Silver Bullet Data Services Group plc (LON:SBDS), a provider of digital transformation services and products, has announced its unaudited preliminary results for the year ended 31 December 2022.
FINANCIAL HIGHLIGHTS.
| Year ended December 2022 | Year ended December 2021 | |||
| Revenue | £5.82m | £3.81m | ||
| Gross Profit | £4.22m | £2.79m | ||
| Headline Loss before tax* | £6.10m | £6.10m | ||
| Reported Loss before tax | £7.54m | £8.57m | ||
| Earnings Per Share | (£0.49) | (£0.73) | ||
* Headline results are calculated before exceptional items and share option charges, reconciliation per note 6 of the consolidated financial statements.
Operational Highlights:
| · | Revenue increased 53% to £5.82 million (2021: £3.81m) |
| · | 16 new services client wins in the period, including Mars, Greene King and Entain Group |
| · | Consolidation of existing services clients as a result of additional contract wins with Heineken, Sony and Salesforce. |
| · | Focus on growth in key markets of UK, US and Australia |
| · | ‘4D’, Silverbullet’s privacy-first contextual targeting and insights platform was further enhanced and developed during the year achieving the product road map and revenue targets set by management |
| · | Management have successfully restructured the 4D team, having reached key milestones on the product development roadmap, to align cost structure with revenues and accelerate the path to profitability |
Post Period End – Convertible Loan Note Issue
It is noted that the Company intends to complete a debt raise via a new convertible loan note imminently following the publication of these results in order to provide the Company with additional working capital to support the significant growth in sales of 4D and its services offering.
Ian James, Chief Executive Officer of Silverbullet, commented:
“2022 was a year of considerable progress for Silverbullet. The Company has seen significant growth based on the strong demand from existing and new clients to transform their data and technology capabilities to improve marketing ROI and deliver meaningful customer experiences. The period saw 16 new services client wins, including Mars, Greene King and Entain Group. To be trusted by these multinational clients to spearhead their next phase of growth is strong evidence that our strategy to accelerate our client’s business through the smart use of data in the privacy first era is well received. The services division of our business continues to underpin the group with both new clients and fast growth. Additionally, with our 4D product having reached maturity, we are now able to focus all resources on sales and delivery of client revenue. Strong 4D bookings have been secured, with a healthy pipeline in place, and we expect the significant 4D revenue growth this year to continue to accelerate, especially in the US.
“Silverbullet is highly encouraged by the developments being made and we are confident of achieving our expectations for the current financial year. We look forward to providing further updates to our shareholders throughout the year ahead.”
CHAIRMAN’S STATEMENT.
It is my pleasure to present the annual results of Silverbullet Data Services Group Plc. I am delighted with the progress made in in 2022, delivering impressive revenue growth with a wide selection of blue-chip clients. The development of 4D, our privacy-first contextual targeting and insights platform, is largely complete and is now starting to deliver significant revenue.
2022 was a challenging period for many companies in the media and technology space. Whilst I am pleased with our top line growth, I am equally satisfied with how the management team has controlled costs and restructured elements of the business to ensure that the Group operates efficiently and is appropriately set up for future growth.
Results.
Revenue for the year was £5.82m (2021: £3.81m), driven primarily by growth in our data-driven transformation services business, providing data consultancy advice to numerous clients across the world. Loss before tax was £7.54m (2021: £8.57m) leading to a loss per share of 49p (2021: 73p). Cash as at 31 December 2022 was £1.35m (2021: £3.69m).
People.
The excellent Board of Directors for the Group remained unchanged in 2022. Keith Sadler and Steven Clarke are independent non-executive directors and are members of both our Audit and Remuneration committees. Martyn Rattle has significant experience in the Media and Technology space and provides excellent insights and challenges to the Board. Keith Sadler resigned from his position (post period end) on 9 March 2023 in order to focus on his other business interests. I would like to thank Keith for his contributions to the Group and wish him well in his future endeavours. We are currently undergoing a search for a new independent non-executive director who will join Steven Clarke on the Audit and Remuneration committees.
I am privileged to be working with our three executive directors, Ian James, Chief Executive Officer, Umberto Torrielli, Chief Strategy Officer and Darren Poynton, Chief Financial Officer. I would like to thank them for their focus and commitment in leading the Group this year and driving the strategy of business.
The Company’s true strength is its people. We have expanded during the year as well as restructured certain areas to drive focus. I would like to thank all our employees across the world for their dedication, expertise and commitment to generating such impressive growth and development.
Overview.
In a world where data and privacy are essential considerations for all companies, I am extremely pleased with the services that the Group provides to its clients. The prospect for growth and further development of the Group is extremely strong. The Board will continue to work with the executive and management teams in 2023 to deliver on our strategy and to create value for our shareholders.
