Blur bosses snap up shares

They may have bagged a bargain: shares in blur plunged four-fifths in a matter of months after the group altered its revenue-recognition policies and slashed its short-term sales guidance. But the shift in standards was precipitated by a flood of high-value, multiyear projects; blur "bit the bullet", says chief executive Philip Letts, by making a one-time, required adjustment to match its prolific growth.

It's hardly slowed down: the group has now helped over 50,000 businesses - including Amazon, Tesco and Argos - to buy and sell business services on its online platform, and 2,000 users join the exchange every month. Project bookings have soared; they more than doubled in value to over $49m (£31.6m) last year.

Mr Letts expects top-line growth of 50-100 per cent over the next five years. In the short term, he's confident that blur will turn a cash profit in the fourth quarter of this year and deliver positive cash flow in the first quarter of 2016. Those goals will be underpinned by the steady influx of ever-larger enterprise customers who are willing to pay more than their smaller peers, driving up margins, recurring revenues and the size of projects. The group will also keep a tight grip on headcount; it already uses an algorithm to help narrow down the best project pitches for customers, and plans to automate other aspects of its platform, such as project management and billing, over the next couple of years.

He also thinks blur is well protected from competition. First off, the problem of matching buyers and sellers of business services can't be entirely solved by technology - expertise and manpower are needed to recruit users and provide quality customer service - so it's an unappealing space for pure technology companies. It's also no simple task to create a marketplace and manage a 'microeconomy' of buyers, sellers and pricing pressures. And blur has gone global already, while an American competitor would likely focus on the US first, then move to English-speaking countries before expanding worldwide.

Broker N+1 Singer expects full-year sales to more than double this year to over $26m, giving a cash loss of $4.2m, swinging to a cash profit of $1m in 2016.