Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Robert F. Hussey - Interim CEO, Director and Interim CEO of Hipcricket, Inc

Ivan E. Braiker - President and Director

Thomas J. Virgin - CFO and PAO

Stephanie Prince - Lippert/Heilshorn & Associates, Inc.

Analysts

Darren Aftahi - Northland Securities

Gerard Hallaren - Janco Partners, Inc

Justin Colatosti - Dawson James Securities, Inc

Robert Goldberg - ThinkEquity

Todd Mitchell - Brean Murray Carret

Patrick Retzer - RCM Technologies Inc

Jeb Terry - Aberdeen Investment Management

Augme Technologies, Inc. (AUGT.OB) Q2 2013 Earnings Conference Call October 10, 2012 11:00 AM ET

Operator

Welcome to the Augme Second Quarter Fiscal 2013 Earnings Conference Call. At this time all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a Q&A session. (Operator Instructions) As a reminder, this conference is being recorded today October 10, 2012.

I’d now like to turn the conference over to Ms. Stephanie Prince of LHA. Please go ahead ma’am.

Stephanie Prince

Thank you, Gina, and welcome everyone to the Augme Technologies’ second quarter of fiscal 2013 earnings conference call for the quarter ended August 31, 2012. With me today are Bob Hussey, Interim Chief Executive Officer; Ivan Braiker, President; and Tom Virgin, Chief Financial Officer.

After management’s comments we will open the call up to your questions. In order to allow everyone the opportunity to ask a question, we’re asking that follow-up be limited to two. Thank you for that. To access the webcast please visit our website at www.augme.com.

Please note that the information presented and discussed today includes forward-looking statements which are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks, uncertainties and contingencies many of which are beyond our control, which may cause actual results performance or achievements to differ materially for anticipated results, performance, or achievements.

Risks and uncertainties that could cause our actual results to differ from those expressed or implied by forward-looking statements include those set forth in the risk factor section of the Annual Report on Form 10-K that we filed with the SEC on May 8, 2012.

I’d now like to turn the call over to Bob Hussey. Bob?

Robert F. Hussey

Thank you, Stephanie, and good morning everyone. As you know a great deal has changed at Augme since the Company’s last earnings conference call. I was named Interim CEO replacing Paul Arena, who resigned as Chairman and CEO last month.

We announced a restructuring program and completed a $6.8 million equity raise. In light of these developments, I’m going to open my remarks today with an overview of the Company’s going forward strategic direction and a redefined business model.

After that Ivan Braiker will take you through the second quarter operational highlights and Tom Virgin, our CFO will provide a detailed review of our financial results. Then we will open the call to some questions.

Let me start with some remarks about our new strategic direction. I joined Augme last June as Interim COO with a mandate to improve the Company’s efficiency, the depth of its business line management and client services and operational infrastructure.

As I began to access all the facets of the Company’s operations, its sales, marketing, customer service, engineering, R&D and finance, I saw a Company with talented, energetic employees who had accomplished a great deal proving mobile marketing and advertising concepts driving its adoption in a nation space, compiling an impressive roster of Blue Chip customers, establishing domain expertise in several verticals notably retail consumer goods, pharmaceuticals and broadcasting and positioning the AD LIFE platform as a one stop mobile advertising and marketing solution.

In addition to the Hipcricket operations, the Company’s IP portfolio also gave us a second key asset. It was also a Company in a rapid growth phase that needed to strengthen its infrastructure and eliminate excess costs in order to efficiently mature its business model.

The 90 days I spent as Interim COO gave me an in-depth familiarity with Company’s operations in every office. I worked closely with all of the senior managers and met several of Hipcricket’s customers, including CBS executives (indiscernible) executives.

In fact when we had a client summit back in June at our headquarters, in New York, I spoke to the assembled group regarding mobile analytics and their value in supporting expanding mobile ad budgets. As a result, as Interim CEO I hit the ground running even as my mandate has begun to expand.

