Full year headline figures look impressive for video search software provider Blinkx but the underlying picture has some flaws as the cost of growth takes its toll and the company waits for video advertising to make its mark.
The company confirmed on the prelim results it revealed last month (Blinkx: reining back to a canter), delivering revenue for the year ending March 31 2012, of $114.4m. Although this represented a 73% increase, it was fuelled by the acquisitions of Burst and Prime Visibility Group and as we noted at the time of the prelims, was down on market expectations of $121.5m. Profits dropped substantially from the $7.6m of the previous year to $3.9m in fiscal 2012 and the acquisitions led to a decline in gross margins from 65% to 53%.
The company pointed to benefits from the growth in smartphones and tablet devices (it operates on these devices), and more partnerships with content providers, distribution agreements with the likes of Sony, and new brand advertising clients that range from Disney to IBM. The list of partner agreements plus the financial results demonstrate demand for its offerings on the consumer front in particular but raise the question of how efficiently it can turn video search interest into profit in this early stage market.