Velocity Comp Regulatory News (VEL)

15 Jan 2009 07:00

15 January 2009

Velti Plc

Trading update

Velti plc, a leading provider of software platforms, applications and services for advertising agencies, mobile operators and media, announces that it has achieved a strong financial performance for 2008. Overall, Velti is experiencing buoyant demand for its products and services from existing and new customers which are increasingly allocating budgets to the mobile channel on a global basis. 

As a result of this and investment in global expansion, the Company expects to achieve total revenues for the year ending 31 December 2008 in excess of €45 million, an increase of approximately 125 per cent on 2007, with profits for the year in line with market expectations. 

Full year results for the year ended 31 December 2008 are expected to be announced on 30 March 2009.

Key drivers for 2008

The strong growth achieved in 2008 reflects a combination of:

Winning new mobile marketing contracts with brands such as Wrigley's, MasterCard, TMP Worldwide, Pepsi, Coca Cola, Pernod Ricard, Clinique and Hewlett-Packard;

Establishing a presence in new geographic areas, for example in Russia and Ukraine where Velti won key operator contracts with Mobile TeleSystems ("MTS");

Opening new offices in Shanghai, San Francisco, Moscow, Madrid and New Delhi;

Renewing key operator contracts such as Vodafone, Orascom-WIND, Cosmote, Cosmofon, MTEL, Vivatel, SingTel and Orange;

Continued progress from Ansible, Velti's joint venture with Interpublic Group, with client wins including Intel, Bayer, General Motors and Verizon, and with second half revenues more than tripling compared to the first half.

As expected, slightly lower margins have resulted from new types of mobile marketing campaigns and a preference by major customers for Software as a Service and revenue share models, as well as from the investment made in geographic expansion and adding sales and marketing capacity in anticipation of further growth in 2009.

Expansion of the Business

During 2008, Velti continued to expand its global footprint and to create incremental revenue opportunities for MMP.

In line with its stated priority of building a significant presence in Brazil, Russia, India and China (BRIC), Velti has established a new mobile marketing company with the Hindustani Times (HT) to service large network operators, brands and advertising agencies, as well as smaller regional companies, in India. The new company, in which Velti has a 35 per cent shareholding, will initially operate in New Delhi and Mumbai. Velti will be providing its MMP to the company together with technical and sales expertise; the overall objective is to become the leading multi-platform (TV, Internet, Print and Mobile) advertising provider in the burgeoning Indian market. The JV's Board is made up of Velti and HT executives.

Velti's investment in Casee (33% with an option to increase its stake to 50%) was completed in April 2008. Casee is China's largest mobile advertising exchange and continues to grow very aggressively. At the time of investment, Casee was serving 400m ads to mobile phones in China every month. Currently, it is serving around 1 billion ads every month and December was another record month.

Since September, Ansible, Velti's JV with IPG, has been growing faster than expected, with second half revenues growing very significantly compared to the first half. Ansible's relationships with its established customers provide us with good revenue visibility and signed contracts converted to revenue at a fast monthly pace, setting the stage for a very significant revenue increase in 2009.

In June, Velti announced its first contract in Russia with MTS, the largest mobile phone operator in Russia with a total of 86 million subscribers in Russia and CIS countries. The initial engagement for Velti to create, deliver and manage large mobile marketing campaigns being run across Russia, using Velti's market-leading, award-winning Mobile Marketing and Advertising Platform, has been extended to Ukraine. The campaigns launched in Ukraine until the end of 2008 generated millions of euros in revenues for Velti.

Velti's progress in Eastern Europe has also been strong with a second deal, with a Telekom Austria Group subsidiary, delivering mobile marketing campaigns for Velcom in Belarus. The campaign was very successful with 10% of the total subscription base of Velcom participating in the campaign within just three months. 

Velti has also recently won its first contract in Latin America for Entel's Bolivia. The campaign involves a call-to-action, delivered via TV, radio and internet advertising, to Entel customers who can win prizes ranging from iPods to cash. The campaign will provide Entel with information on both pre-paid and contract customers which can then be used to improve customer service and loyalty.

In the UK Velti signed-up a new customer, Blyk, the free mobile network for 16-24 year olds funded by advertising. The new set of services, to be launched in early 2009, will allow new members that join the Blyk network, to be profiled based on their lifestyle and personal interests. Velti's MMP will provide the personalisation and marketing infrastructure to ensure that, as members use the content portal, both Blyk and their brands gain the insight necessary to deliver more targeted and valuable content.

Other important new customers wins in 2008 include major advertisers such as Unilever's Becel, Dove, CIF and OMO brands, Friesland, Chrysler, J&J's o.b, Dixons, Wrigley's, United Milk Company's Fibella, as well as an new contract with Procter & Gamble for the creation and management of mobile communities. 

Finally, the total consideration for the acquisition of M Telecom, the leading independent mobile value added services provider in Bulgaria acquired in March 2007, has been fixed at €1.96m (down from a maximum of €2.56m) and a final payment of €0.8m will be paid in April 2009. 

David Mann, Non-Executive Chairman commented: "'The very strong growth of the business in 2008 has been achieved with a high level of investment. This has also positioned the company well for continuing growth and we shall be managing further investments to ensure that the business can operate successfully within available financial resources. As a result the board expects that growth in 2009 will be more moderate than in 2008 but still very strong."

Alexandros Moukas, Chief Executive Officer added: "Velti enters 2009 as the global leader in Mobile Marketing, in terms of revenues, profitability and global presence. Our very strong performance, coupled with solid profitability, allows us to continue to implement our global expansion strategy. Despite the global economic slowdown, we continue to see strong demand for our offering across all territories and we look forward to another solid year of growth and profitability"

END

For further information, please contact: