In-line with expectations EBITDA

Blur Group has announced an update for the quarter ended 30th September 2016. While the period saw an overall reduction in completed project volumes on the quarter prior (Q2 2016), it also saw an improvement in EBITDA, costs and cash burn, making it the fourth consecutive quarter of improvement. The company also added that EBITDA continues to be in-line with management expectations. Blur also confirmed that it has now added the ability for organisations to source goods through its online marketplace, creating an offering that eliminates waste across all categories of indirect spend. On the back of the announcement, we have maintained our forecasts, and continue to value the stock as a growth stock, with the shares offering investors exposure to the high growth business services-commerce market.

Q3 Update

Operating expenses reduced by 23% on the quarter prior (Q2 2016) and by 74% on the comparable period a year (Q3 2015). Cash at period end reduced by 16% to $3.6 million on a quarter earlier ($4.3 million), impacted by unrealised exchange losses. However, excluding the unrealised exchange losses, cash would have increased to $4.5 million, boosted by a R&D tax credit of $0.4 million. Excluding foreign exchange movements and the R&D credit, cash burn for the quarter reduced by 11% to $1.0 million from a quarter earlier (Q2: $1.1 million). Completed projects reduced by 15% to 46. A further enterprise pilot was launched in Q3 and blur continued to engage and work with a number of significant corporates, across several verticals, as they consider implementing blur’s offering as their strategic indirect procurement platform.

Forecasts

For FY16, we are forecasting revenue of $1.0m, gross loss of $85k and LBITDA of $4.0m. For FY17, we are forecasting revenue of $1.8m, gross profit of $282k and LBITDA of $2.8m. We continue to expect a higher focus on reducing costs as efficiencies are realised in the business and the platform. The main risk to our forecasts is a lower than expected uptake in the blur platform as the company works towards wider platform adoption with its customers.

Valuation

blur’s addressable market is significant and we estimate it will grow to $641bn in 2018.