Blur Group Share Discussion Threads

[j777j] 20/11/2014 08:51

A new fan....

Beaufort Securities


Blur Group (LON:BLUR) – Speculative Buy

Further to the Interim Results issued on 9th September, blur yesterday issued a trading update. It announced that the business is currently in line with management expectations in respect of new project bookings, ahead of plan for new and repeat enterprise projects, and ahead of its plan on costs due to the adoption of the blur 4.0 platform by Enterprise customers. The Group continues on its already announced and planned path towards EBITDA breakeven and positive cash flow. The Group has cash resources of US$20m to comfortably sustain it through to profitability and cash flow positive. Whilst revenue growth has been strong, a small number of large projects, which have been submitted to the exchange, will not kick off until early 2015, which will impact the Group’s revenue and therefore profitability for the full year ending 31st December 2014. Operationally, however, it remains pleased with progress, with Project Bookings remaining strong, especially from the Enterprise customers, with a total of 6,329 projects submitted to the Exchange as at 17th November 2014, representing a combined value of US$310m. This represents a fourfold growth against the same point in 2013, with all indicators that EBITDA breakeven will be achieved in Q4 2015 along with positive cash flow from Q1 2016.

Our view: Blur group shares were hit hard yesterday. Investors not surprisingly focussed on the Board’s warning that slippage of various large projects means that revenue growth anticipated for 2014 will now not appear until the opening months of 2015. Consensus revenue forecasts were cut significantly across the three prospective years, while citing the first realistic opportunity for EBITDA breakeven not before this time next year. With the Group’s cash pool also being whittled away, shareholders even started to ask if one more unexpected slip could necessitate of an emergency cash call. In reality, however, these fears appear to be overdone. The group’s business concept is being adopted and its ‘sticky’ model is naturally highly cash generative. More to the point, all key measures for new enterprise project bookings and costs, both for existing and new client business, remain in line, or exceed, management’s ambitious expectations. So far in Q4 2014 the majority of bookings (with around 1/3rd of these being repeat customers) have come from major brands, with the most recent notable additions including Amazon, Tesco and Argos. Against this, cash burn is also being tightly controlled, which means that it should be generating ample free cash long before any real strain is seen in the balance sheet. The significant roll-out of the blur 4.0 platform in particular has proved that the business scales without significantly adding to costs; business growth is being achieved with a headcount that today numbers 67 against 78 at the end of FY 2013.



The potential of blur’s virtually unique business model is clearly enormous; having fallen from a high close to £8/share in 2013, and with net cash presently representing almost two-thirds of the Group’s market capitalization, the shares more than discount a worse-case scenario for a Group likely to report a ten-fold expansion of revenues by year-end 2016 and contribute its first net profit the year after.

Given the above we recommend a Speculative Buy rating on the stock.

[bookbroker] 19/11/2014 22:09

Well I'm in here on this one, was last year and sold, came back two months back, I believe with tight leadership and despite the cash burn they can deliver the goods, every platform tends to be tweaked along the way, important thing is gaining recognition for the right reasons, I'm sick and tired of the way the AIM market operates with such poor oversight with respect to managerial standards and ethics, the LSE needs to be a good deal stricter, might as well be be one large boiler room!

[blah blah] 19/11/2014 21:32

Book broker, well said! There are far too many investors who seem to think 'well the price is 10% of what it used to be so it must be cheap'. You neatly explained why that is not necessarily the case here.

[bookbroker] 19/11/2014 21:14

Why are you quoting a report based on something that existed nearly eighteen months ago, it is now totally irrelevant, and there is no comparison to where we are now, that is extremely irritating to read, if you are serious about this co. start looking forwards not backwards, a note of this kind could be applied to any co. that has been through an experience such as Blur, and there are a few investors who lost a packet based upon what you have dredged up. Perhaps you should correct the number of shares in issue, it now numbers somewhere around double that amount, and the price is now 63.5p. Apologies in order from you Lancashire lad!

As for the Edison note, they are a disgrace to the investment community, I still believe this co. with the right leadership can achieve its goals, but they still have much to prove!

[haydock] 19/11/2014 21:02

Now look at todays report:

[haydock] 19/11/2014 20:57

Blur still out of favour, but having a look back to see the staggering growth profile of this company.
the bears have had the upper hand, due to a few hitches as we know,but in the end growth & quality of the prospect will attract the herd, if Bulls still exist.

