TIDMALB
RNS Number : 6104B
Albert Technologies Ltd
24 September 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE
REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
24 September 2018
Albert Technologies Ltd
("Albert Technologies", the "Company" or the "Group")
Interim results for the six months ended 30 June 2018
Albert Technologies (AIM: ALB.L) today announces its results for
the six months ended 30 June 2018. The Company is pleased to
announce continued progress in deploying Albert, its Artificial
Intelligence marketing platform, as a SaaS product for brands and
agencies, underlining the potential of this ground-breaking
proprietary technology.
Financial Highlights:
-- Revenues increased 4x year on year to $1.9m (H1 2017: $0.5m)
-- 2.5x increase in average monthly revenue per customer, year on year
-- Adjusted EBITDA* loss of $6.3m (H1 2017: $5.5m)
-- Operating loss of $6.7m (H1 2017: $5.7m)
-- Net cash of $21.8m at 30 June 2018 (30 June 2017: $16.9m),
following successful fundraise of $16.8m, net, in June 2018
* Non-IFRS and unaudited, excludes share based compensation
expenses of $268K (R&D-$205K, S&M-$23K and G&A-$40K)
and $185K (R&D-$92K, S&M-$94K and G&A-$(1)K) in H1 2018
and H1 2017, respectively, depreciation expenses of $48K
(R&D-$33K, S&M-$11K and G&A-$4K) and $5K (R&D-$3K
and G&A-$2K) in H1 2018 and H1 2017, respectively.
Operational Highlights:
In line with the strategy set out during the fundraising in May
2018:
-- Continued efforts to increase engagement with higher yielding Enterprise clients
-- Headcount increased to 106 with new recruits on sales, marketing and account management
-- Signed a pilot agreement with one of the top 5 global advertising agencies
-- Secured a 12-month contract with one of the top 25
independent advertising agencies in North America, which accounted
for 8% of total revenue in the period
-- Started a pilot project with one of the world's biggest insurance companies
-- Commenced a pilot project with a Fortune 50 consumer goods
corporation in a key Latin American territory
-- Started a pilot project with one of the top five retailers in Latin America
-- Developing partnership and distribution relationships to drive sales
Current trading:
-- Signed an agreement with one of the largest
telecommunications companies in Australia (through our Australian
partnership) on 1st August
-- Started a pilot with one of the largest US retail chains on 1(st) September
-- Expanded insurance company activity into fifth APAC country in mid-September
-- Extended our engagement with our Fortune 50 consumer goods
customer to more LATAM territories
-- Recruited high calibre former agency executive to lead
account management (joined August)
-- Focus on expanding existing clients in line with the Board's 'land and expand' strategy
-- Making the transition from a tech-centric focus to a broader
sales and marketing culture to build revenue and customer
engagement
-- Recently began rolling out new contracts and payment terms
(payment from Day 1, previously 30 days)
Or Shani, Chief Executive Officer of Albert Technologies,
said:
"During the first half of 2018 we signed pilot contracts with
several global brands and agencies and started the second half of
2018 with a good pipeline of new business activity which we expect
to flow through into the next 12 months as we progress through the
essential onboarding and pilot phases. The summer months marked an
important period as we commenced key pilots with larger scale
clients and through the efforts of the Albert team, we are now
better positioned to successfully commence deploying Albert with
enterprise clients. The cycle of sales and onboarding enterprise
clients is a lengthy one but Albert is now deployed in more than 10
Global Fortune 2000 companies, with meaningful growth
potential.
Albert is a disruptive AI technology, potentially turning the
established digital marketing economic model on its head by
introducing a radically different cost structure in marketing
departments as well as enhanced performance from campaigns.
Therefore, there is a significant investment on our part needed to
market the opportunity and successfully compete against the legacy
operators. With the proceeds of the successful fundraising in May
2018, we have invested in the recruitment of talent from the
advertising agency world into strategic client services roles
within our sales and marketing function and will continue to add
resource in this critical area in order to drive market
penetration.
With the work recently commenced with Enterprise clients and a
pipeline of opportunities the Board are confident about the market
opportunity and our Company's prospects for this year and
beyond."
For further information, please contact:
Albert Technologies Ltd
Or Shani, Chief Executive Officer Tel: +972 3537 7137
Yoram Freund, Chief Financial Officer
https://albert.ai/
Cantor Fitzgerald Europe
Marc Milmo
Catherine Leftley +44 (0)20 7894 7000
Chief Executive's Report
I am pleased to report a period of progress for the Company.
Revenue for the first half was $1.9m, representing a 4x increase
over the prior period. In addition, the company successfully
completed a $16.8m net fundraise in May 2018 to fund future
expansion.
