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Audioboom – following another quarterly update with Rob omitting the meaningful financials, house broker updates…

By Steve Moore | Friday 8 September 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Audioboom (BOOM) was able to get its shares up by more than 12%, above 2p, yesterday on the back of a “Third Quarter Update”. Unfortunately though this was achieved by CEO Rob Proctor again substituting jam tomorrow verbiage for meaningful financials – as Tom Winnifrith noted in a BearCast HERE. There has since been an update by house broker Allenby Capital…

The latest quarterly update from the self-described “leading spoken word audio on-demand platform” included “the company's strong financial and operational performance has continued into the third quarter”. I though commented somewhat differently on the interim results and note the evidencing of “strong financial and operational performance” in the latest announcement is “revenue increasing 329% compared to the corresponding period in the previous year… 32% over the second quarter of the current financial year to £1.49m”.

But revenue is of course vanity - though instead of the sanity of other financial metrics it’s instead talk of ‘available advertising impressions’, ‘unique file requests’ and Rob Proctor stating “nearly 90 million people listened to a Boom in August… This provides a prime target for agencies and marketers who have now realised this engaged, motivated and attractive audience is an ideal demographic for clients' advertising spend”. Have they Rob? I can’t tell from the announcement because you haven’t provided the necessary financial information!

House broker Allenby has now though updated, reckoning Audioboom “well placed to achieve our FY17 forecasts”. These are though for a loss of £4.6 million on revenue of £5.4 million, from £2.6 million on £1.8 million at the half-year stage - and net cash reducing to £1.5 million from £3.2 million at the half-year. This really ‘strong financial performance’ Rob?!?

For the company’s year commencing 1st December, the forecast is for revenue soaring to £15 million – but still a £1 million loss, before profit of £1.4 million the following year. However, the broker considers that the company can actually generate cash next year as a result of working capital manoeuvring. Such manoeuvring looks to be needed otherwise it’ll be heading towards cash crunch ahoy again!

Talking of financials, I also note since my interim results update that David McDonagh has left as Chief Financial Officer and the company “with immediate effect”. Hmmm. At least until there’s much better evidence on delivery of the forecast jam tomorrow, I avoid.

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