So, in addition to strengthening the Company’s operations, it became clear to me that simultaneous investing and managing both Hipcricket’s robust growth and the IP portfolios monetization efforts was a challenging event and not very sustainable. The prolonged nature of the core proceedings only reinforced my thinking. That situation was delaying our ability to capture business opportunities and create more shareholder value relative to the unbalanced allocation of financial resources for a small cap mobile marketing advertising company.

We urgently needed to reset our strategic priorities and redefine our mission statement. And that is a terribly important issue for me as a former brand manager. That mission statement is written as follows. To empower brands, agencies, and media companies, to engage customers, drive loyalty, increase sales through mobile marketing and advertising solutions. That’s what we do and we do it very successfully and we’re extremely proud of all of our employees who help us everyday deliver on that promise.

And with mobile marketing advertising gaining greater traction as more companies test the concept and more customers expand their budgets for mobile marketing and advertising campaigns, we need to seize that opportunity today and to fully realize Hipcricket’s growth potential. Doing so, requires that we concentrate our resources on Hipcricket’s operations and efficiently support the growing needs of our customers.

As a result of that analysis, completed with the support and input of the entire management team, my priorities for the Company going forward are as follows. Drive revenue, we’re growing the ranks and improving our sales ranks and support – and their support systems, all while staying religiously focused on reaching operational profitability. We’re putting in place new policies that institutionalize fiscal discipline throughout the Company, to protect our industry leading gross profit margin while increasing it where we can.

This reinforces the Company’s ability to be accountable and increase its productivity over the balance of fiscal 2013. It ensures that we will advance the Company to the next phase of growth, efficiently serve our customers expanding needs and retain our stellar 95% retention rate with our growing customer base and promote the increased usage of our AD LIFE platform. So that’s driving revenue as one of our key objectives. We are going exercise fierce cost control as our second one.

We recently implemented a cost reduction plan that has removed $6 million of annualized cash operating expenses from Hipcricket’s business. Most of the cost savings have come from reductions in corporate overhead, primarily corporate staff and other non-revenue essential generating expenses. And we’ve also implemented a 20% senior management pay cut, which is not a deferral, but a pay cut as I said. This cost reduction plan is not an end, but a beginning and we intend to continue to scrutinize our expenses, identify additional savings and carefully control our expenses going forward.

The third item that we’re looking to implement is how to harvest our IP investment and immediately curtail our litigation costs. We’ve already begun an all hands effort to seek resources, both internal and external to monetize all and some of our assets in our IP portfolio. We’re dramatically reducing the money allocated to IP portfolio expansion. We’re also considering all our options including selling the portfolio, entering into strategic partnerships with regards to the IP portfolio and continuing to pursue licensing opportunities that offer a lower cost structure and lower legal fees.

I’ve already had an in-depth discussion with our outside legal counsel, Tom Scott of Goodwin Procter and I believe that those talks will bear fruit. Going forward we expect to reduce our quarterly capitalized spending in that area from about $1.5 million to less to a $0.5 million per quarter by the end of the current quarter.

Number four, I want to realize Hipcricket’s brand potential. Today Hipcricket has an established leadership position in the nascent mobile marketing advertising industry. It’s a $1.2 billion market forecasted to grow, over fivefold to nearly $7 billion in the next three or four years. We clearly have a tremendous opportunity to build our leadership position. It’s no better way than with a strong brand name and value proposition.

To that end, I’d like to outline our growth strategy, specifically; first we continue to expand our sales team. We know we cannot cost cut our way simply to profitability. In the last 30 days we’ve hired two new senior sales executives to manage our sales activities on the east and west coast. We also have a new executive in Chicago for the Midwest. One of them is overseeing sales specifically in areas that are important to me, which is heavily directed towards consumer product marketing.

Second, we want to seize more market share dollars spent by the mobile advertising community. It’s a very fragmented category and strategic partnerships with agencies and other media companies that leverage our domain expertise with our AD LIFE capabilities are a tremendous opportunity for us. Thirdly, we’re going to continue to expand all of our platforms and our capabilities.

