Second-Quarter Update

Blur Group has updated on its performance for the second quarter ended 30th June 2016. The business services platform operator said that it has seen an improvement in EBITDA, gross profits, costs and cash in the period, boosted by a focus on high quality, high margin repeating enterprise customers. It added that EBITDA in the first half of the year is in-line with management expectations. With the shares offering investors exposure to the high growth services-commerce market, we classify the shares as a growth stock.

Second Quarter Update

Revenues from its higher margin premium services, access fees and subscriptions increased by 75% in Q2 on the quarter prior, leading to an overall gross profit for the period. The total value of kicked off projects decreased by 2% on the quarter prior as the reduction in the number of projects kicked off (and pitched on) was largely offset by an increase in the average project value. Cash collection performed well, reflecting higher quality of revenues generated from enterprise customers. Cash balances at period end decreased by 26% ($1.5m) on the quarter prior, to $4.3 million (Q1: $5.8 million), impacted by foreign exchange movement on the back of Brexit. Excluding foreign exchange movements and R&D tax receipt ($0.4 million), cash burn was $1.1 million in Q2, which is 28% lower than in Q1. The cash burn improvement was helped by a 22% reduction in operating expenses on the previous quarter (Q1 2016) and by 41% on the quarter prior (Q4 2015).

Valuation

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