[Logan]

MARIN SOFTWARE

The stock has declined steadily from $119.24 in March 2013, to $1.40 in 2020. Marin spent over $100M rewriting its software, with no significant effect on revenues or share price. The company is running out of cash, management and the board seem to be drifting, and sales continue to decline. But the ad market remains strong and the company still has $53 million in TTM revenues.

Marin, from 2006 till IPO in 2013 has raised $184.95M totally which is more than what BCG had raised ($100M). Now Marin is trading at $2. Marin, even though it had good cash/liquidity couldn’t stay competitive.

Revenue – 2013 ($77M), 2014 ($99M), 2015 ($109M), 2016 ($100M), 2017 ($75M), 2018 ($59M), 2019 ($49M).

Rocket Fuel Inc.

2013 (September)
Price – $61.23
Valuation – $2Billion+

2017
Price – below $2.00
Acquired by Sizmek in a deal worth $145Million
Deal Price – $2.60

Rocket Fuel had listed on the stock exchange in September 2013 at $29 a share. Initially the market was pleased with the company and the stock soon rose to $61.23 with a market capitalization of $2 billion. It’s lowest price was $1.70 which is 95% below it’s all time high price.

RocketFuel acquired a company [x+1] in August 2014 for $230M and still it couldn’t grow or stay competitive and later it was acquired by Adtech company Sizmek for $2.60 per share, in a deal that valued the company at $145M. At one point, the MCap was more than $2B but later was acquired for just $145M. It was sold for less than what it paid to get [x+1].

(Taken from an article)

Rocket Fuel’s dismal performance is not for lack of trying. It started new self-service offerings, including Dynamic Creative and improved Native capabilities that integrate into Dynamic Creative. The Dynamic Creative for self-service solution dynamically selects the layout and products most appropriate for each advertising moment and can create targeted advertisements almost real-time based on prospective consumers’ internet browsing habits.

So, RocketFuel’s case is similar to Millennial Media and Marin Software, even though these companies put all the efforts to stay competitive, they couldn’t survive. BCG’s case is little different, BCG has not lost focus on the business but it couldn’t grow because of cash flow issues

Not just these companies, even Magnite Inc (back then Rubicon), Criteo etc and many other companies have also struggled.

[Logan]

Millennial Media (MM)

2012 (March)
Price – $27.90 (IPO)
Valuation – $2Billion

Year – 2015 (September)
Price – $1.34
Acquired by AOL in a deal worth $238Million.
Deal price – $1.75 (30% premium to $1.34)

Though MM had good debut and the business was doing great, it couldn’t compete with giants and was sold for peanuts. It had acquired many companies, tried to expand the business but still failed. See how the stock has crashed, from $27+ to below $1.50.

Before it came to the markets it had higher growth rates and it had raised $240M which is 2.4 times what BCG had raised.

This is what Forbes wrote about Adtech stocks in an article,

For the rest of the ad tech industry, it’s another reminder that the public market that once ate up Millennial’s shares is now a brutal one to engage. TubeMogul trades below its 2014 IPO price and Rubicon Project trades below its 2014 first-day high. Rocket Fuel trades at a fraction of both the list price and initial highs of its 2013 IPO, as does Tremor Video. Even Criteo, which went public in October 2013 and improved share value pretty consistently for months after that, has endured a 30% haircut on its share price since mid-July, dropping it close to its first-day price.

[Logan]

@Diana Horton, I’m sorry for writing that and for misguiding everyone. Yes, I’m always wrong and you are always right and everyone should neglect whatever I write and should follow only you. Why do I always do research before coming to any conclusion? I’m such an idiot and a big fool. You are right to say that suppression of prices is the reason for this valuation, there are no other factors and the many issues that BCG has/had are not important at all. Only fools like me think those issues are important. I wasted so much time researching on different topics.

You can never be wrong anytime, there are many examples to prove it

1)like when you said that price/valuation will increase if the number of retail investors increase.
2)you wrote that the company was hosting the conference call on 20th Saturday, almost 1 week after the results because the company would get PW approved before that.
3)You wrote about the company providing wrong SHP details to exchanges and that proper details are in MCA.
4)You were right about PO funds, NCLT didn’t block that money and wrong information was mentioned in NCLT website.

On a serious note,

Whenever I see your posts, I remember this quote

To a man with a hammer, everything looks like a nail

For every problem you just say suppression as the only reason. I’m really tired of seeing that. If anyone disagrees with you then you attack them (mostly you attack only me). I had neglected you many times but still you always bother me and you will try to undermine whatever I write.