In summary, through cost reduction actions that have been already taken through anticipated growth of quarterly revenues, we expect to achieve operating cash flow break even in the second quarter of fiscal 2014. To reach $10 million in quarterly revenue, we expect to increase revenue sequentially by 15% to 20% on average each quarter. I want to stress the words “on average” given our customers calendar year-end budgeting process, we were likely to see sequential revenue growth above and below that range in some quarters.

I’m aware that we are pushing this important milestone down the road. Previously we had set a goal of reaching cash flow break even by the fourth quarter of fiscal 2013. However, built into that expectation was an assumption that we would monetize a portion of our IP portfolio during fiscal 2013. We’ve removed that assumption from our forecast and have constructed a path to operating cash flow breakeven in the strength of Hipcricket’s operations alone.

I can assure you that the forecast has been developed to analytical rigor and conservative assumptions. Hitting as a goal that – the management team can collectively believe it is achievable and realistic. So before turning to our second quarter performance, I want to touch on the capital raise that was just complete last week.

Certainly we would have preferred a less dilutive financing, but that option was not on the table. In fact, to complete the transaction we had owned up to a lot of pass strategic decisions that some might judge very harshly. We appreciate the confidence placed by investors who participate in that race and both the management team and the Company’s new strategic direction. With the financing behind us, we’re moving forward, focused on extracting every dollar value from all of our assets and treating value for all of our shareholders.

And one final comment I just want to add, I believe our shareholder value was a tremendous opportunity for everyone. There was a comment in fact on Squawk Box tonight – today this morning, where they talked about Microsoft indicating that they want to be more like Apple, to be more of a mobile company and that’s the space we’ve carved out for ourselves.

So let me open up – excuse me, I will turn it over to Ivan.

Ivan E. Braiker

Thank you, Bob. Well turning out to the operational highlights of the second quarter – [first] second quarter performance and perspective. On the last conference call we talked about having a large pipeline of qualified sales opportunities. During the second quarter we maintained a laser focus and turn those opportunities into a $7.9 million of new booking, a 22% increase from last quarter. Based on the superb efforts of our committed staff and the faith shown by our existing and new clients, we ended the quarter with a record backlog of 18.9 million compared to 17.4 million at the end of first quarter on May 31st.

We also posted a record 29,000 campaigns completed in the quarter, which shows that customers are increasing the number of campaigns run on a proprietary and patented AD LIFE platform. In fact, nearly half of the brands that completed campaigns with us in the first quarter increased the number of campaigns that completed with us in the second quarter. For example, during the Company’s second quarter a large nonprofit client and a major retailer each executed six times more campaigns compared to Q1, 2013. Including the 29,000 campaigns in the second quarter, we have now passed 225,000 mark of completed campaign since we started Hipcricket in 2004, holding our lead with the most in the mobile marketing and advertising industry.

We also added approximately 30 customers during the quarter spread across multiple industry vertical such as resorts and casinos, consumer packaged goods, and financial services. Hipcricket is known as the only company to deliver the full mobile marketing and mobile advertising live stock – life cycle solution. Including our unique post-click engagement capability in a single platform, which is the key differentiator with us in the – for us in the market.

Our AD LIFE platform is also known to speed clients time to market and is highly scalable, thus we have the longest track record in the industry. Through the quarter we announced a new partnership with World Financial Group, a leading financial services marketing organization to extend mobile marketing capabilities to their associates in the U.S. and Canada. WFG is leveraging Hipcricket’s mobile marketing platform as a central means to engage their 20,000 associates who will now be able to receive marketing updates and access information regarding their commission and points system on their mobile devices.

Hipcricket’s ability to scale both in numbers and across geography was a key factor in winning this business. Another one of our newer clients, Monumental Sports & Entertainment which owns three sports teams and the Verizon Center, in Washington DC. According to Monumental Sports, we won the contract after a lengthy search these were a unique combination of experience, technology and outstanding customer service.