A core component of the Board's strategy is to focus resource on
securing and servicing larger enterprise clients. This market is
characterized by longer sales cycles, and longer ramp-up periods,
but the potential for scalable growth with such customers is
significant. As a result of the efforts to increase our engagement
with larger clients, coupled with the expansion of activity with
some of our existing customers, average monthly revenue per
customer grew 2.5x over the same period last year. At the period
end, monthly recurring revenues were US$0.36 million.
In line with our stated strategy, we continued to increase
investment in Sales and Marketing, Account Management and R&D
activities and as a result, underlying operating losses increased
to $6.7m (2017: loss $5.7m).
During the period we made good progress with our partnerships
strategy. Our local partners in Australia/New Zealand and Latin
America both secured important new business clients for Albert and
we expect these partners to play an increasing role in marketing
and distributing our AI technology globally.
Market overview
The AI Marketing space is a nascent market. As of 18 months ago,
the leading technology research firms were not covering the space
as it did not exist. The technology adoption is in its early
stages, and the market requires significant education on the value
that AI and autonomous tools can bring to businesses. Yet the AI
Marketing space is acknowledged to represent immense growth
opportunities. A recent MarketsandMarkets report in which IBM, SAP,
Google, Microsoft and Albert were profiled predicts the AI
Marketing space will grow to $40B by 2025.
Operational review
In the first half of 2018, we have seen early traction from
brands and agencies that recognize the potential for Albert's AI
technology to drive improved marketing performance, reduce
operating costs and deliver increased returns on digital marketing
spend. Our Enterprise customer base has grown significantly from
just two in June 2017, to 12 Global Fortune 2000 companies now
either using our technology or going through the onboarding
process. Our major Enterprise wins included the following:
- In January 2018 we started working with one of the world's biggest insurance companies.
- In April 2018 we signed two pilot agreements through the LATAM
distribution partnership we initiated at the beginning of 2018. The
first was with a Fortune 50 international consumer goods
corporation for one of its leading brands in a key LATAM territory,
and the second was with one of the top 5 retailers in Latin
America.
Since the period end, we have already successfully expanded two
of these relationships into additional territories and brands,
consistent with our 'land and expand' strategy.
In addition, we continued to invest in strengthening our
engagement with strategic partnerships and with large advertising
agencies. Wins in the first half of the year in the agency space
included the following:
- In February 2018, we reached agreement with one of the top 5
global advertising agencies for a pilot project. The pilot involves
several brands in different geographies.
- In March 2018, we signed a 12-month contract with one of the
top 25 independent advertising agencies in North America, bearing a
minimum of $0.3m annual SaaS fees. This agency has been working
successfully with Albert since mid-2017 and provides full marketing
services to North American and global brands.
Since the period end, we have added expertise as we make the
important transition from a tech-centric culture to a sales and
marketing mindset. As part of our efforts to penetrate the
Enterprise market and better understand the Agency model, we
appointed Rob Norman as a Non-Executive Director at the recent AGM.
Rob has worked for companies within the WPP media agency network
for over three decades, most recently as Global Chief Digital
Officer of GroupM, and brings significant knowledge, expertise and
industry relationships to the Board. In August we also made two key
appointments to the US team. Mark Kirschner, formerly The Trade
Desk, eBay Enterprise and Rakuten, has been appointed CMO and
brings over 25 years of experience in marketing technology,
e-commerce and product management with technology and media
companies. In addition, we widened our Enterprise suite by adding
Jasmine Presson, SVP, Strategic Client Services, formerly Managing
Partner, Strategic Group Account Lead at MediaCom.
On top of our efforts to scale our activity with the large
Enterprises, we continue with our efforts to increase our SMB
customer base.
Our total number of employees at the end of June 2018 was 106
employees (Dec 2017: 100), of which 65 are in R&D (including
onboarding), 17 in Sales, Business Development and Marketing, 15
Account Management and Professional Services and 9 in G&A.
Summary and outlook
The first half of 2018 marked an important period for the
Company as we increased our customer engagement with the Company's
Albert platform. We have worked hard to build out our pipeline of
opportunities as we executed our growth strategy of moving from
small-to-medium sized business customers to larger Enterprise
customers and this has seen a meaningful increase in the number of
Enterprise customers now working with the Company. In addition,
during the period we entered into our first partnership agreements
with advertising agencies and increased activity through our
international distribution channels, which included an extension of
our strategic partnership in Australia and New Zealand with an
increase in the minimum annual fee value to be paid by the partner
over the 12-month period to June 2019.
We are invested for long-term growth and we continue to develop
Albert's customer base with leading global brands and global
advertising agencies. Our recent wins have created meaningful
growth potential with recent Enterprise customers beginning to
contribute in the last month and an additional four currently going
through the onboarding process. In addition, the business pipeline
is encouraging and we therefore expect to announce further
strategic contract wins over the coming months. The Board is
focused on building shareholder value. With the commencement of
work with larger Enterprise customers in the second half and the
Board's belief that further strategic contracts will be signed over
the coming months, the Board are confident about the Company's
prospects for this year and are optimistic about the overall
long-term growth prospects of the Company.
