Vertro Q2 Update
Vertro released Q2 numbers last week that evidenced a well managed growth trajectory in spite of the constraints on use of their cash resources as a result of the Nasdaq minimum equity requirement that had to be met by June 14. During a quarter in which management continued to achieve greater efficiencies in ad buying and stronger consumer use patterns, they were unable to fully capitalize with the necessary continuity of advertising spend they would choose if they did not have to hoard cash leading up to the June 14th Nasdaq deadline. With the passing of the deadline and the achievement of compliance, the company was then able to resume operating in a fashion where the goal returns to profitable long term growth instead of near term cash management. We believe this is the last such hurdle that could have a material impact on Vertro’s operations and expect to see the final hurdle (Nasdaq minimum bid rule) conquered over the next few weeks.
There were two very important takeaways from the post report conference call –
1) the company gave us an update on quarter to date results and raised Q3 revenue guidance from “high single digits to low double digit sequential growth” to “double digit sequential growth”. The number of toolbar users, home page unique users and searches all showed very strong gains in July over June and management indicated that the numbers through Mid-August suggest that trend has continued.
2) management announced the testing of a new “app bar” that has a few new twists that has shown a higher degree of user engagement than what we currently see with the existing ALOT toolbars.
In addition to these two items, we should note that one who listened to the conference call would be hard pressed to come away feeling anything but very optimistic about Vertro and the prospects for the next few quarters. We believe that the reverse split that will be implemented over the next few weeks will ultimately be very positive for Vertro shareholders as investors get an opportunity to consider the potential of the Vertro growth story without vestiges of the Miva albatross, the dark cloud of Nasdaq delisting or penny stock status. Keep searching, shopping and sharing the Vertro story.
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