Albert Technologies Ltd Final Results (9478T)

TIDMALB

RNS Number : 9478T

Albert Technologies Ltd

26 March 2019

Albert Technologies Ltd.

("Albert Technologies", the "Company" or the "Group")

Full Year Results for the year ended 31 December 2018

Albert Technologies (AIM: ALB.L) today announces its audited results for the year ended 31 December 2018. The Company has made continued progress in deploying Albert, the world's first and only fully autonomous Artificial Intelligence (AI) Marketing Platform, as a SaaS product for brands and agencies, underlining the potential of this ground-breaking proprietary technology. Supported by a growing number of enterprise clients and increased activity with top global agencies, the company expects continued growth in the coming year.

Financial Highlights:

   --      The Board is pleased to report 2018 financial results met its budget expectations 
   --      Revenues increased to $4.6m, an almost threefold increase on the $1.7m achieved in 2017 
   --      50% increase in average monthly revenue per customer, year on year 
   --      Adjusted EBITDA* loss of $12.2m (2017: $11.4m) 
   --      Operating loss of $12.7m (2017: $11.8m)

-- Net cash of $15.4m at year end (2017: $11.1m), following successful fundraise of $16.8m, net, in June 2018

* Non-IFRS and unaudited, excludes share based compensation expenses of $434K (Cost of revenues-7K, R&D-$303K, S&M-$51K and G&A-$73K) and $361K (Cost of revenues-$10K, R&D-$197K, S&M-$99K and G&A-55K) in 2018 and 2017, respectively, and depreciation expenses of $106K (R&D-$78K, S&M-$21K and G&A-$7K) and $80K (Cost of revenues-$1K, R&D-$66K, S&M-$5K and G&A-$8K) in 2018 and 2017, respectively.

Operational Highlights:

Significant progress with enterprise clients and agencies in the period:

   --      Fourfold increase in the number of enterprise clients 
   --      Progress in direct activity with top global agencies 
   --      Continued expansion of activity with existing enterprise clients

-- Headcount increased to 114, mainly in connection with account management functions, to support enterprise client activity

   --      Transition from a tech-centric focus to a broader sales and marketing culture to provide enterprise-grade service to our customers

Current Trading:

   --      Strong enterprise pipeline to support continued growth

-- Industry recognition for Albert - recent Forrester and Gartner reports include Albert as one of the top AI transformational solutions in the advertising industry

   --      Continued strict cash control and focus on key areas of investment

Or Shani, Chief Executive Officer, said:

"2018 was an important year of progress for Albert Technologies. During 2018 we began working with a significant number of new enterprise clients, each of which have meaningful growth potential. The performance data from early client campaigns has clearly demonstrated to our customers how Artificial Intelligence can drive significant improvement in results while also providing previously undiscovered insights, compared to manual execution.

Our progress in 2019 will be determined by our success in securing new enterprise clients and our strategy is geared towards achieving that aim. Pleasingly, we start 2019 with a dozen active enterprise clients and an additional dozen in the current pipeline, in various stages of discussion. Our experience to date reinforces our belief in our strategic goal of building towards a critical mass of active clients during 2019 and 2020.

In addition to progress with enterprise brands, we made significant steps forward on the agency front. Recent engagement with some of the top global agencies has successfully demonstrated how autonomous, cross channel marketing AI can create more efficient and productive operations and deliver increased returns on digital marketing spend for customers.

During the second half of 2018 we strengthened our market-facing presence by building out our customer support and success functions, in order to be able to better support the needs of our enterprise clients and also facilitate expansion. We have created dedicated account management and professional services teams to enable smooth onboarding processes and enterprise-grade services. With this team in place, we believe we have the right talent and resource to meet our key strategic goal of growing our enterprise footprint and the current pipeline reinforces our optimism.

As part of this transition we launched a new brand identity, emphasizing Albert's unparalleled impact on the complex digital landscape by processing, analysing and acting on audience and tactic data at scale, across omni-channels (paid search, social and programmatic).

