Mirriad Advertising’s H120 numbers show strong top-line progress, up 109% on H119 and 26% ahead of H219. H120 revenues were up over 185% year-on-year in China and Singapore, with market confidence rebuilding. There are very promising new agreements in place with US media owners, with early moves in large adjacent markets, such as music video. There are advanced negotiations ongoing with Tier 1 entertainment platforms. These prospects significantly increase the attraction of Mirriad’s proposition to advertisers. Cash burn is now under £1m per month, with end-August cash of £13.3m (no debt). Market forecasts for FY20–22 are unchanged.
The Tencent partnership (see July Initiation) delivers minimum monthly revenues, giving Mirriad a base from which to develop further commercial interests. It also gives validation through successful execution; over 40 brands ran campaigns in June. The group signed agreements in the US with Condé Nast, Tastemade and Meredith in H120, and has since added Fuse Media. It can now offer brands and agencies substantial online audiences and has already run campaigns for P&G. Management is working to broaden the group’s operations, initiating partnerships with ZigZag Productions and with B-Unique Records. Music video is an interesting opportunity, given artists’ current inability to tour or generate much merchandising income. COVID-19 has stretched the conversion timeline of prospects to contracts. We expect more progress in H220, given the high level of engagement being achieved with global agency groups, brands, platforms and content partners.
With a growing top line and the benefits of last year’s restructuring, as well as some COVID-19 related savings (£0.3m of the £1.8 reduction in administration expenses), the group operating loss reduced from £7.2m in H119 to £4.9m in H220. R&D (fully expensed) was 7% up on H119, at £1.2m. This investment will continue to be crucial to maintain the group’s technological advantage and ensure that the Mirriad content can be seamlessly integrated with client delivery platforms. The group’s cash burn is now less than £1m per month (as previously disclosed). With cash balances of £14.4m at end June and £13.3m by end August, there should be a sufficient runway until at least Q321 before further funding may be needed.
The FY20 revenue forecast of £2.2m implies £1.3m in H2. This should be possible, given the momentum in interest within the traditional advertising space and newer applications. With growing awareness and adoption, the upward trajectory could be steeper. The recent US OTC listing could generate greater interest in the equity story.