KIT digital, a Prague-based specialist in video management, has posted a GAAP net loss of US$ 24.9mn for the first three months of this year, and announced new measures designed to get its finances under control and boost growth.
Revenues for the first three months of this year totalled US$ 59mn, down from US$ 70mn in the preceding quarter and US$ 34.5mn in the first quarter of 2011.
The company ascribes its lower-than-usual cash levels to one-time residual payments of consideration for acquisitions closed in Q4; higher than usual legal, accounting and audit costs associated with corporate development activity; post-consolidation integration costs; and other cash requirements of the business during the quarter.
Despite this rocky patch however, the Prague-based firm has undertaken a number of initiatives intended to support its focus on providing video management software and services to tier-one customers around the world, which include: hiring additional personnel in the high-growth areas of Latin America and South East Asia; prioritising development resources for its Cosmos platform; and divesting non-core business lines, including content solutions, digital marketing, and lower-margin broadcast systems.
The company also refers to a number of recent contracts wins which should help boost its performance throughout the rest of the year, including Belgian broadcaster VRT, which has extended its contract for the provision of online streaming and video-on-demand services; Sky Italia, which has selected the Cosmos platform to run all of its online video delivery services; and BSkyB, which will be running its recently-announced Sky Now service on the Cosmos platform.
Some of the company’s biggest problems appear to stem from financial control and management: CFO Robin Smythe is being transferred into a Corporate Development role, and the company has started to look for a new CFO. It has also hired a new Corporate Controller and Head of Internal Audit, based in New York, and retained the services of one of the Big Four accounting firms.
“During my first 45 days as CEO we have conducted a thorough strategic and operational review of our business,” said Barak Bar-Cohen, CEO. “Based on this assessment, we have thus far taken definitive steps to support our operating plan and improve financial controls. This includes raising capital to support our updated operational plan and global commercial strategy. Going forward, we intend to sharpen our focus on tier one video management software and services, which we believe will result in significantly higher cash flow levels by the end of 2012.”
For 2012, the company is setting a baseline revenue expectation at US$ 250mn with non-GAAP operating income margins trending toward previous levels in the second half of the year.
The company expects to begin generating positive free cash flow from operations no later than the fourth quarter of this year, dependent on an ongoing strategic review of its business lines and contractual relationships with its customers.
A new media and video technology company called Vidunix was announced in Prague earlier this week by former senior management from KIT Digital, which intends to offer cloud-based and deployed solutions that allow clients to “connect, engage and enrich the experience they have with their customers” – more details here