FY17 results and revised KOMs
Snakk Media Ltd (BE:SKE) has published its FY17 results and reset its FY18 key operating milestones (KOMs). While revenues were a shade ahead of the prior year, the operating loss widened considerably from NZ$1.0m to NZ$3.3m, reflecting the investment made in repositioning the business. With a broader range of revenue streams and a reduced cost base kicking in more strongly from Q218, financial performance may start to improve. In early May, the Manji Family Trust subscribed at a premium to additional shares to help fund working capital and now holds 17.2% of the equity.
H217 reduced loss
As outlined in the Q417 trading update, FY17 revenues were NZ$10.6m against NZ$10.5m in FY16. The net loss of NZ$3.3m was split NZ$1.9m in H117, narrowing to NZ$1.4m in H217. Employee costs and benefits were 51% higher in FY17 than the prior year, but the restructuring in Q417 addressed overhead in non-customer facing support functions, as well as focusing on improving operational controls and efficiencies. Part of building greater resilience in the business is widening the range of products and services on offer. Growth in the programmatic self-service campaign offering on the UberMedia platform drove this stream to account for 15% of Q417 revenue, with good momentum into FY18. Although achieving lower gross margins, operating margins in self-service are attractive and there is obviously good scalability. It also broadens the potential pool of clients. The group’s new KOM for gross margin is reduced from 62% to 58% to reflect this change in the mix. Mobile advertising overall remains a highly competitive market.
Cash boosted
Snakk finished its financial year with a cash position of NZ$0.6m, down from $3.0m at end FY16, post an operating cash outflow of NZ$2.4m (FY16: outflow NZ$1.7m). Trading and timing issues lead to a low level of working capital at the balance sheet date. With y-o-y revenue growth reportedly positive in April and May, Snakk’s ability to find the required upturn in working capital will have been helped by the Manji subscription post the year-end. This raised NZ$110k (at NZ$0.20, a substantial premium to the then price of NZ$0.09). Its stake now stands at 17.2% of the equity.
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