With our current enterprise client base and pipeline of opportunities, coupled with our strong and focused team, the Board is confident about the future. By the very nature of a new emerging technology, it is difficult to accurately predict short term revenue outcomes, but Albert's proven effectiveness coupled with growing and tangible interest from large enterprises, give us growing confidence about the market opportunity for Albert and our Company's future prospects.

For further information, please contact:

 
 Albert Technologies Ltd 
                                                Tel: +972 3537 7137 
   Or Shani, Chief Executive Officer 
   Yoram Freund, Chief Financial Officer 
   https://albert.ai/ 
 Cantor Fitzgerald Europe (Nominated Adviser 
  and Broker) 
 
   Philip Davies Corporate Finance 
   William Goode 
 
   Caspar Shand-Kydd Equity sales 
   Arthur Gordon                                +44 (0)20 7894 7000

The Nisse Consultancy

Jason Nisse +44 (0)7769 688618

This announcement has been released by Yoram Freund, CFO, on behalf of the Company.

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 cross-channel artificial intelligence marketing platform. Albert is a cloud-based artificial intelligence platform that plugs into a digital marketer's existing tech stack and operates it. An intelligent collection of over 200 different skills, Albert is the self-learning digital marketing ally for marketers: a thinker, a doer, and a support system; automating, orchestrating and evolving campaigns. Always aware of the entire landscape, Albert analyzes the previously unanalyzable, taking purposeful action and flexibly optimizing against business goals. The result: better allocation of budget against channels, audiences and tactics in search, social and programmatic channels. Brands such as The Big Red Group 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 reduce operational costs.

About Albert

Albert is integrated with Google's search and programmatic channels, as well as Facebook, Instagram, YouTube and Bing, delivering access to 90% of biddable inventory that drives the market.

Unlike AI technology that makes recommendations but leaves taking action up to humans, Albert is the world's first autonomous AI for digital marketers. Albert takes action on behalf of marketers, making adjustments and improvements every moment of every day without delay. Albert enables true agile cross channel management: the typical approach of setting channel budgets up front based on past performance and optimizing towards channel-specific metrics as proxies for business outcomes is an inexact science. Albert manages budgets flexibly in response to market conditions and autonomously optimizes against the business goal brands set, resulting in better allocation of budget against channels, audiences, tactics - all within the guardrails specified.

For example, in search campaigns, Albert continuously adjusts bids on audiences / schedule / devices / ads according to real-time data while shifting budget according to performance / engagement to ensure ads get in front of the right customers - all while avoiding over-bidding. In paid social, Albert gets detailed, machine-level reporting on how interests perform and uses that to optimize audiences, ad sets and lookalikes. This is an approach only an autonomous AI can do. In programmatic, Albert leverages real-time engagement of display, cross-channel learning, and smart look-alike modeling. In each channel Albert expands cautiously, spending budget only after understanding what's working, without limiting campaign reach by just eliminating sources.

In addition, everything Albert does happens in clients' Google and Facebook accounts, so there is full transparency of cost and actions.

Albert is designed to learn, evolve, and improve performance over time, getting results for brands through a constant balancing act between spend vs. performance vs. creative fatigue vs. organic impact, retargeting vs. prospecting, branding vs. lower funnel activity and cross-channel budget allocations. These complex multivariate calculations deliver unprecedented impact for marketers.

Chief Executive's Report

I am pleased to report a period of significant progress for the Company. Revenues for 2018 amounted to $4.6m, representing an almost threefold increase over the prior period. Our current customer base carries significant growth potential with 12 diversified enterprise organisations currently contributing to our revenues, some of which are among the largest advertisers in the world.

Enterprise clients carry huge potential for scalable growth, albeit the sales process, onboarding and expansion of these accounts takes longer than for our previous roster of midsize and small businesses. This does make forecasting near term outcomes more difficult at this point in the Company's growth cycle but there is no doubt that our technology is highly regarded, as detailed below. Initial "proof of concept" activity with enterprise clients has already contributed to a 50% increase in our average monthly revenue per customer at year end, compared to last year. At the year end, monthly recurring revenues were US$0.45 million.

