REG - SEEEN PLC - Trading Update and Board Change

SEEENAnnouncement

01/02/2024 07:00

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RNS Number : 6117B  SEEEN PLC  01 February 2024

 

Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
With the publication of this announcement, this information is now considered
to be in the public domain.

 

 

SEEEN plc

("SEEEN", the "Group" or the "Company")

Trading and Operational Update

Board Change

SEEEN plc (AIM: SEEN), the global media and technology platform that delivers
Key Video Moments to drive Video Commerce and transform its clients' video
profitability, is pleased to provide an operational and trading update for the
year ended 31 December 2023 ("2023") together with its 2024 outlook.  The
Company also announces a Board change as it launches the next stage of its
growth plan.

Overview

The Group completed a fundraising in December 2022, principally to execute a
tightly focused Go to Market sales plan, leveraging the proprietary technology
that the Group created over the prior three years, supplemented by two product
releases in 2023.  During the year, SEEEN reinforced its competitive
positioning as an AI-led video commerce platform with sales traction in large
and growing addressable markets.

Today's proposed appointment to the Board of Michael Zigman as an independent
non-executive director will add significant experience in structuring
strategic partnerships and providing domain expertise in a key vertical market
around which the Group plans to add sales, in particular use cases for
education and training (short-form "How To" videos). He will replace Akiko
Mikumo, who is retiring from the Board, but will remain as a member of the
Group's Advisory Board.

As highlighted below, the Group successfully delivered progress during 2023
and has momentum for 2024 with:  40 customers (2022: 21) - 28 customers in
growing vertical markets such as sports and services with recurring income for
2024 and beyond, 6 customers for e-commerce applications and 6 strategic
customers in publishing.  The Board believes that this base of customers will
enable the Group to accelerate sales in 2024 by leveraging existing customer
case studies and adding managed services to existing customers.  The Group
advanced its technology profile with approximately 37% of revenue being
technology related, up from 30% in 2022, with the balance of revenue coming
from an increasingly profitable YouTube Creator Services Partner business
("CSP").  The Group has established a strong sales pipeline for 2024 and has
hired more sales personnel. Continued execution against the sales pipeline
will enable the Group to achieve cash flow breakeven with its current cash
resources.

To strengthen its customer offering, a key part of the Group's strategy was to
strengthen its technology differentiation by launching two new technology
products based on its proprietary AI:  CreatorSuite 2.0 and ShortsCut. The
Board believes that these unique, proprietary products will drive long-run
sustainable value for SEEEN's shareholders.

SEEEN's execution during 2023 has increased gross margins, narrowed operating
losses and put the Group on track for cross-over to cash flow positive.
 Given the sales traction driven by SEEEN's unique technology offering for
the video commerce market, the Group is also looking to accelerate beyond
organic growth through both strategic partnerships to advance product
distribution, and potential accretive acquisitions. The proposed appointment
of Michael Zigman, will provide additional capability on the Board through his
experience of concluding strategic partnerships and acquisitions in the
technology and digital media sectors.

Significant 2023 Customer Wins and 2024 Pipeline

·    Market traction with 40 total customers at end of 2023 (2022: 21),
including:

o  28 vertical market customers in financial publishing, sports, retail and
services markets

o  6 strategic customers, 5 in the publishing industry

o  6 e-commerce customers

·    2023 Key Wins

o  First FAST (Free Advertising Supported Television) channel client, as part
of the Group's YouTube CSP, expected to be worth approximately $1 million in
revenues per year at a blended gross margin of approximately 15%

§ Additional up-sell achieved during 2023 to drive further growth from its
back catalogue to create Shorts using SEEEN's ShortsCut product

§ Further sale made to a FAST customer in the US, leveraging the current
relationship

o  Major financial publisher in the US, expected to be worth approximately
$100K per annum, to leverage events videos with Key Video Moments to drive
sign-ups for ongoing events (physical and online)

§ Potential for further sales, both for wider video opportunities and to
sister publications, as well as YouTube

o  Appointed video commerce and website partner for London Broncos, a Rugby
League Super League side, generating both monthly recurring income and a share
of profits generated from video commerce

§ Builds on momentum in the sports vertical, having signed up various
football, rugby league and rugby union clubs - provides a strong reference
customer for further video commerce integrations, including potential deals
with larger sports clubs

·    Strong growth pipeline for 2024

o  Customers with potential for approximately $2 million in annual revenue
for CSP

o  Expressions of interest for 2024 strategic distribution partnerships,
joint ventures and acquisitions

2023 Operating Highlights

·    AI-led video technology products developed for recurring revenues

o  Release of CreatorSuite 2.0 in July 2023, incorporating both fully
customisable Shoppable Video Prompts and advertising

o  Beta version of ShortsCut, a tool for rapid clipping of Shorts from a
large video back catalogue, currently being used by the Group's CSP to drive
Shorts for creator partners

·    Technology demo day held for customers and investors with videos from
the event available at www.seeen.com/techday/videos
(http://www.seeen.com/techday/videos)

·    CSP increasingly profitable

o  Increasing focus on targeting publishers with large video back catalogues
to optimise historic and new video content through "Key Video Moments" and
perform social media management

o  Shedding of lower margin, higher volume legacy creator partners who had
minimal cross-sell opportunities now complete

·    Strong pipeline of business (both Technology licensing and CSP),
driven from customer case studies and increased sales team

Unaudited FY 2023 Financial Highlights

Profitability

·    Improved gross margin of above 20% (2022: 15.2%), reflecting
increasing mix of technology sales and higher margin CSP channel partners

·    Adjusted Group EBITDA(*) loss expected to be approximately $0.6
million (2022: loss of $0.8 million), reflecting increased investment in sales
team, offset by increased profitability from technology and CSP businesses

