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2015 Half Year Achievements
The first half of 2015 has seen some significant changes for the business as it positions for future growth opportunities. In June 2015, Myriad rebranded its OTT messaging service from “msngr” to “Versy” to coincide with the product’s evolution towards a more content driven social experience and away from a pure group chat proposition. The Mobile Services Division has been split into Sub Data and Versy to improve focus on the different operating environments of these businesses. With clear divisional management and improved visibility of the financial results of these separate divisions, the ability to execute the Group’s strategy in a rapidly evolving business environment has been greatly improved.
Versy
During the first half of 2015 Versy launched content channel pilots, initially focused on Mexico, the country with the second largest mobile subscriber base in Latin America. The results of this pilot programme led the company to the evolution of its Versy strategy announced in June. While Versy continues to offer enhanced chat capabilities, including one-to-one and group chat, content discovery and social discussion around that content will be the cornerstones of the offering as we move into the second half of 2015 and beyond. Versy now supports over 150 content channels that include free access to music, movies, news, and sports, and more than 20 channels which feature independent content producers such as bloggers, influencers and trend setters. Versy has attracted key international content brands with a particular focus on the Latin American market, including Universal Music, Sony Entertainment, Warner Bros. and Perform Group. As of June 2015, over 100 Spanish language channels were operating in Mexico and the Central America region, and Versy went live with Portuguese language channels in Brazil. At the end of June 2015, Versy had a total of 6.1 million channel followers(1) in Mexico alone.
1 Includes users that follow multiple channels
Sub Data
Myriad’s Sub Data business saw solid performance relating to traditional USSD services such as self-care and operational messaging, and growth in Value Added Services such as powering mobile payment services and social messaging over USSD in emerging markets such as Africa, India and Latin America. Overall revenue for Sub Data reached USD 6.1 million, a 22% increase over the same period in 2014 (HY2014 USD 5.0 million).
Myriad currently powers Orange Money, the Orange Group’s mobile payment initiative. By the end of June, this initiative had expanded to cover 12 countries throughout Africa.
The Myriad Updates service has reached 38 million unique visitors by the end of June 2015, delivering social media through a text-based interface for feature and basic phone users who do not have a data plan. In addition, we are Facebook’s partner of choice for USSD services with 24 live deployments with operators across Latin America, Africa, India and South-East Asia. In June 2015, Myriad expanded its portfolio of social messaging services by launching the Twitter SMS service with Vivo, the largest of the Telefonica operators in Latin America. This service allows Vivo clients without a Twitter account and using any GSM device to receive curated notifications. Additionally, registered Twitter users can tweet, retweet, follow and message other Twitter users via SMS. Myriad will now look to launch the service with other carriers in underserved markets throughout Latin America and Africa.
Through the first half of 2015 the Sub Data Division increased its sales force as Myriad looks to accelerate growth opportunities by expanding the reach of our Value Added Services and further penetrating markets in Africa and the Middle East.
Device Solutions Division
The Device Solutions Division’s product portfolio provides OEMs, service providers and device manufacturers with the ability to deliver powerful social, mobile, rich media and television experiences on all types of devices. In the first half of 2015, Myriad concluded two significant deals with Microsoft to provide embedded Java technology on a range of new low end feature phones; and browser technology for new Windows 10 devices, including laptops, tablets and smartphone.
Java-based products are increasingly being used in smaller form factors to address opportunities in the “internet of things” or “IoT” market, and Myriad is well positioned to serve this market. In the first half of 2015, the Device Solutions Division reorganized its product management and marketing function and added additional Java expertise to address this shift in the marketplace. Development activities in the first half of the year focused on support for the most recent versions of Java, IoT-specific chipset architectures, and IoT-specific communications protocols, which will allow us to offer products in areas such as the smart home market. Going forward our strategy will focus on three markets – IoT Smart Home, Cable TV-infra structure providers and operators, and Mobile-feature phone application porting for developing world markets.
Fundraising
On 8 April 2015, Myriad announced that it had raised gross proceeds of CHF 34.4m in a private placement of 8,600,000 shares from authorized capital. The shares were issued to international institutional investors. The funds from the private placement will be used to accelerate the growth and enrich the content of the Versy ecosystem and continue the evolution of Value Added Services in the Sub Data division. It is anticipated that the level of investment in Versy will increase significantly towards the end of 2015 and into 2016.
Managing Costs
The extensive restructuring projects completed in FY2014 resulted in significant cost reductions across the business, allowing the Sub Data and Device Solutions Businesses to run profitably throughout the first half of 2015. This allows the funds from the private placement completed in April of 2015 to be primarily allocated to the growth and development of the Versy product.
Financial results in brief
In the first six months of 2015, Myriad achieved solid financial performance and entered the second half of 2015 with a cash balance of USD 51.9 million, which will enable investment in the business for the remainder of the year and well into FY2016. Sub Data saw a strong 22% increase in revenue to USD 6.1 million.
(HY2014 USD 5.0 million), powered by increased revenue from Myriad Updates. Device Solutions achieved a steady performance through the first half of the year, underpinned by two significant license transactions with Microsoft in North America and China. Overall revenue fell moderately to USD 10.7 million (HY 2014 USD 11.2 million). Versy remained in a pre-monetization stage as key content channel pilots were launched in the Latin America region. These pilots helped evolve the Versy strategy toward content driven conversation and began to lay the foundation for monetization opportunities in the second half of 2015 and beyond. Overall revenue for the period decreased to USD 17.6 million (USD 21.8 million), which is attributable to the elimination of active user fees from America Movil for legacy messaging services in H1 2014, the planned sun-setting of legacy messaging services with several North American mobile operators, and the expiration of legacy support and service contracts with Nokia all acquired with Synchronica in 2012. Given the nascent monetization opportunities for Versy and the elimination of certain legacy services and contracts, we anticipate that overall revenue for FY 2015 will not be as high as FY 2014, as previously reported. In addition, we intend to increase investment in Versy towards the end of 2015 and into 2016, to increase the number of content channels throughout Latin America and to roll out a new service for the Hispanic community in the US.