Financial review
Introduction
During the first half of 2018 the Company made significant
progress in growing SaaS revenues. In line with our stated
strategy, we have continued to invest in R&D and sales and
marketing initiatives to enable our current and future growth,
resulting in increased operating expenses. In May 2018 the Company
raised $16.8m (net) from new and existing shareholders.
Revenues
Revenues amounted to $1.9m for the first half of 2018, an
increase of 4x compared to revenues of $0.5m in the first half of
2017. Monthly recurring revenues increased 3x and reached $0.36m in
June 2018, compared to $0.12m in June 2017.
We ended the first half of 2018 with a deferred revenues balance
of $0.2m. These deferred revenues relate to our Australian
partnership agreement and are expected to be recognized in the
second half of the year.
The increase in revenues was achieved by increasing the client
list, while focusing on large-scale clients,
Gross Profit
Gross profit for the first half of 2018 totalled to $1.7m
(representing 86% gross margin), compared to $0.4m (representing
85% gross margin) in the first half of 2017.
Operating Loss
Operating loss for the first half of 2018 totalled $6.7m,
compared to $5.7m in the first half of 2017.
Excluding share-based compensation expenses of $0.3m and
depreciation expenses of $0.1m, adjusted operating loss totalled
$6.3m, compared to $5.5m loss in the first half of 2017 (excluding
share-based compensation expenses of $0.2m).
The increase in our operating loss is attributed mainly to the
increase in our R&D and S&M expenses due to the recruitment
of additional employees and the resources invested in our sales and
marketing initiatives.
Adjusted* Financial Review
Year ended
Six months ended 30 June 31 December
2018 2017 2017
$'000 $'000 Diff $'000
Revenues 1,927 451 1,476 1,733
Cost of revenues* (264) (66) (198) (284)
gross profit 1,663 385 1,278 1,449
-------- -------- -------- ------------
% of revenues 86% 85% 84%
Research and Development
expenses* (3,694) (2,408) (1,286) (5,560)
Selling and Marketing
expenses* (3,296) (2,587) (709) (5,360)
General and Administrative
expenses* (1,014) (904) (110) (1,910)
Total operating expenses (8,004) (5,899) (2,105) (12,830)
-------- -------- -------- ------------
Operating profit (loss)* (6,341) (5,514) (827) (11,381)
-------- -------- -------- ------------
* Non-IFRS and unaudited, excludes share based compensation
expenses of $268K (R&D-$205K, S&M-$23K and G&A-$40K),
$185K (R&D-$92K, S&M-$94K and G&A-$(1)K) and $361K
(R&D-$197K, S&M-$109K and G&A-$55K) for the six months
ended 30 June 2018 and 30 June 2017 and for the year 2017,
respectively, depreciation expenses of $48K (R&D-$33K,
S&M-$11K and G&A-$4K), $5K (R&D-$3K, G&A-$2K) and
$80K (COGS-$1K, R&D-$66K, S&M-$5K and G&A-$8K) for the
six months ended 30 June 2018 and 30 June 2017 and for the year
2017, respectively.
Cash flows
Cash, cash equivalents and short-term bank deposits at 30 June
2018 were $21.8m (30 June 2017: $16.9m). The change in our cash
position is attributed mainly to $16.8m, net, fundraise completed
in June 2018, offset by funds used for our operating activities. We
continue to maintain close cash control.
About Albert Technologies Ltd.
Founded in 2010, Albert Technologies Ltd. (AIM: ALB.L), a global
software company, is the creator of Albert - the first-ever fully
autonomous artificial intelligence marketing platform, driving
digital marketing campaigns from start to finish for some of the
world's leading brands. Albert's mission is to liberate businesses
from the complexities of digital marketing - not just by
replicating their existing efforts, but by executing them at a pace
and scale not previously possible. Albert serves as a highly
intelligent and sophisticated member of brands' marketing teams,
wading through massive amounts of data, converting this data into
insights, and autonomously acting on these insights, across
channels, devices and formats, in real time. This eliminates the
manual and time-consuming tasks that currently limit the
effectiveness and results of modern digital advertising and
marketing. Brands such as The Big Red Group, Gallery Furniture and
Dole Asia, and global advertising agencies, credit Albert with
significantly increased sales, an accelerated path to revenue, the
ability to make more informed investment decisions, and reduced
operational costs.
The Company's core focus is its SaaS Sales Channel, which offers
its artificial intelligence-based software, Albert, to brands using
a SaaS model. Albert Technologies Ltd. listed in 2015 to accelerate
both investment into and commercialisation of Albert.
