Today I am looking at what to look out for when Blinkx (LSE: BLNX) releases its latest set of interims on Tuesday, November 11.
Have revenues turned the corner?
To say that shares in Blinkx, whose software allows web surfers to find videos more easily, and which sells adjacent on-screen advertising space, have collapsed this year would be something of a colossal understatement — the price of the stock has conceded almost 90% since the turn 2014.
The rapid ascent seen during 2013 was destroyed in a heartbeat by Harvard professor Ben Edelman, whose assertion in January that the company was using “deceptive” software to bloat hit counts and boost ad-related fees smashed confidence in the firm’s revenues structure.
Share prices have since stabilised, but July’s negative trading update has kept the kibosh on a share price breakout. Blinkx warned that revenues had been below expectations for April-June, a result which was likely to harm EBIDTA to the tune of $5m for the year concluding March 2015.
Blinkx has since added that trading difficulties also infringed upon the second quarter, although last month’s update also stated that the firm has seen “sequential month-on-month growth since July” and that this represents an inflection point.
Consequently the business now expects turnover for the first half to register at $102m-$104m and EBIDTA to remain flat. The complex nature of Blinkx’s operations makes it extremely difficult to decipher ‘clean’ hit rates and therefore genuine revenues. Still, the results of whether or not the video specialists have met these projections is likely to have a cataclysmic effect on the share price.
What’s the cash pile like?
Blinkx also advised in October’s update that cash and cash equivalents stood at $115m as of the end of quarter two, a figure which equates to around 17p-18p per share.
This should serve as a floor for the share price in the event of further bad news. But with earnings at the firm already flirting dangerously with negative territory, a poor update on the firm’s cash pile — and consequently the possibility of severe cash burn — could still send shares sharply retreating.
How is the mobile transition progressing?
The tech business underlined the growing importance of revenues generated from mobile devices in October’s release, noting that this sub-sector now accounts for around 20% of total turnover.
Although this sector has lower gross margins than traditional formats, Blinkx asserts that it is “well positioned with high-growth advertising formats that are expected to contribute an increasing percentage of revenues.” So news of further progress in the white-hot mobile arena will no doubt be greeted with fanfare by investors.