# appScatter Group plc Acquisition translating into revenue increases

- Link: https://www.directorstalkinterviews.com/appscatter-group-plc-acquisition-translating-into-revenue-increases/412759066
- Published: 2018-09-27T07:24:19+01:00
- Author: Giles Arbor

**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

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