Augme Begins to Ramp the Top-Line - Analyst Blog

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Augme Begins to Ramp the Top-Line

Ken Nagy, CFA

On January 9, 2012, Augme Technologies, Inc. ( AUGT ) , the provider of strategic services and mobile marketing technology to leading consumer and healthcare brands, reported financial results for its fiscal 2011 third quarter and nine months, ended November 30, 2011.

A solid third quarter resulted in an over 418 percent year over year and 244 percent sequential increase in sales, with revenue expanding $3.571 million to $4.424 million from $853,169 for the three months ended November 30, 2010.

Augme's strength in its third quarter revenues was primarily driven by combined revenues of Augme, Hipcricket and JAGTAG, as well as new business momentum together with the Company's 95% customer retention rate.

Along the same lines, the Company powered nearly 16,000 campaigns in the quarter and executed 136 new contracts which included 30 new customers, 78 up sales to existing customers and 28 license renewals to existing customers.

Still, Augme reported a net loss of $10.548 million for the third quarter of fiscal 2011, with net loss increasing $7.931 million from a net loss of $2.616 million during the third quarter of 2010.

The increase in net loss was primarily a result of increased selling, general and administrative expense offset by an increase in gross margin.

The increase in selling, general and administrative expense includes the added expenses of JAGTAG and Hipcricket as well as transition and consolidation expenses, which the Company anticipates will begin to taper off during the fourth quarter.

Gross margin jumped from 57.7 percent in the third quarter of 2010 to 68.3 percent for the three months ended November 30, 2011.

The improvement in gross margin was due to the Company's current mix of business and cost efficiencies.

It is important to note that during the third quarter, Augme's new business momentum and customer retention rate resulted in new order bookings of $5.3 million as well as a quarter end backlog of approximately $13.2 million.

From this backlog, the Company expects to recognize $2.7 million of revenues in fourth quarter and $7 million in fiscal 2013.

Similarly, during the third quarter, two patents were issued from United States Patent and Trademark Office to Augme and a $20.2 million common stock offering was completed by the Company.

The Company intends on using a portion of capital raised to enhance its capabilities and balance near term and longer term opportunities to drive revenue growth. Augme expects the resources will fully fund the Company to execute its growth plans to reach profitability.

Based on the weighted average number of basic and diluted common shares of 84.758 million shares, basic and diluted net loss per share resulted in a net loss of $0.12 per basic and diluted share during the third quarter of fiscal 2011.  This compared to a basic and diluted net loss per share of $0.04 on a weighted average number of basic and diluted shares of 60.412 million shares during the three months ended November 30, 2010.

For the nine months ended November 30, 2011, year over year revenues improved by roughly 272 percent or $5.059 million to $6.917 million from $1.858 million for the comparable nine months of 2010.

Still, net loss for the nine months increased by $10.653 million year over year to a net loss of $19.919 million for the nine months ended November 30, 2011. This compares to a net loss of $9.265 million for the comparable nine months of 2010.

The increase in net loss was primarily a result of the amortization of intangibles related to the acquisitions or Hipcricket and JAGTAG offset by improved gross margin.

Gross margin for the nine months increased to 68.5 percent compared to gross margin of 54.5 percent for the nine months ended November 30, 2010.

Here again, the improvement in gross margin was due to the Company's current mix of business and cost efficiencies.

Based on the weighted average number of basic and diluted common shares of 70.422 million shares, basic and diluted net loss per share resulted in a net loss of $0.28 per basic and diluted share during the nine months ended November 30, 2011.  This compared to a basic and diluted net loss per share of $0.16 on a weighted average number of basic and diluted shares of 58.549 million shares during the nine months ended November 30, 2010.

As of November 30, 2011, Augme had $16.947 million in cash and equivalents and a working capital deficit of $8.031 million.  This compares to $11.182 million in cash and equivalents and a working capital surplus of $11.409 million as of February 28, 2011.

Still, The Company's strategy is to drive longer term contracts for all of its products and services and going forward its focus will be on acquiring new customers and growing revenue per customer.

Additionally, Augme remains confident in its ability to monetize the Company's intellectual property portfolio through litigation and licensing activities.

As a result, Augme anticipates revenues to be approximately $13.0 million for its fiscal year 2012, ending February 29, 2012.

Along the same lines, moving forward, the Company expects to continue its reporting of sequentially increased revenues with large enterprise customers as a result of its position within the mobile marketing industry due to the completed integration of JAGTAG and Hipcricket.

Likewise, it's important to note that Augme anticipates positive cash flow during its fiscal year 2013.
 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

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