MSE plans to use Hipcricket to power campaigns to drive patron engagement during games, concerts and other events. Fans that opt-in to mobile programs will be entered into a database that Monumental Sports can use for re-marketing purposes. Due to Hipcricket’s sophisticated integration capabilities, this database value able them to link mobile fan interactions with its CRM systems to obtain a comprehensive view of customer touchpoints.

We also continue to cross-sell products and services between AD LIFE and AD SERVE, deepening our relationships with long standing clients. Examples of cross-selling successes included our extend relationship with Spanish Broadcasting System, the largest publicly traded Hispanic-controlled media and entertainment company in the U.S. Hipcricket has worked with SBS for five years and it will now extend mobile marketing and advertising opportunities to additional radio and television stations and bring new programs to advertisers looking to have a one-on-one relationship in conversation with Hispanic consumers.

This will enable them to build a sizable opt-in listener and viewer database that will provide re-marketing opportunity. SBS also plans to leverage Hipcricket’s AD LIFE platform for its upcoming mobile web and gaming initiative. We also extended our relationship with one of our very first client, ISIS, Inc., a national nonprofit organization based in Oakland, California. ISIS uses technology for sexual health promotion and disease prevention and will now include mobile web development, providing the organization with a multiple means of engagement in ongoing interactions with its users. A client since 2005, ISIS uses Hipcricket’s integrator platform to manage SMS messaging, opt-in membership lists, clinic and service locators, informational messages, and regular reminders about HIV and sexually transmitted infection testing.

Under the terms of the new contract, the company will extend its mobile health program by leveraging Hipcricket’s AD LIFE Mobile Site Builder to create campaign and client-specific landing pages accessible through the mobile Web. Finally, we extended our relationship with Virginia’s Mel Wheeler, Inc., owner of a number of radio stations, beginning in 2008 Wheeler implemented a mobile loyalty customer relationship management program that made a previously passive activity listening to the radio interactive, by encouraging listeners to opt into their mobile listener program. This enabled them to build a database of users for reengagement, re-marketing purposes.

Hipcricket’s account service team and self service tools have provided the company to mobile marketing and listener engagement solution that can be easily extended across Wheeler’s station group to local sponsors.

That completes my prepared remarks and now I’ll turn the call over to Tom. Tom?

Thomas J. Virgin

Thank you, Ivan. Hi, everyone. For the second quarter ended August 31, 2012 Augme reported revenue of $6.2 million, an increase of 51%, when compared with pro forma revenues of $4.1 million for the quarter ended August 31, 2011, and an increase of 22% versus revenue of $5.1 million in the first quarter ended May 31, 2012.

As a reminder, pro forma results for the second quarter of fiscal 2012 which ended August 31, 2011 include results for Hipcricket, Inc, which Augme acquired on August 25, 2011. The revenue mix for the second quarter was 69% from mobile marketing and 31% from mobile advertising. Mobile marketing revenues include sales of messaging, mobile web and services. 70% of these mobile marketing revenues were SaaS based licenses. The revenue mix for the first quarter was 73% for mobile marketing and 27% for mobile advertising. 74% of mobile marketing revenues were SaaS based licenses. In dollars comparing Q2 to Q1, we had increases for each of these categories.

As Ivan mentioned, we completed 29,000 campaigns in the second quarter, our largest quarter so far. Since Hipcricket’s inception over eight years ago we’ve completed more than 225,000 campaigns. We believe this is in most of the mobile industry and reflects the level of experience we have with mobile marketing and mobile advertising.

Bookings or the dollar value of contracts signed which includes new orders and renewals totaled $7.9 million for the second quarter. For the quarter, 29% of our bookings were to new customers, 61% were new sales to existing customers and 10% were licensed renewals. Comparing the percentages of bookings to last quarter, we saw a small decrease in bookings to new customers 29% from 31%, a higher percent above sales to existing customers which was up from 56% to 61% and the percent of renewals was down from 13% to 10%.

