10 April 2012 – trading update

The leading video search engine has announced a trading update for the year ended 31 March 2012.  Revenues for the full year are expected to be approximately US$114m, representing a year-on-year increase of approximately 72% but short of the consensus forecast of of US$121.5m.  The company has said that it expects to report an operating profit, before one-time costs and amortization of purchased intangibles, slightly ahead of analyst consensus of US$10.3m.  The cash balance at year end was US$38.4m.

Operating cash flow for the period, both before one-time costs and also on an absolute basis, is expected to exceed analyst consensus.  The company expects to report an IFRS operating profit, after one-time costs and amortisation of purchased intangibles, above analyst consensus of US$1.3m for the period.  The share price has reacted badly to the update and the shares have touched a new 12 month low of 41p in the first few minutes of trading.  Nevertheless, we feel that the long term story remains intact and rate the shares as a BUY.