9/7/2013

In blur Group’s Q2 update, KPIs continue to impress with growth across all reported metrics. The doubling of average project values, boosted by a $3.6m project and 12 projects over $100,000, is particularly encouraging, signalling an increasing commitment to the exchange.
Year end
The overall value of projects submitted in the quarter was reported as up 315% y-o-y at $9.41m. This was driven by a 125% y-o-y increase in the number of projects submitted to 410 (+14% q-o-q) and a 110% y-o-y increase (+112% q-o-q) in the average project value to $22,943. This step change in average project values was particularly affected by one project from a US trucking company, worth over $3.6m – the largest project to date. Other metrics are similarly encouraging; the conversion rate to projects completed is stable at 31% with 129 projects completed, and the take up by new expert service providers remains strong – 2,834 new experts joined the platform, taking the total at the end of the quarter to 28,144.
As we flagged in our initiation report on 24 June, we would expect certain lumpiness in the KPIs at this early stage in the group’s development. The strong performance in average project value in Q2 follows a quarter where average project value was down q-o-q, but where the growth in the number of projects submitted accelerated (+178% y-o-y). Although the project value year to date is running 34% higher than our forecasts, given the q-o-q ‘lumpinessR17; in average project value we make no changes to our forecasts at this stage. However, it does seem that companies are showing an increasing commitment to the platform. The $3.6m project is the second disclosed over $1m since the IPO in October 2012, and in its statement management points to an increasing range of project values – in the quarter, 12 projects were valued over $100,000, including two above $500,000.
blur Group
Q2 metrics update
Price
202.5p
Market cap
£60m
$1.49/£
Net cash ($m) as at June 2013
15.5m
Shares in issue
29.6m
Free float
47.6%
Code
BLUR

Note mkt cap then & now & the size of the rise to even these figs !

[haydock] 19/11/2014 20:29

Bullish new CFO, explained the problem up front.
Regulatory as over 10% expected income.

Positive sound comments from a man who is very experienced & well respected in the mkt.

Selling overdone ?

[yump] 19/11/2014 20:25

... and they get paid for that sort of note - more ridiculous than the most ridiculous Python sketch, while not being funny at all.

But probably in keeping with the Blur culture.

[j777j] 19/11/2014 19:24

New Edison note out suggesting a DCF valuation of anywhere between 300p and 2650p depending on various outcomes.

Got to love this business.

Somewhere in between in the next two to three years will suit me fine.

[kemche] 19/11/2014 19:16

J, Now remind me how many times have we heard "very bullish" noises from this company? Are they still aiming for cashflow positive in Q9 2026? I suspect there are greater bargains in the market than this.

[j777j] 19/11/2014 15:51

Very interesting interview about todays statement with the new CFO.



Large enterprise customers coming on board much faster thanks to Blur 4.0.Made up 2/3rds of the business coming onto the exchange in the last quarter.
They are by nature better credit risk.

He sounds very bullish.

[yump] 19/11/2014 15:36

Perhaps you can explain how a business that needs to grow to a turnover of $40mln+ from $10mln, just to cover its admin. costs, is viable.

and perhaps you have some unique knowledge of the IP that makes the platform unique.

[j777j] 19/11/2014 15:26

Am wondering whether Liberum have put out a comment.

Their last price target was 250p on 15th sep.

The upside of revenues being booked next year means next years revenues will be higher.

[mstate] 19/11/2014 14:06

Blur Group PLC’s “CorporateR21; Rating Reaffirmed at N+1 Singer (BLUR)
November 19th, 2014 ..

[j777j] 19/11/2014 13:11

Judging by the direction of travel,I would say both.

October 2012

1158 projects submitted value $15 million.

November 2014

6329 projects submitted value $310 million.

[yump] 19/11/2014 12:41

J777J

Either the platform needs some unique IP then, or it needs to be viable.

Which one is it ?

I assume you've assessed one or the other.

[j777j] 19/11/2014 12:34

It is about the platforms stupid.

[yump] 19/11/2014 12:25

The comparison with Amazon is just 'convenient' to excuse looking at Blur clearly.

Amazon is an exception and Bezos appears to have done a Derren Brown on investors.

Using that analogy, every company making heavy losses is not to be valued by its ability to make profits.

[bookbroker] 19/11/2014 11:54

One thing I note is that at the half year statement Letts stated that employee numbers were 78,the same as at the end of 2013, so they have dispensed with 11 in the subsequent period, that does show that there were too many numbers on the payroll and cash is being closely controlled, one might assume they included interns, however it may also suggest the new platforms do not require so many staff, costs should be lower accordingly to some degree!
I think that Letts should take on a lesser role nonetheless, in promoting the co., as CEO I get the feeling he is out of his depth!

[haydock] 19/11/2014 11:52

Bookbinder: I do not disagree with your post.
I think in todays notice we can see the new CFO beginning to get to grips with the company.

This company is never going to be easy at this stage to assess financially.

As J has said, though when you look across the pond at the Amazon situation, it is clear that to NAS the mighty $, this does not matter.

The $310 real or imagined, is the carrot.

They have paid a fortune for many a company that is really two kids in a garage connecting up 3 wires & putting a light bulb on !

This is a platform that seems to be growing in a new area S commerce, it has Ist. mover advantsge.

The hook has the bait on !

[j777j] 19/11/2014 11:39

My only gripe is I would like to see Letts buy stock with some of that £3.8 million he trousered last year,probably some from me.