Bidstack Chat - Check In

Hang out and kill some time with some general #Bids chat
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sectornitad
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Re: Bidstack Chat - Check In

Post by sectornitad »

@Bidfry

Hard to say, but the Stifel note points to a blended margin of 24%. That is to say, for every £100 of top-line revenue, Bids would keep £24. It is a blended figure because AAA block-buster games could negotiate a better margin (say, Bids only keeps 15%, but over a lot more revenue) and a smaller Indie game Bids might get 40% etc.

Correct to say no tax yet. Not for a long time, and even when the company makes its first year profit there will be a tonne of losses to off set against tax.

As Stifel note points out, in the early stages of inventory build out it is more appropriate to use the DAU/inventory figure as a gauge of success rather than revenue. If Bids hits 8-10m DAUs by end 2020 then that is a very good sign.



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Re: Bidstack Chat - Check In

Post by Bidfry »

Reason I asked is there is a lot of progress to make to cover running expenses alone!
I am just trying to understand where the business is and what it still has to do.
Obviously the longer this takes dilution will take its toll on our investment.

I am hoping all is good at bids I want to see success as we all do in a time frame that makes financial sense



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Re: Bidstack Chat - Check In

Post by Bidfry »

Just to add I am very much a believer in bids idea and tech, just need more understanding of what is happening and where it could lead us.



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Re: Bidstack Chat - Check In

Post by sectornitad »

@Bidfry no problem, I get where you are coming from.

So far we can potentially breakdown Bids business streams as the following:

a) Primary Viewer - ads in games, dynamically targeting players based on anonymous data. The player alone sees the ad.
b) Secondary Viewer - ads inserted into streams during or after the game was played by the Primary. We haven't heard much about this yet, but the potential market is huge - bigger still than the Primary.
c) Esports - still need to hear details of the business model here, but would probably use b) above and maybe more tournament-duration advertising campaigns.
d) Sundry - such as the Gfinity website deal.

With a) Primary we have quiet a good handle on the business model, the others less so. With Primary we have the following inputs to the income calculation:

1. DAUs - Daily Active Users across the Bidstack inventory portfolio. Add up all the daily users of all the games Bidstack has its tech in.
2. Ad places per game - realistically, the maximum number of places within the game that the game developer would want to expose to the Bidstack SDK. Think number of billboards along a road. There comes a time when the council will not allow any more to be put up.
3. Fill rate - given the DAUs multiplied by Ad places, how many of these atomic units of 'adverts' can you sell? Overtime we hope for near 100% but this is unlikely out of the traps.
4. The Cost Per Mille (thousand) ad impressions - for every 1,000 ad impressions (that is, for every 1,000 users who see your ad in a given timeframe - assume one day) what is the cost you can charge the brand? Typically this we know will be between £7-£11 per thousand.
5. The margin Bids take - as mentioned this is negotiated per game and is around 24% average.

The fixed costs (mostly salaries) will be around £9m by close of next year (we are led to believe). This is up from about £5m at end 2019. A growing company which grows its headcount is not a bad thing.

Now the maths...

Assuming Bids has DAU of 10m, with 3 places per game (low ball) - this gives total atomic units of 'ads' which could be sold of 30m per day. If we start with a 5% fill rate, we are in effect saying we will only sell 1.5m impressions per day. We therefore earn (1,500,000 / 1,000) * £7 = £10,500. Bids takes 24% which is £2,520 per day, over a year is £919k. Clearly this is not enough to pay fixed costs of £9m.

But here is where the scale up comes in... Move the fill rate up to 25%, add another single ad placement per game and you now have £6m income after paying the developer. Add another 5m DAUs etc and you cover costs. Then on in it is all profit.

What I am trying to say is, starting from a low base once the tech is in the games the scale up is frictionless and rapidly snowballs. With £9m fixed costs and a blended margin of 24% the company needs top-line sales of less than £40m to break even. £40m out of an anticipated DIGA market of £800m+ by 2025 and a global advertising market of over £400 billion with a 'B'.

...And we haven't even thought about income streams b) c) d)

If DIGA is a thing of the future, Bids will cover its costs in time. No doubt.
Last edited by sectornitad on Thu Jul 23, 2020 9:47 am, edited 1 time in total.



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Re: Bidstack Chat - Check In

Post by Bidfry »

Thanks that is helpful



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Re: Bidstack Chat - Check In

Post by sectornitad »

If DIGA is a thing of the future, Bids will cover its costs in time. No doubt.
Quoting myself here, but this is really the whole darn bet in a nutshell.

Bids has early mover advantage. If you back Bids you are essentially taking a bet that Digital (native) In Game Advertising is going to be a thing. That is the punt.

If it is, and Bids is still playing then it will be worth more than £16m some time down the track. If it turns out that no games would dare sully their creations with adverts, and no brands would dream of wanting to sell their wares to gamers, then maybe you lose your money.

The rest is noise.

I like simple punts.



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Re: Bidstack Chat - Check In

Post by Yatak »

sectornitad wrote:
Wed Jul 22, 2020 12:28 pm
If it turns out that no games would dare sully their creations with adverts.
EA CEO:
giphy-downsized-large.gif



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Re: Bidstack Chat - Check In

Post by GlobalNomad »

so news at the other end of the scale from Bidstack's position as an undervalued company...

simplistically and with various caveats taken as read...

Tesla - detached from reality ?
4th quarter of profit for first time
valuation - $300billion
revenue last quarter approx $6bn/quarter ....circa 24bn annual
profit/quarter $104million, circa 400million annual

however, valuation against revenue is 'only' 12.5 times....
valuation from profit is 750 times...

its an established and high profile company with high demand and almost singlehandedly changing the market and other companies priorities.



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Re: Bidstack Chat - Check In

Post by mike »

@GlobalNomad maybe next announcement will be that Bidstack will be serving contextually relevant ads on the rocket ship to mars



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Re: Bidstack Chat - Check In

Post by GlobalNomad »

@mike and you'll be riding it like a cowboy....



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