Programmatic advertising reaping incremental financial rewards for engage:BDR

Engage BDR ASX EN1 2018 revenue programmatic advertising
Engage:BDR has exceeded its 2018 annual revenues of A$11.4m with three months still remaining.

Engage:BDR (ASX: EN1) is confident of leveraging its novel approach to advertising in order to generate growth within the programmatic ad sector, a digitally-driven form of driving brand awareness and product sales online.

In a trading update, the ad company underscored its recent performance, as well as its future ambitions, by reporting that revenue last month grew to $1.67 million and hit $4.7 million in the third quarter of this year.

In terms of gross profit, engage:BDR reported generating just over $601,000 last month, which equates to around 36% of its revenue figure.

Moreover, as of today, the company has reportedly exceeded last year’s annual revenues figure of $11.4 million, with almost three months still to go before year-end.

Its latest financial figures mean engage:BDR has recorded a 16% improvement in revenue compared to the previous quarter, which the company said was “as expected”.

On a quarter-on-quarter basis, comparing last year’s figure with this year’s shows engage:BDR’s activities yielded 46% revenue growth in Q3 over the prior year.

On a monthly basis, September exceeded the prior year by 68%, indicating a steady upward trend in the company’s financial performance.

More broadly, the company’s annual revenue totalled $11.4 million with prospects of an even better performance expected in the fourth quarter, which is considered to be the most lucrative for ad companies given the holiday period and seasonal factors going into year-end.

Operating activities

Despite being ASX-listed, engage:BDR is headquartered in Los Angeles and has quickly grown its presence to include Kiev in Ukraine.

At its core, the company specialises in the “programmatic delivery” of media and aims to go above and beyond how ad-buying and brand marketing was done in the past.

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 (AI), engage:BDR intends 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,” according to engage:BDR co-founder and executive chairman Ted Dhanik.

Engage:BDR’s technology also facilitates detailed tracking of previous campaigns and improves cost-effectiveness when launching ad campaigns, which in turn, translates into better profit margins for the company.

As part of its financial reporting requirements to Australian regulators, engage:BDR said its net cash from operating activities improved by $570,000 year over year. Meanwhile, its cash balance increased to A$3 million.

Furthermore, its filings show cash receipts growing 22% over Q2 2019 and 56% over Q3 2018.

In Q3 2019, engage:BDR reported “significant cash outflows” related to future revenue as pre-payments to publishers. The company explained these pre-payments were “assets, not costs” and are “fully refundable and available to the company at any time”.

“These assets were the same as cash as they typically sit in trust accounts and are quickly retrievable should the company require them,” the company said.

Normalised net cash flow was $280,000.

George is an award-winning market analyst who has authored articles and editorial opinion pieces for multiple publications around the world. He has written about a wide variety of topics including financial markets, stocks, trading, politics and economics.