Pureprofile Ltd: Q3 EBITDA up 150%, on Track to Meet FY21 EBITDA Guidance
Pureprofile Ltd
Q3 EBITDA up 150%, on track to meet FY21 EBITDA guidance
Pureprofile Ltd 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. The company has an established position with delivering insights to clients across 89 countries and has captured through its panel fully declared, deep consumer profiles, first-party data and insights. Pureprofile has reported Q3 revenues of $7.1m, up 25% on the previous corresponding period, and a 150% improvement in EBITDA to $0.506m. The company also reported positive operating cashflow for the quarter of $0.79m versus negative cash outflow of $1.3m in Q3 FY20. This is the second consecutive positive cashflow quarter for the year and follows the transformational restructure which cleaned up the company’s balance sheet and re-set the business to focus on growth. PPL has reiterated it expects to deliver FY21 EBITDA of $3.0m. We have upgraded our forecasts to reflect stronger than expected revenue growth over the past two quarters and this has resulted in our FY21 EBITDA forecast lifting to $3.0m from $2.9m previously, in line with guidance. Our base case DCF valuation is now $0.053/share (previously $0.046/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.
Delivers a strong Q3 result, earnings forecasts upgraded
PPL has reported Q3 EBITDA of $0.5m, representing growth of 150% on the previous corresponding period and has reiterated its guidance for $3m EBITDA for the full year. Revenue for the quarter increased 25% to $7.1m with strong sales growth across the company’s divisions. Year to date, Pureprofile’s revenues are up 14% while EBITDA and operating cashflow are respectively up 148% and 145%. We have addressed our forecasts for the stronger than expected growth over the past two quarters, resulting in a 8% upgrade to revenue to $30.0m (previously $27.7m) and a 5% upgrade to EBITDA to $3.0m (previously $2.9m. Our earnings upgrade has also flowed through to our FY22 forecasts with revenue lifted by 7% to $35.9m and EBITDA by 9% to $5.2m.
Base case DCF valuation of $0.053/share (previously $0.046)
We have used the discounted cashflow methodology to value Pureprofile using a WACC of 14.5% (beta 2.0, terminal growth rate of 2.2%) and this derives an equity value of $56.0m or $0.053/share (previously $0.046/share). Our terminal value is $0.026/share within this valuation. As a sense check, this implies an FY21 EV/Sales multiple of 1.85x and FY21 EV/EBITDA multiple of 18.8x (based on our forecasts) which is still well below the group of comparable domestic and international peers that we have identified. In our view, continued demonstration of strong revenue growth and a sustainable return to profitability should underpin Pureprofile’s share price in the near term.
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