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appscatter group plc

appScatter Group plc Acquisition translating into revenue increases

appScatter Group plc (LON:APPS), the intelligent app management platform, has today provided its unaudited interim results for the six months ended 30 June 2018.

Financial highlights

· Stable revenue achieved notwithstanding management’s focus on the acquisition of Priori Data with an increase of 3% to £904,000 (H1 2017: £875,000)

· Gross profit of £364,000 compared with a loss of £30,000 for H1 2017

· £2.6 million in cash at 30 June 2018 (H1 2017: £222,940)

· £3.1 million raised for Priori Data acquisition and working capital at 70p per share (a 20.7% premium at that time)

Operational highlights

· Launch of appScatter Market Place to offer new products

· GDPR App Security Scanning service launched

· ISO 27001 Certification achieved

· appScatter Trademark approved

· New partnerships include IronSource, Airpush and AppInChina

Operational KPIs

· 54% increase in daily data collection on total unique app URLs from 842 million to 1.3 billion

· Unique apps tracked daily increased by 53% from 7.2 million to 11 million

· Publishers tracked each day increased by 88% from 1.7 million to 3.2 million

· 900,000 apps daily across 3.5 billion devices following the new data gained from the Priori acquisition

Post-period highlights

· Completion of acquisition of Priori Data for a consideration of £13.5 million

· £2.6 million raised at 70p per share, a premium to the IPO price

· New advisory board members identified

· Strong pipeline of prospective enterprise customers

Philip Marcella, appScatter Group plc CEO, commented:

“In the first half of 2018 we were focused on acquiring Priori Data and this subsequently completed shortly after the period end. This is a transformational acquisition which has enabled us to combine the appScatter platform with the significant amounts of data held by Priori Data. appScatter now holds an impressive suite of data now which is resonating well with clients and has begun to translate into revenue increases in the second half of the year.

Operationally, we have seen significant increases across our core operational driven data KPIs and with a strong pipeline of prospective enterprise customers, we remain confident of the opportunities ahead of us and look forward to completing the integration of Priori Data and the continued growth of appScatter and its client base in the second half of 2018.”

appScatter is a scalable B2B mobile app management platform with its own data intelligence stack. We track and collect daily data from 1.3 billion unique app URLs across 252 territories. In addition, we have daily audience data on 3.5 billion mobile devices covering 900,000 apps.

The Groups app management platforms has 3 core focus areas:

1. Mobile Asset Management: The ability to manage the distribution of apps across multiple app stores with full reporting on downloads, sales, in-app-purchasing and advertising revenues. Users can access other tools including App Store Optimisation and keyword optimisation.

2. Data Intelligence: Quantitative and qualitative insights on the performance of more than 4 million apps. Including Daily Active Users (DAU), Monthly Active Users (MAU), Average Revenue per Daily Active User (ARPDAU), retention rates, downloads, store revenue, top chart ranks, keyword ranks. We track top performers, top growers, keywords, ranks, version updates, and niche markets.

3. Security & Regulatory Compliance: Identifies if EU General Data Protection Regulation regulations have been implemented and are being adhered to. Clients can check for data breaches and identify where apps could allow unauthorised access to private data.

Chairman’s statement
Introduction

I am pleased to present this interim report covering the six months ended 30 June 2018.

The most significant achievement to date in 2018 was completed just after the end of the period under review. We acquired Priori Data GmbH, a Berlin based data company, for a consideration of £13.5 million – the majority of which was satisfied through the issue of new ordinary shares in the Company at an effective issue price of 70 pence per ordinary share.

The completion of the Priori Data acquisition inevitably consumed much of the attention of the management team which lead to the timing of the roll out of the appScatter platform to the app developer community being delayed. Nevertheless, revenues for the first half of 2018 were stable at £904,000 compared with £874,000 in the corresponding period in 2017.

More importantly the combination of the appScatter platform with the data and customer contacts of Priori Data has already led to the enlarged Group winning significant new contracts with Enterprise customers which demonstrates the importance of management having focused on this during the period under review.

The Company is now focused on winning more Enterprise customers, where individual annual contract values can exceed £1 million.

Further details of how our business model is adapting to the dynamics of the market place are set out in the CEO report.

Corporate governance

As required by recent amendments to the AIM Rules for Companies, which come into force on 28 September 2018, the Company has conducted a thorough review of its corporate governance practices and procedures. The board fully endorses the importance of good governance and has chosen to apply the QCA Corporate Governance Code (the “QCA Code”), published by the Quoted Companies Alliance, which the board believes to be the most appropriate recognised governance code for a company of appScatter’s size and with its shares admitted to trading on AIM. We have today posted the details of how we comply with accepted best practice under the QCA Code on the Company’s website.