The Company and its management received 18 awards in 2017,
including being named as Gartner Cool Vendors in Advertising, an
International Stevie Award for "Best New Product of the Year," the
"Market Disruptor" Award from the Masters of Marketing, and being
named "AI Application of the Year" by the Global Annual Achievement
Awards for AI. Albert CEO, Or Shani, was recognized as Innovator of
the Year (bronze) in the International Stevie Awards and was chosen
for the DMN 40 Under 40 List.
About Albert
Albert replaces the human campaign manager in managing brands'
online advertising campaigns. A brand provides Albert with access
to its Google, Facebook, Bing, Twitter and other online marketing
channels. When a brand manager wishes to launch a new online
advertising campaign, all that is needed is to simply log into
Albert and deploy that new campaign, which is usually no more than
a 15-minute task.
Albert autonomously creates hundreds of micro campaigns across
all relevant online marketing channels (Google, Facebook, Bing,
Twitter, Instagram, Display, Email, etc.), then reviews these
hundreds of micro campaigns every few minutes and optimises each of
them as needed. Albert works in very much the same way that a human
campaign manager would, making correlation and cost/benefit-based
decisions.
Where an experienced campaign manager could possibly make circa
100 decisions per day, Albert can make thousands per minute.
Albert's ability to launch hundreds of micro strategies and review
and amend them all every few minutes typically brings about a
significant increase in ROI. In addition, all learnings from the
decisions made remain in-house, and the brand has full and instant
transparency and can easily scale up marketing activities through
larger budgets or applications to new brands and new geographies,
without hiring new expert campaign managers.
FORWARD LOOKING STATEMENT
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". By their nature,
forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances. Actual results may, and
often do, differ materially from any forward-looking statements.
Any forward-looking statements in this announcement reflect Albert
Technologies' view with respect to future events as at the date of
this announcement. Save as required by law or by the AIM Rules for
Companies, Albert Technologies undertakes no obligation to publicly
revise any forward-looking statements in this announcement
following any change in its expectations or to reflect events or
circumstances after the date of this announcement.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands
30 June 31 December
2018 2017
--------- -----------
Unaudited Audited
--------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 21,849 $ 3,955
Short-term bank deposits - 7,105
Restricted cash 156 101
Trade receivables, net 1,418 2,175
Other accounts receivable and prepaid expenses 744 747
--------- -----------
Total current assets 24,167 14,083
--------- -----------
NON-CURRENT ASSETS:
Property and equipment, net 228 254
--------- -----------
Total non-current assets 228 254
--------- -----------
Total assets $ 24,395 $ 14,337
========= ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands
30 June 31 December
2018 2017
--------- ------------
Unaudited Audited
--------- ------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables $ 664 $ 1,618
Other accounts payable and accrued expenses 2,298 2,013
---------- -----------
Total current liabilities 2,962 3,631
---------- -----------
NON-CURRENT LIABILITIES:
Employee benefit liabilities, net 135 118
---------- -----------
EQUITY:
Share capital -
Ordinary shares 265 162
Share premium 56,467 39,559
Capital reserve (193) (193)
Accumulated deficit (35,241) (28,940)
---------- -----------
Total equity 21,298 10,588
---------- -----------
Total liabilities and equity $ 24,395 $ 14,337
========== ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
21 September 2018
-------------------- ---------------- -----------------------
Date of approval of Or Shani Yoram Freund
the
financial statements CEO and Director Chief Financial Officer
and Director
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE
LOSS
U.S. dollars in thousands (except per share data)
Six months ended Year ended
30 June 31 December
----------------------
2018 2017 2017
---------- ---------- ------------
Unaudited Audited
---------------------- ------------
Revenues $ 1,927 $ 451 $ 1,733
Cost of revenues (264) (66) (285)
---------- ---------- ------------
Gross profit 1,663 385 1,448
---------- ---------- ------------
Operating expenses:
Research and development (3,932) (2,503) (5,823)
Sales and marketing (3,330) (2,681) (5,474)
General and administrative (1,058) (905) (1,973)
Total operating expenses (8,320) (6,089) (13,270)
---------- ---------- ------------
Operating loss (6,657) (5,704) (11,822)
---------- ---------- ------------
Financial income 163 92 217
Financial expenses (58) (9) (17)
Loss before taxes on income (6,552) (5,621) (11,622)
Taxes on income (72) (63) (184)
---------- ---------- ------------
Net loss from continuing operations $ (6,624) $ (5,684) $ (11,806)
Discontinued operations:
Net profit (loss) after tax from discontinued
operations $ 323 $ (779) $ (1,214)