[Logan]

We look at the recent Axis development as long term investors (LTI) and think that this will lead to jump in prices. That’s where we get it wrong. Though this is one of the most important material development, but it isn’t the only development that is in the pipeline. LTIs won’t move the prices, but traders and momentum investors (MI) do. Now we should ask ourselves whether any trader or MI would buy BCG’s shares.

The answer is a simple NO. Why?
Traders and MIs are not emotional like LTIs and they won’t have the patience that we have. Though they take risk, but it will be calculated risk. Right now they won’t take any calculated risk because of many reasons like PW, NCLT case, NOC from Axis, revoking pledged shares etc. Among these reasons, PW is the biggest.

Main Reason

– Why would any trader or MI want to buy BCG’s shares above 8 when the PW price is set at 7.70? and what if they buy shares now and the company doesn’t get approval from the exchanges and then the price falls to below 7 levels because of that news? They’ll have to wait till the next material development to get back their money or worse, they’ll have to sell at a loss.

Other Reasons

– What if NCLT doesn’t give a verdict now and it takes more time to get the final verdict? There will be uncertainty till the case moves out of NCLT.

– Though NOC and revoking pledged shares take time, many traders and MIs won’t be comfortable till these happen.

We believe in the growth story of the company and we buy more shares if the price falls (if we have funds) but traders and MIs won’t do that. They’ll either dump their shares or not buy more. If they dump, price will fall.

Sometimes when the sentiment is very positive, the price will still change and shoot up but in my opinion, we can’t expect that to happen now because of the PW. As mentioned above, no trader will take risks buying the shares above 8.

Then we have to look at other thing also, which is, the price may rise after PW and after other material developments but it still won’t reach very higher levels because of the involvement of traders and MIs. As I’ve written above, these people are not in for the long term and they will be happy to get small returns. They won’t consider intrinsic value, growth of the business etc and will focus only on prices (and momentum).

Again, the price may reach intrinsic value without any pause if the sentiment is very positive like in Tanla which reached intrinsic value without too many pauses. To get that extremely positive sentiment, in my opinion, many developments have to happen, like, BCG should get the LOC, the business must grow and should have very high growth rates, the company should pay dividends (which I don’t like personally) or the company should go for buybacks (which I prefer because it reduces the free float) and many other positive events should happen.

I don’t think the company will buyback shares in the near future and I don’t think it’ll pay very high dividend because, right now, growth of the business is more important.

(Note – these are my personal opinions, please don’t take them for buy or sell decisions and also ignore my opinions if you don’t think its important)

[Logan]

@Admin, thank you very much for creating this forum and for bringing all genuine investors under one roof. We all stayed united even during tough times because of this forum. We all have gained so much knowledge on different topics because of this forum.

Please continue this good work and thank you once again for all your efforts.

[Logan]

Thank you for your efforts @drjaysee.

I don’t think these documents should be shared publicly in a forum like ours. I don’t know whether it is legal or not but in my opinion, it won’t be ethical. Since those documents contain sensitive information like personal details, account details etc, people can misuse it. What if someone misuses that information and puts the blame on this forum? Many shareholders in that list may have significant holding and what if hackers see that and decide to hack the accounts?

Most of us are not using our real names and are using other names but everyone knows who the Admin is. If the hacker gets caught and if he tells that he saw the information in our forum then that will cause trouble to the Admin (and to all the forum members). MCA is a government body and if the hacker takes information from there then MCA can take action against the hacker.

The Admin has done a great job in uniting all the investors. We should not cause any trouble to him.

[Logan]

@hw_tw, I don’t know what impact those events have on BCG but the general trend is that many governments (US and Europe) are trying to put more pressure on big tech firms.

I’m more worried about Apple’s upcoming privacy changes. Facebook and Apple are fighting about that. It impacts Facebook a lot which in turn may impact BCG also. Many small businesses advertise more on Facebook and Apple’s decision has made Facebook little nervous. Since BCG does more business in the US and since most people in the US use iPhone, I think it will impact BCG also.

I agree with @anirudhreddy about BCG capturing market trends faster than others. When the trend in online advertising was shifting to programmatic, BCG adapted quickly by starting Brightcom. Then when GDPR was implemented in Europe, even though it was tiresome for everyone involved, BCG adapted to that quickly as well.