Revenues

·    Changing mix of revenue, reflecting technology commercialisation

·    Revenues from customers using CreatorSuite, the Group's primary
technology product, of approximately $0.8 million, representing approximately
37% of Group's revenues (2022: 30%)

o  Recurring technology revenues of more than $0.2 million (2022: $0.1
million)

·    Total Group revenues for the year ended 31 December 2023 expected to
be approximately $2.1 million (2022: $3.3 million). Reduction reflects
shifting priority away from lower value CSP business towards higher value
media technology business: (i) completion of elimination of unprofitable
revenue from CSP channel partners with no technology upselling potential; (ii)
weaker than expected advertising rates in 2H 2023 for CSP

Balance Sheet

·    Cash position of $1.2 million as at 31 December 2023, following
one-off development costs of CreatorSuite 2.0, considered sufficient to reach
cash flow profitability given the Group's current pipeline

Board Change and Proposed Director Appointment

SEEEN announces that Akiko Mikumo is retiring from the Board with immediate
effect and the Board proposes the appointment of Michael Zigman as an
independent non-executive director to replace Ms. Mikumo.  Ms. Mikumo will
join the Group's Advisory Board.  Mr. Zigman is currently CEO of NYC First,
an educational non-profit that promotes Science, Technology, Engineering, and
Mathematics (STEM) learning including Artificial intelligence (AI) and
robotics.  Michael has spent over 25 years operating, scaling and advising
technology companies.  Prior to NYC First, Michael was a managing director at
Soundview Technology Group and WR Hambrecht & Co., both technology-focused
U.S. investment banks. He is a graduate of Dartmouth College. The Board
believes that Mr. Zigman's experience in education and technology will be
synergistic both in advancing SEEEN's customer use cases for training
(short-form "How To" videos) and in financial advisory matters that support
SEEEN's growth plan.  Mr. Zigman's appointment to the Board is subject to
approval from the Company's Nominated Adviser after the customary director due
diligence process to satisfy itself as to Board composition and independence
and the suitability of a potential director for the purposes of the AIM Rules
for Nominated Advisers.

2024 Outlook

Having made investments during 2023 in the sales team and refining the Group's
products, the Board considers that SEEEN is now well positioned to take
advantage of two key trends in the market; video commerce and the continued
preference across the web for short form, 'snackable' video over longer form
content. Snackable videos are increasingly used for education and training to
reinforce skills.  The video commerce and snackable video markets  are both
expected to grow at CAGRs of over 30% and 10% over the next five and seven
years respectively.(1)

SEEEN's products can benefit customers across all vertical markets by driving
increased views, advertising revenues and engagement rates, driving directly
to product and service sales for the Group's customers. SEEEN's technology
does this by identifying and creating the Key Video Moments from a customer's
video collection that will drive viewer purchases and engagement. This is
reflected in strong clickthrough rates for SEEEN-enhanced videos of more than
10%, versus industry standards typically around 3-5%. This strong engagement
also means that viewers shop for more of SEEEN's customers' products because
they are being served relevant content, allowing customers to "double dip" by
generating both advertising and e-commerce or affiliate revenues. This
directly increases their return on investment from videos.

As the market has moved increasingly towards short form video content and
video commerce, SEEEN's technology platform allows customers to capture these
trends. SEEEN's unique technology can be used by customers both on their own
websites, as well as through the creation of short form content for social
media, which directly benefits the Group's CSP business (formerly MCN).
 SEEEN's platform deploys more than 20 different AI models, including natural
language processing, visual, activity and optical character recognition. SEEEN
combines these results to find the best segments of video to maximise
customers' views and income. Having now established traction in key target
markets, the Group will continue to execute against the sales pipeline to
achieve cash flow breakeven.

Adrian Hargrave, CEO of the Group, stated: "We have progressed our 2023
Go-to-Market plan. We have also released two new products that leverage our AI
and Key Video Moments to drive revenues for both ourselves and our customers.
These products have been well received across all our core vertical markets.
The results from implementations, including 10% clickthrough rates and
enhanced on-site engagement and sales, demonstrate the value that our products
deliver.

The market is increasingly shifting towards video commerce and we are well
positioned to capitalise on this, whilst recognising that we have to be
opportunistic and aggressive in this fast moving industry."

Dr. Patrick DeSouza, Chairman, added: "We would like to thank Akiko Mikumo for
her service to the Company and its shareholders.  Akiko's prior experience in
execution and focus as a leader at one of the world's leading law firms has
been instrumental in helping our team transition from its founding group to
advance SEEEN's corporate development towards being a profitable, growing
technology company.  We would also like to welcome Michael Zigman's proposed
appointment to the board.  He has a wealth of operating and financial
advisory experience that will help SEEEN now that we have gained sales
traction and technology differentiation as a platform to leverage with
strategic partners."

Notes

* EBITDA adjusted for share-based payments and one-time costs

1. Sources include: Reportlinker for global video commerce market (May 2023)
and Grand View Research for short video platforms market (March 2023).

 

 SEEEN, seeen.com                                          Tel: +44 (0)7775 701 838
 Adrian Hargrave, CEO

 Dowgate Capital (Joint Broker)                            Tel: +44 (0)20 3903 7721
 Stephen Norcross

 Allenby Capital Limited                                   Tel: +44 (0)20 3328 5656

 (Nominated Adviser and Joint Broker)
 Alex Brearley / George Payne (Corporate Finance)

 Tony Quirke / Amrit Nahal (Sales and Corporate Broking)

 focusIR (Investor Relations)                              Tel: +44(0) 07866 384 707
 Paul Cornelius / Kat Perez                                seeen@focusir.com

 

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