Pureprofile Ltd: Strong Data & Analytics Revenue Growth in Q1
Pureprofile Ltd
Strong data & analytics revenue growth in Q1
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 its 500+ clients and has captured through its panel fully declared, deep consumer profiles, first-party data and insights. Pureprofile has been through a substantial restructure over the past two years, culminating in the recently announced recapitalisation plan and debt to equity conversion for all but $3m of its outstanding borrowings. This positions the company to both leverage its data and insights business into higher margin opportunities as well as explore small acquisitions to expand its panel. The company has reported Q1 FY21 EBITDA of $0.88m, up 61% on Q4 FY20 and 17% on Q1 FY20 on sales of $6.4m, an increase of 19% on Q4 FY20 and small 5% decline on Q1 FY20. Pureprofile has provided FY21 EBITDA guidance of $2.5m to $3.0m, with our forecast for $2.9m in the upper end of this range.
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.
Q1 FY21 highlights, EBITDA guidance range of $2.5m-$3.0m
Pureprofile has reported Q1 FY21 cash receipts of $6.2m and a positive operating cashflow of $0.09m including $0.38m in government grants and tax incentives. The company’s closing cash position for the quarter was $1.44m, which post the entitlements offer and revised debt position, puts the company on track for net cash of $1.9m. PPL generated $6.36m in revenue in Q1 FY21 with data and insights contributing $5.21m, an increase of 11% on Q1 FY20. The self service platform generated $0.23m in revenue, up 111% on pcp. Revenues from media and performance declined in the quarter, due to COVID-19 impacts. Operating expenses for the period were $2.56m, an improvement of 19% or $0.59m on Q1 FY1. PPL provided an EBITDA guidance range of $2.5m-$3.0m for FY21.
Base case valuation is $0.046/share post entitlements offer
We use the discounted cashflow methodology to value Pureprofile (WACC of 14.5%, beta 2.0, terminal growth rate of 2.2%) and this derives an equity value, post entitlements offer and debt restructure of $48.9m or $0.046/share. Our terminal value is $0.022/share within this valuation. As a sense check, this implies an FY21 EV/Sales multiple of 1.7x and FY21 EV/EBITDA multiple of 16.2x (based on our forecasts) which is still below the group of comparable domestic and international peers that we have identified. Please refer to our initiation report Data analytics on a pure scale for more detail.
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