---------- ---------- ------------
Net loss and total comprehensive loss $ (6,301) $ (6,463) $ (13,020)
========== ========== ============
Net loss per share attributable to
the Company's shareholders (in $)
Basic and diluted loss per Ordinary
share $ (0.10) $ (0.10) $ (0.21)
========== ========== ============
Basic and diluted loss per Ordinary
share for continuing operations $ (0.10) $ (0.09) $ (0.19)
========== ========== ============
Weighted average number of Ordinary
shares used in computing basic and
diluted net loss per share 64,042,186 61,744,259 61,985,174
========== ========== ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Retained
earnings
Capital (accumulated
Share capital Share premium reserve deficit) Total equity
------------- ------------- -------- ------------- ------------
Balance as of 1 January
2017 (audited) $ 160 $ 39,146 $ (193) $ (15,920) $ 23,193
Exercise of options 2 - - - 2
Cost of share-based
payment, net - 413 - - 413
Total comprehensive
loss - - - (13,020) (13,020)
Balance as of 31 December
2017 162 39,559 (193) (28,940) 10,588
Exercise of options 2 56 - - 58
Cost of share-based
payment, net - 135 - - 135
Issuance of shares,
net of issuance expenses 101 16,717 - - 16,818
Total comprehensive
loss - - - (6,301) (6,301)
Balance as of 30 June
2018 (unaudited) $ 265 $ 56,467 $ (193) $ (35,241) $ 21,298
============= ============= ======== ============= ============
Retained
earnings
Capital (accumulated
Share capital Share premium reserve deficit) Total equity
------------- ------------- -------- ------------- ------------
Balance as of 1 January
2017 (audited) $ 160 $ 39,146 $ (193) $ (15,920) $ 23,193
Exercise of options 1 - - - 1
Cost of share-based
payment - 221 - - 221
Total comprehensive
loss - - - (6,463) (6,463)
------------- ------------- -------- ------------- ------------
Balance as of 30 June
2017 (unaudited) $ 161 $ 39,367 $ (193) $ (22,383) $ 16,952
============= ============= ======== ============= ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended Year ended
30 June 31 December
--------------------
2018 2017 2017
--------- --------- ------------
Unaudited Audited
-------------------- ------------
Cash flows from operating activities:
Net loss $ (6,301) $ (6,463) $ (13,020)
--------- --------- ------------
Adjustments to reconcile net income
to net cash provided by (used in) operating
activities:
Adjustments to the profit or loss items:
Share-based payment 135 221 413
Tax expense 72 63 184
Depreciation 59 47 107
Exchange rate differences in respect
of cash and cash equivalents 19 (53) 17
--------- --------- ------------
285 278 721
--------- --------- ------------
Changes in asset and liability items:
Accrued interest on restricted cash * ) - (5) -
Decrease in trade receivables 757 928 1,064
Decrease (increase) in other accounts
receivable and prepaid expenses 6 47 (386)
Decrease in trade payables (954) (483) (688)
Increase in other accounts payable
and accrued expenses 213 230 1,211
Accrued interest on short-term bank
deposits (54) (43) (105)
Increase in employee benefit liabilities,
net 17 3 6
--------- --------- ------------
(15) 677 1,102
--------- --------- ------------
Cash paid and received during the year
for:
Taxes (3) (191) (363)
--------- --------- ------------
Net cash used in operating activities $ (6,034) $ (5,699) $ (11,560)
--------- --------- ------------
*) Represents an amount lower than $ 1.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended Year ended
30 June 31 December
------------------
2018 2017 2017
-------- -------- ------------
Unaudited Audited
------------------ ------------
Cash flows from investing activities:
Purchase of property and equipment $ (33) $ (55) $ (133)
Withdrawal of (investment in) short-term
bank deposits 7,159 (9,000) (7,000)
Withdrawal of (investment in) restricted
cash (55) - 86
-------- -------- ------------
Net cash provided by (used in) investing
activities 7,071 (9,055) (7,047)
-------- -------- ------------
Cash flows from financing activities:
Exercise of options 58 1 2
Proceeds from issuance of shares, net 16,818 - -
-------- -------- ------------
Net cash provided by financing activities 16,876 1 2
-------- -------- ------------
Exchange rate differences in respect
of cash and cash equivalents (19) 53 (17)
-------- -------- ------------
Increase (decrease) in cash and cash
equivalents 17,894 (14,700) (18,622)
Cash and cash equivalents at the beginning
of the period 3,955 22,577 22,577
-------- -------- ------------
Cash and cash equivalents at the end
of the period $ 21,849 $ 7,877 $ 3,955
======== ======== ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
NOTE 1:- GENERAL
a. Company description:
Albert Technologies Ltd. (formerly: Adgorithms Ltd.) ("the
Company") was incorporated under the laws of Israel and commenced
operations in September 2010. The Company's registered address is
20 Lincoln Street, Tel-Aviv, Israel.
The Company offers Artificial Intelligence-based software
("Albert") to brands and advertising agencies using a SaaS
("Software as a Service") model. The Company develops and deploys
algorithmic solutions to provide marketers with a self-driving
solution for cross-channel campaign execution, testing,
optimization, analysis, and insights.
