Higher than anticipated online ad campaign cancellations mean that Burst Media’s full year figures will be below expectations.
US-based Burst’s revenues grew from $11.4m to $13.3m in the six months to June 2007. Gross margins improved but higher sales and admin costs mean that net income before restructuring costs and share based payments fell from $1.6m to $1.1m. Burst is also investing in its technology and writing the cost off to profit. The shares dipped 3.5p to 13.5p on the news.
There was a cash outflow even though Burst reported a profit. At the beginning of July Burst changed its payment terms from 90 days to 45 days and that should help to improve cash flow. Burst expects to end the year with cash of at least $11.2m which suggests that there will be a minimal cash outflow in the second half.
Burst Network is the core business and the ad cancellations mean that its performance will be hit in the second half. The Burst Direct advertising and Burst AdConductor ad platform businesses are growing rapidly from a small base. However, it will take some time for these newer businesses to make a significant contribution to profits.
Full year revenues are expected to be between $28.5m and $29.5m while adjusted EBITDA should be at least $2.4m.
Online advertising will continue to grow but competition is getting tougher.
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