TIDMBIDS
RNS Number : 6964P
Bidstack Group PLC
13 February 2023
Certain information contained within this Announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in
the United Kingdom. Upon publication of this Announcement, this
information is now considered to be in the public domain.
13 February 2023
Bidstack Group Plc
("Bidstack" or the "Company" or the "Group")
Trading and Operational Update
Bidstack Group Plc (AIMS: BIDS), the native in-game activation
platform, is publishing a trading and operational update.
Azerion Update
Following a preliminary hearing in the District Court in
Amsterdam, Azerion has provided Bidstack security in respect of the
initial part of Bidstack's claims. The Company has been advised
that a full hearing in Amsterdam on the merits of its case and
wider claims against Azerion will likely take place in late Q3
2023.
Given Azerion's purported termination of the agreement with
Bidstack, the Company does not expect to recognise any amounts
ultimately paid by Azerion in respect of its FY23 and FY24
obligations as revenue.
Financial Update
-- Unaudited revenue for FY22 up +103% to c.GBP5.3m* (FY21: GBP2.6m)
-- Unaudited gross margin for FY22 at c.70%** (FY21: 36%)
-- Unaudited cash balance at 31 December 2022 up 21% at GBP8.7m (31 December 2021: GBP7.1m)
*Unaudited gross billings, including all revenues and Azerion
minimum revenue guarantee invoiced for FY22, were c.GBP9.3m (FY21:
GBP2.6m), which is in line with its contractual arrangements
previously indicated. However, as a result of the net accounting
treatment under IFRS 15 of revenues and corresponding costs of
sales towards servicing the Azerion contract, the Board believes
that Bidstack's unaudited reported revenues for FY22 will be
approximately GBP5.3m.
** Unaudited gross margin has risen significantly as a result of
the net accounting treatment under IFRS 15 of revenues. Excluding
this impact the Board believes that the unaudited adjusted gross
margin would be closer to 40%. Nevertheless, the Board currently
believes that unaudited gross profit will be in line with FY22
market expectations.
In the Group's audited accounts for the year ended 31 December
2022, revenue, gross margin and consequent profit or loss are
likely to be subject to a provision based on the Board's assessment
of the outcome of the Company's case against Azerion. This has no
impact on the cash position at the year end.
FY22 Operational Highlights
-- Successful placing raising proceeds of c.GBP10.5m in October
2022, including a significant investment by Irdeto B.V., a world
leader in digital platform cybersecurity, taking a 13.5% stake in
the Company;
-- Growing global network of premium developers and publishers
with over 250 titles (FY21: 58) across in-game, in-menu and
rewarded video. This includes an addition of two further titles
with a AAA game publisher and a multi-year renewal with Sports
Interactive's Football Manager;
-- Increased focus on the US market following the recruitment of
Jude O'Connor (CRO) and Camila Franklin (COO) in September 2022,
both former executives with AdColony. The commercial team in the US
now comprises 10 people;
-- Onboarding of additional resellers with MMP Worldwide (MENA),
AdScholars (India), Totally Awesome (APAC), TNK Factory (South
Korea) and Omega Media (Vietnam);
-- Expansion in Asia-Pacific through the appointment of Motoki
Kikuta (Regional Lead) in Japan to capture the opportunity with
local game developers, enterprise customers and media agencies;
-- Partnership with Unity as a Unity Verified Solution
recommended monetisation solution for game developers across all
platforms;
-- Internet Advertising Bureau (IAB)/The Media Rating Council
(MRC) have recognised standards for in-game advertising.
Advertisers now have clear benchmarks on how to measure campaign
success; and
-- Early success with enterprise customers licensing Bidstack's
technology such as mobile ad-tech company Adways and metaverse
franchise SimWin Sports.
Outlook
-- As a result of momentum from existing business in UK and
resellers, and driven by the recently hired US in-house sales team,
approximately GBP1.2m of revenue has already booked for Q1 2023,
which is typically the smallest quarter of the year;
-- Strong pipeline of premium publishers, such as recently
signed two-year exclusive in-game advertising agreement in
Ubisoft's successful mobile franchise Hungry Shark Evolution which
also includes rewarded video on a non-exclusive basis;
-- Signed enterprise customers with Status PRO's NFL PRO ERA 23,
the first ever licensed NFL virtual reality game. Bidstack's
technology will power all marketing and advertising placements
across the in-game digital stadiums; and
-- Acceleration of DSP connections to drive open marketplace and
access points to Bidstack's gaming inventory platform.