As appScatter evolves, we will continue to look to ensure that the board is sufficiently equipped and strengthened to further support the journey of the Group through its next stage of growth and subsequent future international expansion. It is currently intended that the board will also, in future, be supported by an advisory board composed of individuals with expert technology and business experience that have been identified as being able to aid appScatter in our journey. Further announcements will be made, as appropriate, in this regard.

Current trading and outlook

The acquisition of Priori Data is transformational and allows the Group to address the opportunities in the market by combining the appScatter platform with the data and customer base of Priori Data.

The Group is already winning new customers on the basis of the compelling offering of the combined Group, the financial benefits of which are not reflected in these interim results but will come through over the coming months and next financial year in a steadily growing revenue base. That said, we have already seen the benefit of the impact of the Priori Data acquisition with revenues for July and August 2018, the first two months as a combined entity, materially above the same period last year. We therefore expect our full year revenue figure to exceed that of 2017.

Competition in our chosen markets has to date been limited. This will not always be the case and we remain focussed on developing the Group’s first mover advantage by both continued product development and acquisitions.

In particular we intend to make further acquisitions where the board believes the target can add real value to the appScatter offering and to the medium-term valuation of the business.

We thank our appScatter staff and advisers for their continued hard work, welcome our new colleagues from Priori Data to the appScatter Group and continue to appreciate the ongoing support of appScatter shareholders.

We continue to see a favourable market place for the products and services the Group already has and those it plans to develop. We therefore look forward to the future with confidence.

Clive Carver

Non-executive Chairman

27 September 2018

Chief Executive’s report
Introduction

I am pleased to report on the continued development of the appScatter Group as we mark the one-year anniversary of admission to AIM. It is our mission to be the number one ecosystem for businesses with a stake in the mobile app industry. We enable our clients to uncover insights and actionable intelligence to make informed decisions when managing their mobile assets.

In the period under review and subsequently, we have added to our product range. We now have two platforms, over the next twelve months we intend to merge these together creating one new unique app management and data intelligence stack.

New products launched during the period include:

– app management tools such as keyword intelligence and app-store optimisation

– an increased selection of ad-networks, which now cover over 45% of the market

– new data products covering market and app intelligence and our new audience usage data which covers 3.5 billion devices daily

– IP from the Priori Data acquisition has made it possible to release a new suite of security and threat analysis tools, including GDPR app compliance scanning

Although the number of businesses and individuals that have registered their interest in using our platforms has risen by 350% from 10,000 last year, we are now concentrating on growing our active user base which is currently over 4,800. Many of our paying customers use our platforms on a campaign basis therefore the number can be variable, but we have expanded our customer base to over 400. Since the acquisition of Priori Data, we are also seeing many significant contract wins and renewals from the likes of Hewlett Packard, Amadeus and Bain & Co.

This year also saw the beginning of new partnership agreements with Airpush, Iron Source and AppInChina.

Financial review

Revenue for the first six months of 2018 was 3% ahead of the same period in 2017. As mentioned in the statement of the Company’s Chairman, the important acquisition of Priori Data occupied a significant portion of management time during the period under review.

We raised £3.0 million during the period and a further £2.6m since the end of the period (both before expenses and at a significant premium to the prevailing share price). A portion of these funds were used to complete the acquisition of Priori Data and the balance is being used to fund working capital. At the end of June 2018 our cash balance was £2.6 million up from £0.2 million at the same point last year.

Business model
When appScatter was first admitted to trading on AIM in September 2017, we initially focused on app management with app distribution. Over the past year we have developed, through innovation and acquisition, into a Group that offers a range of products to a customer base which includes many major multinational corporate clients.

appScatter is a B2B mobile app management platform with its own data intelligence stack. We collect data daily from over 1.3 billion app URL’s from 11 million apps across 252 territories. In addition, we observe 900,000 apps on 3.5 billion devices daily. This enables us to provide a range of products covering 3 main areas, mobile asset management, data intelligence and security and regulatory compliance.

Data

Data is an integral part of appScatter’s business model and it is an essential part of the products that we offer. We are able to offer our customers app analytics from around the globe in a variety of forms including public, private and device data. The board believes that there are currently no direct competitors to the Company that offer a similar breadth of tools to those offered on appScatter platform.

At the time of the IPO, appScatter was collecting, on a daily basis, data from 842 million app URLs from 7.2 million apps whilst monitoring 1.7 million active app publishers. We have improved these numbers during the first half of the year, now collecting, on a daily basis, over 1.3 billion app URLs from 11 million apps whilst monitoring 3.2 million active app publishers. In addition, we observe 900,000 apps on 3.5 billion devices daily.