As we said in the past, new bookings fluctuate from quarter-to-quarter and renewals will vary primarily due to the timing of the contracts renewal dates. We ended the quarter with a backlog of signed contracts of $18.9 million. Cost of sales were $2.5 million for the quarter compared to $1.3 million pro forma for the same period last year. First quarter cost of sales were $1.9 million. The increase in cost of sales over the last year and last quarter is primarily due to higher revenue levels. As a reminder, in the cost of sales may include short code-related costs, hosting of our cloud based platform and certain third-party costs primarily mobile ad deliveries.

Gross profit increased 32% to $3.7 million or 60% of revenues for the second quarter of fiscal 2013 versus pro forma gross profit of $2.8 million or 69% of revenue for the second quarter of fiscal 2012.

Gross profit increased 18% when compared with $3.1 million or 62% of revenue for the first quarter of fiscal 2013. The decrease in the gross profit margin when compared to prior periods reflects the Company’s shifting mix of business towards mobile ad sales. The percentage of business from the mobile ad network account for 31% of second quarter revenue compared with 12% in the second quarter last year and 27% in first quarter.

Selling, general and administrative expenses increased 17% to $10.9 million for the second quarter of fiscal 2013 versus $9.3 million pro forma from the second quarter of fiscal 2012 and increased 2% when compared with $10.7 million for the first quarter of fiscal 2013. SG&A excluding stock option expense, depreciation and amortization expenses for the second quarter was $7.8 million, the first quarter results was $7.8 million. Second quarter compared to the first quarter includes additional spending and sales and higher transition cost offset by lower professional and consulting fees.

We recorded a net loss of $2.3 million or $0.02 per share for the first quarter of fiscal 2013, it includes the acquisition related contingent – the second quarter which includes the acquisition related contingent expense adjustment of $4.9 million. Excluding this the net loss for the second quarter was $7.8 million. This compares to a pro forma net loss of $6.8 million or $0.08 per share for the second quarter of fiscal 2012 and a net loss of $7.6 million or $0.08 per share in the first quarter of fiscal 2013.

Included in the net loss for second quarter of fiscal 2013 are non-cash stock option and warrant expenses of $1.5 million. Depreciation and amortization expense of $1.6 million and the non-cash adjustment of the acquisition related contingent expense of $4.9 million. The pro forma net loss for the second quarter of fiscal 2012 included non-cash stock option and warrant expense of $1.9 million plus depreciation and amortization expense of $300,000. Included in the net loss for the first quarter of fiscal 2013 are non-cast stock option and warrant expense of $1.4 million plus depreciation and amortization expense of $1.5 million.

The net loss for the quarter was $4.1 million were non-cash charges [switching] that to $1.8 million. This compares to a pro forma net loss of $4.3 million in the second quarter of fiscal 2012 excluding non-cash charges of $2.5 million. In the first quarter of fiscal 2013 the net loss was $4.7 million excluding non-cash charges of $2.9 million. Day Sales Outstanding or DSOs were 71 days compared to 68 days in the first quarter. We think this number will stay around this range and that reflects our tight monthly billing practices.

During the quarter, net cash used in operations was $2.9 million. We also invested approximately $1 million in patent related activities including $860,000 in patent and legal fees. We received proceeds of $1.2 million from the exercise of stock options and warrants. We ended the quarter with $500,000 in cash and no debt on the balance sheet. Subsequent to quarter end we completed a capital [technical difficulty] that we built in net proceeds to the Company’s $6.1 million.

As discussed we are implementing a cost reduction plan that will reduce operating expenses by $6 million annually or $1.5 million per quarter. We have started cost reduction in the current fiscal quarter. We expect to record restructuring charges of approximately $1 million in the second half of the fiscal year.

I will now turn the call back over to Bob.

Robert F. Hussey

Thank you, Tom. We would like to open the meeting to comments or questions. Can I field any at this time?

Question-and-Answer Session

Operator

(Operator Instructions) Our first question will come from the line of Darren Aftahi with Northland Securities.

