Financial and Operational Review
Sales Revenue in the 2016 financial year was $2.36 million (2015: $0.66 million) an exceptional increase of 257%. This was primarily driven by video content sales in the Australian operations and a number of new products and packages, including subscription packages launched during the year for specific market segments. Strong sales were also a result of strong growth in the Company’s member base, a key driver of sales, which grew by 125% to 18,000 members as at 30 June 2016.
Application fees accounted for 35% of the 2016 financial year’s sales revenue and membership fees began to account for a higher percentage at 41%, providing the Company with increased recurring revenues. This is representative of Big Review TV’s focus on securing long term relationships with tis clients, and membership and fees are expected to become an increasingly significant proportion of revenue.
The Company also received $0.57 million in sponsorship fees, representing its ability to generate additional revenue streams via the increasing demand from corporates for data, advertising and sponsorship opportunities targeted at SMEs.
The Company’s cash receipts totalled $4.07 million for the 2016 financial year. Revenue for the period comes primarily from the sale of licenced video content produced from Australia-wide operations. The significant difference between cash receipts from operations and sales revenue is due to the revenue recognition of the sales contracts. In many cases, the Company receives cash payment upfront on 12- 24 month contracts, however, the accounting treatment sees the sales revenue recognised proportionately over the life of the contract as the services are provided.
Big Review TV’s ability to generate strong cash flow resulted in its Australian operations becoming cash flow positive in March 2016 and over the final quarter (excluding corporate costs).
Big Un Limited and its controlled entities reported a net loss after income tax for the year ended 30 June 2016 of $7.80 million (2015: loss of $4.67 million). The loss can be attributed to an increase of 66% in operating expenses to $7.31 million, reflecting the Company’s significant investment in personnel, training and infrastructure to service the ongoing robust growth being achieved and forecasted.
The Company increased its employees from 16 to 95 during the period and experienced a related increase in employee expenses. Following the success of the business model in Australia, the expansion included substantial investment in growing the sales team and new production teams to establish the capacity required to meet additional demand in Australia and acceleration of strategic development in overseas markets. In addition, in line with public company and strategic requirements, the Company experienced an increase in consultant and contractor costs.
In June 2016, the Company successfully raised $2.4 million via a 1 for 4 Rights Issue that closed significantly oversubscribed and included management and board participation. The capital raise will fuel the platform enhancement, which is expected to drive customer acquisition as the Company will be able to offer increased services, both Saas and a broader range of online services including the ability for customers to manage their video marketing strategies in one place.
1. Investment in Global Expansion
In line with the Company’s international growth strategy, it has continued to invest in building the infrastructure, capacity and team for accelerated global growth.
Following the proven success in Australia, the Company has leveraged its first mover advantage by investing in establishing operations in key markets identified by specialist market research. Over $400,000 has been invested in establishing Big Review TV in New York. This has resulted in over 1,000 business videos being produced ready to be monetised.
The Company’s strategy is to accelerate its growth into overseas markets to increase market share and activate further revenue streams. Big Review TV can now boast a presence in London, Singapore, Hong Kong, Vancouver, New York, San Francisco, and Auckland. It now has in place the necessary infrastructure required for accelerated expansion in these markets, which will be a core focus of the Company in the 2017 financial year.
Operations in London, UK commenced in March 2015 and have made substantial traction with over 500 businesses filmed and significant video content generated. The Company intends to expand its operations to other major UK cities over the next 12 months.
2. Product Development
In January 2016, the Company introduced specialist video packages tailored to the not-for-profit (NFP) sector and corporates. At the end of the 2016 financial year, the Company had achieved over 50 Australian NFP clients. In April, following a positive response to the concept of video packages from larger organisations the Company started to offer corporate packages tailored to the requirements of specific industry sectors that are delivered over a 12 month period. These Corporate Packages range in price from $12,000 to $24,000 and have made a significant impact upon revenue growth and recurring revenue streams.
Also in April 2016, as part of its product development strategy, the Company began the enhancement of its video platform to include dynamic publishing and further social integration features. The new product offering will provide recurring revenue based on a SaaS model and deliver members the ability to control and publish content on their profile pages of bigreviewtv.com. The platform is anticipated to be live in the December Quarter 2016.
3. Sales Strategy Growth
The Company’s growth strategy includes actively collaborating and partnering with strategically relevant organisations to aggregate and assist with global market penetration. Over the period, the Company has signed agreements with leading Australian and international organisations that will be highly beneficial for customer acquisition growth.
Partnerships signed during the 2016 financial year include a sponsorship agreement with Mojo Downunder, an Australian luxury fashion company for the menswear market and First Class Capital (FCC), a specialist in EFTPOS services for small retail businesses for a sponsorship partnership.
In addition, the Company has expanded its channel partnerships through agreements with GeoOp, a mobile field service management application and Velpic, a video based education software-company. Each of these partnerships has expanded the Company’s cross-selling and cross-promotional opportunities and expands its market penetration into new sectors.
In the US, the Company also continued its expansion strategy through a sales distribution partnership with DNA Behaviour International Resources (DNA). As part of the agreement DNA were granted an exclusive license to sell Big Review TV products and services within a number of areas in the New York area.