Hipcricket Inc (OTCBB:HIPP)’s Q2 Results are Out
Looking at the chart on the right, you can see that Hipcricket Inc (OTCBB:HIPP) has been displaying the quintessential penny stock performance over the last couple of months. There are lots of big surges in the right direction when positive news create some excitement, but there are also quite a lot of unexpected drops once the hype gets a bit too much.
HIPP‘s behavior during yesterday’s session is no exception. The ticker gapped down for no obvious reason and opened the day at $0.47. Some turbulent trading ensued bringing the low of the day to as little as $0.425. An intraday high of $0.48 was registered but when the closing bell rang, HIPP was standing comfortably at $0.45 meaning daily losses of around 10%. This is especially odd, not least because of the two press releases that came out on Tuesday.
The first one talked about a partnership that HIPP have established with Mondelez International Inc (NASDAQ:MDLZ) and Google Inc (NASDAQ:GOOG) while the second one gave a brief description of the financial results for the second quarter of the current fiscal year (we’ll get to them later on). You would agree that few penny stock ventures can brag about having deals with huge NASDAQ companies like MDLZ and GOOG. Predictably, the announcement of the agreement gave the ticker a push on Tuesday when the value went up by about 7%. As we mentioned, however, virtually all the gains were wiped out and we decided to take a look at the financial results and see if they were the reason for yesterday’s pessimism.
The figures were briefly described in a press release about half an hour before the end of Tuesday’s session and as the announcement itself would suggest, there’s some good news and there’s some bad news. The 10-Q covers the quarter ended August 31, it came out about an hour after yesterday’s closing bell and it paints the following picture:
- cash: $360 thousand
- current assets: $6.8 million
- current liabilities: $9.1 million
- quarterly revenue: $7.5 million
- quarterly net loss: $3.3 million
- accumulated deficit: $120 million
The highlight of the statement is, without a shadow of a doubt, the 23% increase in revenues year-over-year but unfortunately, this is still not enough to outweigh the huge expenses. The net loss has increased by a whopping 46% compared to the one registered during the corresponding quarter of 2012. The $9.6 million recently raised through the sale of equity apparently isn’t enough to soften the blow, either.
HIPP, who were previously know as Augme Technologies, have been plagued by millions of dollars in annual losses since the very beginning. In September 2012 they decided that it’s finally time to do something about it and a restructuring plan was put together. The workforce was reduced and numerous efforts were made to decrease the colossal expenses. To some extent, it has worked and the financial statement reveals that they’ve managed to slash some of the costs. So far, however, they are struggling to keep up with the increased demand for their online marketing platform (which is, apparently, quite clever) and this pushes the notion of profitability further and further away.
The future reports should reveal if they have what it takes to get themselves out of the financial hole and in the meantime, 
the stock remains as volatile and as risky as ever.
On the bright side, HIPP, even when it went under its previous name, has managed to stay away from the paid pumpers. We see numerous penny stock ventures with interesting business plans go through the promotional treatment and, more often than not, the results are quite catastrophic. Alkaline Water Company Inc (OTCBB:WTER) is a prime example.