Darren Aftahi - Northland Securities

Hi guys, thanks for taking my question. Just a couple; one, I guess the first one to Ivan. In the past quarters you’ve talked about some elephant type perspective deals. If you could give us any update on that it would be helpful and then where you’re seeing that if its more on the mobile marketing side ad network or combination of the two?

And then the second one for Bob; on the IP strategy whether the end result is to keep in-house the portfolio or outsource it, what is sort of your timeframe to do this, and then the third one kind of housekeeping for Tom, if you’d give us kind of what the updated fully diluted share count would be with the Hipcricket [are now] in the capital raise, that would be great. Thanks.

Ivan E. Braiker

I guess I’ll start what you asked me asked me first and there are still several substantially large deals in our pipeline, one that I even mentioned before is still in process, believe it or not it’s still there, it’s still being worked and it’s still very much alive and we’re hoping that to get rid of dilution at one of these on that thing and we’re excited about it and we still have -- until we get a final decision it’s not final, but there are substantial deals in our pipeline and we’re very encouraged by that.

And as Bob mentioned in his remarks, I mean, the business is right now been kind of attracting 1% of the dollars compared to 10% of the time it gets and we believe that, that (indiscernible) is going to start closing and with that a lot more revenue is going to come into the market place which I think everybody is kind of watching and knows it’s going to happen. We’re just not quite sure when that reflection point – inflection point is going to happen, but we truly believe that it will. Now Bob, I will let you take the next one.

Robert F. Hussey

With regards to the timetables through the IP process, we’re actually going to formalize the process. We’re going to talk internally about what we see is the opportunities. This process is probably going to take us no more than 30 days. We’re going to engage all of our advisors. We know a fair number of the players in the market place that are interested. It’s a question of seeking the best value from that asset for our shareholders, but we’re going to be very focused. Our point of view with the Company is we have two very, very valuable assets. One is the IP asset and the other is the Hipcricket operating Company and we’re going to capture value as quickly as we can from both. Thank you.

Thomas J. Virgin

Hi Darren, on the shares outstanding we clearly have 112 million -- approximately 112 million shares outstanding. We have option and warrants outstanding and the average price on these is $2 and the number is about $31 million, so that will be $62 million to cost exercise those. And then with the remaining earn out to pay, another 4 million approximate shares going out for a total of $147 million.

Operator

The next question will come from the line of Gerard Hallaren with Janco.

Gerard Hallaren - Janco Partners, Inc

Hi guys. It looks like you are weathering and marching forward at a very, very brisk rate. I’ve got two questions for you, if you’d be good enough. Could you put some color around the cost adjustments on the acquisitions liability, is one and second, if you could talk a little bit about how you guys see this Christmas starting to shape-up, I imagine people are starting to order or at least beginning that process now.

Robert F. Hussey

Thank you very much for the questions. On the first one, I’ll turn it over to Tom.

Thomas J. Virgin

Hi, Gerard – hi. On the adjustments there are two pieces to the adjustment, one was just to adjust the estimate of what the actual payout would be on the earn out, and then the second piece was that we calculated – in order to calculate the number of shares going out to the former Hipcricket shareholders. We had a floor or $2, so the calculation was based on a $2 amount to get to the number of shares and then when those shares are distributed, they were distributed at the market price at the time they’re distributed. And so those two adjustments, it pretty much in equal parts added up to the net adjustment on that.

Gerard Hallaren - Janco Partners, Inc

Okay. And with respect to the total business, looking into the end of the year, and I have one more question about Tom DeLuca.

Robert F. Hussey

Ivan would you take that second question?

Ivan E. Braiker

Yeah, I’d be happy to yes, we clearly guided that we are looking toward a very, very strong quarter this quarter. Obviously it is a big quarter because of a holiday and we are seeing strength along with – the rest of the ad works. So, we are encouraged about it. Our ad network is active and it is getting orders certainly by the day. So we’re excited about this quarter and we remain very optimistic.

Gerard Hallaren - Janco Partners, Inc

Okay. And then have you settled with Tom DeLuca?