The Company's shares are admitted for trading on AIM, commencing
June 2015, under the symbol "ALB" (formerly "ADGO").
In May 2018 the Company completed an additional placing of
36,756,757 Ordinary shares at a price of GBP0.37per share ($0.49),
with new and existing institutional shareholders for total
consideration of GBP12,645 ($16,818), net of issuance expenses of
$1,099.
b. In March 2014, the Company established a wholly-owned
subsidiary in the United States, Albert Technologies Inc.
(formerly: Adgorithms Inc.), which is engaged in the distribution
of the Company's products and services in the United States, as
well as provides the Company with advisory and management
services.
In August 2016, the Company established a wholly-owned
subsidiary in Israel, AA Digital Media (All Aspect) Ltd. which
commenced operating in November 2016 and ceased its operations in
December 2017. All Aspect was engaged in trading media in various
strategies with an array of participants in the online advertising
value chain ("In- direct activity" or "In-direct business").
On 5 December 2017, the Company publicly announced the decision
of its Board of Directors to cease the In-direct business by the
end of 2017. The In-direct activity is presented in the statement
of operations and other comprehensive loss as "discontinued
operations", including comparative data. For further information
please refer to Note 5.
In May 2017, the Company established a wholly-owned subsidiary
in Brazil, Adgorithms Brasil Internet Ltda, which is engaged in the
distribution of the Company's products and services in Brazil.
(Albert Technologies Inc., AA Digital Media and Adgorithms Brasil
Internet Ltda, collectively, "the Subsidiaries").
c. The interim consolidated financial statements were approved
for issuance by the Board of Directors on 21 September 2018.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Company's annual
consolidated financial statements for the year ended 31 December
2017, except for the adoption of new standards effective as of 1
January 2018. The Company has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
a. Unaudited interim financial information:
The accompanying unaudited interim consolidated financial
statements have been prepared in a condensed format in accordance
with International Financial Reporting Standards as adopted by the
European Union ("IFRS as adopted by the EU") for interim financial
information. Accordingly, they do not include all the information
and footnotes required by IFRS as adopted by the EU for complete
financial statements, and therefore, they should be read in
conjunction with the annual consolidated financial statements as of
31 December 2017. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.
Operating results for the six-month period ended 30 June 2018
are not necessarily indicative of the results that may be expected
for the year ending 31 December 2018.
b. New standards, interpretations and amendments adopted:
IFRS 15, "Revenue from Contracts with Customers":
IFRS 15 replaces IAS 18, Revenue, and IAS 11, Construction
contracts and establishes a new five-step model that applies to
revenue arising from contracts with customers:
Step 1: Identify the contract with a customer, including
reference to contract combination and accounting for contract
modifications.
Step 2: Identify the separate performance obligations in the contract
Step 3: Determine the transaction price, including reference to
variable consideration, financing components that are significant
to the contract, non-cash consideration and any consideration
payable to the customer.
Step 4: Allocate the transaction price to the separate
performance obligations on a relative stand-alone selling price
basis using observable information, if it is available, or using
estimates and assessments.
Step 5: Recognize revenue when the entity satisfies a
performance obligation over time or at a point in time.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Under IFRS 15, revenue is recognized to reflect the transfer of
promised goods and services to customers for amounts that reflect
the consideration to which an entity expects to be entitled in
exchange for those goods and services.
The Company adopted the standard by applying the modified
retrospective method. Per the Company management analysis, the new
standard had no effect on uncompleted contracts as of 1 January
2018, results and therefore no cumulative adjustment was necessary
to be made to the opening balance of retained earnings as of that
date.
The Company derives its revenues from campaign management SaaS
platform and until the end of 2017 the Company also derived part of
its revenues from sales through bids for advertising spaces on
advertising exchanges ("In-direct").
The effect of adopting IFRS 15 going forward is, as follows:
1. Sale of services:
The Company's contracts with customers for the sale of its
services generally include one performance obligation. The Group
has concluded that revenue from sale of services should be
recognized over the course of the period in which the services are
provided to the customer. Therefore, the adoption of IFRS 15 did
not have an impact on the timing of revenue recognition.
