Location Sciences Group - defining the opportunity
Location Sciences, the world leader in location verification for mobile advertising, recently released results for the first half ( H1) of 2019 and announced a share placing raising £0.6mlm (gross) of additional capital. Revenues for the H1 period were up 94% at £0.45mln, and period-end net cash was £1.5mln. The core product Verify achieved new client wins that confirm the market opportunity for this offering. The company will now undertake some realignment of its marketing strategy to best realise the potential for Verify. We make some changes to our forecasts to reflect these changes.
US expansion – the lessons learned:
Verify was rolled out in North America, the key target market, during H1 2019. This experience has allowed the company to better define the target market for this product.
The company will now focus on tier 2 and tier 3 advertising agencies rather than the big four. These mid-sized agencies have a greater incentive to differentiate themselves by adding Verify to their suite of capabilities.
New personnel have been added to deliver on this strategy, including Donnie Williams of Horizon Media to a non-exec role, and Andy Roberts, formerly head of trading of MindShare, who is to join the advisory panel.
New ad agency partnerships achieved during the period include SITO Mobile in the US and Vicinity Media in South Africa.
We are changing our financial forecasts to reflect a lengthier timeframe for Verify to achieve scale in the US and a revised cost base. We are lowering our 2019e revenue forecast to £1.1mln.
Our year-end net cash forecasts are presented based on no further capital being raised. We believe that Location Sciences will, in fact, seek additional capital to fund the development of the business through to 2021 and positive profitability.
Quick facts: Location Sciences Group PLC
Price: 1.806 GBX
Market Cap: £6.69 m
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