Pureprofile Ltd - EBITDA Guidance Set at Mid-Point of $4.0m to $4.4m Range

Equity Bottom-Up

3 Views04 May 2022 08:00

Issuer-paid

SUMMARY

Pureprofile Ltd

EBITDA guidance set at mid-point of $4.0m to $4.4m range

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 a 40% increase in Q3 FY22 revenues to $10m and a 6% increase in Q3 EBITDA to $0.5m, which includes a negative, mark-to-market, non-cash foreign exchange loss of $0.137m in the quarter. This brings year-to-date revenues to $30.8m, which is ahead of the revenues reported for the whole of FY21, and YTD EBITDA to $3.0m, largely in-line with that reported for the whole of FY21. Pureprofile has reset its FY22 guidance at the mid-point of its EBITDA range of $4.0m to $4.4m due to the forex loss. Previously, the company had expected to deliver at the top end of the range (24 February H2 FY22 presentation). We have trimmed our FY22 forecasts to bring EBITDA back in-line with the new guidance but have left our FY23 forecasts unchanged. Pureprofile has an ambition to expand its EBITDA margins to 30% by the end of FY24, and our current forecasts anticipate this occurring in FY26. We feel there is upside to our forecasts from FY23 onwards should the company be successful in its strategy. Our DCF-derived valuation is maintained at $0.113/share, fully diluted for in-the-money options and performance shares. On the current share count, our base-case valuation is $0.129/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 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.

Continued strong performance into Q3

PPL reported Q3 revenues of $10.0m and EBITDA of $0.5m, respectively up 41% and 6% on the same period in FY21. Revenues for the first nine months of FY22 are up 43% to $30.9m on the same period in FY21 and 63% on the same period in FY20. Year-to-date EBITDA is up 43% on FY21 to $3.0m and two-and-a-half times that reported in FY20. Q3 is seasonally Pureprofile’s weakest quarter but the group continued to demonstrate strong growth over the same quarter in FY21 with all revenue divisions reporting an uplift. The company’s SaaS platform in particular delivered a strong result with revenues increasing 323% to $0.8m for the quarter. We have taken into account the company’s revised guidance as a result of the forex loss in Q3 and have adjusted our FY22 revenues forecast down by 1.1% to $42.1m and EBITDA down by 5.6% to $4.2m. We have maintained our forecasts for FY23.

Base-case DCF valuation of $0.113/share fully diluted

We use the discounted cashflow methodology to value PPL and arrive at a fully diluted DCF of $0.113/share, based on a WACC of 12.3% (beta 1.6, terminal growth rate 2.2%). Our terminal value is $0.069/share within our $0.113/share valuation. On the current share count of 1,107.0m, our base-case valuation is $0.129/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.

Try Now

Begin exploring Smartkarma's AI-augmented investing intelligence platform with a complimentary Preview Pass to: