RhythmOne confident online ads will escape Brexit effect

Online advertising agency RhythmOne, which changed its name from Blinxx in June, expressed confidence about returning to full year profitability and played down the effects of Brexit as trading in the first quarter "materially" beat expectations.

A trading update for the first quarter to 30 June impressed investors, lifting shares in the company to their highest level in over a year, as programmatic platform revenues increased.

Volumes of programmatic advertising, using software to buy digital advertising instead of human negotiations and manual orders, more than tripled year-on-year, with over one trillion requests processed per month in the period.

RhythmOne said there was notable improvements in both fill-rate and pricing, as mobile constitutes a majority of the volume processed.

The company said despite its revenues streams being transaction based and subject to seasonality, the UK’s decision to leave the European Union is expected to have a negligible foreign exchange impact due to most of the company’s revenues and costs are generated in the US and the balance sheet is US dollar denominated.

During the period, RhythmOne said it integrated its mobile, video and programmatic platform with a number of new programmatic demand and supply partners, which increased programmatic revenues. This set a new three-month performance record for the company.

The company said it is focused on ramping video, performance and international revenues within its platform, while continuing to drawdown non-core products and migrating non-programmatic revenues.

Chief executive Brian Mukherjee said the first quarter trading was expected to be "materially ahead of management expectations".

He added: "Our focus on core mobile, video and programmatic products, and draw down of non-core product lines, remains fully aligned with broader structural market trends. We feel confident that the significant steps we took in 2016 financial year 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 financial year."

Shares in RhythmOne rose 15.27% to 33.14p at 0940 BST.