BIRD Blackbird Plc

5 March 2024

Blackbird plc

("Blackbird" or the "Company")

Audited full year results for the year ended 31 December 2023

Blackbird plc (AIM: BIRD), the technology licensor, developer and seller of the multi award-winning cloud-native video editing platform, Blackbird, announces its audited full year results for the year ended 31 December 2023.

Ian McDonough, CEO of Blackbird, commented:

"2023 was a year of great progress on our direct to creator platform, elevate.io. During the year we conducted both qualitative and quantitative market research which reinforced our belief that there are three key problems that creators face in content creation, namely: i) they currently have to use complex locally installed products; ii) third-party collaboration is clunky; and iii) existing tools have limited extensibility. Our vision for elevate.io is to address these problems via a powerful web-based platform. We are early to market in this area and have the opportunity to capitalise on the paradigm shift to web-based video tools for the huge and fast-growing Creator Economy.  Good progress is being made on the development of elevate.io which went into its early access phase in November 2023 and will move to general release at the end of March 2024. The Board are very excited about the prospects for elevate.io."

"2023 was a challenging year for our existing Blackbird platform. Revenue fell by 32% to £1.94 million. Whilst the majority of the fall is attributable to non-recurring items in 2022, such as the EVS technology licensing development fees and the fees for the global winter games, we also experienced some deal losses, most notably A+E Networks, which as we announced in May 2023 concluded at the end of June 2023. Flat advertising revenues and structural changes are affecting the industry with layoffs  being made across the Media and Entertainment and technology sectors. Despite this, Blackbird continues to be used at the pinnacle of Sports and News video creation. During the year our platform was used at a number of major global sporting events, including the Women's World Cup, the Rugby World Cup, the Ryder Cup, the Superbowl and at all of the tennis majors. Through one of our OEM partners, we also closed a deal for the 2024 summer games where the platform will be used on up to 70 concurrent feeds granting access to our full suite of tools to global broadcasters. In News, through our partnership with Blox Digital, Blackbird continues to provide fast-turnaround content for local US news stations and in early 2024 we had a further expansion of an additional 2 stations to leave us with 69 in total.  Through our deal with the US Department of State, the US Secretary of State's press conferences continue to be edited and pushed at speed to social media through our platform."

"Additionally, as general access of elevate.io approaches we have had a number of High Net Worth individuals show interest in investing directly in our story. As a result, last week we raised additional funds to assist in the early months of elevate.io's growth. We were delighted to get the support of the individuals and institutions and did this at only a minimal discount. As announced on 29 February 2024 I and other members of the management team intend to subscribe for £70,000 of new shares following the announcement of these results."

"I am very excited about 2024 and progressing elevate.io to general release. The Creator Economy represents a massive opportunity for the Company to open up our addressable market and, through elevate.io's self-service model, we anticipate this significantly accelerating our revenue growth".

Operational highlights (post year end)

·              elevate.io on track to move to general release at the end of Q1 2024

·              Placing announced on 29 February 2024:

o  to raise approximately £1.05 million before expenses;

o  bring onboard some engaged High Net Worth individuals who showed interest in investing directly in our story; and

o  proceeds will be used to bolster our investment in and grow elevate.io

·             Certain members of the Board, associated family members and management are intending to subscribe for an aggregate of approximately £70k following the release of this announcement

·             Anne de Kerckhove to join the Board on 6 March 2024 as Senior Independent Non-Executive Director and Audit Chair. John Honeycutt, Independent Non-Executive Director will step down on the same date

·             Deals signed, through our partner Blox Digital, for an additional 2 local US news stations taking the total serviced to 69

·        £1,167k* revenue secured for 2024, at end of February 2024, which is down 28% year on year (2023 comparative at end of February 2023: £1,618k)

·       Contracted but unrecognised revenue of £1,514k* at end of February 2024.  Of this, £913k* is to be recognised in 2024, a further £311k* in 2025, with the remainder in 2026

*Unaudited and subject to exchange rate fluctuations

Operational highlights (during the year)

·        Direct to Creator platform named elevate.io at the Company's investor day in September 2023. Subsequently, elevate.io went into early access in November 2023

·           Contract win with an OEM partner for use at global summer games in 2024. The deployment will involve Blackbird's platform being used to edit and publish content from up to 70 concurrent live streams and provide rights holders all over the world with the full editing suite

·             Deal signed with CBS19 reinforcing Blackbird's applicability for fast turnaround news content

·            Restructuring leading to annual cost savings £0.6m from reduction of UK based roles mainly in sales and marketing. Reinvestment of funds in software development team and product specialists

·            Deal signed with Argentinian station Telefe, part of the Paramount Global group and introduced by the CBS sports team, for football highlights

·              One year deal signed with a large Mexican broadcaster via our partner, Simplemente

·             Deals signed with Australian OTT provider and subsequently used at Roland Garros and all subsequent tennis majors

·              Further successful renewals including with US Department of State, Sky News Arabia, BT and Arsenal

·              Protected our core technology increasing our IP portfolio to 27 patents, with a further two pending

·              Guest exhibitor on Microsoft's stand at the NAB show in April 2023

