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Phorm Corporation Limited: Interim Results for the Six Months Ended 30 June 2014

SINGAPORE -- (Marketwired) -- 08/22/14 -- Phorm Corporation Limited (AIM: PHRM)

Phorm Corporation Limited
("Phorm" or the "Company")
Interim Results for the six months ended 30 June 2014

Phorm (AIM: PHRM), a leading internet personalisation technology company, today announces its unaudited interim results for the six months ended 30 June 2014.

Highlights:

  • Gross revenue $0.5m (2013: $0.03m)

  • Operating Losses $22.8m (2013: $24.3m)

  • Losses after taxation $23.0m (2013: $24.8m)

  • Loss per share was $0.04 (2013: $0.18)

  • During the first 6 months of the year, average monthly cash burn excluding financing activity was $3.6m (2013: $2.6m)

For further information please contact:

Phorm Corporation Limited
Andy Croxson (analysts and investors)                   +44 (0) 203 397 6001

UK Investors
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Mirabaud Securities LLP (Broker)                        +44 20 7321 2508
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Jason Woollard
Peter Krens

Strand Hanson Limited (Nominated Adviser)               +44 20 7409 3494
James Harris
Matthew Chandler
James Dance

US Investors
----------------------------------------------------------------------------
Lippert/Heilshorn and Associates (Investor Relations)   +1 212 838 3777
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John Heilshorn

Chairman and Chief Executive Officer's Statement

I am pleased to present the group's unaudited interim results for the six month period to 30 June 2014. The unaudited consolidated results show that the group's financial loss narrowed in the six months ended 30 June 2014 compared to the equivalent period in 2013. This reflects the fact that Phorm is now entering the revenue growth phase of its business.

Phorm is now in the fortunate position of having set the foundations for achieving substantial growth. As set out in the Company's previous financial statements, revenue growth is a function of the interaction between deployed internet service provider ("ISP") users, partnerships which bring us inventory in the form of advertising requests, and advertising campaigns sold and successfully delivered. Accordingly, users, advertising requests and advertising campaigns are the fundamental drivers of revenue.

Users

The Company's technology is currently deployed with 10 ISPs worldwide, compared to only 1 ISP a year ago. We therefore have a substantially greater number of users than this point last year. In late June 2014, we announced that peak daily unique users had grown from approximately 0.8m to 37.8m and this figure is currently in excess of 40m.

Advertising requests
The access to inventory, which we currently enjoy, grew from 22.3bn requests in H2 2013 to 67.3bn by the end of H1 2014 and this growth trend is continuing as more publishers join Phorm's network.

Advertising campaigns

The number of advertising impressions served has similarly increased, from approximately 0.8bn impressions in H2 2013 to 2.6bn by the end of H1 2014. Our advertising campaign pipeline is continuing to strengthen and the total value of the opportunity pipeline (defined as specific campaign opportunities that are currently being discussed with advertising and agency partners) has grown to over $2m, which demonstrates advertiser confidence in our proposition and the performance of our system.

As we continue to bring these campaigns online, the imperative is to ensure that the performance, that we are able to secure for advertisers, matches or exceeds the groundbreaking performance levels which we achieved in Turkey as announced to the market in late September 2013. Achieving sufficient user numbers, to run multiple, large-scale commercial campaigns, remains an important goal in Turkey and it is expected that this situation will improve over time.

Our system is extremely powerful, yet complicated. In order to operate it successfully in China, which is substantially larger in scale than Turkey, we need to deliver rapidly on a number of fronts including: recruitment, sales management, advertising operations, performance management and data science.

In terms of recruitment, a key challenge in China is recruiting and training world class staff who can acquire the operational experience necessary in a very short period of time. This includes staff in advertising sales, advertising operations, technical ISP sales, network deployment and senior local management.

Sales staff need to be trained up to explain the benefits of a product which we believe is truly different from anything which the industry has so far encountered. They then need to go through the process of meeting with and educating clients on our proposition and taking them through to the order stage. We are seeing encouraging responses so far as manifested by the significant sales pipeline, which has developed in a short space of time.

Similarly, the range of options available for utilising the power of the system to reach the client's desired audience to an unprecedented degree also means that the appropriate level of staff in advertising operations needs to be recruited and trained accordingly. In addition, we have been focusing on developing a management model, which allows us to supervise operations from our operations centre and thereby upscale significantly, efficiently and effectively.

The scale at which we are now operating in China makes it critical that we measure performance in real time and optimise our performance across numerous campaigns, time zones and language barriers. We are now running both test campaigns with new customers and full commercial campaigns with advertisers, who have rebooked following positive results. As the test campaigns with new customers come to their conclusion, the extent to which we have managed their performance will dictate the propensity of advertisers to renew their custom and increase scale, making this function critical. Performance management is now a dominant focus within the group.

Looking ahead, we are developing a number of statistical techniques and software technologies, which will allow us to automate much of the performance management process. We expect some of these efforts to bear fruit within the coming months. We currently anticipate this to replace manual performance management as the most critical resource allocation within the business.

In summary, growth rates achieved so far have been very significant and we expect them to accelerate. Comparing H1 2013 to H1 2014, we have seen a 44 fold increase in peak daily unique users, a 42 fold increase in advertising requests and a 18 fold increase in revenues. Simply extrapolating those growth rates moving forward would lead us to highly respectable large scale revenues. However, we believe that, based upon what we currently have in hand and in our pipeline, rates of growth should in fact accelerate further, particularly as current test campaigns convert into full-scale commercial campaigns.

We have made good progress in the first half of 2014 and the group is now well positioned for the remainder of the year as we seek to build on our achievements to date.

Kent Ertugrul
Chairman & Chief Executive Officer
22 August 2014

Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/8116P_1-2014-8-22.pdf

For further information please contact:

Phorm Corporation Limited
Andy Croxson (analysts and investors)
+44 (0) 203 397 6001

UK Investors
Mirabaud Securities LLP (Broker)
+44 20 7321 2508
Jason Woollard
Peter Krens

Strand Hanson Limited (Nominated Adviser)
+44 20 7409 3494
James Harris
Matthew Chandler
James Dance

US Investors
Lippert/Heilshorn and Associates (Investor Relations)
+1 212 838 3777
John Heilshorn

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