Engage:BDR Limited (ASX: EN1) is an advertising and digital media company. The company provides advertising solution to advertisers and publishers across desktop, tablet, mobile, and other devices. It enables dynamic buying and selling of its display and video ads along with other advertising inventory via its online marketplace. The company integrates its client platform into its programmatic platform to facilitate online buying and selling of advertisements.
The company recently came up with the announcement of changes in its annual revenue numbers and EBITDA guidance. As per the release, the company has downgraded its revenue in the range of $12 million to $13 million for FY18 from the previous guidance of $21 million - $23 million. However, this revised guidance is in line with the previous year 2017 revenue of $13.1 Mn. On the EBITDA front, the company expects approximately a loss of $4 million to $5 million, whereas the normalized EBITDA(Loss) is likely to be in the range of $2 million-$3 million.
The company rationale behind the revision stems from the fact that it did not obtain enough capital either to meet the high volume of publisher prepayments nor to complete the integration of all planned new publishers. The company faced challenges on the grounds of negative sentiments from declining share prices and delays with brokers, even after a substantial commitment of preliminary capital by existing institutional shareholders. Additionally, the Company expected to raise significant capital during September which has been delayed due to share price declines and the degrading small-cap environment on the ASX.
The company has reduced 2018’s fourth-quarter operating expenses by 53% compared to fourth quarter 2017 numbers. It has cut payroll alone by 67%, including executive cuts, during the same periods. Over the past year, full-time employee headcount has decreased from 33 to 15 as a result of increasing automation of programmatic revenue sources. The Company also negotiated on all its significant contracts, including all tech infrastructure, facilities costs, insurances, professional fees, etc. to significantly reduce the operating expenses.
The company has raised approximately $12.2 million since its inception. The first capital raising was started through an IPO twelve months ago. Within this period, the company’s balance sheet liability improved by over $12 million. In the future few months, the management expects significant incremental revenue growth from the new EN1 and AdCel integrations that took place during the 3rd and 4th quarters of 2018.
Let us view the performance of Engage’s stock and the returns it has produced over the past few months. The stock is currently trading at $0.018, a decline by almost 10% intraday, with a market capitalization of $5.77 million. The stock opened at $0.020 with a day’s high price of $0.021 and touched a low of $0.016. It has yielded a negative YTD return of 91.30% and further produced negative of 84.00% in the past six months. The stock has a 52-week high price of $0.235 and a 52-week low of $0.016.
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