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Snakk Media shares slide as loss widens in strategy to chase Asian sales growth

Shares in Snakk Media [NZX: SNK] fell 10 percent after the company, which matches advertisers with app users and social media, said annual sales nearly doubled, while its loss widened 62 percent as the company chased growth in Asia.

The loss widened to $1.89 million in the year ended March 31, from $1.16 million a year earlier, the Auckland-based company said in a statement. Sales rose to $7.1 million from $3.7 million, as direct media more than doubled to $4.18 million. Operating and staff expenses rose to $4.77 million, from $3.1 million.

"The date we end up knocking out a profit is really to be determined. The focus now is on growing a significant business as quickly and carefully as we can," Snakk chief executive Mark Ryan told BusinessDesk. "We've got money in the bank and the business is pulling strong revenue, but we still haven't been throwing it around and hiring people willy nilly." The rising costs were a mix of "talent and technology" as well as moving office costs.

The shares recently traded at 9.8 cents. The stock listed New Zealand Alternative Index at 6.5 cents in March 2013 as a compliance listing, meaning no funds were raised at the time, and soared to 29 cents on its first day of trading. It has since declined 66 percent.

Snakk raised $6.5 million in May last year through a share purchase plan in a,private placement at 12 cents a share. The company has said those funds will be used for potential acquisitions as the it targets growth. The company is also mulling another listing, across the Tasman on the Australian stock exchange to access capital quickly and fund its aspirations.,

"We've got some pretty ambitious growth plans over the next few years, so at some point they have to be connected into a public market where if we need to grab $20 million and make a series of acquisitions we need to be able to do that very quickly and easily and that might still be New Zealand but that might also be the ASX," Ryan said.

The company generates more than 85 percent of its sales out of Australia, and the strength of the New Zealand dollar against the Australian currency had crimped sales returns.

"Exchange rates, sometime they're with you and sometimes they're against you, and the kiwi is in fantastic shape right now," Ryan said. "At the moment it is kind of against us" and stripping out the unfavourable exchange the company reported year-on-year growth of 117 percent, he said.

Snakk is expanding further into the Asia, setting up an office in Singapore as a launching pad to the wider market.

(BusinessDesk)

Comments and questions
3

It's a great business idea, incredibly scalable, and they seem to be executing well; if they've timed the market need well they'll be laughing.

Have you ever clicked on an advert on your phone Rumpole? They rely so heavily on interrupting people's lives on their phone. This cannot be a sustainable strategy. There is enough going on in the 7 inches of screen already, let a lone more banner advertising, with year on year decreases in click through rates how ling will it last. They need to make a profit quick or acquire companies who are innovating in digital channel and creating alternate ways of distributing advertising and content otherwise they risk going the same way as newspaper advertising. Down.

Have you ever clicked on an advert on your phone Rumpole? They rely so heavily on interrupting people's lives on their phone. This cannot be a sustainable strategy. There is enough going on in the 7 inches of screen already, let a lone more banner advertising, with year on year decreases in click through rates how ling will it last. They need to make a profit quick or acquire companies who are innovating in digital channel and creating alternate ways of distributing advertising and content otherwise they risk going the same way as newspaper advertising. Down.