Mobile tech company VMob migrating to NZX main board after rapid share price rise

Friday 8th January 2016

VMob, the mobile advertising firm, is migrating to the main board of the NZX after its stock gained enough to lift its market capitalisation over the required $40 million mark.

The NZAX-listed VMob was told by the stockmarket regulator, NZX, last September that it could join the main board if it almost doubled its market value to at least $40 million by the end of March and completed a $5 million private placement.

The shares fell 1.9 percent to 51 cents today, valuing the company at $41.8 million, having reached an eight-month high of 52 cents yesterday. VMob has surged 46 percent in the past two weeks and is now well above the 34 cents apiece investors paid in the most recent fund-raising round.

The company, now headquartered in San Francisco, raised a total $5,032,220 in three tranches late last year to a mix of high net worth individuals, institutional investors, and one of the company’s directors. Founder Scott Bradley, who didn’t participate in the fund raising, had his stake diluted to 21 percent from 23 percent.

Bradley attributes the rise in the shares to the successful completion of fund raising and first-half results that showed a 440 percent revenue increase to $3.3 million and a more than 1,000 percent rise in annualised committed monthly revenue (ACMR) to $4.8 million. The company’s first-half net loss was $3.2 million.

Software-as-a-service companies are typically valued at a 10 times multiple over ACMR, which would value VMob at $48 million, and the “market had finally woken up that the stock has been undervalued”, he said.

The expected timetable for VMob’s migration to the main board will see its shares stop being traded on the NZAX on Jan. 22 and then re-open on the main board on Jan. 25. Bradley said a planned ASX listing is still a consideration later in the year but not a priority given its Australian investors will now find it easier to trade on the NZX main board.

The NZAX is gradually being phased out in favour on the new NXT board which has so far attracted only two listings and VMob chairman Phil Norman said last year the company didn’t favour switching to the NXT as it offered virtually no liquidity to shareholders.

Bradley said the money raised would last the company through to mid-year with its cash burn hovering between $600,000 and $700,000 a month.

VMob’s technology platform delivers personalised, location-based promotional offers to mobile phone users on behalf of major brands to increase sales and Bradley said the bigger retail brands were based in more mature markets such as the US. Clients include McDonald’s, 7-Eleven, Ikea, Anheuser Busch and Mars Drinks.

BusinessDesk.co.nz

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