New Business Momentum at Augme - Analyst Blog
New Business Momentum at Augme
Ken Nagy, CFA
On May 8, 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 2012 fourth quarter and full year, ended February 29, 2012.
A concrete fourth quarter resulted in a nearly 423 percent year over year and approximately 14 percent sequential increase in sales, with revenue expanding to $5.032 million for the three months ended February 29, 2012.
Augme's strength in its fourth quarter revenues was primarily driven by mobile advertising solutions revenue. Likewise, the Company expects revenue to continue to shift in favor of mobile advertising.
Along the same lines, the Company powered over 16,000 campaigns during the fourth quarter alone and signed 194 contracts as well as executed its 175,000th marketing campaign for the year during the quarter.
Still, Augme reported a net loss of $11.182 million for the fourth quarter of fiscal 2011, with net loss increasing $5.232 million from a net loss of $5.950 million during the fourth quarter of 2011.
The increase in net loss was primarily a result of increased total operating expenses, decreased gross margin and $1.749 million in acquisition related contingent expenses.
Total operating expenses jumped $5.946 year over year to $12.409 million for the three months ended February 29, 2012.
Additionally, gross margin fell to 60.8 percent in the fourth quarter of 2012 from 61.7 percent for the three months ended February 28, 2011.
It is important to note that during the fourth quarter, Augme's new business momentum and customer retention rate resulted in new order bookings (the dollar value of contracts signed during the fourth quarter) totaling $7.1 million, which was a 34% increase over third quarter fiscal 2012 bookings.
Likewise, 33 percent of the Company's fourth quarter bookings were to new customers while 67 percent were to new sales to existing customers.
Furthermore, Augme reported a quarter end backlog (the dollar value of signed contracts including deferred revenue and unbilled revenue) of $15.7 million as of February 29, 2012 up sequentially from $13.2 million for the three months ended November 30, 2011.
Similarly, during the fourth quarter, the Company significantly expanded its IP portfolio to over 60 patents and patents pending with over 1500 claims.
Also, Augme began expanding its sales and client services team during the fourth quarter of fiscal 2012.
Based on the weighted average number of basic and diluted common shares of 94.349 million shares, basic and diluted net loss per share resulted in a net loss of $0.12 per basic and diluted share during the fourth quarter of fiscal 2012. This compared to a basic and diluted net loss per share of $0.09 on a weighted average number of basic and diluted shares of 65.309 million shares during the three months ended February 28, 2011.
For the full year ended February 29, 2012, year over year revenues improved by roughly 323 percent or $9.129 million to $11.950 million from $2.821 million for fiscal 2011.
The increase in revenues was primarily driven by the August 2011 acquisition of Hipcricket and the execution of organic growth initiatives, together with the Company's 95% customer retention rate.
Still, net loss for the year increased by $20.101 million year over year to a net loss of $32.580 million for the fiscal year ended February 29, 2012. This compares to a net loss of $12.478 million for the comparable twelve months of fiscal 2011.
The increase in net loss was primarily a result of increased total operating expenses and $2.716 million in acquisition related contingent expenses offset by a jump in gross margin.
Gross margin for the year jumped to 65.3 percent compared to gross margin of 56.9 percent for the full year ended February 28, 2011.
Furthermore, it should be noted that the dollar value of deals signed increased from an average of $27,000 in fiscal 2011 to average of $57,000 for fiscal 2012 and revenue per client increased to approximately $65,000, a 33% increase over last year.
Based on the weighted average number of basic and diluted common shares of 80.146 million shares, basic and diluted net loss per share resulted in a net loss of $0.41 per basic and diluted share during the full year ended February 29, 2012. This compared to a basic and diluted net loss per share of $0.21 on a weighted average number of basic and diluted shares of 60.264 million shares during the twelve months ended February 28, 2011.
As of February 29, 2012, Augme had $11.428 million in cash and equivalents and a working capital deficit of $15.512 million. This compares to $16.947 million in cash and equivalents and a working capital deficit of $8.031 million as of November 30, 2011.
Still, Augme added more than 100 customers during the year while increasing penetration into existing customers' brand portfolios. The Company now supports over 300 customers and more than 600 brands.
What's more, the Company intends to aggressively invest in its multi-faceted growth strategy, which includes monetizing both its Hipcricket operating business and the Company's IP portfolio.
Additionally, Augme remains confident in its ability to monetize the Company's intellectual property portfolio through litigation and licensing activities.
The Company recently signed its first IP licensing agreement. Similarly, a January 2013 trial date has been scheduled for the Company's patent infringement case against Yahoo!
Furthermore, Augme stated that it anticipates reporting additional IP milestones during the year.
Additionally, during fiscal 2012 the Company steadily increased the number of completed campaigns and management expects this growth to continue.
What's more, in fiscal 2013, Augme plans to continue to very purposefully and aggressively invest in its growth strategy, including adding to sales and client support teams, continuing to enhance capabilities for its AD LIFE platform and build out its enterprise channel.
As a result, the Company anticipates generating increasing rates of sequential revenue growth during fiscal 2013 and reaching cash flow breakeven by the end of the fiscal year.
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