Pureprofile Ltd: Stellar Q1 Result, Revenue up 61%, Upgrading FY22 Forecasts
Pureprofile Ltd
Stellar Q1 result, revenue up 61%, upgrading FY22 forecasts
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. The company has an established position 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 a 61% increase in Q1 FY22 sales revenues to $10.2m and Q1 EBITDA of $1.1m, an increase of 29% on Q1 FY21. Net operating cashflow for the quarter grew 727% to $0.7m. The result demonstrates that the momentum experienced in July, when Pureprofile reported revenues were up 50%, accelerated through to September end. Revenues by business unit all performed better than expected, with the SaaS platform meeting our FY22 forecast of $0.9m in Q1. Given Q2 is seasonally the strongest quarter, we have upgraded our H1 FY22 forecasts and this has resulted in a 9% uplift in our FY22 revenue forecasts to $40.5m (previously $37.7m). Our DCF-derived valuation has been upgraded to $0.092/share (previously $0.064/share) as a result of our earnings upgrade and a reduction in our risk weighting.
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.
Strong start to FY22, earnings forecasts upgraded
PPL has reported Q1 FY22 sales revenue of $10.2m and underlying EBITDA of $1.1m, respectively up 61% and 29% on the previous corresponding period (pcp). Operating cashflow increased more than seven-fold to $0.7m. By business unit, revenue growth was stronger than expected across the board. Data & Insights APAC increased 39% to $5.0m pcp, Data & Insights UK jumped 57% to $2.5m, Pure.Amplify Media Australia gained 137% in revenue to $1.3m while Pure.Amplify UK added 27% to $0.5m. The group’s SaaS platform revenue jumped 298% in Q1 to $0.9m, hitting our full-year forecast in one quarter. Given Q2 is seasonally the strongest quarter, we have upgraded our H1 FY22 revenue forecast by 12.0% to $20.2m and our FY22 revenue forecast by 7.5% to $40.5m to reflect this better- than-expected start to the year.
Base case DCF valuation of $0.092/share (previously $0.064)
We use the discounted cashflow methodology to value PPL and arrive at a fully diluted DCF of $0.092/share (previously $0.064/share). The upgrade in valuation is a combination of our earnings upgrade and an adjustment to our risk-free rate. We have reduced our WACC to 12.3% (previously 14.5%) on the basis that Pureprofile has significantly reduced its risk profile over the past 12 months. We note the observed beta (Refinitiv Eikon) is calculated at 1.08, versus 1.6 used in our valuation (we previously used 2.0). Our terminal value is $0.055/share within our $0.092/share valuation. In our view, continued demonstration of strong revenue growth and a sustainable return to profitability should underpin PPL’s share price in the near term.
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- Pureprofile Ltd: Stellar Q1 Result, Revenue up 61%, Upgrading FY22 Forecasts22 Oct 2021