Nigel Sharrocks
Non-Executive Chairman
CHIEF EXECUTIVE’S STATEMENT.
Throughout 2022, Silverbullet has seen significant growth based on the strong demands from existing and new clients to transform their data and technology capabilities to improve marketing ROI and deliver meaningful customer experiences.
Customer Experience Services Outlook:
Silverbullet’s Customer Experience (CX) Services division delivered 19% year-on-year growth, having won 16 new clients including Mars, Greene King and Entain. Further, the business has renewed global services agreements with Heineken and Sony. Most notably, our client base has substantially grown in the Americas, having launched into the LATAM region with a central hub based in Mexico. This new market opening, in combination with our North American presence, has seen the business significantly expand its US client base.
Our strategy of ‘land and expand’ has been fruitful, and this can be seen through the continued client relationships with our core flagship clients, including Heineken, Mars and Sony. Silverbullet now works with Heineken in six markets, including UK, US, Spain, Mexico, Brazil and Ireland. Our relationship with Mars has expanded into the US and Australia, and with Sony we are working in Europe, Singapore and Latin America.
Geographically, the business has focused on streamlining its regional hubs into three key markets, the UK, the US and Australia. This geo-focus has brought significant alignment throughout the organisation, having enabled the regional leadership teams to focus on the expansion of our global clients, which has consequently led to substantial margin improvement.
Silverbullet’s partnerships with Salesforce and Treasure Data continue to thrive, enabling a new business pipeline focused on the technical expertise surrounding the leading customer data platforms and marketing automation tools. For example, year-on-year Silverbullet has increased the volume of managed services projects specifically related to data-driven marketing activation based on the use of the technology and data infrastructure that we deployed in 2021.
Further, as we look to support our clients in safeguarding them for future challenges, Silverbullet is increasingly assessing how clients can enable their first-party data to be deployed in media activation environments such as programmatic video and Connected TV. This pivotal approach to unlocking various compliant data sets for improved marketing and advertising is opening the opportunity to cross-sell the 4D product to our global CX services client base to form a combined offering.
The business continues to invest in new talent in the customer experience services division, expanding our skillset and certifications across multiple marketing technologies. Silverbullet maintains a clear focus on investing in (and training) its talent pool which remains a key market differentiator.
4D Outlook:
Despite initial revenue headwinds in the first half of 2022, the 4D product in the second half of the year began to build connections with key media agency partners, seeing considerable revenue growth year-on-year. This revenue momentum has been underpinned by media agencies requiring a more ‘hands-on’, managed service approach to delivering smart contextual targeting and insights across display and video advertising. This trend is set to continue, and we expect to see revenue growth within this ‘managed service’ model, as well as the original self-service approach.
Despite the further Google delay of the third-party cookie deprecation in 2022, we have seen a significant change in mindset from brands towards improved advertising approaches, as consumer expectations and demands continue to push for personalised experiences in a privacy-safe world. This change in mindset has generated interest and bookings on the 4D platform that accelerated in the second half of 2022 and has continued into 2023.
Having achieved maturity in the development of the 4D product, the Group successfully completed a restructure of the 4D team during Q3 and Q4 2022. This restructure reduced the headcount of the product and engineering team and aligned the cost base with the commercial traction of the product. With a mature 4D product and structure, the management will be able to make any future investment decisions in line with the commercial growth and market opportunities.
Outlook.
Revenues in Q1 2023 (post period end) were c.£2.0m, which represents a 107 per cent. increase on the previous year. During the quarter, we also secured £1.8m of bookings with new or existing clients. These new bookings, together with bookings of £3.4m in Q4 2022 is driving significant growth in 2023. This growth has been achieved from a cost base that is 7% lower than the comparable prior year period, evidencing the Company’s cost management measures.
A notable feature of this strong growth in Q1 2023 is that over 30% of Group revenue was generated in the US market. Management expects that this momentum will continue and the percentage of overall revenue in the US to increase, driven by expansion of our global client portfolio into this significant market.
With our 4D product having reached maturity, the complete focus of the 4D business is on sales and delivery. Strong 4D bookings have been secured and a strong pipeline has been developed. In May 2023, the Group announced its first 4D reseller contract with Silverpush Global Pte Ltd, a global leader in cookieless and AI powered advertising solutions, with 18 offices worldwide. The partnership significantly increases 4Ds global sales reach. Management is also negotiating additional complementary commercial reseller partners. This traction reinforces the belief that 4D is due to deliver significant growth in 2023 and beyond and confirms our view that the product will deliver excellent long-term shareholder value.
