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Barr Ellison Solicitors – commercial property
31 August, 2023 - 19:59 By Tony Quested

Aferian bounceback looks an even money bet at this juncture

Video streaming company Aferian has won business with Paddy Power but no-one is betting on how fast the Cambridge company can bounce back from a tricky last year.

The odds look to be slightly in Aferian’s favour; although the AIM-quoted stock is hovering clear of the 52-week low, it is way off the year high and the shareholders won’t be receiving a dividend on the back of a fire-fighting six months to May 31.

The performance is in line with a trading update delivered at the end of June, with CEO Donald McGarva insistent that the company is steadily bouncing back.

He said: “This has been a very busy and challenging half for Aferian. The restructuring of our cost base in 24i and Amino is generating significant annualised cost savings and providing a stronger platform on which to build and grow. 

“Demand in our 24i division has remained strong as we continue our strategic focus on growing software and services revenue in the fast-growing video streaming market.

“To align ourselves better with our customers' changings needs, our Amino business has been refocussed to concentrate on higher quality, higher margin streaming and device management opportunities and we have seen good initial customer engagement in the Pay TV and digital signage markets. 
“We have continued to progress our strategy to improve the quality of our earnings and enhance revenue visibility in the first half, against what is for everyone, a challenging macroeconomic environment. 

“Our higher margin software and services revenue was up 17 per cent year on year and we closed the period with exit run rate ARR up 19 per cent.
“Following the successful completion of our $4 million equity raise in July, we have the resources to focus on driving forward our advantage and growth in the video streaming market. 

“With 90% of revenue contracted for the full year and a well-developed pipeline of well qualified prospects, we remain confident in the full year outcome and Aferian's positioning to capitalise on long-term opportunities in the fast-growing video streaming market.”

Recurring revenue of $9.5m was up 16 per cent year-on-year, but the adjusted operating loss of $4.2m was almost double the H1 2022 figure due to a reduction in Amino device revenues.

Aferian says that management actions taken in February and June have reduced the group's annualised cost base, including capital expenditure, by a total of c$8m. Additional cost reduction actions are underway.
Net debt at May 31 was $12.9m compared to net cash of $4m at the end of November last year.

Sports betting brand Paddy Power is now using Amino digital signage devices throughout its shops in the UK and Ireland to improve the customer experience and reduce costs.

The board anticipates full year software and services revenue growth of 10-15 per cent in the current financial year.

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