Blinkx swings to operating loss as it narrows core focus

Internet media platform Blinkx swung to operating losses in the year to 31 March, it reported on Tuesday, having improved core revenues but slashing non-core turnover.

The AIM-traded firm reported core programmatic revenue of $75.2m, up from $44.9m a year earlier, and core direct revenue of $40.9m, down from $58.5m, for total core operating revenue of $116.1m against $103.4m in 2015.

Non-core operating revenue slid more than 50%, however, to $50.7m from $111.6m.

Blinkx’s adjusted operating LBITDA was $10.5m for the year, against EBITDA of $3.5m in 2015.

On a statutory basis, it made a loss before tax of $94.3m, widening from losses of $24.8m last year.

Its basic loss per share was 22.88 cents, increasing from 5.19 cents, and its adjusted basic loss per share was 4.42 cents, against 0.94 cents last year.

“As anticipated, 2016 was a year of integration and investment for the company, during a period of rapid industry evolution,” said chief executive S. Brian Mukherjee on the results.

“We undertook a broad restructuring of the business to focus on our core capabilities of mobile, video and programmatic trading under the RhythmOne brand - perfectly aligned with dominant industry growth trends.

“Simultaneously, we accelerated the draw down on certain legacy non-core product lines that are no longer considered strategic to the company's future, resulting in short-term impact on revenue and profitability,” Mukherjee explained.

He said that as a result of the deliberate shift, core products now represented more than 70% of revenues, compared with less than 20% two years ago.

Over the year, Blinkx rebranded the majority of its commercial offerings and launched its fully-integrated programmatic trading platform RhythmMax, Mukherjee said.

He explained that, through RhythmMax, Blinkx aims to unify the entire supply side of the value chain eliminating intermediary, margin-compressed point solutions and streamlining the value exchange between consumers and advertisers via the content users consume.

“Programmatic revenues for 2016 grew far in excess of industry growth rates, driven by the RhythmMax platform.

“This platform now provides us the structural foundation and critical mass upon which to build momentum for future growth,” he stated.

Mukherjee said that during the period Blinkx also aligned its engineering, product, sales, marketing and operations teams around its unified RhythmOne proposition, resulting in a reduction of around $40m, or 40%, of the company’s annualised operating expenses.

“We believe the significant steps we took in 2016 to realign the business around our core capabilities and achieve operational efficiency have set the stage for higher quality top-line growth and a return to full-year profitability in 2017,” Mukherjee concluded.

His comments appeared to appease the markets despite the company’s loss too - at 1530 BST, shares in Blinkx were up almost 22%, trading at 20.42p.