blur Group: Trading Update & Significant Project Kick-Off

blur Group has announced a positive trading update and that a new customer has kicked-off a project on its platform with a potential total project value of $17 million over a four-year period. With the trading update in-line with market expectations, we are keeping our forecasts unchanged and continue to estimate EBITDA breakeven in FY16. We are encouraged by the announcement as it shows that the blur platform is continuing to grow in popularity, further cementing its position as the leading exchange for buying and selling business services. Assuming that revenues and earnings grow in-line with our expectations, at a faster rate than the average company in the same industry, we classify the company as a growth stock.

Trading Update

blur has confirmed that it expects revenue for the full-year will be in-line with market expectations and continues on its planned path of EBITDA breakeven in Q4 2015 and positive cash flow positive in Q1 2016. Furthermore, it added that it has the cash resources to sustain it through to profitability and positive cash flow.

Significant project kicked-off

In addition, the group announced that a new customer has kicked-off a project on its platform with a potential total project value of $17 million. The project will run over a four-year period, and aims to raise sponsorship and investment for an independent cycling team, which is planning to complete in the Tour de France and other signature events.

Forecasts

For FY14, we keep our revenue, gross profit and EBITDA forecasts unchanged at $11.03m, $2.98m and ($8.48m), respectively. We also keep our forecasts unchanged for FY15 and are therefore forecasting revenue of $20.26m, gross profit of $5.27m and EBITDA of ($6.19m). We continue to expect a higher focus on controlling costs, and continue to estimate EBITDA breakeven in FY16.

Valuation

blur’s addressable market is significant and we estimate it reached $265bn in 2013 and will grow to $641bn in 2018. Assuming blur’s share of this market reaches only 1%, we estimate the company could be worth $94.14m (£55.54m). Furthermore, blur shares are trading on a prospective EV/Sales of 0.67x, which compares to the average of similar, but mature, e-commerce companies of 2.2x.