Robert F. Hussey

Tom DeLuca is currently our COO. He’s a very seasoned marketing executive. As part of my restructuring plan I’m looking at all of the manpower assets we’ve got, and we’re evaluating how to best utilize his skills and I think over the next two weeks to 30 days we’ll have more report on that.

Gerard Hallaren - Janco Partners, Inc

Thank you and good luck going forward.

Robert F. Hussey

Thank you.

Operator

Your next question will come from the line of Justin Colatosti with Dawson James.

Justin Colatosti - Dawson James Securities, Inc

Good morning, thank you for taking my call. I was hoping you could just provide a brief update on where you stand with the current litigation?

Robert F. Hussey

It’s a very good question. In fact – it’s Bob Hussey talking. I had a very extensive conversation yesterday with Tom Scott of Goodwin Procter. He gave me quite an extensive update. I’m kind of digesting that information and we planned an in-person meeting next week and I’ll have more to report on that in a later date. We have a very active calendar in the litigation area and the events surrounding those litigations are evolving daily if not weekly. So I’ll have a lot more to report later on about that.

Justin Colatosti - Dawson James Securities, Inc

Great. Thank you.

Robert F. Hussey

You are welcome.

Operator

Your next question will come from the line of Robert Goldberg with ThinkEquity.

Robert Goldberg - ThinkEquity

Thank you for taking my questions. So first off, Ivan just wondering if you could maybe characterize some of the large deals in the pipeline, how they sort of breakdown by client vertical? When we speak to some of your competitors they see some of their largest deals coming from telecom, financial streams and automotive, is that pretty much the same breakdown for you? Also I’m wondering if you’ll not be able to discuss at this point sort of the cross-sell rate or success in terms of cross selling effort, in terms of selling in the AD SERVE or the media product into your Ad LIFE customer base?

And then finally, I was just wondering about your thoughts on keeping cash flow breakeven. I apologize if I may have missed this earlier in the call versus the current cash balance post the rates? Thank you.

Ivan E. Braiker

Well thanks Robert, I guess I’ll take your – with the questions on the sale side I think. With us kind of reviewing new clients because it’s difficult for us to do that, but [suffice] it to say we have several very large clients as far as their sourcing capabilities or what they do and how they do it, and part of the large sized thing we do would be to extend our crossover selling into our ad network with some of their ad dollars.

So that really is part of where those large deals fit. They are – they would be large ad deals, there’s only so much you can do on the marketing side so it’s our ability to cross-sell into the ad bunches of these big clients that we have and we think that’s where there is a lot of opportunity. But we have done some of that already as I mentioned in my remarks earlier. We’re finding that literally every week where we’re having success doing more of that. Well I hope that kind of gives you a little bit of color into what it is. It’s difficult for me to talk real specifics, because our clients get pretty catchy about who, what, why and when?

Robert Goldberg - ThinkEquity

Sure.

Robert F. Hussey

Tom would you like to take the second part?

Thomas J. Virgin

Sure. So I think Ivan covered the customer type questions that you had. On the question of how far the cash takes us, we’re expecting the recent financing to take us into the spring and we think at that point we’ll be at a better position. If necessary we’ll be at a better position to raise funds at that point, again if necessary.

Robert Goldberg - ThinkEquity

Okay. Thank you.

Operator

The next question comes from the line of Todd Mitchell with Brean Capital.

Todd Mitchell - Brean Murray Carret

Question here, can you give kind of an idea of what your run rate is for stock base comp on net non-cash component, and secondly just to follow-on to the last question in terms of sources of funding. Are you looking at other alternatives other than equity? Any (indiscernible) can you address that?

Ivan E. Braiker

I’ll take the stock –I think I will take the stock option question. So the run rate has been about $1.5 million on stock options. We expect that with this quarter we’ll have some transition thing so we’ll probably see a little bit more expense in that area and then seeing it gradually to bring off going in the future.

Robert F. Hussey

And its Bob Hussey, let me take the second one of that question about financing opportunities. As Tom articulated earlier a lot is going to develop here over the next six months with regards to both our balance sheet and our P&L. We think our restructuring plan is to positioning us well going forward. We know what our assets and liabilities are as an operating company.

