Daily Research News Online no. 21122 - Phorm Looks to Superpowers to Clear Skyscraper of Debt

Phorm Looks to Superpowers to Clear Skyscraper of Debt

July 6 2015

Ad targeting firm Phorm in its accounts for 2014 has once again reported a colossal operating loss - this time $37.9m (2013: $35.1m) - and tiny revenues of $351k (2013: $280k). The company has closed its operation in Turkey to focus on China, the US - and Russia where some revenue is now arriving.

Kent Ertugrul Equity placings in the year brought in a gross of £18.9m, and Phorm says it has reduced its costs: overhead run-rate is down from a high of c.£2.9m per month to around £1.5m at present. Nevertheless debt continues to pile up for the company, whose accounts show an accumulated deficit of $302,264,942.

The Turkish closure comes less than three years after CEO Kent Ertugrul (pictured) said operations in the country were performing sufficiently well to at last make the group 'profitable during the next financial year'. However the continuing if frustratingly slow-growth operation in China has apparently given Phorm a taste for frying bigger fish.

In an unaudited operational and financial update this week, the firm says its average daily unique user numbers in Russia have grown from 12.5m in Q3 2014 to 35.5m in Q2 2015, demonstrating 'the scale of the opportunity available to the Company' - and that it 'now has publishing deals in place with some of the largest players in the market'. Unaudited revenue derived from Russia has risen from RUB15.7m (c.$US 0.3m) in Q1 to RUB29.0m (c.$0.5) in Q2 2015.

In the US, commercial operations commenced on 21st April this year, and the company is serving both paid and free test campaigns - eight in total. The 'pipeline of potential opportunities' in the US currently stands at over $0.5m and the company 'expects this to grow rapidly'.

After 18 months in China, Phorm says it has shifted its strategy to a partnership model, and will make 'further announcements as and when appropriate'. Most of the company's daily opted-in users in 2014 were in China (109m of a total peaking at 148m).

It's now seven lean years since the collapse of Phorm's relationship with UK carrier BT, and the company has tried its luck in Korea, Romania, Brazil and Turkey. Seven good ones to come?

Web site: www.phorm.com .