[Logan]

Magnite Reports Fourth Quarter 2020 Results

* Revenue was $82.0 million for Q4 2020, up 69% from Q4 2019 on an as reported basis, and up 20% on a pro forma basis

* Net income for Q4 2020 was $5.9 million, or income per share of $0.05, compared to net income of $1.5 million, or income per share of $0.03 for the fourth quarter of 2019

* Adjusted EBITDA was $30.0 million representing a 37% Adjusted EBITDA margin, compared to Adjusted EBITDA of $15.3 million for the fourth quarter of 2019

[Logan]

PubMatic rev up 31% to $148.7 million in fiscal year 2020

Revenue in the full year of 2020 was $148.7 million, a 31% increase over $113.9 million in 2019. Net income was $26.6 million, an increase over net income of $6.6 million. Net dollar-based retention was 122%, an increase from 109% for 2019. Adjusted EBITDA was $50.3 million, a 116% increase over Adjusted EBITDA of $23.3 million in 2019. Net cash provided by operating activities was $24.3 million.

“Our record performance demonstrates PubMatic’s differentiated market position across the digital advertising ecosystem. We are in the midst of an accelerated digital transformation, with consumers everywhere spending more time online as they shift transactions from the physical world to the Internet,” said PubMatic co-founder and CEO Rajeev Goel.

[Logan]

Generally, markets hate court cases and legal issues (and also debt sometimes). Markets hate these things because they bring uncertainty with them. We can never know how long a case goes on for. We are seeing that in Reliance-Future-Amazon case. Even the biggest companies are not getting a clear picture on what will happen. Till markets see less uncertainty, there’ll be volatility and retail investors should to be ready to digest that volatility. Operators enjoy uncertainty and they also enjoy volatility. Combination of these two things will make operators very happy.

Thankfully, with BCG, in my opinion, the two legal issues that are there aren’t as big as people believed. From now on, hopefully, we will see value realization happen.

We have come a long way actually, we have seen uncertainty, we have seen volatility and we have seen the combination of those two things also. Few years back there was lack of trust on the numbers, then there was uncertainty with DAUM issue – now we have a somewhat clear picture but 3-4 years back that was not the case. Then, before the pandemic, and before Affle came to the market, most people didn’t really understand the business properly. When I say business I don’t mean people don’t understand online/digital advertising part, what I mean is the business model of the company i.e. payment cycle – high receivables, low payables (even now many don’t get it properly), cash flow issues of the company (still now we can see people commenting 400crs profit but can’t pay 40crs etc), the need to invest heavily in technology etc. People used to say why can’t BCG pay more than 50% dividend? Thankfully all these have changed a lot in the last 1-2 years. Still there are people who don’t understand many things but that percentage is very small compared to the past. Now we have less uncertainty compared to the past – there is reduction in pledged shares, 2 bank loans have been paid off and the other is almost done.

(Sorry for such a lengthy reply – most of the times my replies will be lengthy because there’s no easy way to explain many things in short)

[Logan]

@nitin_asce, sorry for the late reply (#11117).

The management will be happy because market sees value in BCG i.e. there’s value recognition in the stock. Now they have to do things that’ll help in value realization. Just because there’s value recognition doesn’t mean that value realization will happen. The former is easy to achieve but for the latter to happen it takes time and effort. Not all the times more investors will result in higher prices. That happens when others are not ready to sell their shares, if others are ready to sell and new investors buy then there won’t be any impact on the prices. There should be demand and optimism for the price to rise, not supply and pessimism.

There are many reasons why retail investors go up in number. They will buy from others who dump the shares, suppose someone who held 1% of the shares decides to dump their shares, what happens is thousands of retail investors will buy those shares. Let’s see BCG’s case – on average, one retail investor (share capital less than 2 lakhs) holds little over 1500 shares. So assuming if that 1% (say 50 lakh shares) is absorbed by retail investors then more than 3000 investors buy those shares. 1 is replaced by 3000 but still the price will drop. Then are traders who aren’t long term investors buying the shares seeing some momentum in prices. There’ll be penny stock traders who buy more because small increases in price will make them more money. People think if there’s a turnaround in business then they can make good money.

Why Value Realization hasn’t happened yet?

Let’s say there’s a plot of land (let’s say few acres) in a very good neighborhood but the owner of that land has two cases against him (like DAUM and Axis) and the land (land litigations are very common). Many people won’t be ready to buy that land. So what happens to the price? Obviously it’ll go down. Rest of the neighborhood will have good prices but that one plot will be very cheap. People who buy that land when its cheap will make a killing but that depends on the severity of the cases. In the future, if the verdict goes against the owner then the new buyer will lose everything. The new buyer will have to fight in courts and the issue goes on and on. At some point in time, when many people buy those plots, the price of the land goes up but when there are no developments happening wrt the cases then the price will drop again. That is why material developments are very important. Many times they are like 2-edged swords. Sometimes they will be positive for the investors and sometimes they will be negative.

