A Financial Reporting Council enquiry, a painful change in revenue recognition, a major shift in strategy and mounting frustration among investors have hammered shares in blur (BLUR) over the past couple of years. Investors sent them even lower following the latest results from the group, which operates a digital marketplace for business services. Lower project sales drove turnover down 43 per cent, but stricter cost control meant the adjusted cash loss slightly narrowed to $8.9m (£6.1m).
Management has shifted its focus from connecting small buyers and sellers to helping larger enterprises manage their indirect spending. The upshot was the volume of enterprise projects pitched and kicked off rose more than 15 per cent in the first quarter of 2016, compared with the fourth quarter of 2015. The strategy promises to boost revenue visibility, but the downside has been longer sales cycles that have weighed on short-term growth.
The group has also become more thrifty. Underlying cash burn fell 58 per cent between the third and fourth quarters of 2015 and shrunk another third in the first quarter of 2016 to about $1m. Management has also rolled out premium services such as buyer plans in a bid to bolster margins.
Broker N+1 Singer expects an adjusted pre-tax loss of $4.9m, giving a loss per share of 9.3¢, narrowing to losses of $4.0m and 7.5¢ in 2017 (2015: losses of $9.7m and 19.7¢).
