Reply To: New Chairman

Nick Hargrave

Here’s a summary of thoughts I shared with the new Chairman in the new hope of improved IR
1) Show they are on top of the financials and announce H1 results by end Jul. BIDS costs are essentially headcount and reconciling current levels of revenue shouldn’t take the 4-month window they currently work to
2) Then organise an Investor Meet Company presentation to clarify the Azerion contract and business model + provide high level KPIs

2a. The original Azerion contract announcement was confusing, referring to access to $30m of ad spend, which didn’t necessarily mean revenue to BIDS. This was later clarified in results some months later as guaranteed $30m revenue to BIDS. It is now understood that the $30m is POST fees to Azerion, where previously there was an expectation that the deal was below their stated target of 30%+ gross margins due to an extra layer of fees. It would be powerful to simply and clearly state they have contracted, $30m guaranteed revenues at 30%+ margins from 1 deal alone

2b. Set out some high level KPIs. We entirely respect that they can’t disclose publishers where NDAs are in place, even though everyone is pretty sure who it is. However, setting out that they have over 100 games signed up, with a total of X DAUs, Y impressions per DAU and Z fill rates with a £[] CPM allows everyone to fully appreciate just how exponential their growth could be. Our model shows that when they’re over 190 games with DAUs >150,000, just 2 sessions of 4 impressions per DAU with 25% impressions not available to BIDS, a fill rate of just 15% and CPM of £8 gives revenues of c.£85m in a couple of years. I would argue, given the value of impressions vs. other formats, the CPM should be higher as the format matures

2c. Per 2b, set out clearly how revenues and fees are calculated to arrive at gross profit i.e. show the calculation above and some scenarios – it isn’t competitively sensitive to explain how the market operates. MANO does this very well in their presentations and they make their model easily understandable despite their accounting being more complicated

2d. Provide at least revenue guidance for this year. H1 is in the bag and they have stated they have greater visibility with the Azerion deal which has now started to deliver. The investor base is predominantly retail and we don’t all have £5,000 a year to access Stifel notes to know the ‘market expectations’ are just under £9m revs this year. Come out from behind ‘market expectations’ and state the guidance – yes this makes management accountable, but that’s what they are paid for. On that point, the 2 founders should not be on £300k p.a. until the business is profitable and no more funds are needed – their re-priced options should be incentive enough after all the dilution shareholders have suffered. They could announce they are doing the right thing on that point

3) Deal with the funding elephant in the room. If they meet expectations this year, our model suggests they may not need further funding. However, given their annual report states that they do, we must assume they do, as the market clearly has done. However, given the history, the market is also expecting another dilutive fundraising without any IR occurring beforehand. Having raised financing in the past for smaller, listed AIM companies and speaking to a former colleague who is a debt financing advisor currently executing similar deals, I believe there is more than enough appetite from private debt funds / family offices for a non-dilutive mezz financing on the back of the guaranteed revenues, publisher deals and current prospects. If they raise, say £5m, in mezz at even 20% rates, they can easily repay that in 2 years with the projected growth. How much would shareholders prefer this to another dilutive raise! While they can’t just announce what they’re doing or if they even need to raise, some acknowledgement that they are exploring all these options instead of an equity raise would provide comfort