Member Info for martyh

I’m certainly not saying it’s a slam dunk. But they are now adding more meaningful DAUs to the portfolio and we’re now seeing more ad campaigns in the mobile games.

It’s taken a lot longer than we were led to believe, but that doesn’t mean it won’t work.

Of course they need to keep adding games and more brands. But things are starting to move in the right direction.

We've never had a game like Top Eleven before though. Nothing close in terms of DAUs.

FM contributed a large chunk of the in-game ad revenue last year, and Top Eleven has an order of magnitude more DAUs.

Gridz,

You asked ‘Bids going to actually get into any decent games?’

They’ve just signed Top Eleven on an exclusive basis. One of the world’s highest grossing sports games on mobile. Number 1 in a lot of countries, above FIFA.

Millions of DAUs. Billions of football matches are played in the game each year. That means billions of ad opportunities, even before in-menu ads are considered.

We’ve now seen adverts in Tennis Manager, which show how they can display ads in a sports games with a 2D top down pitch. Tennis Manager is now also showing ads in a menu screen as well as in-game.

Top Eleven could provide several million in revenue even with a low fill rate. It has far more DAUs than FM.

Also getting Subway in Football Cup today.

The same subway ad is being used across a number of games - subway logo and sub on black background. Seen it in BMX2, Tennis Manager, Football Cup and Mr Bean.

I'm still getting Burberry in BMX 2 today, and got some Subway in BMX 2 yesterday.

I'm getting Burberry in Tennis Manager as well.

Mentioned in 'Stocks to Watch' by Alex Lawson of the Mail on Sunday

https://www.thisismoney.co.uk/money/investing/article-9776357/STOCKS-WATCH-Russians-coming-Tui-sights.html

Hopefully the share price will push higher this week as the placing churns through.

As I posted elsewhere over the weekend, I’m now seeing ads in a lot of the Bidstack mobile games.

Over the weekend I was getting ads in the following games appearing frequently.

*Mr Bean - Subway ads
*Football Cup 2021 - Subway ads
*Soccer Manager 21 - 90Min.com, Goal.com, Kappa
*Soccer Manager 20 – NXGN, Kappa, Lotto
*Mad Skills Motocross 3 – TheMXFactory, Vurbmoto, The Whiskey Throttle (all motocross related brands)
*Mad Skills Motocross 2 – The Whiskey Throttle

Top Eleven is a huge game.

Nordeus was acquired by Take Two for $378m last month.

Nordeus has a few other games, but nothing as popular as Top Eleven. Therefore most of the acquisition price will be in relation to Top Eleven.

It shows how popular a game it is, and the revenue potential of this deal.

Take Two has a market cap of $20bn.

I've been hoping they get this game for some time. Enormous player base.

Fantastic to have tied this up on an exclusive basis. The real estate will be worth a fortune, especially once open exchange buying comes in.

Note that this is a full RNS (not an RNS reach) so is expected to have a material impact.

Very good new.

Top Eleven is a very popular game with a huge number of active players. It will mean a large increase in Bidstack's DAUs.

DE,

The recent Stifel note had a DCF model.

They used a 15% discount rate and arrived at a 11.4p valuation. To capture the funding requirements over the period to the end of 2022, they reduced the 11.4p to 8.5p.

Clearly the funding has created more dilution that forecast. Based on the new number of shares in issue the 8.5p valuation becomes 4.8p.

They note that as the group establishes the business model they would expect the discount rate to come down. This has a big impact on the valuation because of the large cash inflows in later years.

At a 10% discount rate their valuation increases from 8.5p to 18p, and at a more typical 7% discount rate it increases to 37p.

With the new number of shares this equate to a valuation of 10p using a 10% discount rate and a valuation of 21p using a typical 7% discount rate.

So they have a valuation of 21p, a 10 bagger from here, based on a typical discount rate.

The games will be a mixture of games from AAA studios and from Indies. Longer term, once there is open exchange buying I imagine a large chunk of the revenue will come from mobile games from Indie studios.