2. Variable consideration:
Certain of the Company's contracts define thresholds upon the
basis of which the customers are being charged. Prior to the
adoption of IFRS 15, the Company recognized revenue from its SaaS
platform measured at the fair value of the consideration received
or receivable, net of discounts. If revenue could not be reliably
measured, the Company deferred revenue recognition until the
uncertainty was resolved. Under IFRS 15, those thresholds give rise
to variable consideration, as the consideration received from the
customer may change based on the threshold applied. The variable
consideration is estimated at contract inception and constrained
until the associated uncertainty is subsequently resolved. The
Company uses the expected value method to estimate the
consideration that will be received because this method best
predicts the amount of variable consideration to which the Company
will be entitled. The Company applies the requirements in IFRS 15
on constraining estimates of variable consideration to determine
the amount of variable consideration that can be included in the
transaction price. Although there is no impact in the financial
statements as of 30 June 2018, the described above might affect the
Company revenue recognition moving forward.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
IFRS 9, "Financial Instruments":
IFRS 9 Financial Instruments replaces IAS 39 Financial
Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018, bringing together all three
aspects of the accounting for financial instruments: classification
and measurement; impairment; and hedge accounting.
The adoption of IFRS 9 did not have a material impact on the
Company's consolidated financial statements.
c. Disclosure of new standards in the period prior to their adoption:
IFRS 16, "Leases":
In January 2016, the IASB issued IFRS 16, "Leases" ("the new
Standard"). According to the new Standard, a lease is a contract,
or part of a contract, that conveys the right to use an asset for a
period of time in exchange for consideration.
According to the new Standard:
Lessees are required to recognize an asset and a corresponding
liability in the statement of financial position in respect of all
leases (except in certain cases) similar to the accounting
treatment of finance leases according to the existing IAS 17,
"Leases".
Lessees are required to initially recognize a lease liability
for the obligation to make lease payments and a corresponding
right-of-use asset. Lessees will also recognize interest and
depreciation expenses separately.
Variable lease payments that are not dependent on changes in the
Consumer Price Index ("CPI") or interest rates, but are based on
performance or use (such as a percentage of revenues) are
recognized as an expense by the lessees as incurred and recognized
as income by the lessors as earned.
In the event of change in variable lease payments that are
CPI-linked, lessees are required to remeasure the lease liability
and the effect of the remeasurement is an adjustment to the
carrying amount of the right-of-use asset.
The new Standard includes two exceptions according to which
lessees are permitted to elect to apply a method similar to the
current accounting treatment for operating leases. These exceptions
are leases for which the underlying asset is of low value and
leases with a term of up to one year.
The accounting treatment by lessors remains substantially
unchanged, namely classification of a lease as a finance lease or
an operating lease.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The new Standard is effective for annual periods beginning on or
after 1 January 2019. Earlier application is permitted provided
that IFRS 15, "Revenue from Contracts with Customers", is applied
concurrently.
For leases existing at the date of transition, the new Standard
permits lessees to use either a full retrospective approach or a
modified retrospective approach, with certain transition relief
whereby restatement of comparative data is not required.
The Company is evaluating the possible effects of the new
Standard. The effect of this standard is expected to be
immaterial.
NOTE 3:- CONTINGENCIES
From time to time, the Company is party to various legal
proceedings incidental to its business. As of 30 June 2018, the
Company accrued an immaterial amount to cover probable losses from
legal proceedings and threatened litigation.
On 6 September 2016, a statement of claim was filed with the
Magistrate Court of Tel-Aviv, Israel (the "Court") against the
Company, Albert's CEO and founder, Mr. Or Shani, and the Company's
then CFO, Mr. Ron Stern (the "Defendants") by Mr. Tal Saar (the
"Plaintiff"), a former service provider of the Company. The
statement claims, among other things, that the Defendants are
liable for certain fees due to such service provider and demanding
to receive information with respect to payments made to Mr. Stern
by the Company (the "Claim"). A statement of defense and a motion
to dismiss the Claim were filed by the Defendants with the Court on
20 November 2016 and 30 December 2016, respectively. The plaintiff
claims he is entitled to a payment of NIS 600 thousand
(approximately $ 165, based on the exchange rate as of 30 June
2018). During 2017 the Defendants filed a response to the
Plaintiff' statement and the Plaintiff filed an amended statement
of claim. Pre-trial hearing was held on 3 July 2018. An evidentiary
hearing is set for 18 March 2019.
No provision in respect of the Claim was recorded in the
financial statements as of 30 June 2018, as the Company's current
position is that all allegations are groundless and it is unlikely
that any allegations brought against the Company, Mr. Shani and Mr.
Stern will be accepted by the Court.
NOTE 4:- EQUITY
Share-based payments:
In October 2013, the Board of Directors of the Company adopted
the Company's 2013 Share Option Plan ("Plan"). The Plan provides
for the grant of options to purchase Ordinary shares of the Company
to employees, officers, directors, consultants and advisors of the
Company.
The share-based payment transactions that the Company granted to
its employees are described below.
Option issued to employees:
Options granted under the Plan expire 10 years from the vesting
commencing date. The options generally vest over three years (1/3
at each year).
