Mirriad Advertising plc

("Mirriad" or the "Company")

Trading update for the six months to 30 June 2022

Mirriad, the leading in-content advertising company, announces the following trading update for the six months ended 30 June 2022 ("the period").

H1 headlines

·      Revenue for the year to December 2022 now expected to be flat year-on-year at approximately £2m due primarily to significantly weaker than expected market conditions in China

·      Revenues for H1 of £577k (H1 2021 £1,137k). Due to seasonal nature of key advertising markets and the sales pipeline, higher revenues are expected in H2

·      China revenues down 85% in the period from £820k in H1 2021 to £123k

·      Decision to make orderly wind down of Chinese operations by the end of the Tencent contract in March 2023, delivering annualised cost savings of approximately £1m

·      US revenues grew by 57% to £418k (30 June 2021 £266k), now accounting for 72% of total revenue

·      Closing cash at the end of June 2022 of £17.7m (June 2021 £29.8m) and year end cash to be better than market expectations due to cost savings and lower than budgeted bonus provisions

·      Improvements recorded across all KPIs on supply and demand sides

·      Cost control programme to deliver £2.5m of total annualised savings of which the vast majority will be achieved in respect of 2023

The completion of the half-year budgetary review process identified significant current weakness in the Chinese market which was not anticipated at the time of the last review, predominately due to stringent Covid-19 lockdowns. Combined with contractual changes which saw us move away from guaranteed income in this market, revenue in China decreased from £820k to £123k.  The Board no longer considers it prudent to budget for the anticipated strong bounce-back in China.

The company has taken decisive action to address this challenge, with an orderly wind down in China agreed for the end of the current Tencent contract to Q1 2023. This will reduce the Company's overall cost base by around £1m per annum as an important part of a wider cost control programme, and allow for the prioritisation of spend and management focus in the US.

The Board is encouraged by the US sales pipeline, with the business receiving an increasing number of substantial RFPs and inbound enquiries. In the financial year ended 31 December 2021, 30% of US revenues were recorded in the first half of the year, with 70% in the second half.  The Board remains confident of significant revenue growth in the US in the second half and believes that US revenue will be in line with market expectations.

Outlook

Across the business, the team is working hard to successfully convert and further grow our pipeline, against the backdrop of varying macroeconomic uncertainty in many of our markets.

Recurring business is strong and, as evidenced by our KPIs, there is positive progress on building both the supply and demand sides of our pipeline. To maximise the realisation of this pipeline we will now be leaning more into digital - in the EU and APAC - to reflect positive initial progress made on this front in North America.

The contract signed with Magnite on 30 May 2022 underlines how we will bring scale and automation to the in-content advertising format via programmatic ad campaigns across multiple platforms, channels and markets.

Alongside this, we continue to make positive progress on developing our dynamic insertion approach, with a first campaign running with a leading global food and beverage company in the US. We are continuously improving our end-to-end experience, enhancing data exchange, and developing self-service capabilities.

Revenue is not currently where we would like it to be, but Company plans always assumed a significantly backloaded revenue profile and, factoring the elements outlined above, we anticipate H2 will show substantially higher revenues than H1.

Stephan Beringer, CEO of Mirriad, said: "Mirriad is extending its lead in the in-content advertising market with an augmented focus and position in North America. We are at the forefront of the industry, with steadily rising adoption and ever-growing evidence that our format delivers better results for advertisers and new revenue streams to content owners.

"Our positive US momentum is diluted by the disappointing results of our operations in China, stemming from the unexpected length of stringent lockdowns and a challenging macro environment overall. The decision to make an orderly wind down of our operations at the end of the Tencent contract does not impact our overall route to scale, which is rooted in standardisation and integration with the wider advertising ecosystem and enhancing our advanced programmatic capabilities.

"In our priority markets we are seeing a clear in-content interest surge - moving it from novel consideration to must-have and we expect our revenue-generating activity to be backloaded towards the end of the year, as per industry norms. We are also within the Company's expectations of cash consumption and cash balance as the whole Mirriad team works to convert our high-quality and varied pipeline at pace."

The company will provide further updates in its interim results, which will be released in the week commencing 8 August 2022.

ENDS

Enquiries:

For further information please visit www.mirriad.com or contact:

Mirriad Advertising plc

Stephan Beringer, Chief Executive Officer

David Dorans, Chief Financial Officer

Tel: +44 (0)207 884 2530

Financial Adviser, Nominated Adviser and Broker:

Panmure Gordon

Dominic Morley (Corporate Advisory)

Erik Anderson (Corporate Broking)

Tel: +44 (0)20 7886 2500

Financial Communications:

Charlotte Street Partners

Tom Gillingham Tel: +44 (0) 7741 659021

Andrew Wilson Tel: +44 (0) 7810 636995

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

About Mirriad

Mirriad's award-winning solution unleashes new revenue for content producers and distributors by creating new advertising inventory in content. Our patented, AI and computer vision technology dynamically inserts products and innovative signage formats after content is produced. Mirriad's market-first solution seamlessly integrates with existing subscription and advertising models, and dramatically improves the viewer experience by limiting commercial interruptions. 

Mirriad currently operates in the US, Europe and China.