Whilst we still have over half a year’s trading to go and the macro-economic climate remains uncertain, we are confident of achieving managements expectations for the current financial year and look forward to providing further updates to our shareholders throughout the year ahead.
Ian James
Chief Executive Officer
FINANCIAL REVIEW.
A year of great progress for the business in terms of performance, development and structure.
| Year ended | Year ended | |
| December 2022 | December 2021 | |
| £ | £ | |
| Revenue | 5,818,255 | 3,809,255 |
| Cost of sales | (1,598,973) | (1,024,221) |
| Gross Profit | 4,219,282 | 2,785,034 |
| Other operating Income | – | 38,328 |
| Distribution costs | (799,272) | (522,306) |
| Administrative expenses | (10,810,386) | (9,988,875) |
| Exceptional Items | 42,154 | (861,085) |
| Operating Loss | (7,348,222) | (8,548,904) |
| Finance Expense | (188,551) | (18,928) |
| Loss before taxation | (7,536,773) | (8,567,832) |
| Tax | 314,741 | 57,150 |
| Loss after taxation | (7,222,033) | (8,510,682) |
| Currency translation differences | (84,236) | 36,495 |
| Total Comprehensive Loss for the year | (7,306,269) | (8,474,187) |
Revenue and Gross Profit.
Overall revenue of £5.82m represents growth of 53 per cent. compared to 2021. During 2022, our customer experience services division added 16 new client including significant agreements with Mars, Greene King and Entain Group. We also renewed or extended agreements with several existing clients including Heineken and Sony. Having laid the foundations and invested in 4D sales and delivery teams in 2021 4D revenue has grown 633% to £1.52m in 2022.
Gross profit of £4.22m represents growth of 51 per cent. compared to 2021. Gross profit margin has remained constant year on year at 73 per cent. The increase in revenue in customer experience services would have helped to improve the gross profit margin but the this is offset by increased 4D hosting and media costs.
Operating Expenditure.
Total Adjusted Operating Expenditure (Adjusted to exclude depreciation, amortisation, share option expenses, exceptional items) was £9.34m, which represents an increase of 11 per cent. from 2021 (£8.40m).
| Year ended | Year ended | |
| December 2022 | December 2021 | |
| £ | £ | |
| Operating Expenses | 11,567,504 | 11,372,266 |
| Less | ||
| Depreciation | (29,208) | (36,255) |
| Amortisation | (761,065) | (475,809) |
| Share option Charge | (1,476,183) | (1,602,025) |
| Exceptional items | 42,154 | (861,085) |
| Adjusted Operating Expenses | (9,343,201) | (8,397,092) |
Staff costs of £6.88m (excluding share option expenses) continue to make up the majority of the operating expenses, this is an increase of 27 per cent. on 2021 (£5.42m) largely driven by increased staff costs to deliver the customer experience services and the sales and delivery teams working on the 4D growth. Having developed the 4D product to a position relative maturity in the second half of the 2022 the company reduced the headcount of the product and engineering team. During the year average staff numbers have increased from 69 to 80.
Administrative expenses excluding staff costs have fallen to £2.72m from £2.96m in 2021, this reflects management tightly controlling costs in 2022 whilst delivering significant revenue growth.
Taxation.
As a loss-making group, we do not currently incur corporation tax. We do however benefit from a research and development tax relief related to the development of 4D. The total tax relief for the year was £0.35m.
Balance Sheet and cashflow.
We have continued to develop and invest in 4D our privacy-first contextual targeting and insights platform in 2022 and we are now in a position where we believe the product is reaching development maturity. During the year £1.10m has been added the development intangible asset account. Goodwill relates to the acquisition of Silver Bullet Data Services Limited and Videobeet Italia Srl. We have reviewed the carrying value of these investment and we are comfortable that no impairment is required against these assets.
In June 2022, the Group announced it had successfully raised £4.6m. This comprised of a £2.494m equity subscription at a price of £1 per ordinary share and £2.106m of convertible loan notes (see note 19). At the year end and at today’s date a payment £186,000 relating to these convertible loan notes remains outstanding from an individual. The Company has been informed that this amount will be settled and is contact with the relevant subscriber, however the timing of receipt remains uncertain.
Net cash flow used in operating activities was £5.14m (2021: £7.22m). The decrease versus the prior year relates to the reduction in losses during the period largely due to the increased corporate costs in 2021 as a result of listing on the AIM market.
The Group’s cash balance decreased by £2.34m to £1.35 million in 2022 (2021: £3.69m).
The Company intends to complete a debt raise via a new convertible loan note imminently following the publication of these results in order to provide the Company with additional working capital to support the significant growth in sales of 4D and its services offering.
Darren Poynton
Chief Financial Officer