Regulation

At the time of the IPO we committed to gaining ISO 27001 certification within 24 months. The Company delivered against this milestone ahead of timetable in June 2018, and can now provide an independent, expert verification to assure that information security is managed in line with international best practice and business objectives. Though not obligatory, we have implemented this standard to reassure our customers and clients that we aim to meet a gold standard.

Acquisition
We were pleased to report that in July 2018 appScatter completed the acquisition of Priori Data for £13.5 million.

The Priori Data acquisition is a key milestone for appScatter which provides appScatter with new data analytics and intelligence. This data is of fundamental importance in such a rapidly developing sector and, critically, of a similar importance to prospective Enterprise customers.

The acquisition of Priori Data has materially enhanced our product range, user base, partner group and the capabilities of our team.

The initial integration of Priori Data into the Group has been successful, and the business is performing well, producing new opportunities for the combined Group. Based on progress to date, the full integration of the appScatter and Priori Data platforms is expected to be concluded by Q2 2019.

Market
Mobile Asset Management

The market in which we operate in is significant and growing. There are over 300 app stores worldwide and appScatter tracks data from 75 app stores across the globe. While Apple and Google Play app stores are currently estimated to account for a combined 85% US downloads, this decreases to around 62% of EU downloads and only 24% of downloads in China.

Data Intelligence

The global app analytics market size is expected to grow from US$1 billion in 2018 to US$3 billion by 2023, at a CAGR of 22.1% during the forecast period.

Security & Regulatory Compliance

From our data we have established that 43% of all apps in the Apple and Google Play stores have not been updated in the last 12 months and many of these have not been updated in more than two years. As GDPR only came into effect earlier this year many apps are in breach of GDPR. As described below, the appScatter security-based services include means of identifying potential GDPR non-compliance issues.

Product

appScatter is mobile app management platform with its own data intelligence stack. We offer over 50 free and paid for app management related products and our own in-app Billing SDK (Software Developer Kit).

Mobile Asset Management

Our mobile asset management platform includes a complete suite of app tools to allow clients to manage their app portfolios.

· App Distribution and Workflow: distribute and update apps on 75 app stores worldwide.

· Keyword Optimisation: determine organic downloads generated by keywords for ASO.

· Downloads & Revenues: aggregate sales and downloads from 75 app stores.

· Advertising Revenues: review mobile advertising metrics from major networks.

· Top Charts & Rankings: view historical and current ranking data for any app across multiple stores.

· Telemetry Services: integrated telemetry technology, allows the tracking of core, app-centric metrics and combining them with supporting systems to build a complete picture of app performance.

· Review and certification: custom built to include bespoke security best practice, brand guideline (MSDX), localisation certification.

Data Intelligence

Our Data Intelligence stack enables clients to research, benchmark, and track their competition in one place.

· Market Intelligence: powerful market screening for sizing and lead generation.

· App Intelligence: performance insights on individual apps, across multiple countries and time periods with daily granularity.

· Audience Intelligence: including detailed location, cross-app ownership and device information including models and distribution down to city level location data.

· Usage Intelligence: powered by the largest and most diverse data sample in the industry allowing clients to see estimates available for over 4 million apps.

· Competitive Intelligence: offers market insights and competitor intelligence.

Security & Regulatory Compliance

Our new security-based services include a range of reports to identify threats and security weaknesses.

· App audit report: identify apps most at risk for GDPR compliance, security breaches and unauthorised access of private data.

· Threat likelihood reporting: uses our intelligence and app store data to assign a risk likelihood score for prioritising further deeper scanning.

· App security scanning: reviews permissions and encryption levels.

· Deep Dive Scanning: checks if malicious code has been injected, if suitable encryption is used, reviews coding standards known vulnerabilities.

Outlook

The appScatter and Priori Data teams are very excited about the next 12 months. We will be improving operational efficiencies by consolidating the Priori Data technology with appScatter’s existing platform into a single appScatter product – improving the Group’s ability to deliver features as well as reducing our operational cost base.

In addition to improvements in our technology we continue to look at revenue generating enhancements through our threat analysis offering and improvements to our data intelligence services by providing SDK Usage and Creative intelligence as well as a new browser plugin to allow users to see data in their browser directly from the appScatter platforms.

With our sound operational foundation, our concentration will be on sales and revenue generation. We have begun recruiting to expand our sales force considerably to support this focus. With an increasingly international customer base, we have taken an additional office in New York to support our client needs as well as maximising on international sales opportunities.

We will continue to seek to strengthen our board of directors, including the appointment of a new board level and a new advisory board is being formed, consisting of industry specialists, to assist the management in achieving new large enterprise customers.

We look forward the continued growth of the combined company and I would to take this opportunity to personally like to thank all our shareholders for their support in appScatter Group PLC.

Philip Marcella

Chief Executive Officer

27 September 2018