Engage:BDR provides revenue update
Engage:BDR (ASX:EN1) has released a revenue update for Q1 2019.
At the end of January 2019, EN1 raised A$700k in a placement to existing shareholders (and shortly after), a draw down from its existing convertible notes facility of US$720k.
This capital was raised with intention of activating dormant publishers which were strong contributors to EN1’s programmatic business over the past two years.
Approximately A$1.1 million was deployed during February 2019, publisher activation took nearly 3-4 weeks in some instances. On 18th March 2019, management reported the initial results of the activity was yielding around US$20k revenue per day.
Management expected full volume capacity with all publishers within 30 to 60 days from 18 March 2019. At that time, revenue expectation was US$30k per day.
EN1 will begin testing its new AI technology to reduce margins and increase sell-through margins to accommodate high gross profits.
Historically, the fourth quarter of the year is typically the largest for advertising companies in the US from a revenue standpoint.
EN1 expected Q4 2018 to be strong, but due to limited capital key publisher activation was down during this time. As a result, average programmatic advertising revenue during this period was about US$16k per day.
Results over the last seven days demonstrate an increase in daily revenue of about 40%, from US$20k to US$28k per day. Gross margins have sustained ~41%, with management still to test its AI margin optimisation tech. This is expected in the next two weeks.
This proprietary auction optimisation technology is intended to deliver stronger revenues and sell-through on existing supply and demand, while achieving stronger results for EN1’s brands and publishers.
Revenue averages over a shorter period (less than the past seven days) show significantly stronger results over 40% growth to US$28k per day. The company will update the market shortly with these new results once they’re statistically relevant.
End of year and quarter daily revenues generally trend higher than overall daily averages, the market should expect these recent figures to be higher than daily averages over the entire first quarter.
The current daily average is about 75% greater than Q4 2018 daily averages – EN1 feels this is a strong indication for what to expect for 2019.
As mentioned above, the company expects publishers to be operating at full capacity over the next 30-60 days.
Revenue estimates at full-capacity have now increased to 25% at US$37.5k per day, up from US$30k (or A$42k). Gross profit margins are expected to be in the 35-40% range, with the current yield at ~41% (around double of what the industry average is).
Naturally, revenue growth could enable EN1 to generate more gross profit. The company’s primary objective is to return to profitability, with 2019 shaping up as a pivotal year for EN1.
The company will update the market on further activities and revenue as they develop.
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