Rhythmone Share Discussion Threads

[gowlane] 17/10/2016 11:19

1gw, this is not the counter argument but I just don't think we can place too much reliance on these snippets from R1. Their investor communications consist of ambiguity built on top of ambiguity.

We are never told what management expectations are in the first place, so now we are told performance is ahead of expectations, what does it really mean?

Crucial information is still deliberately withheld. We still do not know the cash balance – this can have nothing to do with any possible acquisition of course.

It is a bit like Barky happily announcing the winner of the 3.30 at Exeter at 3.40 – but not admitting that he actually backed the losers.

The expression 'slightly profitable overall', seems another ambiguity, I would simply interpret that as adjusted ebitda profitable

[gowlane] 17/10/2016 11:02

I fear Big Bear has been in the honey again and has over indulged himself. Now happily sleeping it off in a pleasant dream in the afternoon sun, when he wakes up he will have a lot of bee stings on his little nose.

Much too optimistic - he was suggesting $100m turnover in H1. Does that not make two wildly optimistic calls from Rupert?

Now undeterred he is away again and is adamant that they are already in profit - without a shred of evidence. That's what R1/Blinkx does to you.

[1gw] 17/10/2016 09:56

This taken from an ii post I put up on Friday. I believe that from the guidance R1 have already given, it looks like 2H is likely to be close to if not above breakeven in bottom-line (IFRS) profit terms. We'll know more when we get the interim results, particularly in terms of the 1H-2H split on non-cash costs. I would hope they will update their guidance for the full year at that point. In the meantime, I would be interested to see the counter-argument from one of the less-bullish posters.

If I look at the guidance we already have:
"slightly profitable on an adjusted EBITDA basis" (AGM)
"$12m-$15m non cash items" (AGM)
"less than ($2.9m) EBITDA loss in 1H" (latest TU)
"materially ahead of management expectations in several key metrics" [including adj EBITDA] (latest TU)

I can perhaps deduce:

1. Management expectations for 1H adj EBITDA were materially below a $3m loss - so perhaps they were expecting at least a $5m adjusted EBITDA loss in 1H.
2. If they were expecting a $5m adjusted EBITDA loss in 1H, they were perhaps expecting a $6m-$7m adjusted EBITDA profit in 2H (to come in "slightly profitable" overall).
3. If the non-cash items were evenly spread between 1H and 2H, that implies (AGM)expectations of being very close to breakeven in bottom-line terms in 2H (i.e. $6m-$7m of adjusted EBITDA profit less $6m-$7.5m of non-cash costs).
4. Given the success in 1H, the expectations for 2H should also have improved beyond those underlying the AGM guidance (on the assumption that their "material" outperformance on revenue in general and programmatic revenue in particular was mainly the result of faster growth and not just pulling forward revenues or one-off factors that they hadn't foreseen at AGM time).

So the conclusion for me is that, for 2H, 1R does have a very realistic chance of making a bottom-line profit, not just an adjusted EBITDA one. Whether that profit is sufficient to make the year as a whole (bottom-line) profitable is more open to debate I think.

And if 2H is profitable, then it sets up the following year to be bottom-line profitable in a meaningful way.

My analysis only - to promote discussion. No advice intended.

[jwoolley] 17/10/2016 09:51

Could the lack of cash in hand figure have something to do with another possible acquisition???

Update was also what I expected, but as with most updates, they always leave you with more questions than answers.

[barkboo] 17/10/2016 09:19

I remember Gordon having this conversation with John John:

"STT - what do you think the revenue run-rate was at the end of FY16? In the post I've copied below, I made a case that on a run-rate basis 1H revenue could have been as low as $62m if you look at the split in FY14 between 1H and 2H AND assumed that all the $75m reported in 2HFY16 was ongoing business (and I suspect some of it was from business that was closed down in the half).

So to report "at least $80m" revenue shows huge revenue growth against a $62m "like-for-like" basis. That would be 29% growth, enough for a sizeable contribution from each of Olympics, election and underlying growth."

I also remember John John telling his readers - "$90m would be a miss for me." lol

Yes, there are many things you can accuse John John of - but being discreet is not one!

[barkboo] 17/10/2016 08:55

Benny - that's precisely why you are skint!

[alex1621] 17/10/2016 08:54

All through 2015 the updates were fairly bleak, albeit, with the usual positive spin. The concern for me at the time was that the new model would not be viable and the cash would get run down to nothing after a few years. However, that trend appears to be reversing, the new model is picking up traction and looks like it will be commercially viable. The broker updates suggest they also have a bit more belief in the business. I'd say they have shown slow steady progress, and nothing in the last RNS suggested that was going awry.I suppose "disappointing" is a relative term ... and depends on what you're expectations were. The update was pretty much what I expected, with the direction of travel still positive.

[bennywin] 17/10/2016 08:53

A million to one any of Barkys predictions are correct.

[barkboo] 17/10/2016 08:36

Gordon, you are a statistical analysis - what % of positive v's negative comments does John John post on his site per week?

I would conclude around 90% negative or perhaps even more?

Pretty high for someone that constantly claims his neutral position. Then again he bans positive posters. lol

[bluesbreaker] 17/10/2016 08:32

10,000/1 - Sikh sounds mildly positive

[barkboo] 17/10/2016 08:11

It might well be "amateur day" in leaving out any cash statement, and I was not happy about that.