In line with our stated strategy, and as also referred to above, during 2018 we increased our investment in Sales and Marketing, mainly in Account Management infrastructure and this contributed in part to the operating loss in 2018 that increased to $12.7m (2017: loss $11.8m).

We started 2019 with an enterprise-ready, dedicated team which will enable us to meet the ever-increasing demands of working with large, global customers, to expand their activity with us and to gain additional enterprise clients throughout the year.

Market overview

During 2018 our market continued to evolve, resulting in increased interest and demand for AI technologies in the marketing space. According to the Salesforce '2019 State of Marketing Report', only 28% of marketers are completely satisfied with their ability to engage customers across channels at scale. Marketers' ability to engage dynamically across channels - or evolve from channel to channel based on customer actions - is nascent. When marketers deploy AI to get this right, the opportunity is enormous, as highlighted in a September 2018 report from the McKinsey Global Institute which estimates that AI has the potential to create $200bn-$300bn annual incremental value in marketing and budget allocation and customer acquisition/lead generation.

The two major analyst firms covering our sector, Gartner Inc., and Forrester Research, took notice of Albert in 2018. In October 2018, Albert was the only company of its size listed in Gartner Inc.'s 2018 "Magic Quadrant for Ad Tech" research report. In a Notable Mention, Gartner wrote, "Brands comfortable with a disruptive, AI--based autonomous system that leap--frogs conventional approaches to ad management should consider Albert for their next campaign. "

(Gartner, Inc., Magic Quadrant for Ad Tech, 2018, Andrew Frank, Lizzy Foo Kune, James Meyers, Eric Schmitt, October 11, 2018.)

Forrester Research made multiple mentions of Albert. First in an August 2018 report titled, "Leverage AI To Improve Marketing Efficiency" and then in a January 2019 report titled "How AI Is Transforming Advertising And What You Should Do About It." Last month, Forrester invited Albert to participate in an upcoming report, Now Tech: Omnichannel Media Management, Q2 2019, which will place Albert alongside many established players.

Operational review

During 2018 our Enterprise customer base grew significantly from 3 in the beginning of 2018 to 12 Global Fortune 2000 companies by the year end.

Notable client wins during the year include:

-- February 2018 - we announced initial activity with one of the top 5 global advertising agencies for a pilot project, which began in April 2018 and still rolls out;

-- March 2018 - we announced a pilot project with one of the world's biggest insurance companies. The activity with this insurance company grew materially throughout the year and is now spread over 6 territories in Asia-Pacific and expected to expand into additional territories in the coming months;

-- March 2018 - we announced an initial pilot project with one of Europe's leading telecommunications companies. The activity with this telecommunications company has continued consistently since then;

-- April 2018 - we announced a pilot project in Latin America with a Fortune 50 consumer goods corporation. In the past few months the activity with this consumer goods corporation expanded from a single territory to additional territories in Latin America and to additional brands;

-- July 2018 - we announced an agreement with one of the largest US retailing chains. Pilot activity with this large US retailing company started during the second half of 2018 and we are now in discussions for expansion of the activity;

-- July 2018 - we announced an agreement with one of the largest telecommunications companies in Australia (signed through our Australian partnership). Activity with this customer started in August 2018 and is overachieving past performance results of this customer since then;

-- November 2018 - we started initial activity with one of the largest American multinational food and beverage corporations. Following very promising early performance results, activity with this customer is expected to expand in the second half of 2019;

-- December 2018 - we started initial activity with a multinational telecommunications company, which is one of the largest telephone operating companies in the world, for one of its brands; and

-- January 2019 - we started an initial project with an additional top 5 advertising agency network in the world, for one of its customers, in order to evaluate our technology. Following successful results, we are now in discussions for expansion of this activity into additional brands.

Team

During the year, we added expertise to drive 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 2018 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.

During the year, 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.