Material Development that was Positive – Subex

Even though people saw value, the price didn’t go up until share capital reduction happened. Before that there were small increases in share prices like 3 to 6 to 9 and then fell or stayed at that level but a greater impact happened (price went up above 30) only when a material development happened.

Material Development that was Negative – Lakshmi Vilas Bank

In this case, retail investors lost everything. Even though a different company came and bought LVB which is a material development, retail investors didn’t get anything. There are many such cases that have happened.

[Logan]

@bhalothia9 (#11035)

There are many reasons why the management wants to get back Lycos. One is from a business point of view and the other is from the market’s (valuation) point of view.

1) Business

If they leave it as it is then in the future, DAUM may again trouble BCG. It’s always better to close off a legal issue even if the impact is not big. That’s why most companies settle these issues outside the court. Even a small thing can hurt the company in the future. For ex – If BCG decides to acquire a company then the sellers will look at complete history of BCG. Their lawyers will try to find if the company has done anything wrong/bad in the past. Some will use for their advantage i.e. they’ll ask a higher sale price and some will not even agree to sell because that’ll hurt their reputation. Then there’ll be the worry of non-payment i.e. what if BCG agrees to buy a company in a 2-part deal and it pays the first part of the payment but later doesn’t pay the remaining amount? Sellers will see DAUM case and will think that BCG may repeat it again. People will think that BCG may not fulfil commitments. They won’t be ready to sell their assets. Then one more scenario is that DAUM may go and trouble the financiers like it did with White Oak (not Oak India Investments).

I don’t know what plans they have once they get back Lycos, maybe they’ll focus on APAC region or maybe AI or some other thing. It may bring value to the business also. I think BCG won’t pay more than $16M to DAUM and also I don’t think DAUM is in a position to command/demand more than $16M.

2) Valuation/Market

This, according to me is like “It brings nothing but also it may bring everything” kind of a situation if we consider what value (Market Valuation) it may bring to the company. Before the announcement of bankruptcy of BCG’s subsidiary, the stock price was in 25-35 range (which is a somewhat okay valuation compared to the current valuation or the 0.5PE valuation). If DAUM case hadn’t happened and if BCG had closed off India debt then the price would’ve been at 5-6PE.

Once the bankruptcy was announced, the price started going only in the downward direction. We in this forum are a group of individuals who have completely/thoroughly studied the company but the same can’t be said of the whole market or even all the retail investors who have invested in BCG. Many were more concerned about DAUM than they were about the business but that trend is changing a lot because of many reasons. One is the interest in new age companies/technology because of the pandemic.

Before this forum was started, everyone talked only about one thing, that is – DAUM. People thought if DAUM is closed then everything will be alright. But now only a few talk about DAUM (maybe because of Axis case in NCLT). I’m really not that concerned about DAUM but I know how important that is to change the market sentiment. That’s why I wrote “It may bring everything”. Also, I use “may” because the market has changed so much in the last year. Present market is completely different from 2016-18 market. Now the market may give more importance to growth of the business than to getting back Lycos. We have believed all these years that once DAUM is closed BCG will trade at good valuations but we can never know that’ll happen for sure. After closing DAUM, stock price may go up but I don’t know whether BCG will trade at a good valuation.

It’s really hard to say which is more important for BCG to get the right valuation it deserves. Some say closing off DAUM will do that, some say closing Axis will do that, some say PW approval will do that and some say growth in business will do that. So, everything depends on the CEO’s actions.

[Logan]

I couldn’t attend the call, can someone share what was discussed in the call (especially about PW).

Thank you.

[Logan]

Conference call rescheduled to 4PM. It was supposed to be at 1PM.

Check notification in BSE.

[Logan]

Adtech industry is getting more competitive. Flipkart has also started adtech business.

Amazon started adtech business in the last few years but has grown significantly and is now one of the top 4 (along with Facebook, Google and AOL).

Flipkart gets leaner with a $300 million Jabong write-off as CEO Kalyan Krishnamurthy lists out the priorities for 2021

Flipkart is also betting big on adtech (Advertising technology). Krishnamurthy said that Flipkart’s advertising platform is currently one of the top five in India today.

