Pureprofile Ltd: EBITDA Set to Hit Top End of $4.0m-$4.4m Guidance Range
Pureprofile Ltd
EBITDA set to hit top end of $4.0m-$4.4m guidance 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 53% increase in H1 FY22 underlying EBITDA to $2.48m, which was ahead of our forecast for $2.41m. Underlying NPAT for H1 FY22 was $0.51m, a turnaround from the $4.39m underlying net loss reported in H1 FY21. The company has announced that it expects to deliver FY22 EBITDA at the top end of its guidance range of $4.0m to $4.4m. We have upgraded our FY22 revenue forecasts by 5.1% to $42.6m but have taken into account the company’s commentary around balancing its investment in its growth strategy, including expansion into new regions, and improving its operating margin. As a consequence, we have aligned our FY22 EBITDA forecast at the top end of the guidance range, which has resulted in an 8.5% reduction in our FY22 forecast. We have, however, upgraded our FY23 forecasts which we discuss on the following pages. Our DCF-derived valuation has increased to $0.11/share (previously $0.09/share) fully diluted for in-the- money options and performance shares. On the current share count, our base-case valuation is $0.127/share (previously $0.10/share).
Business model
Pureprofile generates its revenue 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.
Balancing growth investment with margin expansion
PPL reported better-than-forecast revenues of $20.8m, an increase of 44% on H1 FY21. Underlying EBITDA of $2.48m was also better than expected, up 53% on the previous corresponding period and ahead of our forecasts. Underlying NPAT was $0.51m, a $4.9m turnaround on the year before, but below our forecast for $0.67m as a result of slightly higher-than-anticipated operating costs. The company’s SaaS platform is particularly outstripping our expectations and we have upgraded our FY22 and FY23 revenue forecasts accordingly. This division is the key driver of our 5.1% upgrade to $42.6m for FY22 and 7.7% increase in our FY23 revenue forecast to $48.7m. We have taken into account a higher cost of sales and operating margin investment as Pureprofile invests and expands into new regions and this has resulted in a reduction in our FY22 EBITDA forecast to $4.4m ($4.8m previously), putting it at the top end of the company’s guidance range.
Base-case DCF valuation of $0.11/share fully diluted
We use the discounted cashflow methodology to value PPL and arrive at a fully diluted DCF of $0.11/share, based on a WACC of 12.3% (beta 1.6, terminal growth rate 2.2%). Our terminal value is $0.067/share within our $0.11/share valuation. On the current share count of 1,100.5m, our base-case valuation is $0.127/share. In our view, continued demonstration of strong revenue growth and a sustained return to profitability should underpin PPL’s share price in the near term.
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- Pureprofile Ltd: EBITDA Set to Hit Top End of $4.0m-$4.4m Guidance Range25 Feb 2022