GrooveVC Update Re: Vertro Management Interim Update
The following GrooveVC update was posted in the new GrooveVC message board forums on September 11 and copied to subscribers of the GrooveVC newsletter at that time. We are posting it to the Groove Blog so those who visit us through WordPress can access it:
In what we (and apparently investors in general) see as a very positive development, Vertro management released an update on several key metrics for Q3 to date:
1) Revenue – top line growth for July and August suggests that we should see double digit sequential growth for Q3 over Q2.
2) Expenses – management appears to executing with operating expenses running exactly where they told us they would be – $1 million per month.
3) Toolbar Base Growth – the net addition of 400,000 new users since June 30 is a most impressive feat, when you consider that our net new users in Q2 was only 300,000 and that we spent $5.8 million on advertising to achieve that net 300,000 user growth vs. $4 million ad spend for Q3 to date. Thus, our $4 million ad spend in July and August produced 33% more net new toolbar users than our $5.8 million ad spend in Q2 achieved. This tells us one of two things, we are either achieving a higher conversion rate (i.e. more toolbar downloads per dollar spent) or our attrition rate is slowing markedly. Either or a combination of both is very bullish for Vertro’s outlook. While we expect that Vertro’s ad spend in September will bring us in line or even slightly ahead of last quarter’s ad spend of $5.8 million the Q-to-date trend is very impressive.
4) ALOT home page user growth – Amazing. Do not miss the importance of this metric. ALOT home page users on average will search more often, click more often and click higher paying ads than toolbar users. ALOT has put together an extremely user friendly home page application and it is apparently catching on in a big way. The August monthly unique user figure is more than double the average monthly unique users of the Alot home page in Q2.
5) ALOT portfolio search figures – August searches from all three ALOT offerings (toolbar, homepage and desktop) showed a nearly 25% increase over June searches. This is also an extraordinary growth rate from two months ago and further evidences the momentum that we see for ALOT heading in to Q4.
Following the release of this report from management, Vertro’s stock rose 38% on trading volume of just over 3.15 million shares vs. an average daily trading volume closer to 250,000 shares. While volatility is to be expected following such a large spike in volume, we feel that the increase in the stock price is warranted and leaves much room for upside as the Vertro story begins to get more attention from investors.
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