San Francisco Business Times - by Patrick Hoge
Date: Monday, October 18, 2010, 12:00am PDT - Last Modified: Thursday, October 14, 2010, 7:18pm PDT
Related: Technology
Blinkx Inc., a search engine that has indexed millions of hours of video, is riding a rising video advertising tide that has quadrupled its revenue in the last three years and put it on the verge of profitability.
Suranga Chandratillake, founder and CEO of the 6-year-old company, this week notified investors that for the six months ending Sept. 30, Blinkx expects to report revenue of $27 million, an increase of 100 percent from same period during the previous fiscal year.
Both the number of video searches and the quantity of advertisements from companies like Coca Cola, Virgin, Toyota, Microsoft and McDonald’s have grown significantly, he said.
Blinkx, which is headquartered in San Francisco and London and traded on the London Stock Exchange, said it expects to report an operating profit of more than $1 million for the first half of the year, above the $630,000 average that analysts had predicted.
In addition, Chandratillake said that in the last six months Blinkx increased its cash stockpile from about $2 million to around $17 million.
That is despite the fact that since early 2009, Blinkx’s staff has more than doubled from 55 to 110 employees, more than half of them located in San Francisco. The company currently has several openings in San Francisco for technical jobs, particularly in research and development.
Chandratillake had earlier said that in the first quarter for the first time, Blinkx was EBITDA positive by about $30,000. Blinkx took in $13.9 million in revenue in the year ending March 31, 2009, $33.6 million the next, and analysts have predicted it will do $59 million this year with a profit of roughly $5 million. The company lost $8.5 million in the year ended March 31, down from $8.8 million the prior year.
Mike Galli, an analyst with MRG Inc. in Oakland, said Blinkx has become one of the biggest businesses with expertise cataloguing and tagging video from sources like the Associated Press, the BBC, Howcast and Lonely Planet.
The company’s core intellectual property, which is protected by 111 patents and uses facial recognition technology, among other techniques, is a spin-off from corporate information management giant Autonomy, where Chandratillake was previously CTO.
“They are one of the biggest, if not the biggest, in their category,” Galli said. “To me, they’re the kind of company that a company like Google might look to purchase.”
According to eMarketer, the runway for growth remains long, with online video advertising in the United States estimated to grow from $1.5 billion this year to $5.5 billion in 2014.
Blinkx has continuously been announcing deals to distribute its content from and through a host of media and search properties, and it now has partnerships with 720 companies, up from 420 in early 2009.
It has also been investing in different technology platforms, pursuing a long-term “three-screen” strategy for distributing content on mobile devices and Internet-connected televisions, as well as the desktop personal computer where it got its start.
Chandratillake said it has been a challenge figuring out the right balance of preparing for the inevitable ubiquity of web video on mobile devices and TVs without detracting from efforts to serve today’s online users.
“We know in the long term, the three- to five-year time frame, we have to be relevant on mobile phones and television sets,” he said.
In July, Blinkx announced that Samsung Electronics Co. would feature a Blinkx application on Android devices, and it opened its platform to mobile application developers.
Last month, the first partnership emerged, with Evri, a San Francisco-Seattle company backed by Microsoft co-founder Paul Allen’s Vulcan Capital that delivers content on selected topics over mobile phones.
Evri CEO Will Hunsiger said he was particularly impressed with Blinkx’s technology because it makes video playback exceptionally smoothly over mobile devices when compared with competitors.
Chandratillake said that even though televisions have been around for decades, the momentum is much greater currently in the mobile realm largely because of the iPhone.
“We always assumed it would be the other way around,” he said. “The iPhone has turned everything on its head. It has revolutionized expectations.”
http://www.bizjournals.com/sanfrancisco/stories/2010/10/18/story9.html
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