Pureprofile Ltd - Delivers Its Maiden Normalised NPAT

Equity Bottom-Up

662 Views02 Sep 2022 08:00

Issuer-paid

SUMMARY

Pureprofile Ltd

Delivers its maiden normalised NPAT

Pureprofile Ltd (ASX:PPL) is a data analytics, consumer insights and media company underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers. Pureprofile has reported its maiden normalised NPAT, pre-non-cash share based payments, of $0.2m, up from a loss of $3.36m a year ago. Revenue for the year was $41.7m, up 39% on the previous corresponding period (pcp), as previously reported by the company at its Q4 results. Normalised EBITDA was $4.04m, at the lower end of the company’s guidance range for the year but up 28% on the pcp. Pureprofile has refrained from giving a guidance range for EBITDA for FY23 at this time but noted that it expected the FY23 EBITDA margin to be from 9-10% in-line with FY22. This is largely due to the investment the company has made, and which is still being absorbed, in additional talent and adjacent support (including new offices) to drive growth across the business. Management noted in its post-results investor webinar that it expects one of the benefits of this investment will be the UK surpassing Australia in revenues in FY24. We have adjusted our FY23 forecasts to reflect the margin guidance but also have given attention to our UK forecasts in FY24 which have been lifted. The overall impact to valuation, having also rolled the model for year-end, is a small pullback to $0.09/share fully diluted (previously $0.10/share). On the current share count (1,107m shares) the valuation is $0.102/share.

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 on-line 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.

FY22 was a breakout year operationally for PPL

PPL reported a 39% lift in FY22 revenue to $41.7m, with a 50% increase in ex-ANZ Data & Insights revenue to $11.2m. Across the group, growth in regions outside Australia exceeded growth in Australia, with an overall increase of 48% on the pcp. Revenue ex-Australia now represents 32% of total revenue, up from 29% a year ago, with the UK/Europe comprising 21.5% of revenue. The company has ambitions to grow its ex-Australia base and FY22 was a year of investment in people and infrastructure to do so. The company has guided that it expects to maintain its FY22 margin in FY23 as it focuses on growing its market share in regions outside Australia and that its employee costs as a percentage of revenue would be in-line with FY22 (31.3%). Our FY23 forecasts have been adjusted to reflect this guidance.

Base-case DCF valuation of $0.09/share fully diluted

We use the discounted cashflow methodology to value PPL and arrive at a fully diluted DCF of $0.095/share (previously $0.10/share), based on a WACC of 13.6% (beta 1.6, terminal growth rate 2.2%). Our terminal value is $0.049/share within our $0.09/share valuation. On the current share count of 1,107.0m, our base-case valuation is $0.102/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.

Get started on the Smartkarma Research Network with a complimentary Preview Pass to: