BLACKBIRD - FLYING HIGH - 08/09/21
Updated: Sep 9
It was back in 2018 that I last spoke with Blackbird (BIRD) CEO Ian McDonough, just a few months after his being installed in the hot seat at the AIM quoted company.
Back then, the shares languished down at 5.5p per share, being somewhat unloved and where the jam of tomorrow seemingly remained firmly out of reach.
McDonough though, with a wealth of industry experience behind him came on board after sizing up the tech which he viewed as being quite amazing.
Fast track three years and much has changed here, where multiple deals have been struck to leverage the BIRD platform which has resulted in the share price appreciating six fold to stand at a current 37p.
The market valuation may well and perhaps rightly so appear heady at present, in the context of the revenues achieved to date and the losses wracked up over the years.
But, catching up once more with the man at the helm ahead of results being reported next week, there is continued and indeed growing confidence from the CEO.
When he joined, McDonough says that the technology was aligned to a very artisan supply chain and was really looking at doing too much, so he quickly refocused the business on serving the hot areas of sport and news.
These are massive markets in a revenue sense and as part of that process he looked at where the BIRD platform could go in a global concept.
As an example of the platform in action, the CEO speaks of its previous tie up with the National Rugby League of Australia.
Here, using the BIRD technology a clip from a live game happening in Sydney can be turned around via the cloud-via an editor sitting in Perth or Melbourne to Twitter in less than thirty seconds.
It is impressive stuff to say the least that is incredibly fast, so little wonder it has been and is now gaining traction.
The CEO explains, “we decided to really focus on that area so brought in others such as the NHL and NRL, plus major news companies like SKY, Bloomberg and others”.
The US State Dept is also on board as the platform is the perfect partner for capturing and relaying live press conferences and breaking news.
With the digitalisation world of business and commerce well upon us and having accelerated throughout Covid, BIRD is gaining increasing interest as highlighted by a recent deal.
“We are growing very quickly and just recently closed a deal with Univision, the leading Spanish-language media and content company in the US. So the platform is now gaining traction at the very highest tables.
Scoring with such major media companies is clearly not only a positive endorsement of the business, but serves to whet the appetite on what the future may hold and translate into a long term building and sustainable revenue stream.
Hot on the heels of the Univision news has come an announcement this week which takes on a slightly different form, as it will capture value away from the core product itself.
As an analogy, the CEO speaks of how back in the day the Acorn computers had an amazing chip design which later became ARM and went on to serve the world.
Although such a comparison may appear somewhat premature, McDonough is clearly excited by the massive opportunity that appears to be emerging. “Rather than a chip design we have a way that we can present video instantaneously on any machine with any connection and that is what we have sold to this company and it is absolutely fascinating”.
Regarding revenue on yesterday’s licensing deal announcement McDonough explains, “the customer is going to build an editor platform on the back of our technology which will be to their own specifications.
For every editing platform license they then sell, Blackbird will receive a revenue share”. Quantifying this, he continues, “If you look at the professional video space the total addressable market in video software is around a $1bn.
This customer is going to pay Blackbird a percentage of their gross revenue from selling software, so it is fascinating to think that if you extrapolate that over the entire market, then Blackbird really has something.”
Looking back over the last year the CEO describes BIRD as being a hot brand across the areas it serves where he says that people have been knocking on their door, particularly since the start of the pandemic.
With results due next week investors or watchers will be able to hear more on the recent progress along with the numbers and prospects for ramping up revenues going forward.
With that to come, McDonough is obviously unable to divulge any financials, but does say that BIRD is well funded moving ahead.
He adds that they did a raise in 2019, but actually didn’t really need to do that, but some of their bigger customers were looking at the balance sheet making sure that we were sound, so it was undertaken rather as a safety mechanism.
With BIRD now gaining traction and an increasingly wider audience, it begs the question as to whether at some point, it may attract the unwanted attention of a would-be suitor.
The company is unique in what it offers as nobody else has apparently cracked what BIRD has achieved, so it could well prove attractive to the right party, should things proceed as envisaged.
Interestingly, founder Stephen Streater who retains a major stake but a more R&D focused role is no stranger to a buy-out situation as he co-founded Eidos in the 1990’s which was subsequently acquired for $130m in 2009.
There are some impressive Institutional holders on board here including Gervais Williams Miton being the largest holder, along with Schroder's and Herald, arguably suggesting confidence in the ability of delivery.
With a closing comment, McDonough says that despite having worked for a number of blue chip companies during his career, Blackbird is by far the most exciting job he has ever had, where he feels every bump in the road and every time the wind catches the sail.