Bidstack Group PLC (AIM:BIDS, OTC:FTBGF) shares surged on Friday morning as it shook hands on what is thought to be one of the industry’s largest programmatic in-game advertising deals with Azerion, the Amsterdam-based online 'metaverse' games publisher and platform operator.
The two companies have agreed to be exclusive commercial partners for the next two years.
The AIM-listed company put out a separate statement confirming that due to the recently signed commercial agreements, it has now secured a revenue stream of at least US$30mln of advertising spend over the two years from 1 March 2022.
Having implemented 76 ad campaigns in the 2021 financial year, its brand count doubled year-on-year to 70, with publisher numbers nearly tripling to 58, lifting its global footprint from 17 to 30 countries.
On the downside, the board said that delays will mean revenues for the current year will be lower than expected but significantly higher than last year's £1.7mln.
More positively, gross margins have jumped above 30% from 13% last year, meaning gross and net profits are both expected to be broadly in line with market expectations.
On the outlook for 2022, it said as well as the Azerion agreement coming on stream, there is a "robust" pipeline of additional AAA and independent titles in contract or in active negotiation.
Azerion's sales teams, which stretches across 26 offices in 18 countries, will have exclusive access to all of Bidstack's advertising formats and will see the company become the AIM-listed company's sole external global reseller, including on its 'metaverse' games like Habbo Hotel.
"We expect this to be just the start of a long and deep relationship with Azerion as both companies have strong ambitions within the digital entertainment and media space,” said Bidstack founder and chief executive James Draper.
Azerion will have access to roughly 40mln users and roughly 60 titles across a quickly growing portfolio of publishers with the genres diversified across stadium, racing, open world and life simulation titles, Bidstack said.
"This contract signals a realisation that brand advertising within the metaverse has truly arrived,” added Draper.
“Since our pivot into gaming in 2017, we have embedded a culture of no-shortcuts into the formation of in-game advertising as a new channel."
On the wider performance for 2021, Draper said, “In the second half of 2021, as the in-game market has started to mature, we have focussed on delivering advertising campaigns that have an accretive impact on gross margins."
Since the fundraise in July, he said the board has focused on establishing a pathway towards profitability by balancing investing for growth and strategic cost control.
“We have been pleased with the run of network deals across our portfolio, where blended margins have been healthy and have helped drive operational leverage.
"With our network now growing, through the tremendous work of our publisher acquisition team, our portfolio is now diversified sufficiently to attract a broader range of advertising verticals."
He said the success of the media business, which led to the announcement of today's Azerion deal, “will empower the product team to work on a number of technology-only and software-as-a-service deals that are expected to drive additional recurring revenue over and above the group's advertising revenue."
Shares in Bidstack jumped 35% to 4.32p by late morning.