Solid Quarter at Augme
Ken Nagy, CFA
On July 10, 2012,
Augme Technologies, Inc. (
, the provider of strategic services and mobile marketing
technology to leading consumer and healthcare brands, reported
financial results for its fiscal 2013 first quarter, ended May 31,
A concrete first quarter resulted in a 321 percent year over year
and approximately 1 percent sequential increase in sales, with
revenues expanding to a record $5.078 million for the three months
ended May 31, 2012.
Similarly, the Company ended the quarter with over a $20 million
annual run rate and its average deal size was $59,000 during the
quarter compared to $57,000 for first quarter of fiscal 2012.
Augme's strength in its first quarter revenues was primarily
driven by addition of the Hipcricket operations in August 2011 and
the JAGTAG operations in July 2011.
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Still, Augme reported a net loss of $7.560 million for the first
quarter of fiscal 2013, with net loss increasing $3.544 million
from a net loss of $4.016 million during the first quarter of
The increase in net loss was primarily a result of increased
selling, general and administrative expenses related to the
expansion of the Company both organically and through acquisitions.
Total operating expenses jumped $5.832 million year over year to
$10.706 million for the three months ended May 31, 2012.
However, it should be noted that operating expenses during the
first quarter decreased $1.784 million or 14 percent sequentially,
while the selling, general and administrative portion of total
operating expenses dropped 7 percent sequentially as a result of
improved efficiencies in selling activities and lower non-cash
stock option expense.
Gross margin for the quarter fell to 61.9 percent from 69.9 percent
for the three months ended May 31, 2011.
The decrease in gross margin was primarily due to the Company's
shifting mix of revenue.
Still, It is important to note that during the first quarter,
Augme's new business momentum and customer retention rate resulted
in new order bookings (the dollar value of contracts signed during
the first quarter) totaling $6.5 million, of which approximately 69
percent were received from existing customers and 31 percent from
Furthermore, Augme reported a record quarter end backlog (the
dollar value of signed contracts including deferred revenue and
unbilled revenue) of $17.4 million as of May 31, 2012, up 11
percent sequentially from $15.7 million for the three months ended
February 29, 2012.
Similarly, Augme added more than 50 new customers during the
quarter (spread across more than 15 industry verticals) and now
supports over 350 customers (which includes 60 Fortune 500
companies and a dozen Fortune 100 companies) and more than 600
regional and national brands.
It important to note that even with the expanding customer base,
Augme was able to maintain an over 95 percent retention rate per
Likewise, revenue per client increased to approximately $67,000
while customers signed 214 contracts and completed over 27,000
campaigns in the first quarter, which was a 52% sequential increase
in completed campaigns.
Equally, 87 percent of the brands that completed campaigns with the
Company in the fourth quarter increased the number of campaigns
with Augme during the first quarter of fiscal 2013.
Based on the weighted average number of basic and diluted common
shares of 94.489 million shares, basic and diluted net loss per
share resulted in a net loss of $0.08 per basic and diluted share
during the first quarter of fiscal 2013. This compared to a
basic and diluted net loss per share of $0.06 on a weighted average
number of basic and diluted shares of 69.414 million shares during
the three months ended May 31, 2011.
As of May 31, 2012, Augme had $3.242 million in cash and
equivalents and a working capital deficit of $22.248 million.
This compares to $11.428 million in cash and equivalents and a
working capital deficit of $15.512 million as of February 29, 2012.
Still, it should be noted that the Company ended the first quarter
with its largest-ever pipeline of qualified sales opportunities due
to the substantial investments that it has made in sales, client
support and other revenue generating functions.
As a result of these quick returns, Augme intends to scale its
business more rapidly through increased spending levels. To
fund this increased investment, management is evaluating several
options to secure additional funding, with a preference for
Additionally, management believes the value of the Company's
foundational mobile technology patent portfolio is becoming more
apparent as a result of it signing its first license agreement in
April 2012 and the first two patent infringement cases scheduled
for trial within the next seven months.
The Company's IP portfolio now numbers 13 patents with 80 pending
patents applications and over 1500 claims in the telecom media
Along the same lines, the Company intends to vigorously defend its
proprietary technology as well as fortify barriers to entry.
Nevertheless, management remains optimistic that we will continue
to achieve increasing sequential growth for the balance of the year
with a rate of growth of 10 to 20 percent each quarter.
Furthermore, the Company's timetable to cash flow breakeven is
unchanged and management continues to anticipate reaching this
objective by fiscal year end.
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