Active Member Straws

×

Add a Straw

Note: Maximum file size should not exceed 2 MB and file type should be JPG, PNG, PDF or DOC.
Private — only you will be able to see this Straw
Last edited 3 months ago
#ASX Announcements

Really positive updates today. I'm looking forward to the market noticing and a re-rate (may take some time to shake off the baggage).

I've attached the summary page below...

 
Added 3 months ago
#ASX Announcements

From the Q3 4C, net cash from operating avtivities sits at -(2.1m).

Estimated cash outflows for Q4 of 4.3m.

If EN1 can hit 6.5m+ revenue in Q4, this will be a break-even FY. Revenue for October was just over 2m, so on track to hit 6.5m.

That, and legacy debt getting very close to paid off (with frustrating but neccessary 3Bs) - the EN1 ship has nearly finished the turn-around. This might be the ground floor with growing profits in the years ahead.

 
Last edited 2 months ago
#Risks

8 Jn 20: I am back in with a small position.  Legacy liabilities are being cleaned up and there has been strong increase in revenue.  Will look to the next and subsequent 4Cs before increasing the position.  The company looks to be taking the right steps but the dilution of shares for the payment of legacy liabilities has been huge (doubling the share count in the last year alone)

5 Aug 19

Held this stock briefly while doing further research but sold out after reading the FY2018 Annual Report.

1. Doubts with management.  Related party loans and forgiveness of loans with a footnote in the Annual Report

“Per a Board special resolution on 20 December 2018, a total of $633,338 of the loan balance was deemed to be offset as payment in recognition of significantly reduced payroll for 2011 and 2013 with the same amount recognised as remuneration" Annual Report FY2018 p.55 Note 23. Related party

2. Consolidated Cash Flow Report does not state the customer receipts

3. Over 127m shares have been issued this year alone (currently 558m shares) for conversion of Convertible notes and payment of outstanding creditor balances at share prices as low as $0.011 (current share price of $0.036)

4. Recent change of auditor

5. As Luke Winchester pointed out on twitter, 28 market sensitive announcements this year excluding 4Cs and half yearly report

6. Annual reports not available on the company website ASX annoucements

All this makes me doubt management and I avoid investing in companies where I don't trust management.  There are plenty of opportunties else where even though the company seems to have reached an inflection point and could increase cash flow and profits significantly from here. 

 
Last edited 2 months ago
#Risks

8 Jan 19: Starting to hit revenue targets.  

Quarterly cashflow reports have been released with frequent corrections to the reports the following day.  Most are typological errors, but it does raise doubts about the quality of financial reporting system. 

Needs capital to pre-purchase advertising.  In the past this has been difficult to raise when it has needed it most.

Have missed revenue targets in the past by a long way due to their capital contraints.

Economic downturn leads to reduced advertising spending.

 
Added a month ago
#2020 outlook

Using the Index for January 2019 as a model: based on the revenue for the first 12 days of January 2020 we would expect a full month revenue of $1.77m. While I would be happy for anything $1.5m+, I have used $1.77m to forecast revenue for 2020. See the graph below.

If EN1 achieves something halfway between the two forecast profiles, I would be very happy. FY20 revenue of $40m would give a PBT of roughly $5m, worthy of a SP at least 10c.

If the excessive scrip issue has come to a close, then the outlook is very positive.
 

 
Last edited a month ago
#2019 revenue review

I have compared the revenue growth for 2019 to the Ad Revenue Index (https://adrevenueindex.ezoic.com/) for the same period.

The graph below shows the growth in revenue throughout 2019 compared to the January. EN1 strongly outperformed the index.

Gross margins for EN1 settled around 35%

 
Added 3 months ago
#Financials

Despite the dilution this year, revenue per share has doubled, meaning revenue growth is far outpacing issue of new shares.

The last of the legacy debt should be all settled within 6 months.

 
Last edited 2 months ago
#ASX Announcements

Released today - EN1 now cashflow positive. Profits won't be too far away!

View Attachment

 
Last edited 2 months ago
#ASX Announcements

EN1 exceeded it's 2019 integrations target, announcing 4 new partners. This milestone has been reached 6 months ahead of schedule. Maybe a case of setting conservative goals, but still a great update.

See attached.

View Attachment

 
Last edited 2 months ago
#Industry/competitors

From the AGM investor presentation released 31/5/19:

EN1 coexists with its competitors in the digital ad ecosystem by providing unique demand & supply to partners who are also competitors. The digital ad space is very unique from this perspective, where there is significant opportunity for companies to coexist.Companies compete aggressively for the same direct brand business, but also buy ad inventory for those clients from their competitors. Relationships are strong and the industry has built consortiums for companies to grow & evolve together.

Companies specialise in unique audiences since millions of apps and websites exist; no one company has access to all publishers, so the opportunity to provide access to unique audiences is significant.

Video advertising is an inventory constrained environment; there is exponentially more demand than supply; it is not commoditized. Demand & margins continue to increase every year in U.S. video advertising.

engage:BDR has been listed numerous times in comScore's Top Video advertising companies rankings (measures reach of unique users).

EN1 has achieved a Top 10 ranking (exceeding the reach of a number of its traditional and larger competitors).

EN1 was rated #9 in video in the USA, the worlds largest internet market. This ranking was comprised of Facebook, AOL, Google, Yahoo, EN1, and many others.

 
Last edited 2 months ago
#Business Model/Strategy

engage:BDR (“engage”) has developed proprietary technologies which automate the transaction of digital video, display advertising and influencer marketing for advertisers, advertising agencies and the publishers which display these advertisements.

Influencer marketing is marketing through social media users who have large followings. This form of marketing is growing massively. EN1's IconicReach is a self-serve platform taking advantage of this huge opportunity.

This business is capital light so will scale well from here. It has gone from 85+ employees in 2015 to 15 full-time now. Over this time it has transitioned to a programmatic sales model with relatively fixed costs.

Recently announced the release of Net Zero, a disruptive publisher payment system where publishers are payed immediately rather than up to 90 days later. EN1 takes on the cost of this financing, all-the-while attracting new publishers to drive growth in revenue.

 
Last edited 2 months ago
#Management

CEO Ted Dhanik, an en ex-MySpace executive, is one of the top shareholders who has been increasing his stake. Founders heavily invested. Top 5 shareholders hold 45%

For those old enough to remember MySpace: that guy, Tom, who was everyones friend - he was the founder of MySpace and is now on the BOD for EN1. Just a fun fact

 
Last edited 2 months ago
#ASX Announcements

Announcing run-rate profitable on monthly basis, meaning the business is likely to post an annual profit in the near future. I'd consider this an upcoming inflection point.

View Attachment