Our total number of employees at year end was 114 employees (Dec 2017: 100), of which 68 are in R&D, 17 in Sales, Business Development and Marketing, 19 Account Management and Professional Services and 10 in G&A.

Summary and outlook

The past year marked an important period in our Company's evolution as we started to gain an increasing number of enterprise clients, enabling us to demonstrate the huge benefit and unique value proposition of our technology. At this stage in our market's maturity it is difficult to pinpoint exact predictions of the rate of revenue growth by the end of the current year, but the growth trend is clear. Following successful projects, there is increasing take-up of our solutions by brands (as evidenced by the increased spend per customer) and this is coupled with growing interest from agencies. Our pipeline is encouraging and we therefore expect continued growth in 2019.

The Board is focused on delivering shareholder value and is confident about the Company's continued prospects.

Financial review

Introduction

During 2018 the Company continued to make significant progress in growing its revenues. In line with our stated strategy, we have continued to invest in our infrastructure throughout the year, mainly in the account management functions to enable our current and future growth. In May 2018 the Company raised $16.8m (net) from new and existing shareholders.

Revenues

Revenues for 2018 amounted to $4.6m, an increase of 2.7x compared to revenues of $1.7m in 2017. Monthly recurring revenues increased 1.5x and reached $0.45m in December 2018, compared to $0.3m in December 2017.

The increase in revenues was achieved due to a shift in our customer base, while focusing on large-scale enterprise clients. Average monthly revenue per customer increased 1.5x during the period December 2017 to December 2018.

Gross Profit

Gross margin remained 84%, as in the previous year, resulting in gross profit of $3.9m in 2018, compared to $1.4m in 2017.

Operating Loss

Operating loss for 2018 totalled $12.7m, compared to $11.8m in 2017.

Excluding share-based compensation expenses of $0.4m and depreciation expenses of $0.1m, adjusted operating loss totalled $12.2m, compared to $11.4m loss in 2017 (excluding share-based compensation expenses of $0.3m and depreciation expenses of $0.1m).

The increase in our operating loss is attributed mainly to the increase in our R&D and S&M expenses, mainly due to increase in our average head-count throughout 2018 compared to the previous year.

Adjusted* Financial Review

 
 
                                                 2018       2017      Diff 
                                                $'000      $'000     $'000 
 Revenues                                       4,609      1,733     2,876 
 Cost of revenues*                              (724)      (284)     (440) 
 Gross profit                                   3,885      1,449     2,436 
                                            ---------  ---------  -------- 
 % of revenues                                    84%        84% 
 
 Research and Development expenses*           (7,290)    (5,560)   (1,730) 
 Selling and Marketing expenses*              (6,602)    (5,360)   (1,242) 
 General and Administrative 
  expenses*                                   (2,195)    (1,910)     (285) 
 
 Total operating expenses                    (16,087)   (12,830)   (3,257) 
                                            ---------  ---------  -------- 
 
 Operating loss*                             (12,202)   (11,381)     (821) 
                                            ---------  ---------  --------

Cash flows

Cash, cash equivalents and short-term bank deposits at 31 December 2018 were $15.4m (31 December 2017: $11.1m). 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.

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

 
                                                              31 December 
                                                           ------------------ 
                                                     Note    2018      2017 
                                                     ----  --------  -------- 
 
 
CURRENT ASSETS: 
 
   Cash and cash equivalents                               $ 15,410  $ 3,955 
   Short-term bank deposits                                       -     7,105 
   Restricted cash                                              155       101 
   Trade receivables, net and contract assets         3       1,804     2,175 
   Other accounts receivable and prepaid expenses               582       747 
                                                           --------  -------- 
 
   Total current assets                                      17,951    14,083 
                                                           --------  -------- 
 
NON-CURRENT ASSETS: 
 
 Property and equipment, net                          4         261       254 
 
   Total non-current assets                                     261       254 
                                                           --------  -------- 
 
   Total assets                                            $ 18,212  $ 14,337 
                                                           ========  ========