the generation of robust revenues from the group’s existing operations is expected to see the company reach its run rate profitability in the June quarter.

Of significance was the news relating to AdCel.

Revenues double at AdCel

EN1’s AdCel daily revenues have more than doubled since data was last provided in April.

The recent increase in revenue is attributed to new partnerships which have gone live over the past week.

AdCel CTO, Denys Kravchenko says AdCel is now a one stop solution for publishers of all sizes, which brings a range of benefits.

"Existing and new publishers can utilize our ML powered algorithms to monetize their supply through their own direct deals on top of the existing 60+ demand sources AdCel has. This new value proposition brought us new publishers' integrations and has allowed us to increase AdCel’s daily revenue by 230%. Running a lean team and a lean expenses structure has also allowed us to scale without significant cost increase."

AdCel CTO Denys Kravchenko.
AdCel CTO Denys Kravchenko.

Management targets AdCel’s revenue to double again by June 2019, as the current revenue increase is based solely on test traffic, at 10% scale of each publisher.

Once that goal is reached, AdCel will also be run-rate profitable.

Management is currently evaluating term sheets for debt facilities which would enable the company to pay publishers immediately upon receipt of their invoices (or prepay).

This would significantly improve publishers’ cashflows and prompt migration away from their existing platforms, bringing volumes of incremental revenue to EN1.

There is plenty of upside for AdCel.

Kravchenko says, "Programmatic, non-programmatic and fix priced direct demand from dozens of DSPs creates a real challenge for publishers. Running RTB auctions and analyzing historical data in near real time makes it almost impossible for a publisher to efficiently create an ad session that will maximize their ad revenue. The current combination of our sophisticated ML models and smart header bidding allow us to build the most effective ad session publisher planned for the users. Meanwhile, publishers can focus on what they are doing best - creating great products users will enjoy."

This game-changing opportunity will initiate a hyper-growth stage for the company and enable it to seize market share away from its competitors in 2019.

More publishers and buyers will compound revenue and profitability for EN1.

Once a facility is in place, EN1 plans to broadcast aggressive payment terms to the industry through the company’s own programmatic and social media influencer platforms.

New contracts

Management highlighted that 13 new programmatic integration contracts had been negotiated, bringing the group’s total programmatic integrations to 191, just 3 integrations away from the 2019 annual milestone set by management, announced by the company in February.

This represents 88% of EN1’s annual goal and the achievement of 216% of its June quarter goal.

The new partners are Admixer, Advenue, AMLI Media, Axonix , Clean Media , Criteo, Inmobi, LoopMe, Mediaforce, Mintegral, SomeSpider, Velis Media and Vidstream.

Mid-month revenue has scaled to about $48,000 per day with the $65,000 per day conservatively expected by the end of the June quarter.

Gross margins are consistent with April at 40%.

Management noted last week that operating expenses had been reduced, paving the way for improved margins as the year unfolds.

The company is moving quickly into stride with one publisher from group 2 publisher activations going live and exceeding expectations by generating about $4300 per day in revenue.

EN1 expects several other publishers to be live this week and to beat on the initial $10,700 per day target for group 2.

Capturing market share with superior technology

engageBDR estimates that the addressable US market size will be approximately US$70 billion and globally US$98 billion by 2020 (eMarketer).

These are dollars to be spent specifically on programmatic advertising across desktop, mobile and TV screens, exactly where EN1 operates.

EN1’s addressable market size for influencer marketing is US$10 billion globally, by 2020 (Mediakix).

EN1’s use of Ai (artificial intelligence) in programmatic advertising and influencer marketing is a rare and key differentiator in both of these arenas.

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.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Thanks for subscribing!

X