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Augme Technologies, Inc. Message Board

  • trendsbroken4now12 trendsbroken4now12 Nov 12, 2012 5:06 PM Flag

    New analyst report just out BUY

    Investment Highlights

    1) Augme reported results for its fiscal second quarter ended August
    31, 2012 in early-October. The Company reported sales of $6.2 million
    in Q2/13, a 21.9% sequential increase from sales of $5.1 million in
    Q1/13. Gross profit increased from $1.9 million in Q1/13 to $2.5
    million in Q2/13, as gross margins narrowed from 61.0% to 60.0%
    over the same time period. Operating losses narrowed from $7.6
    million in Q1/13 to $7.2 million in Q2/13, as selling, general, and
    administrative expenses fell slightly from Q1/13 to Q2/13. Excluding
    non-recurring items, Augme reported a net loss of $7.2 million, in
    Q2/13, or ($0.07) per share, compared to a net loss of $7.6 million in
    Q1/13, or ($0.08) per share. Augme’s results were ahead of our
    expectations for sales of $5.8 million and a loss per share of ($0.07).

    Following the end of the quarter, Augme announced a restructuring
    plan and replaced former CEO Paul Arena with interim CEO Robert
    Hussey. The restructuring plan includes a shift in strategic focus
    towards the core mobile marketing business, a $6 million annual cost
    reduction in the core business, and a reduction in spending towards
    development and monetization of the intellectual property portfolio.
    Additionally, the Company has outlined a strategy for short-term
    monetization of the intellectual property portfolio including outright sale,
    partnerships, and/or licensing. Shortly following the announcement of the
    restructuring plan, Augme announced the closing of a $6.8 million equity
    financing of 8.5 million shares priced at $0.80. In conjunction with cost
    reduction measures, we believe that the equity raise will provide Augme
    with sufficient runway to reach cash-flow breakeven.

    Conclusion/Stock Valuation

    Augme is one of the only pure-play publicly traded providers of a complete end-to-end mobile marketing platform. Additionally, the market for mobile advertising is growing rapidly and is expected to exceed $20 billion by 2015 driven by the increased penetration of smartphones such as the iPhone, Blackberry, and numerous Android devices1. The Company is deserving of a premium valuation as one of the only public companies in a highly desirable industry. Shares of AUGT have sold off following the litigation loss to Yahoo! at the district court level in August and the subsequent equity offering at a discount to the market in late-September. However, sequential quarter-over-quarter growth rebounded strongly in Q2/13 at 21.9% compared to a disappointing 0.9% in Q1/13. Additionally, Augme’s management reaffirmed guidance for sequential quarter-over-quarter revenue growth of 15-20% and cash-flow breakeven by Q2/14.

    We have valued Augme on a sum-of-the-parts basis, as detailed below:

    Core Business – 4.9X FY2014E sales of $40.3 million, discounted to present value at 25% - $1.41/share in value

    We believe that potential upside catalysts include continued growth in the core business, successful short-term monetization of the intellectual property portfolio through an asset sale, and new mobile advertising contracts with marquee clients. Thus, we are maintaining our BUY rating on shares of AUGT.

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