Flipkart is strengthening its advertising and monetisation portfolio and has announced the launch of a custom built demand-side platform (DSP). It recently partnered with MediaMath to launch its demand-side platform.

[Logan]

The Trade Desk Reports Fourth Quarter and Fiscal Year 2020 Financial Results

TTD had explosive growth rates in the December quarter. If this trend continues then it’s net profit will be more than BCG’s revenues this year itself. 3 years back, BCG and TTD revenues were close but now TTD’s is more than double that of BCG’s. TTD’s margins are also increasing and have improved drastically.

Don’t know what BCG has to do to have good growth rates. If this trend continues then BCG will end up being a laggard and will not gain recognition.

[Logan]

Investor info page in BCG’s secured website doesn’t work but it works in BCG’s unsecured website. Don’t know how long they’ll take to fix this issue.

[Logan]

@jay69, usually you’ll be in listen only mode, if you want to ask any question, you should press *1 (when the moderator says if anyone wants to ask any question)

[Logan]

@Ashish

#10948
I don’t know what arrangements BCG has made with WE group. Jacob Nizri and other people didn’t get BCG’s shares so BCG let them start WE group. My guess is that their role is as advisors. They won’t be working on day to day operations but they decide what actions should be taken by the company. Jacob Nizri and others are board members in Brightcom (OMS) and in BCG (parent company), Jacob is in board of advisors list.

#10957,

I think Brightcom didn’t change the logo because they use that logo/brand for business. If Brightcom were to change the logo then they have to update each and every client about it. That takes time and effort.

I don’t think this should be taken seriously. BCG, the parent company doesn’t use any logo/brand for business. It doesn’t matter what logo they use.

Anyway, we can ask about this in the conference call to get a clear answer.

[Logan]

Corporate Governance/Market/Dividends

– The IR Department doesn’t even have the courtesy to reply to shareholders’ mails/calls. Even though we send many mails, they won’t reply to even a single mail. This is not how a company is supposed to treat its shareholders. How are we supposed to get any information about anything related to the company? Do you expect us to visit the company to get answer for a single query?

– All the time you say you will improve communications with the shareholders but there’s no progress on that.

– Some of us still haven’t received dividends from the company. We send mails to the IR Department, asking them about the dividends, they won’t reply to us. If we ask Aarthi Consultants, they say that the company has not communicated with them regarding dividends. Whom should we contact to get even basic information? Its not how much dividend amount we are getting but its about the company’s commitment and transparency.

– The market perception/sentiment towards the company is very poor/negative. Your actions aren’t helping it get any better. For eg – you decided to do a massive dilution but didn’t inform the shareholders as to why you’re doing that. You announced dividends more than 6 months back and you had all the time to sort out any issue with the payment but still you delayed the payment (and still haven’t paid to many investors). You said you have arranged buyers for OAK’s shares but they decided to dump their shares. How are we supposed to trust what you say when you have always ignored/neglected shareholders?

-You didn’t even talk about PW in the AGM. Such a big event but still nothing was discussed about that.

-In the AGM, many didn’t get a chance to ask queries. Why only 3 investors were given chance to ask queries? Why not others?

-There’s so much manipulation going on with the company’s shares. Operators are controlling everything. What measures are you taking to handle this issue? When asked about this the last time, you said you have arranged stable investors to buy shares. What’s the progress on that?

-You said all the details regarding Other Assets, Other Liabilities, Loans and Advances etc will be given in the Annual Report but no details were given. How is anyone supposed to know what other assets, other liabilities, other receivables etc are? If we send mails to the company, you won’t reply, if we ask in the conference call you say it will be mentioned but again you won’t honor that.

– What constitutes the following –

Non-Current Loans of 100 crores. Current Loans of 650 crs. Other Intangible Assets of 650 crores. Other Current Assets of 150crs. Other Current Liabilities of 220+crs.

– Last year other receivables were 530crs and this year they are 150crs. What are these and how are we supposed to know what these are? Nothing about this is mentioned in the Annual Report.

LOC/Axis/Lycos

– In the last conference call, the CEO said the company will get the LOC within December quarter but almost 2 months have passed since December but still no updates on that.

– In all the last 3 conference calls, you told us that Axis issue is almost done but still the case isn’t resolved yet. The case being in NCLT is causing lot of uncertainty. What’s the progress on the case?

– How will Lycos contribute to BCG’s business once you get it back from DAUM? We respect and appreciate what Lycos brought to the company in the past but the whole world/industry has changed a lot since then. What plans do you have with Lycos?

[Author]

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