Financial highlights

·             Revenues of £1,937k for the 12 months to 31 December 2023, down 32% year-on-year (12 months to 31 December 2022: £2,847k) with the main reasons being no development fees on technology licensing in 2023 (2022: £452k), one-off fees on the winter games in 2022 and the loss of the A+E Network and NHL deals

·        Contracted but unrecognised revenue of £1,770k down 48% year-on-year (as at 31 December 2022: £3,426k). The main reasons behind the fall were the loss of the A+E Networks deal and one year less of some of our larger deals

o  £1,151k of this balance is to be recognised in 2024 (as at 31 December 2022: £1,597k to be recognised in 2023),

o  £325k in 2025 (as at 31 December 2022: £1,045k to be recognised in 2024),

o  £294k in 2026 (as at 31 December 2022: £480k to be recognised in 2025)

·            Operating costs, excluding LTIP provision, during the year to 31 December 2023 were £4,114k compared to £4,510k in the corresponding period in 2022. Operating costs pre-capitalisation and LTIP provision increased to £5,744k from £4,975k. Capitalisation costs increased to £1,631k from £458k mainly due to the increased development work on the elevate.io platform 

·            Adjusted EBITDA loss (pre LTIP and share option costs), increased to a loss of £2,301k (2022: a loss of £1,806k). This was due to lower revenues partially offset by lower operating costs

·            The net loss for the year was £2,493k compared to a net loss of £1,917k in 2022 due to a lower Adjusted EBITDA pre LTIP provision, as explained above, no amount relating to the LTIP in the income statement in 2023 (2022: £350k credit), partially offset by higher net financial income as a result of higher interest rates

·             Net cash outflow, ignoring proceeds from share issues and transfers into short-term deposits, increased to £3,786k (12 months to 31 December 2022: £2,746k), primarily as a result of £1,248k additional costs incurred on developing the elevate.io platform

·          At 31 December 2023 the Company had cash and short-term deposits of £6,468k (2022: £10,099k) and no debt.

Enquiries:

Chairman's statement

2023 has been a significant year of investment and transformation for Blackbird:

In last year's Annual Report (and in our public statements prior and subsequently), we stated our plans …" to focus on creating a self-service SaaS platform provided on a public cloud ("Blackbird SaaS")" to "…bring on board, product, engineering and marketing talent to enable us to initially address the Prosumer and Pro Teams markets" and to "continue to drive innovation, creating valuable IP in the process". 

This we have done in 2023.  Our new elevate.io SaaS platform commenced early access Q4 of 2023 and will begin general release towards the end of Q1 2024.

Background

Long term followers of Blackbird will already appreciate that our award-winning technology is well recognized within the professional broadcast market for media and entertainment ("M&E"), which has previously been the main focus and drive of our go to market strategy. However, each of our major accounts have often required bespoke integrations which are both time consuming and costly. Combined with the pressures that major broadcasters face with diminishing audience share and reduced advertising or subscription revenues, it has proved a challenging task to grow our share of the M&E services market. As a consequence, we took steps to ensure that, without turning our backs on the M&E market where we still have role to play, we expanded our focus into the significant prosumer/creator market with a standalone product that builds upon the core technology that underpins the Blackbird platform.

The market potential for elevate.io is significant. The total addressable market ("TAM") is enormous and, after almost two years of team building and product development, we start 2024 in a position to capitalise on our capabilities. We will provide unique and much needed solutions to this major market. Ian outlines our approach and this opportunity in more detail in his Chief Executive's review.

Governance

Over the last year we have made changes to the composition and skill mix of the board to better reflect the requirements of our wider market focus and SaaS product model. To this end, David Main one of our most long serving nonexecutive directors (and former Chairman) stepped down during the year and we undertook an extensive search to secure a suitable replacement. We would like to use this opportunity to thank David for his contribution and diligence over the years and for the unwavering support and constructive input that he has always provided.  We will also shortly be saying goodbye to John Honeycutt who has stepped down to concentrate on his growing International client portfolio. We would like to thank him for his sound technical advice and M&E sector knowledge.  Yesterday we were pleased to announce the appointment of Anne de Kerckhove as a non-executive director. Anne is an experienced international executive with a background in technology, B2B and B2C SaaS, Media and Entertainment, e-commerce, marketplaces & digital transformation, and helping businesses scale.  Anne has a wealth of relevant and valuable experience which will assist us as we roll out and scale elevate.io.

Regarding governance policies, we have recently updated our corporate governance policies in line with renewed guidance from the Quoted Companies Alliance (QCA) which is our adopted corporate governance code. Our updated policy statement is available to view on www.blackbird.video.  We have adopted all the updated recommendations, where applicable, and going forward will seek annual reelection to the board for all directors and putting director's remuneration to an advisory vote. We also follow all QCA recommendations on ESG matters whilst we promote the role that we play in helping other stakeholders in achieving their own ESG targets. 

We appreciate that the last couple of years have been a very challenging time for our business and shareholders alike. All of the board are shareholders of Blackbird and we are very mindful of the investment journey that each of us have experienced. On behalf of the board, I would simply like to thank you for your belief and on-going support, particularly as we transition the business in order to realize the full economic potential of our amazing technology which we are working relentlessly to achieve.

Andrew Bentley

Chairman