engage:BDR’s margins more than double that of leading influencer marketers’
engage:BDR (ASX:EN1) today provided a market update regarding cash deployed from February to early March to activate dormant publishers, which has resulted in significant incremental revenue contribution.
This comes after EN1 announced in late January that it was raising working capital to activate publishers to contribute to revenue in the first quarter and beyond for its programmatic advertising exchange.
EN1 successfully raised A$700,000 in a placement to existing shareholders and shortly after, a draw-down from its existing convertible notes facility of US$720,000.
The capital was to activate partners which were strong contributors to EN1’s programmatic business over the past two years.
The most recently activated publishers have been partnered and integrated with engage:BDR since 2010, when engage:BDR was one of the first in the global digital advertising industry to develop its own programmatic technologies and deploy a self-serve demand-side platform for performance marketers, direct-brands and their agencies.
This first group of publishers to be activated required about A$1.1 million, which was quickly deployed during February and all publishers are now actively producing revenue.
Management decided to deploy this capital early in the year to generate more revenue and it understands the capital will take longer than a quarter to return.
Many publishers required testing periods to validate numbers between the technologies and are currently throttled down as part of this process. EN1 expects to be in full volume capacity with all publishers within the next 30 to 60 days.
In the interim, revenue contribution from these activations is currently about US$20,000 or A$28,000 per day, which just recently started.
Gross profit margins for these activations are in the 30-55% range, averaging ~41% currently. Management will be testing its new Ai technology to reduce margins to increase sell-through and increase margins further to accommodate higher gross profits to find the optimal balance.
At these rates, EN1’s margins are more than double of what the industry’s leading companies yield.
Management expects these publishers to be in their full-capacities over the next 30 to 60 days. Revenue estimates at full-capacity would be around US$30,000 or A$42,000 per day, while gross profit margins are expected to be in the 35-40% range.
Management intends to continue to deploy capital to activate additional dormant and new publishers for the rest of the year. The capital utilised will have several cycles of revenue contribution throughout the year for EN1, yielding strong ROI multiples on the cash.
StartApp Customer Integration Update
Since late 2019, EN1’s engineering team has been working diligently to complete the integration with high revenue opportunity buyer, StartApp.
The original integration (API-based) went live in the test phase in late December, but after two weeks of testing, both companies opted to build a true-programmatically integrated environment together, to accommodate scale.
This development cycle is nearly complete and engage:BDR will be one of the first to integrate with this customer through a fully-programmatic integration.