The following table lists the number of share options, the
weighted average exercise prices of share options and movement in
options during the period:
Six months ended Year ended 31 December
30 June 2018 2017
---------------------- ------------------------
Unaudited Audited
---------------------- ------------------------
Weighted Weighted
average average
Number exercise Number exercise
of options Price of options Price
----------- --------- ------------- ---------
Outstanding at beginning
of year 4,965,837 $ 0.370 5,395,912 $ 0.489
Granted - - 1,620,253 0.318
Exercised (339,481) 0.168 (665,437) 0.003
Forfeited (222,958) 0.209 (1,384,891) 0.949
----------- --------- ------------- ---------
Outstanding at end of
period 4,403,398 $ 0.428 4,965,837 $ 0.370
=========== ========= ============= =========
Exercisable at end of
period 2,370,825 $ 0.558 1,634,385 $ 0.539
=========== ========= ============= =========
NOTE 4:- EQUITY (Cont.)
Option issued to non-employees:
The following table lists the number of share options, the
weighted average exercise prices of share options and movement in
options during the period:
Six months ended Year ended
30 June 2018 31 December 2017
---------------------- ----------------------
Unaudited Audited
---------------------- ----------------------
Weighted Weighted
average average
Number exercise Number exercise
of options Price of options Price
----------- --------- ----------- ---------
Outstanding at beginning
of year 665,479 $ 0.003 506,975 $ 0.003
Granted - - 158,504 -
Exercised (158,504) 0.003 - -
Outstanding at end
of period 506,975 $ 0.003 665,479 $ 0.003
=========== ========= =========== =========
Exercisable at end
of period 506,975 $ 0.003 480,557 $ 0.003
=========== ========= =========== =========
The cost of share based payments recognized in profit or loss
for services received from employees and consultants is shown in
the following table:
Six months ended Year ended
30 June 31 December
------------------
2018 2017 2017
-------- -------- ------------
Unaudited Audited
------------------ ------------
Research and development,
net $ 205 $ 92 $ 197
Selling and marketing 23 94 109
General and administrative 40 (1) 55
Discontinued operations (133) 36 52
-------- -------- ------------
$ 135 $ 221 $ 413
======== ======== ============
NOTE 5:- DISCONTINUED OPERATIONS
On 5 December 2017, the Company publicly announced the decision
of its Board of Directors to cease the In-direct business by the
end of 2017. Beginning 31 December 2017, the In-direct business was
classified as discontinued operations. The results of the In-direct
business for the period ended in 30 June 2018 and 2017 and in the
year ended 31 December 2017 are presented below:
Six months ended Year ended
30 June 31 December
------------------
(*) 2018 2017 2017
-------- -------- ------------
Unaudited Audited
------------------ ------------
Revenues $ 248 $ 3,942 $ 6,682
Expenses (99) (4,690) (7,823)
Share-based payment income (expenses) 133 (36) (54)
-------- -------- ------------
Operating income (loss) 282 (784) (1,195)
Financial income (expenses) 41 5 (19)
-------- -------- ------------
Net profit (loss) from discontinued
operations $ 323 $ (779) $ (1,214)
======== ======== ============
Basic and diluted profit (loss)
per Ordinary share for discontinued
operations (**) $ 0.01 $ (0.01) $ (0.02)
(*) Relates to unrecognized revenues which were collected during
the six months ended 30 June 2018, as well as to expenses in
connection with the ceasing of operations.
(**) See the consolidated statements of operations and other
comprehensive loss for the weighted average number of Ordinary
shares used in the computation.
NOTE 6:- REVENUES FROM CONTRACTS WITH CUSTOMERS
a. The Company operates in a single operating segment. Revenues
from continuing operations, based on the location of customers, are
as follows:
Six months ended Year ended
30 June 31 December
------------------
2018 2017 2017
---------- ------ ------------
Unaudited Audited
------------------ ------------
America (principally USA) $ 1,064 $ 245 $ 1,285
Europe, Middle-East and
Africa 208 168 234
Asia-Pacific (principally
Australia) 655 38 214
$ 1,927 $ 451 $ 1,733
========== ====== ============
NOTE 6:- REVENUES FROM CONTRACTS WITH CUSTOMERS (Cont.)
b. In the six-month period ended 30 June 2018, the Company's
largest customer represented 26% of the Company's revenues. No
other single customer represented more than 10% of the Company's
revenues.
In the six-month period ended 30 June 2017, the Company's
largest customer represented 24% of the Company's revenues. No
other single customer represented more than 10% of the Company's
revenues.
In the year ended 31 December 2017, the Company's two largest
customers represented 20% and 12% of the Company's revenues. No
other single customer represented more than 10% of the Company's
revenues.
- - - - - - - - - - - - - - - -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LBMATMBITBIP
(END) Dow Jones Newswires
September 24, 2018 02:00 ET (06:00 GMT)
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