With Bidstack's improving revenue visibility and growing client
list, the Board is confident in Bidstack's ability to operate
independently of the Azerion relationship over time. While Bidstack
intends to continue pursuing Azerion in respect of its claims for
unpaid invoices and breach of contract, the Board believes
Bidstack's strategy positions the Company's for future growth in
the US and success in its growing licensing business.
For FY23, the Company had been expecting its revenue to grow
from its US sales team and its additional resellers, alongside its
agreement with Azerion. The Board currently expects this FY23
revenue to increase more than previously expected, for the Group's
revenue to be significantly greater than FY22 and materially
weighted to the second half of the year. The Company expects to be
able to update shareholders on progress at the time of its final
results and throughout the year as appropriate.
James Draper, CEO of Bidstack, said
"In 2022, Bidstack achieved operational growth as the business
aims for a $100 million revenue opportunity over the next three to
five years.
"The attraction to Bidstack for signing the Azerion partnership
in 2021 was Azerion's sales footprint into the advertising
agencies, initially across Europe and their companies' plans for a
global reach thereafter. This allowed Bidstack to focus our
resources on building out our technology, continue to work with the
IAB and MRC to standardise the in-game advertising market, deepen
our relationships on the gaming side and for our strategic teams to
explore different use cases for our proprietary native SDK and
gaming SSP.
"This focus allowed us to launch our first licensing technology
deal with the DSP Adways out in Japan, where Bidstack provides our
SSP infrastructure, integrating their DSP into our platform. Adways
onboard the games and bring the advertising demand, Bidstack takes
a revenue cut for providing the SSP infrastructure. This is a low
touch, high margin solution.
"The Company recently launched Bidstack Sports, where game
studios can grant access to sports teams or leagues through our
platform, where they can control the advertising within their IP,
including stadium, shirt and car sponsorships. SimWin Sports is a
perfect launch product for this technology, but we are already
mapping our technology across sports stadia in multiple high
profile officially endorsed gaming franchises, where we can see a
clear route for Bidstack's technology to underpin the world of
virtual sports rights.
"In territories outside of the Azerion contract we've welcomed
in new reseller partnerships, where in-game advertising specialist
companies have been formed to sell our gaming inventory, in
addition to geo-specialist existing agencies, across MENA, India
and APAC. We are seeing campaigns trafficked across our global
network from these partnerships and are looking to grow these
relationships further through 2023. We are seeing strong demand
from new resellers wanting to capitalise on the in-game advertising
opportunity.
"In Q1 2022 the first IAB Playfronts event was held in New York,
with a follow-up at the back half of 2022 added to the published
measurement standards for in-game advertising, through the IAB and
MRC. This is a significant moment in this new categories' journey
to becoming a thriving advertising format and industry. Revenues
through the space will continue to grow as the format is becoming
widely adopted, with all advertising agency holding groups forming
dedicated 'gaming' divisions to service their clients globally.
"In 2022 we made the strategic decision to work alongside
Azerion in tackling the US market, where Bidstack took the
opportunity to hire-in a US commercial lead. We attracted world
class talent, bringing in a sales and operational team who had
taken reward-video specialists AdColony to a $400 million exit to
Digital Turbine in 2021.
"Attracting Jude O'Connor (CRO) and Camila Franklin (COO), as
well as a number of the key performers from the team they had
worked with through their time at AdColony and beyond, gave the
company a media footprint in the US.
"Only four to six months in, we are seeing impactful results.
Our Q1 is already multiples of our previous best revenues for this
period, this while only in mid-February.
"When it became clear that Azerion and Bidstack were in dispute
surrounding our contracted relationship, I'm proud of how our
internal teams had adapted immediately to the situation.
"The Company has attracted proven adtech talent, secured
strategic investments, executed campaigns across the globe from the
world's leading advertisers from all industry verticals. Our
contracted games count has pushed past 250 and I'm delighted we're
now working with a number of the world's biggest game studios, with
exponentially growing campaign sizes.
"Although we will continue with our claims against Azerion in
the coming year, we remain extremely confident for the future and
are excited with the quality of the people we are now attracting to
join us at Bidstack, and as the business momentum grows we look
forward to keeping our shareholders informed on our progress
throughout the year."
-ENDS-
Contacts
Bidstack Group Plc
James Draper, CEO
SPARK Advisory Partners Limited (Nomad)
Mark Brady / Neil Baldwin / James Keeshan
+44 (0) 203 368 3550
Stifel Nicolaus Europe Limited (Broker)
Fred Walsh / Tom Marsh
+44 (0) 20 7710 7600
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