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Revenues will ramp up once open exchange buying happens and has bedded in. Should mean a significant increase in fill rates.
I’m hoping everything is in place for open exchange buying next year and we start to see the real ramp up in 2023.
What’s important now is for them to tie up mobile games with large DAUs (like Top Eleven), ready for the taps to be turned on with open exchange buying.
Forecasting £9m revenue for next year so £40m for 2023 is achievable with open exchange buying.
We could get a hockey stick moment for revenues, with open exchange coming online and a lot more mobile games coming onboard to benefit.
Cenkos have cash profitability at £28m revenue. So £40m revenue could see c£3m cash profit.
The margin will be lower on test spends, with large studios, and sponsorship work.
Stifel explained the 13% margin in 2020 as being due to test spends rather than commercial margins.
Going forward Bidstack expect in-game ad margins to be 20-50% (up to 50% for smaller publishers) and for sponsorship margins to be 20%.
On a blended basis Cenkos are forecasting a 25% margin for 2021 with scope to increases once the number of smaller publishers increases.
‘Overall, we have assumed a stable gross margin of 25% for Bidstack but this will be determined within each year by the mix of business activity. There is scope for this gross margin to increase once programmatic advertising revenue commences and increasing numbers of mobile games publishers are onboarded.’
So once they achieve open exchange buying they can look forward to both much higher fill rate, and higher margins.
Gridz, in Dec last year they confirmed they were ahead of market expectation. The came in at £1.7m vs £1.5m forecast.
You say '£10mil won’t go far if they are bringing nothing in.'
Actually it will get them to the end of 2022, even with zero revenue, based on the Cenkos forecast for costs.
The forecast £4m and £9m revenue for 2021 and 2022 will get them £3.2m of additional cash (@ the forecast 25% margin) and will last them to June 2023. Any additional revenue will extend that.
Good to see Herald adding another £0.4m.
Bidstack now has an enterprise value of £7m.
As has been posted elsewhere, the only listed competitor of Bidstack is Adverty.
It has an enterprise value of £13m, double that of Bidstack.
In Q1 2021 Adverty had revenue of only £15k.
Another competitor, Admix, is a private U.K. company. It has a £20m+ enterprise value based on the latest fundraise, 3 times that of Bidstack.
I think Bidstack is ahead of both these companies, in terms of quality of games signed, contacts, and certainly well ahead of Adverty in revenue.
There will be churn for a while, but when the dust settles people will see the value in Bidstack.
The latest forecasts show the cost base stabilising and rising slightly in 2021 and 2022.
2020: £7.2m
2021: £7.3m
2022: £7.6m
That seems achievable. It’s not like they’ve been asked to cut costs in half, just trim some fat and managed cost increases.
There have been costs controls imposed as part of the fundraise, so forecast cash outflow has improved.
The latest cash flow forecasts are as follows
2019: -£4.5m
2020: -£6.2m
2021: -£5.4m
2022: -£4.5m
The £10m net cash raised should last for over 2 years on that basis.
Thanks Gridz,
Looks like a heavyweight hire.
Stifel have the gross margin going back up to 24% for 2021.
She's very much still there and bringing a lot to the table apparently.
Mazrui's participation in the fundraise was to take up their entitlement, keeping their shareholding at 13.33%.
This TR1 suggests they've just bought another 12% of the enlarged share capital in the open market.
Shareholder information page fixed and showing Herald still at 25m shares.
https://www.bidstack.com/investors/shareholder-information/
As I said, Simply Wall Street must be pulling through some incorrect information. Herald haven't sold any.
I don’t think Herald have sold any.
I’m not sure where the Simply Wall Street figures are coming from. All of their holdings data is showing as being last reported on 4 Jan 2021, so are suggesting Herald sold a small amount of their shareholding before that date, but nothing since (otherwise they would have crossed a % boundary and need to report a TR1).
Haven’t got access to a Bloomberg terminal over the weekend, but other online sources are all still showing Herald as holding all of their original 25m shares.
This yahoo breakdown still shows 25m shares based on Herald’s Annual Return dated 26 Feb 2021.
https://finance.yahoo.com/quote/BIDS.L/insider-roster?p=BIDS.L
The 31 Dec 2020 Bidstack annual report also showed the holding still as 25m on that date.
I think the Simply Wall Street figures may be pulling some spurious information.
Stifel are forecasting an underlying cash burn of £7.2m for 2021 (The £7.9m EBITDA less non-cash costs).
However, they are also forecasting £2.7m of positive working capital movements so the net cash outflow for 2021 is forecast as £4.5m.
The working capital movements are mainly an unwind of the large receivables at the end of 2020, plus will include the two cash payments received of £0.5m+.
These movements will happen in the first half of the year so cash at the end of June could be £1.4m (opening cash of £2.3m, plus £2.7m working capital movements, less £3.6m underlying cash burn.)
Share price is not changed from yesterday's close (2.9-3.0).
It's just there was UT trade at 3.27 yesterday making it look like a drop today.
In fact it's almost all buys being printed so far today. All the 2.94 trades are buys.
Jimmy,
What makes you thinks Frameplay and Adverty are ahead technically? Not what I've heard.
To be clear, anyone could have sold their entire holding this week at 3.2p+ and bought them back at 3p in the open offer, by partially taking up their entitlement.
I think a lot of holders will take their full entitlement though, and many will apply for excess.
I think most of the shares (maybe all of them) will be issued under the open offer, and very little will go to the placing.
Surely everyone is taking up the offer.
If nothing else you could sell the same amount of shares from your existing holding at a higher price and use the cash to buy the offer shares at 3p.
Jimmy,
You’re looking at accounting losses rather than cash flow.
Stifel are forecasting a cash burn of £4.6m for 2021, down from £6.2m in 2020. The 2021 cash flow is helped by R&D credits, receivables collection, and non cash expenses.
They could potentially have enough cash to get through to August.
Looks like we're on a P/S ratio of only 1.3!
https://twitter.com/thesageinvestor/status/1336598864833507329?s=20