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Engage:BDR provides upbeat profit guidance on back of strong revenue growth and improved margins

Margins increased from about 40% in fiscal 2016 to 48% in 2017, and they are still on the rise.
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Engage is forecasting revenues in a range between $24 million and $24.5 million for the 12 months to December 31, 2018

Engage:BDR Ltd (ASX:EN1) has provided an operational update and financial guidance, indicating the company has made a good start to 2018.

From a quantitative perspective, Engage is forecasting revenues in a range between $24 million and $24.5 million for the 12 months to December 31, 2018.

The provider of digital media and advertising services expects underlying earnings to be between $1.25 million and $1.5 million for the same period.

Strong revenue growth in January and February

The strong earnings outlook is underpinned by strong month-on-month programmatic revenue growth of 280% in January and 310% in February.

This reflects the robust performance by the advertising arm of the company’s business.

In addition, the company’s influencer marketing business IconicReach, originally expected to generate revenues of about $1.2 million with a 50% gross margin for the 2018 calendar year, is now expecting to do considerably better.

The company has already almost achieved that anticipated full calendar year revenue in just the first two months of 2018.

It now expects to achieve revenues in its influencer marketing business in the vicinity of $3 million for the 2018 year.

Cost reductions and revenue mix improve margins

Engage has been able to cut back costs in certain areas of its business.

This along with a changing revenue mix is expected to result in higher margins in 2018.

Margins increased from about 40% in fiscal 2016 to 48% in 2017 and they are still on the rise, suggesting underlying earnings could surprise on the upside.

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