Pureprofile Ltd - Delivering Record Revenue and EBITDA for FY22

Business model

Pureprofile generates its revenues from providing data analytics and consumer insights derived from its actively managed panels of digital members accessed through its proprietary technology platform. Pureprofile also has a media arm which executes advertising campaigns for clients. In a world where privacy is increasingly valued, consumer insights and profiles generated through online panels allow businesses to gain the ability to segment, target and engage with their audiences without consumer privacy issues. In exchange, consumers are directly financially rewarded for their information and responses, and indirectly through more relevant content and personalised experiences.

Strong finish to FY22, investment ready for FY23

PPL reported Q4 revenues of $10.9m, up 29% on the pcp, and EBITDA of $1.0m, flat on the same period in FY21 but up 50% on Q3 FY22. FY22 revenues lifted 39% to $41.7m and EBITDA 28% to $4.0m. Pleasingly, Pureprofile delivered EBITDA within its guidance range of $4.0m to $4.4m while still investing in talent to drive future revenue and earnings growth. Revenues from Data & Insights outstripped our forecasts, particularly from outside Australia, while Pure.amplify revenues were largely in line with our expectations. The SaaS platform increased revenues 57% in Q4, which was a slower rate of growth than delivered for the full year. We have aligned our FY22 forecasts to reflect the full year revenue and EBITDA reported. Our FY23 forecasts are under review pending the FY22 audited results which will be released in late August.

Base-case DCF valuation of $0.10/share fully diluted

We use the discounted cashflow methodology to value PPL and arrive at a fully diluted DCF of $0.10/share, based on a WACC of 13.6% (previously 12.3%) and a higher risk-free-rate to reflect the rise in the 10-year Treasury bond rate. On the current share count of 1,107.0m, our base-case valuation is $0.12/share. In our view, continued demonstration of strong revenues growth, a sustained return to profitability, and further evidence of margin expansion should underpin PPL’s share price in the near term.