engage:BDR confident of revenue increases in the near-term

engage:BDR Ltd’s (ASX:EN1) April revenue grew 3% to $1.25 million, compared to April 2019 and the company is confident of continuing growth with interim May figures showing further improvement. Gross profit also improved in April, rising from 40% (or $488,000) in 2019 to 41% ($513,000) in 2020. The interim financial results for May show a 20% revenue increase over April of $305,000 compared to $255,000. Advertiser bid rates, bid prices, completed auctions, the number of live campaigns, clearing prices and revenue have all increased daily in May. All figures are unaudited, as all financials are pending audit. Revenue seasonality Consistent with EN1’s results, the advertising industry traditionally expects 65-70% of its revenues in the second half of the year, from July to December. The company experienced this in 2019 with a 34% revenue in the first half of the year and 66% in the second half. EN1 expects 2020 to produce similar revenue seasonality. Operational outlook Due to around 95% of the US population being in lockdown, many brands (not specific to EN1) have temporarily reduced their marketing budgets, as consumers cannot transact with them. The preliminary analysis of April revenue impact due to COVID-19 when compared to March, was about 38%. Management expects this figure to be narrower for May, considering many businesses in the US are to re-open this month. April was the start to a new quarter and typically, demand is lighter in the first three weeks of the first month, however, May performance has been significantly stronger than April, which EN1 views as a strong indication of where the month should finish. Financing opportunities The company was working with an Australian bank in the application process and did not end up submitting as the pre-application process recently determined that EN1’s assets and principle business activities are mostly in the US - which are outside of their lending guidelines. However, EN1 qualifies and has applied for US Economic Injury Disaster Loan (EIDL) funding under the CARES Act and should have updates in this area shortly. The company has received conventional debt term sheets from advisory firm Virathus for $8 million and is in the process of evaluating. EN1 is also in talks with US banks about applications for term loans, as interest rates are the lowest in recent years. In the near-term, the company is focused on refinancing current note balances and securing equity-free alternatives.