The Internet Video Engine - RhythmOnemarketing.corporate.rhythmone.com/docs/EarningsPre... ·...

Fiscal Year 2012 – Results and Discussion SURANGA CHANDRATILLAKE, CEO

S. BRIAN MUKHERJEE, COO

JONATHAN SPIRA, CFO

London, UK - May 18, 2012

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The Internet Video Engine

safeharbor statement During this presentation we may make various remarks about the company’s future expectations, plans

and prospects, which constitute forward-looking statements for purposes of the safe harbor provisions

under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from

those indicated by these forward-looking statements as a result of various important factors, including

those discussed in blinkx’s most recent prospectus, which is on file with the Financial Services Authority.

Any forward-looking statements represent our views only as of today and should not be relied upon as

representing our views as of any subsequent date. While we may elect to update forward-looking

statements at some point in the future, we specifically disclaim any obligation to do so, even if our

estimates change and, therefore, you should not rely on these forward-looking statements as

representing our views as of any date subsequent to today.

During this call we may be referring to non-IFRS financial measures. These non-IFRS measures are not

prepared in accordance with generally accepted accounting principles. A reconciliation of the non-IFRS

financial measures to the most directly comparable IFRS measures will be made available in the Investor

Relations section of our website, www.blinkx.com, under the heading Investors.

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• Revenue grew 73% to $114M, breaking the $100M ceiling for the first time

• Four sequential halves of operating profitability

• Cash from operations grows to $13.5M*, representing strong conversion cycle

• Cash balance at the end of the period was $38.4M, with no debt

• Completed Burst and PVMG, acquisition, expanding to 275 employees in 10 offices

• Strengthened executive management team with the appointments of S. Brian

Mukherjee (COO) and Frank Pao (EVP Business Affairs & General Counsel)

• Video search technology continues to lead the market with 2 new patents granted

• Closed landmark content and technology partnerships, including AOL, Samsung, Sony

• 5-Year CAGR of 104% v. 20% for the Online Video Advertising sector

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FY2012 Highlights

*Before one-time costs

Corporate Snapshot

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History Founded in 2004

IPO 2007

Headquarters Cambridge, UK

San Francisco, CA

Locations Boston, Cambridge, Chicago, London, Los Angeles, Montreal, New York, San Francisco,

Seattle, Tempe

Employees 275 Total : 178 Sales & Marketing, 67 Research & Development, 30 General & Administrative

Technology blinkx Video Search Engine and AdHoc Advertising Platform

Financials

(FY2012)

$114.4M – Revenue

$12.8M – Adjusted EBITDA

$11.3M – Operating Cash Flow

Partnerships 40+ Advertising Agencies, 1000+ Brands

800+ Content Partners, 2500+ Publishers

1. Market Overview – Video in a Hyper-Connected World

2. Technology Overview – Content Fragmentation and Video Search

3. blinkx Business Model – Video Everywhere

4. Financial Performance – Five Year and FY2012 Results

5. Conclusions and Q&A

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Agenda

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Video in a Hyper-Connected World

US & WORLDWIDE HH

BROADBAND PENETRATION 3

% P

en

etr

ati

on

US

WW

By 2015, one million minutes of

video – the equivalent of 674

days – will traverse the Internet

every second 1

Internet video is now 40% of

consumer internet traffic, and will

reach 62% by the end of 2015 1

In 2010, there were 780 million

online video viewers worldwide,

in 2016 there will be 1.3 billion 2

Peta

byte

s

INTERNET VIDEO TRAFFIC WW 1

1. Global IP Traffic Forecast 2010-2015, Cisco Systems

2. Online Video Viewers Worldwide, 2010 & 2016, eMarketer

3. US Fixed BB HH and Subs, 2010-2016, eMarketer

Fixed BB HH Penetration WW, 2010-2016, eMarketer

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Video Enhances the Text Web

Proliferation of Connected Devices

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US SMARTPHONE/TABLET PENETRATION 2

Usa

ge i

n M

illio

ns

By 2015, nearly 3 billion people

will be using the Internet —

more than 40% of the world’s

projected population. On

average, there will be more than

two Internet connections for

each person on Earth, driven by

the proliferation of web-enabled

mobile devices 1

140 117 98 49

AVG. TIME (MINS) SPENT WITH

MEDIA (WW) 2011 3

1. Global IP Traffic Forecast 2010-2015, Cisco Systems

2. 2012 Trends: A Virtuous Circle of Technology and Content Adoption, eMarketer

3. Avg Time Spent per Day with Select Media According to Mobile Internet Users Worldwide, eMarketer

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+ INTERNET

Targeting, tracking,

measurability

TV

Emotive, story-

telling, brand

building

US ONLINE VIDEO AD SPENDING ($BN) 1

Advertisers Following Audience

1 US Online Video Ad Spending, 2011-2016, eMarketer

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ONLINE VIDEO AD SPEND COMPARED

TO TOTAL AD SPEND ($BN) 1

ADVERTISING COST PER THOUSAND

IMPRESSIONS BY MEDIUM, 2009/2010 2

1 US Ad Spending and Growth, 2011-2016, eMarketer

US Online Video Ad Spending, 2011-2016, eMarketer

2 Morgan Stanley: Internet Trends, Morgan Stanley

Advertisers Following Audience

Denotes

average CPM

Online Video Ad Spend

Total Ad Spend






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Agenda

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Text search engines miss the VIDEO in Video Search

