Gaining Momentum

blur Group continues to attract new enterprise buyers and service providers, in both the US and Europe, with the overall number increasing by 30% to 65,000 in H1 2015. The early-stage technology company is also making progress with its premium service, gaining traction from projects of >$10,000, and is set to officially launch its subscription-based products from 1st July 2015. We are encouraged by this announcement, as the increased level of enterprise buyers and service providers implies a higher quality and more reliable income stream, and the premium and subscription-based products offer the prospect of higher gross margins. We have kept our forecasts unchanged and continue to believe that the current cash position provides sufficient funding for the business to execute its strategy. With the shares offering investors exposure to the high growth services-commerce market, we continue to classify the shares as a growth stock.

Trading Update

During H1 2015, the number of buyers and service providers using the blur platform increased by 30% to 65,000 (50,000 at the end of 2014). The number of projects listed from enterprise buyers increased by 20% during the same period. Unilever, Home Retail Group and the University of Greenwich were amongst a number of new customers who started to adopt the platform. Existing customers contributed to a 75% increase in the proportion of repeat projects listed in H1 2015. In Q2 2015, >700 new enterprise service providers joined the platform, accounting for 10% of all new service providers. Its premium service gained traction from projects of >$10,000. The enterprise buyer and service provider subscription plans were pre-launched ahead of their full launch on 1st July 2015, and Q3 will see the launch of blur Data, a subscription-based product that enables organisations to gain insight into global business services trends and market pricing information.

Forecasts

For FY15, we are forecasting revenue of $5.00m, gross profit of $1.56m and EBITDA of ($8.90m). For FY16, we are forecasting revenue of $7.98m, gross profit of $2.79m and EBITDA of ($4.49m). We continue to expect a higher focus on controlling costs, and estimate EBITDA breakeven in FY18.

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 $73.25m (£47.09m).