Engage:BDR posts full-year results showing growing revenue and operating profit

Engage BDR ASX EN1 revenue EBITDA 2019 ad exchange
Engage:BDR said it accomplished all its goals last year en route to an operating profit of A$1.6 million.

Hot on the heels of reporting a record quarter last week, programmatic ad company engage:BDR (ASX: EN1) has published audited financials for 2019 indicating an improvement in a range of financial and performance metrics.

Parallel to the announcement, the company told the market that 2019 was a “pivotal, successful and profitable year” in which it “moved several mountains” by believing in, and the daily execution of, its plan.

“We have a head start on 2020 with about three times the revenue we had this time last year; we’re focused on keeping that momentum growing,” engage:BDR executive chairman and chief executive officer Ted Dhanik said .

engage:BDR currently has 220 programmatic integrations on its ad exchange platform reXer and more than 50 in its AdCel subsidiary while wielding several additional integration contracts.

Also, the company actively integrates client platforms and claims to have a further 100 or more potential clients in its business development pipeline at all times.

As part of a regulatory filing, engage:BDR reported 50% revenue growth in 2019 up to $17.1 million with gross profit growing by 216% to $9.3 million.

Importantly, the ad company’s gross margins grew to 54%, representing a 42% increase in the gross margin percentage.

Revenue footprint engagebdr map
engage:BDR’s revenue footprint.

Net assets appreciated to $3.9 million from -$6.6 million in 2018 with net tangible assets also improving to as high as $876,000 – a complete turnaround from its $9.1 million slump in 2018.

Duel profit

engage:BDR said it generated an EBITDA, or operating profit, of $1.6 million and met all of its set milestones for the year.

However, if including finance and other facility costs, the company slipped to a net loss after tax of $1.34 million.

The loss was a $9.5 million improvement compared to the previous year with engage:BDR reporting it had executed several cost-saving measures to reduce operating expenses including slashing staff costs by 43% and cutting tech infrastructure and other operating spend by 26%.

Having had a strong year in 2019, engage:BDR declared it remains “hyper-focused” on three key areas in 2020. Namely, NetZero publisher boarding, AdCel growth and new integrations for the company’s programmatic ad exchange.

Engaging audiences

engage:BDR develops proprietary artificial intelligence and machine learning technologies that automate and maximise digital video transactions, native and display advertising and influencer marketing for advertisers.

The platform also supports agencies and app publishers who display advertisements to generate revenue.

In addition, the company works with digital influencers but focuses on ‘programmatic delivery’ of media to go above and beyond traditional ad-buying and brand marketing.

Traditionally, advertising has been rather analogue, resource-intensive and required many man-hours to be sold and distributed to various clients.

However, with the advent of artificial intelligence, engage:BDR wants to leverage automated and data-rich computing techniques to better engage with each ad campaign the company delivers to its clients. This is typically done by better predicting what ad buyers are willing to buy and what they’re willing to pay in real-time.

One of the more novel aspects of engage:BDR’s strategy is the fact its sales channels are fully automated which means the company retains zero sales staff.

Engage:BDR’s technology facilitates detailed tracking of previous campaigns and improves cost-effectiveness across the board, which, in turn, translates into better profit margins.

The ad company launched its programmatic ad business in 2010 within a programmatic industry that’s now worth around US$70 billion in the US and a further US$28 billion internationally.

Furthermore, influencer marketing also makes a significant contribution – US$10 billion per year which means engage:BDR’s total addressable market stretches to around US$108 billion (A$185 billion).

According to engage:BDR, AI-based advertising has “compounded” industry ad spends, revenues and value for advertisers, globally. “The value-chain has collapsed on the buy-side of digital advertising; the supply-side is now due for optimisation and engage:BDR is embracing artificial intelligence to optimise all digital advertising transactions,” the company said.

“From management’s perspective, engage:BDR has never been positioned better for exponential revenue, profitability and market share growth. The company has a healthy balance sheet, is profitable, has scaling revenue and margins and has access to significant capital,” the company said.