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blur Group keen to exploit its first mover advantage

blur Group shares took a knock on Monday as the company revealed it has asked its broker to explore financing options to exploit the company’s first mover advantage and support its fast-growing business.
blur Group keen to exploit its first mover advantage

blur Group (LON:BLUR) has asked its broker to explore financing options to exploit the company’s first mover advantage and support its fast-growing business.

The move follows a wave of enterprise-class projects kicked off in 2013.

The group’s business exchange, now offering nine live professional categories, is evolving and maturing and, as such, is increasingly attracting larger and more complex projects. While the increasing proportion of heavyweight projects being handled by the exchange is a welcome development, the nature of these projects, with their extended delivery times, means there is a longer gap between the time when a project is submitted and the point at which blur can recognise those revenues in its accounts.

As an example of this, the revenue from a live project with a booked value of US$3.6mln that was submitted to the exchange and kicked-off in June 2013 will now be recognised in 2014, rather than 2013. As a result, the group has lowered 2013 revenue guidance to US$4.8mln, versus previous guidance of US$5.3mln to US$5.6mln. The revenue figure is still a 71% year-on-year increase on 2012.

George O’Connor, analyst at Panmure Gordon, commented in a morning note, “The root cause is success rather than fail.”

The clearest indication of the growing use of the exchange is the total value of projects that were submitted under contract to its business exchange in 2013. This shot up to US$22.2mln from US$2.4mln in 2013; this means the group has US$17.4mln worth of bookings that it expects to recognise as revenue in 2014 and beyond, when delivery of the services has been completed or key contracted milestones have been achieved.

blur Group said its underlying loss (LBITDA) for 2013 is expected to be around US$6.3mln, versus a loss of US$1.8mln in 2012, with the widening loss reflecting an increased level of investment in technology and an operating model that can deliver operational leverage at scale earlier.

At the end of April, the company had net cash of US$5.6mln, but with the business growing rapidly the group is looking at ways of funding future growth and strengthening its balance sheet.

Shares were off by around one-third in mid-morning trade at 190p but are still up by more than a quarter from a year ago.

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