VMob first-half loss widens as costs offset surging sales, more fundraising looms

Thursday 10th December 2015

VMob Group, the NZAX listed mobile voucher developer, widened its first-half loss as costs more than doubled, offsetting a surge in sales, and plans to raise more capital to continue its growth strategy.

The net loss was $3.18 million, or 5.2 cents per share, in the 6 months ended Sept. 30, from $1.96 million, or 3.9 cents, a year earlier, the Auckland-based company said in a statement. Revenue jumped to $3.29 million from $610,000, while operating expenses more than doubled to $6.45 million.

The first-half results show VMob, which joined the small-cap NZAX market in 2012 after a reverse listing, burned through about $1.4 million of cash from a year earlier, leaving the software-as-a-service company with about $1.6 million in the bank as at Sept. 30. Since then it has raised $2.4 million in a private placement and said it plans to reach a fund-raising target of $5 million. Notes to the company's accounts include a material uncertainty because of a "dependency on future capital raising" to meet cash requirements.

That target is consistent with advice from the NZX that it needed to raise capital and grow its market valuation to $40 million to graduate to the exchange's main board. The shares rose 6 percent to 35 cents today, valuing the company at $26 million.

"The directors are confident about the future prospects for the business but remind shareholders that pursuing enterprise sales with large retail customers takes time," chairman Phil Norman said. "The prize, however, is large."

Asia overtook Australasia as its biggest market in the first half, with operating revenue rising to $1.29 million, from $100,000 a year earlier. VMob's technology platform is now used by McDonald's Japan for their Android and iPhone app, and VMob has also signed a data analytics contract with McDonald's Japan. McDonald's Korea and McDonald's Singapore have also signed up for VMob services, and will go live in 2016.

The US, VMob's newest market, jumped to second place with $622,000. European sales climbed to $377,00 from $104,000, while Australasian sales fell to $245,000 from $298,000.

The company is making its biggest push for growth in the US, with chief executive Scott Bradley relocating to San Francisco this year, a move that chairman Norman said was also helpful for managing VMob's relationship with technology supplier Microsoft.

"Since he arrived in the US, there is a notable increase in sales momentum," Norman said. "To quite a large extent (that's) attributable to the credibility that goes with having the company's CEO in market. This augurs well for 2016."

Annualised committed monthly revenue (ACMR) soared to $4.8 million from $415,000 a year earlier. ACMR represents committed monthly recurring revenue at the balance sheet date multiplied by 12, and is often used by SaaS companies with monthly subscription models based on the assumption that the most recent month's revenue is indicative of future revenue. VMob is forecasting ACMR will exceed $10 million in the next six months.

BusinessDesk.co.nz

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