One of our trading ideas, US app developer Bitzio, reported its Q3 2012 on Wednesday. Given the fact that the company is still in a start-up phase we do not emphasize the actual quarterly result too much. Focus should rather be, in our opinion, on the ongoing project in co-operation with the NFL Players association. The app is expected to be launched in December, hopefully in-time for the important Christmas business.
As we have previously reported, during the third quarter, Bitzio divested non-core assets and operations to focus on developing and monetizing fan-based apps in the sports and entertainment markets. The company generated nominal revenues from it legacy software and mobile applications in the third quarter, totaling USD 154,000 compared to marginal revenues in the same year-ago quarter. Operating expenses in the third quarter of 2012 were USD1.4 m, a significant improvement from USD8.1 m in the same year-ago quarter. The year-over-year improvement was primarily due to a significant decrease in stock-based compensation, as well as a USD2.3 m goodwill impairment charge recognized in Q3 2011. Net loss from continuing operations in the third quarter of 2012 totaled USD 1.1 m or USD(0.02) per share, as compared to a net loss of USD 8.1 m or USD(0.22) per share in the same year-ago quarter.
“During the third quarter of 2012, we greatly improved our operational platform and set course on our new business model designed to tap the tremendous opportunities for mobile apps in the sports and entertainment markets,” said Peter Henricsson, president and CEO of Bitzio. “In fact, we achieved several milestones in the quarter, including divesting non-core assets, strengthening our balance sheet and executive team, and forming major strategic partnerships.”
“Our new license agreement with The NFL Players demonstrated our ability to secure the media rights of large, existing fan bases, as well as establish a co-marketing and revenue-sharing partnership that requires no up-front fees. We have been working closely with The NFL Players to develop the first app, which is now set to launch next month. Given their marketing support, we are confident the trivia app will be well received and widely downloaded by the millions of NFL fans across the country.” (visit the app’s Facebook page: http://www.facebook.com/pigskins?filter=3)
“Our partnership with The NFL Players also serves an ideal showcase of Bitzio”s capabilities, and represents a springboard toward greater opportunities across a number of verticals, including other sports communities, entertainment properties and major consumer brands. We are now well positioned to capitalize on the tremendous opportunities in delivering apps to the fan-based communities of some of world”s largest sports clubs and entertainment brands. We plan to leverage our deep industry relationships and marketing partnerships to secure new licensing agreements during the coming months, and roll out a number of new and highly-engaging mobile apps.”
We continue to see Bitzio as a high risk – high reward on the globally growing app market, driven by rapid smartphone and tablet expansion. The current market cap of <11m does, in our opinion, not give any credit to the ongoing project with the NFL. If executed successfully, we believe this high profile app could be able to generate multi-million dollars in revenues. Also, we consider it highly likely that there will be many more apps under this co-operation and potentially other brands as well. Financing has been secured for the coming quarters and expected cash flow from the NFL app as of December/January should limit the risk for a new share issue near-term (taking aside potential acquisitions).
See our detailed interview with CEO Henricsson from September here: http://nordicinvestor.net/2012/09/23/bitzio-ceo-interview/