Altitude Group plc (AIM: ALT), the operator of a leading marketplace for personalised products, announces a trading update for the six-month period ending 30 June 2019 (the “Period”), during which time the acquisition of Advertising Industry Mastermind LLC (“AIM Smarter”) was completed. The Group expects to announce its Interim Results for this period on 30 September 2019.
AIM Smarter (formerly AI Mastermind) has integrated well under Group ownership and continues to grow adding a further 268 members since the acquisition bringing the total to 2,185 with aggregate revenues of $2.13bn (up from $1.9bn), increases of 14% and 12.1% respectively.
The Group expects to report revenue for the period of approximately £5.4m compared to £3.8m for the same period last year, an increase of 42 per cent. As a constituent of this the Group is pleased to announce significant success in increasing US revenue which has grown six-fold to $1.9 m1 for the quarter ended 30 June 2019 (2018: $0.3m). Despite this rapid growth in the very short post acquisition period, overall revenue has not accelerated as quickly as envisaged by the Company. This is primarily due to the scale and complexity of the transition to our new business model. This means that, despite growing at an historically record pace, Q3 and Q4 revenues will track below expectations and it will take longer to achieve the forecasted levels.
The growth in revenue in the US means that the US business is now self-funding and the Group retains current cash resources of approximately £3.0m and has no bank borrowings.
Whilst it is very early stage, and having only just received the Q2 data, this data proves that the business model is working, is scalable and is commercially attractive to both sides of the marketplace, evidenced by the significant growth in Q2 revenue compared to the same period in 2018.
Currently, AIM Smarter has 159 preferred supplier partners. Based on AIM data insights through the end of the period, these partners cover approximately 25% of the AIM Smarter marketplace. Utilizing this data, we have recently accepted 10 select supplier partners. We will continue to utilize our data insights to balance the AIM Smarter marketplace and accept applications for additional key suppliers to be considered for our program in 2020. By accepting select additional suppliers into the preferred program and deploying our marketing expertise to promote preferred suppliers to our members, we can provide a balanced and varied marketplace for our distributor members while driving product awareness and more orders to our supplier partners. Preferred supplier feedback is universally positive with key suppliers reporting average growth of 20% since joining the AIM Smarter program.
The value of enhanced packages is currently lower than estimated as we took time to implement systems and processes to allow scale and to recruit and train high quality sales staff. The demand for certain additional member service offerings is clear from feedback we have received from members and the provision of these in due course will be a key feature for distributor members looking at higher value enhanced service packages.
We have therefore invested time and resource to develop these higher value services, some of which were launched on a strictly controlled test basis in August. The Board believes that the addition of these premium enhanced member services provides the business with even greater potential than originally envisaged.
We are charting new territory for the largest distributor member group for promotional products in the US and believe the strategic execution of the growth plan is being handled well. Across the business our products and services are being well received throughout the whole supply chain and there is great enthusiasm by customers for our offering and strategy.
Discussions continue regarding the disposal of Ad Products and we will provide an update as appropriate.
Nichole Stella, Chief Executive Officer, commented:
“The acquisition is proving to be transformational, as underlined by the six-fold increase in Q2 US revenue. Whilst revenues have not advanced as quickly as we had hoped, the investments made into the supplier partner programs, data insights and new member services offering, allow us to look forward with confidence. We have the technology and have successfully built out the necessary team, infrastructure and service offerings to drive a sustainable and growing business far into the future. I remain confident that the potential for the business is greater than originally thought.”