Pureprofile Ltd - Strong Q1 Result, Revenue up 17% to $12m
Pureprofile Ltd
Strong Q1 result, revenue up 17% to $12m
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 17% increase in Q1 FY23 sales revenue to $12.0m and Q1 EBITDA of $1.0m, down 10%, or $0.1m, on the previous corresponding period which included $0.12m revenue from sub-leasing a UK office. The EBITDA margin for the quarter was 8.0%, but the company, importantly, reiterated its guidance for full-year EBITDA margin in the range of 9.0-10.0%. The largest division, Data & Insights, surprised, delivering 24.0% growth in APAC revenue and 40.0% growth in UK/EU/US revenue. Given Q2 is seasonally the strongest quarter, we remain confident that the company is on track to meet our FY23 forecasts, which remain unchanged.
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 FY23
PPL has reported Q1 FY23 sales revenue of $12.0m, up 17.0% on the previous corresponding quarter in FY22 and 10.0% ahead of Q4 FY22. Underlying EBITDA was $1.0m, down 10% on the same period in FY22, which included $0.12m of rental income from a UK premises sub- lease. Pureprofile noted that as it communicated at its FY22 results in August, the first quarter result was expected to be affected by continued investment in markets outside Australia. The Q1 result equated to an EBITDA margin of 8%. The company reiterated its guidance for the FY23 EBITDA margin to fall between 9-10%. By business unit, revenue growth was stronger than expected within the Data & Insights business, with APAC increasing sales 24% to $6.2m and the UK/EU/US division jumping 40% to $3.5m. Offsetting this was a decline in Pure.amplify Media revenue (down 20% to $1.4m) with the result impacted by the timing of client campaigns and a decision to close the UK operations. With the company now in its seasonally strongest quarter, Pureprofile looks to be tracking a little ahead of our FY23 forecasts, giving us comfort in our current numbers.
Base-case DCF valuation of $0.09/share, fully diluted
We use the discounted cashflow methodology to value PPL and arrive at a fully diluted DCF of $0.09/share, based on a WACC of 13.6% (risk-free rate of 3.5%, beta of 1.6). Our terminal value is $0.049/share within our $0.09/share valuation. On the current share count, our valuation is $0.102/share. Our peer analysis highlights that the company is trading at a ~50% discount to its Australian peers, despite being one of the few profitable companies in the smaller media and analytics sector.
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- Pureprofile Ltd - Strong Q1 Result, Revenue up 17% to $12m24 Oct 2022