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BLINKX WATCHES the video, too

blinkx CORE Concept Recognition Engine based

on a patented combination of

Shannon’s Information Theory and

Bayesian Inference

blinkx understands the meaning contained in video

TEXTUAL

Advanced textual

analysis, page and site-

level human design

context analysis and visual

spidering with support for

over 200 video and audio

metadata file formats

SPEECH

RECOGNITION

Continuous, speaker-

independent, large

vocabulary speech

recognition. Neural

Network and Hidden

Markov Model-based

acoustic language modeling

VISUAL

ANALYSIS

Visual Analysis: Real-time

scene decomposition, On-

screen Character and

Facial Recognition, visual

and metadata Closed-

Caption extraction

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Video Search AdHoc

the blinkx ecosystem

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Capturing an Unfair Share of the Market

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AOL acquires

Truveo

blinkx

powers

video

search for

Ask

Google Video

shuts down blinkx

powers

video

search for

AOL Pixsy

shuts

down

blinkx powers

video search

for Lycos

US VIDEO AD SPENDING VS BLINKX

REVENUE

blinkx Revenue ($M)

US Video Ad Spending ($BN)

104% CAGR

20% CAGR






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Agenda

Business Model

Audience

Monetisation

Advertisers

Internet Video Engine

Content

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KPIs and Opportunity AdHoc Conventional Tech & Svcs Opportunity

Description Direct sold and

platform premium

campaigns, including

video, rich media,

display and search

Non-premium, run of

network campaigns,

primarily display and

rich media

Technology and

services that support

current revenue

streams

Access to interactions

blinkx.com, blinkx

Syndicates, Burst,

PVMG, Mobile and

Connected TV API

partners

Revenue ($)

Revenue (%)

$91M

80%

$16M

14%

$7M

6%

$0

eCPM ($) $4.65

Premium: $6 - $70

Platform: $2 - $8

$0.66

High: $2.50

Low: $0.36

N/A $0

Interactions (B)

Volume (%)

19.6

4.2%

24.5

5.2%

N/A 421.6

90.5%

Trends • Device

proliferation

• Digital spend

growth

• eCPM Seasonality

• Trading Platforms

• Data driven buys

• High volume, low

value interactions

• High strategic value

• Insight into actual

spend patterns

• Leverage and drive

content partnerships

• Massive opportunity

• Direct and exchange

traded campaigns

• Potential

monetization

Acquisition Update – Burst Media

Description Online media and technology company

Locations Boston, Chicago, London; New York, Los

Angeles and San Francisco

Employees

103 - 45 Sales and Marketing, 35

Services and Support, 14 Products and

Technology, 9 G&A

Technology

Ad serving, ad management, publisher

management and real time bidding

enabled supply side platform

Products

Display, rich media, video, mobile and

social media ad formats and publisher

advertising inventory management

systems.

Relationships

1,400+ Publishers

500+ Advertisers and Agencies

155M Monthly Unique Visitors

400+ Billion Ad Impression Opportunity

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Acquisition Update – PVMG, Inc.

Description

Digital marketing holding company with an

PPC Ad Network and Full Service Digital

Marketing Agency

Locations New York, NY and Tempe, AZ

Employees

60 - 25 Services and Support, 15 Sales &

Marketing, 15 Product & Technology, 5

SG&A

Technology Leading pay-per-click advertising and

optimization platform

Products Search and Pay per Click, Rich Media,

Display Ads SEO, SEM, Mobile, Social

Relationships

500+ Advertisers

350+ Publishers

300+ Billion Ad Interactions/Year

Description

PPC Ad Network, Digital Marketing Agency

Locations New York, NY and Tempe, AZ

Employees

60 Total: 25 Services and Support, 15 Sales &

Marketing, 15 Product & Technology, 5

SG&A

Technology,

Expertise

Leading pay-per-click advertising and

optimization platform and Award winning

Search and Social Marketing Expertise

Products Text, Rich Media and Display Ads, SEO, SEM,

Mobile, Social, E-mail, Strategy and Analytics

Relationships

500+ Advertisers

350+ Publishers

300+ Billion Ad Impression Opportunity






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Agenda

blinkx Confidential

5 Yr P&L Summary

Year 1

10 mo ended

31 Mar 2008

Year 2

12 mo ended

31 Mar 2009

Year 3

12 mo ended

31 Mar 2010

Year 4

12 mo ended

31 Mar 2011

Year 5

12 mo ended

31 Mar 2012

Revenue $6,545 $13,933 $33,664 $66,102 $114,397

GP ($000) $4,903 $9,831 $21,927 $43,156 $60,493

OPEX * $11,744 $20,288 $30,881 $35,931 $50,047

EBIT * ($6,841) ($10,457) ($8,954) $8,181 $10,446

EBITDA * ($6,578) ($10,149) ($5,821) $9,236 $12,818

OPERATING

CASH FLOW * ($6,418) ($9,028) ($4,949) $9,167 $13,549

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Revenues ($M) EBITDA* ($M)

Operating Cash Flow* ($M) EPS* (cents)

Financial Trends


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FY12

FY11 Income Statement ($M) Operating Expenses ($M)

Comparative Financial Data

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FY 2012, ($M)

MARKETING

$50 (1%)

SEVERANCE

& STOCK COMP

$590 (13%)

STAFFING

$1,940 (41%)

PROFESSIONALS

$1,755 (37%)

FACILITIES

$380 (8%)

Transaction and Restructuring Costs

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Balance Sheet

As of March 31, 2012 ($M)






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Agenda

• Fifth anniversary of the IPO:

– Online video advertising delivered on its promise

– Unique technology provided blinkx a head start in this accelerating sector

– Execution of key partnerships enabled blinkx to garner an unfair share of the

growing market

• Looking Forward:

– Online video advertising is set to continue growth

– Proliferation of devices and potential increase in the switch to digital spend may

provide further upside

• With content, advertisers, technology and now reach, blinkx is well

positioned to continue to garner an unfair share of this growing market

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Conclusion

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