In-game advertiser, Bidstack Group’s (LON:BIDS) latest results are a mixed bag – the headline figures show FY21 revenue of £2.6m and costs of £8.7m. Yet despite this and the fact that the share price has fallen 27% to 3.04GBX since we last covered this stock, we are optimistic about Bidstack’s prospects.
It’s all about the brands
One reason is that overall, the brand count has doubled year-on-year to 70 (in FY20 it was 35). This year Bidstack has worked with leading brands across travel, technology, apparel, luxury and food delivery platforms, with brands such as Paco Rabanne and Doritos now on their roster.
Many campaigns moved from test spend to ‘on-plan’ in 2021 leading to projected repeat spend in 2022. Both Bidstack’s core markets saw significant growth, particularly in the US which grew 116% year on year to just under £900k and EMEA by 36% to just under £1.8m. The publisher portfolio nearly tripled year-on-year to 58 (in FY20 it was 20) and the company is now active in over 30 markets (in FY20 it was 17).
Bidstack’s partnership deals are with some of the best brands in the business. It has signed a multiple format advertising agreement covering the mobile portfolio of one of the world’s leading AAA, digital interactive entertainment companies. The name is still as yet undisclosed but this deal is meant to include exclusivity for one of the publisher’s biggest sporting franchises.
Meanwhile Bidstsack continues to add games to its portfolio – last year it added 38 titles to its portfolio and in the last few weeks it has added four train simulator games in a partnership with Highbrow Interactive, as well as a fashion and lifestyle game developed by Nanobit in a partnership with Hollywood Story: Fashion Star – it is a role-playing mobile game that allows players to live their movie star dream and experience the life of a celebrity.
Gross margins have improved. Bidstack reports that FY21 gross margins are now at 36%, compared to 13% in FY20. And the board expects that revenues for FY22 will be considerably greater than FY21 which presumably refers to fact that Bidstack has a secured revenue stream of a guaranteed minimum of US$30 million advertising spend over two years which began on 1 March 2022. Although the higher revenues will not be seen until the second-half of 2022.
High staff costs
But, as mentioned above, costs are high. The headline operating expenses (excluding exceptional items) of £8.7m (FY20: £7.2m) grew by 20% year on year. The company states that the increase is primarily driven by staff costs which represents the investment in headcount (excluding directors) averaging 73 in 2021 (FY20: 49). It’s worth noting here that founder and CEO, James Draper and directors, Francesco Petruzzelli, John McIntosh and Lisa Hau are earning an annual salary of just over £1m between them.
Mobile gaming is a growth industry
Yet, the industry in which it operates has massive growth potential. Thanks to the pandemic, gaming is moving into the mainstream with mobile gaming projected to be a multi-billion dollar industry – by 2026 the global mobile gaming market is expected to reach $139.5bn. The image of it being solely a hobby for single young male adults is now more myth than reality; more than half of all gamers are women, gamers are more connected via social media, and fashion is also beginning to play a part. As well as fashion-focused games, many gamers apparently want their virtual characters to look good too. Within this evolving metaverse, we believe that the Bidstack platform could become an integral part of the gaming offering.