AAA games obviously take time. But Bidstack are ahead of the competition with AAA games. The closest I’ve seen to a AAA game from the competition in Anzu with Trackmania (2020) (a PC only racing game from Ubisoft).

I don’t think running high volume through the platform will be an issues. The tech is built to scale. DSPs that handle huge volume like The Trade Desk have tested and integrated into the Bidstack tech.

From the forecasts given in the Cenkos and Stifel notes the company could be breakeven by the end of 2023 and have sufficient cash to get there.

Both notes have similar revenue forecasts for 2021 and 2022. Cenkos doesn’t have forecasts for 2023 other than saying that programmatic open exchange buying should allow for revenue to increase dramatically.

Stifel included a discounted cash flow calculation and all of the assumptions used. They forecast a large increase in DAUs in 2023 and future years (10m added per annum compared to 4m added in 2021 and 2022). This doubles the number of DAUs during 2023 (from 10m opening to 20m closing). They also forecast an increate in fill rate (8% in 2022, rising to 25% over 5 years).

Plugging this all into my model with their other assumptions I’m coming out with the following revenue numbers:

2022: 9m (with a 13m exit run rate). Using an 8% fill rate for all of 2022
2023: 19m (with a 30m exit run rate). Using a 11.4% average fill rate for all for 2023.
2024: 38m (with a 52m exit run rate). Using a 14.8% average fill rate for all of 2024

This ties with Stifel’s comment that Bidstack could be EBITDA breakeven in 3 years on revenue of 35m. The note was out in March 2021 so 3 years would be March 2024.

Following the raise there is far more cost discipline and the Cenkos notes forecasts lower operating costs. Therefore Cenkos are now forecasting profitability at £28m, rather than £35m.

This puts profitability around the end of 2023.

The cash raised should be sufficient to get the company to the end of 2023. Per the Cenkos forecasts cash at the end of 2022 should be £3.2m. Based on £19m revenue for 2023 the cash outflow should only be about £2m in 2023.

‘We estimate that Bidstack will need to see digital ad revenues of around £28m over its platform to pass through the profitability inflection point and into cash generation, after which we would expect to see profitability increase markedly over a relatively stable operating cost base from end FY22E.’

I’m surprised there is not more discussion around the forecast cash position from Cenkos. It’s much better than I was expecting.

Cenkos think there is a possibility that this cash could get them through to profitability depending on the pace of revenue growth, and in any case should last 2 years to mid 2023.

Cenkos are forecasting revenues of £28m are needed to get to profitability. So there’s a possibility Bidstack can get to that figure faster than forecast.

Cash position is better than I was expecting.

Based on a £10m raise they are forecasting cash of £7m at the end of 2021 and £2.5m at the end of 2022. (Cash burn reduced to £4.5m in 2022).

They suggest the cash could possibly get them to profitability, but in any case should last them 2 years until June 2023.

From the new 30 page Cenkos note out this morning.

‘We estimate that this funding round will sufficiently finance the business through FY21E and FY22E based on current revenue forecasts and possibly through the profitability inflection point depending on the pace of revenue growth. There is emphasis placed on cost discipline during the transition towards commercialisation of the business, with growth of headcount not expected to be significant over the next couple of years.’

Thanks ZENGAS,

https://wp-savannah-2020.s3.eu-west-2.amazonaws.com/media/2020/05/27095427/AIM_Admission_Document.pdf

ZENGAS, great posts over the last few days. Thanks.

Do you have a link to the Savannah document setting out the scenarios?

"Savannah has prepared development scenarios for reserves of 50, 100, 200 and 400 million barrels which have been reviewed and found to be reasonable. All the scenarios are similar but with costs and production scaled according to the reserve base.....'

roleybirkin,

Those projections are nothing to do with Anzu.

They are the statista estimates of Chinese video game revenue. It's billions not millions. Just bad reporting.

Click on the statista link in the article:

'Revenue in the Video Games segment is projected to reach US$49,313m in 2021.
Revenue is expected to show an annual growth rate (CAGR 2021-2025) of 9.63%, resulting in a projected market volume of US$71,239m by 2025.'