Augme Seeks to Monetize Patents Outside of Litigation

Jul.14.11 | About: Hipcricket, Inc. (HIPPQ)

By Ian Gilson, CFA

On July 12, 2011 Augme Technology (AUGT.OB) reported its 2012 first fiscal quarter results. Billings and revenue were in line with guidance and our estimates. Gross margins were better than expected and are moving to normal software gross margins of over 80%. However, we were significantly low on our estimate of G&A expenses as the company has ramped G&A expenses to support the company's anticipated growth and continues to add legal expenses on litigation.

Active campaigns increased from six a year ago to 28 in the 4Q11 to 64 in the 1Q12. The company expects to have over 100 active campaigns in the 2Q12. Since many clients adjust their advertising budgets during Augme's first quarter, Augme anticipates seasonal softness in revenue in its first quarter.

Although Augme has not received any licensing revenue from its IP portfolio, it is actively seeking to monetize its patents outside of the litigation currently under way.

The company currently meets the requirements for listing on the AMEX and, except for the stock price requirement, for the NASDAQ. Augme reiterated its guidance for fiscal 2012 revenue of $16 million, slightly below our estimate, and positive cash flow for the full year.

The company has redesigned its logo and web page to offer greater visual appeal and a cleaner image in order to attract the attention of corporate marketing departments. Augme has launched AD LIFE v4.0, its next iteration of mobile marketing platform. Based on the company's proprietary Mark-Up language, Version 4.0 is fully scalable to the needs of any enterprise. The Software as a Service (SaaS) software platform allows automated delivery of ad content to any 3G and 4G smartphone currently available.

Disclosure: None