After asking questions to those far more knowledgeable about the inside of R1 than myself - we are drawn to two favourite answers and the odds:

4/5 - there is a pleasant surprise.. Numis upgraded its investment rating and there is every chance of no cash burn, with in fact a growing position over the last two months.

6/4 - The cash position is pretty much as expected.

7/2 There is an acquisition announcement imminent around the interim statement. They have certainly ramped up PR recently and all timed around November???

33/1 The cash position was left out of the update because of bad news.

Sure that is just over my 17% mark-up - but I like the favourite here.

[alex1621] 17/10/2016 07:24

Let's hope it's the "sale" RNS. As for the cash, I suspect they are still spending more than they are generating from the business and they may well be splashing a bit more on the expansions into new territories. But given the amount they have, that won't run out any time soon ... if volumes continue to increase the business becomes more and more profitable as the fixed cost of the platform has already been expended and the variable costs of adding volume are relatively low. They may surprise on the upside when people least expect it. I hope.

[kendonagasaki] 16/10/2016 23:09

Yes, it's just not cricket Alex!I mean it's not as if 1R are the greatest thing since sliced bread are they now?They are as you have insinuated most humbly an outfit that may or may not be out of the woods just as yet?I for one am still surprised they have continued to monetise desktop 'USA' and that mobile had slightly fallen behind in the second half.BM should be under no illusion that he has the magic stick that will turn him into a superstar by simply blowing his whistles and jangling his bells.....?It's simply amateur day IMO in leaving out cash reserve figure at second half preliminary, why???Are they burning through more cash then they want us to know?Has SC been nicking out of the piggy bank again?Has Mike Lynch come back and asked for $10 million up front for crack Hoes and nose candy?One day, just one day we may be able to get an honest RNS from 1R....let's hope it's not to say we're skint and stupid?

[alex1621] 16/10/2016 20:26

I'm not claiming that R1 falsify their accounts, just that they are given to throwing out statements that are open to misinterpretation by investors. And in my opinion we'd all be better off if they stopped doing that.

[barkboo] 16/10/2016 12:24

Alex - I think you will find accounting honesty does not exist with any company. I seem to remember Tesco writing off almost £300m in profits after their accounting scandal was looked at a little more closely by authorities.

Remind me - was those responsible punished? They may well have been, but I cant remember reading about the outcome of this severe fraud.. costing investors and pensions a lot of dough.

R1 in the opinion of a scaffolder - are straighter than most we rely on as investors..and I for one are very choosy who I trust with my hard earned.

[sikhthetech] 16/10/2016 12:15

weeks of waiting for the H1 TU and we end up with a disappointing week...
the share price is where it was pre-TU..

The TU was mixed with no comments on cash in hand. Numis target price 42p...

[sikhthetech] 16/10/2016 12:07

Irish Adtech Start-up Delivers 120 Billion Impressions in First Year of Business

[geheimnis2] 16/10/2016 07:37

Loops is back trolling

Laughing along with her pal Larry!

[alex1621] 16/10/2016 05:51

My point is that real profitability is looking likely if the company continues to grow revenues, I just think that it will take another couple of years to get there, and that is if they are not taken out beforehand. By real profitability I mean IFRS or recognised accounting profit.

[football] 16/10/2016 00:14

Google's desktop search could be out of date compared to mobile results soon

[kendonagasaki] 15/10/2016 23:56

Sikh, I may have some solid news for you with clarity also.Boiler Room Barky says that the scaffolders have told him 1R are making real money......but he had to be excused as he was busy.....?Mmmmmmm?

[kendonagasaki] 15/10/2016 23:53

1GW.Until they show us the money, no one is really going to be suckered into a turnaround story.Alex is probably spot on, in his '2018 before they return to true profitability' and of course I'm sure that Brian would rather take his 52p options in any consolidation rather than work so persistently and vigorously with passion and conviction with his interests aligned only with small private shareholders.....................ahem?Brian's only option is to massage the figures until Tosca say he can sell it cheap whilst earning his Judas Silver in the process.The only good thing is SC will not get any meaningful amount when 1R is sold.

[kendonagasaki] 15/10/2016 23:40

Hopeful Holder, hopefully one day you will be able to read P&L statements all by your self?

[1gw] 15/10/2016 15:54

Is this a parallel universe? There certainly seems to be a bit of groundhog day about the $40m cost "savings" debate. HH - some references in the post below which might help.


1gw 12 Jul '16 - 14:09 - 337 of 1456 2 0 Edit

Hopeful Holder - you should perhaps spend a bit more time reading up on things like the $40m cost savings if you're going to present profit forecasts on the basis of them. If you look at slide 13 of the full year results presentation you will see that $27m of the savings were already realised in the FY16 results, so that leaves just an incremental $13m to be realised in FY17, compared to FY16.

Then the $40m cost savings may have been achieved at a "cost" of only $3m, but they also removed $60m of revenue [full year results announcement: "Executed planned draw down of certain historical, Non-Core product lines...reducing annual revenues by over $60M"]. Revenue fell from $91m in 1HFY16 to $75m in 2HFY16 whereas normally 2H revenue is higher than 1H. So although we might hope that revenue will now grow sequentially (1HFY17 bigger than 2HFY16), there does need to be quite a lot of growth to match FY16 numbers because of the relatively high 1HFY16 number.