We’re actually talking to many different financing sources given the fact we have zero debt to speak of, it gives us some flexibility. And I think as we strengthen our P&L more opportunities will open themselves up. And we have the opportunity of realizing some recovery of our asset value in the IP portfolio and that any event there could dramatically change our financing options.

Todd Mitchell - Brean Murray Carret

Thank you.

Operator

(Operator Instructions) Your next question will come from the line of Patrick Retzer with RCM.

Patrick Retzer - RCM Technologies Inc

Hi guys. I don’t have a question, I just wanted to complement you on another nice quarter in terms of revenue and bookings, but also congratulate you on the recent moves in terms of changes and personal and cost cutting and mention that’s just refreshing to have a CEO that lays out specific goals and also mentions things like shareholder value and cost control. So congratulations Bob and I look forward to seeing what you guys can accomplish over the next several quarters.

Robert F. Hussey

Thank you very much sir. We are – really we have one mission beyond the stated one that’s offered to our constituents our advertising media company agency constituency. But the mission internally is to be fiercely focused on revenue generation and cost control, so that we have operational profitability. We don’t believe internally as a management team that there’s any reason why we cannot achieve that.

With the talented people that we have here on staff and the understanding of the product that we’re offering to the mobile advertising and marketing community and our understanding of pricing, cost, and gross profit margin analysis, there’s absolutely no reason why we can't deliver more shareholder value and that’s our singular focus. And I think if we can realize at the same time some benefit from the IP portfolio and asset recovery that will be just more opportunity for us. Thank you.

Operator

Your next question will come from the line of Jeb Terry with Aberdeen Investment.

Jeb Terry - Aberdeen Investment Management

Good morning.

Robert F. Hussey

Good morning.

Jeb Terry - Aberdeen Investment Management

Just a quick clarification on some of the growth. I just was looking at the ad network growth and that seems to be – seem to have grown almost 40% sequentially. And then likewise on your bookings growth can you – Ivan can you add a little – is clearly the percentage growth may decline as numbers get bigger, but is there – can we expect to see that kind of grow as we look at into 2013. Is there anything you can help us with on the ad network and the bookings?

Ivan E. Braiker

Yes, thanks Jeb. I appreciate the question and as its pretty much common knowledge and I know you’re quite the student in the industry too, the biggest pool and the fastest growing pool of dollars around mobile is mobile advertising and that is going to be no exceptions to us. I think you’re going to see those percentages really continue as you’ve seen and may be even grow a little bit along with our base staff type platform business is also growing but because the numbers are recognized so much faster because more ad dollars come in, they run over a given period of time which relatively quickly, it can be as fast as two weeks, usually its doesn’t go any longer than six or eight weeks and the money is all (indiscernible) and over done with.

So those revenues are received very quickly versus our platform in marketing dollars which tend to be over contracted a period of anywhere from 12 to 36 months. And you’re going to see the ad dollars becoming larger and more important but with continued growth among our platform dollars too. I hope that kind of gives you the right kind of insight into that?

Jeb Terry - Aberdeen Investment Management

Okay, very good. And booking then is kind of a similar outlook is that …?

Ivan E. Braiker

I think you’re going to see the bookings continue to be strong – well they are going to be strong. I think where we – as I mentioned earlier, I think we’ll all be very proud of the quarter that we’re in right now and we’re looking forward to the call that we’ll be doing three months from now and we’ll be able to report that.

Jeb Terry - Aberdeen Investment Management

Very good. Thank you very much.

Ivan E. Braiker

Thank you.

Operator

I will now turn the call back over to Bob Hussey for closing remarks.

Robert F. Hussey

Well thank you very much everyone for joining us this morning. We look forward to talking more and seeing you all on our next quarterly conference call. Thank you and goodbye.

Operator

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your line.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Augme Technologies CEO Discusses Q2 2013 Results - Earnings Call Transcript
This Transcript
All Transcripts