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Agree 1GW. Net loss as expected at $2m. I'm surprised exceptionals are so low too. Assuming no material change here and they hit c$200m in H2 then on this we should have a proper profit of c$8-9m at year end.
Ops costs are below my $80m forecast which made up for a slightly lower margin then I had forecast.
They should be on track for $45-48m Adj EBITDA for full year.
Hopefully they will have a nice cash bridge in the results deck as the working capital unwind is key to understanding this as I had them in for $27-30m cash at H1 so they are below this - but that could be all working capital vs my forecast.
Pleased to see the buy back. I did send the Taptica RNS yesterday to Mark Bonney just in case he was going to miss it preparing for today!
Well we'll soon have the H1 release so below is an email I sent to Mark Bonney the day before the results date RNS:
'I trust that you are making good progress on the transformation plans for Rhythmone. Given the share price weakness throughout 2018 I hope that isn’t an indication of what is to come and that the regular statements the Board have made over creating shareholder value can be evidenced.
From my perspective there are 4 critical areas the Board should be focussed on when presenting the results and related commentary to shareholders:
1. Revenues: Whilst the rushed out September trading update spoke of revenues increasing 50% the clear view outside the company is that revenues on a like for like basis are declining materially. A bridge that showed the Companies view of revenues could clear this up. If we have either closed down certain non-profitable areas or deliberately reduced low margin activity the scale of this should be articulated. If there is organic growth then demonstrate this in a clear way.
2. Acquisitions: Rule out any acquisitions until the Board have demonstrated they can absorb businesses, generate real profit and grow the existing business. Revenues in FY19 will be below the standalone revenues of Yume, Radiumone, Perk and Rhythmone. We need to see the shareholder value created from the acquisitions. The current market cap is less than the amount paid for YUME alone. The markets are scared that Rhythmone will make a value destroying acquisition in the near term.
3. Share Buy Back: Assuming cash is being generated and working capital unwinds in Q3 then announce a material share buy-back to start in January 2019. This is the most tangible action to create shareholder value. Assuming acquisitions are in the longer term plan then a much stronger share price will make executing those acquisitions much easier.
4. Future Guidance: Provide clear unambiguous guidance for FY19,with actual revenue and profit numbers. Semantics around ‘market expectations’ in various RNS releases does nothing for clarity or shareholder value. It just undermines the company given it’s track record. By the time you release H1 results we will be most of the way through Q3 so you should be able to provide clear numbers based guidance on at least that.
As you will be more than aware the valuation of Rhythmone seems wholly disconnected with its peers and profit projections. I believe the four areas above are critical ones behind this. If you want to create real shareholder value then please focus on answering those and communicate it in a clear, unambiguous way. Of course, once we’re out of a closed period some Director buying would also boost confidence too.
I’m sure none of this is new to you and I’m not expecting any form of detailed response (as you are in a closed period) but did want to at least provide the views of one shareholder at this current time.'
For H1 numbers I haven't changed my view since the TU in September gi
I see Taptica is having some excitement this morning. Apart from CEO resigning due to legal issues the trading statement is an interesting read and very similar to R1 trading update re EBITDA growth and revenue decline due to forgoing low margin revenue. Just hope we don’t get the same share price reaction after results next week!!
But why would they need to raise money via a placing?
Graham, let’s pretend you have any interest in R1, why do you think there would be a placing? Making idiotic comments on this board just makes you look stupid and undermine any contributions you make elsewhere. I don’t think the apparent rivalry between R1 and TLY boards adds anything to either board, it just wastes space.
Yes, I've got losses on R1 with a buy in just over £2.50. I don't subscribe to your theory though and have argued my position and discussed my forecasts over on the R1 board.
This is a TLY board though so if you don't agree with 1GW why not post your counter factual rather than hurl insults at him. The whole board would benefit far more from this and you seem much closer to what's going on in TLY's sector than any other contributor on this board (possibly with the exception of Deltrotter).
There are risks with this share but I'm not concerned at this stage and feel they are on the right track. An incoming Labour government might change that view but outside of that there should be plenty of upside on my 17.44p average.
Ouch, TLY losses must be hurting, if you're invested at all that is.
Don't know 1GW from Adam. He just tends to write balanced and well thought through logical posts. I don't agree with all of them by any means but at least he can state and discuss his position.
Assuming you've been analysing the accounts why do you feel R1 will collapse but TLY won't?
Graham, how many shares in TLY do you actually own? You forever go on about buying every month but I don't seem to recall you providing any advance notice of any buys - I could be wrong here but none spring to mind.
I think 1GW is a genuine investor and does call out his trades, who knows if it's all of them or not, but if he was a deramper I don't think he'd be saying he is holding on for a turnaround he'd say he sold them all and be posting much more negatively.
The fact is that TLY do need to demonstrate positive cash flow and then real profits. That and a couple of contract wins would propel the share price I'm sure - that's why I bought in.
Max, it is positive but would temper it a little in that the 25 Sep update only spoke of the half year, which they pretty much knew at the time of release. There wasn’t anything confirming full year expectations so I wouldn’t read anything in to Q3 or full year. Of course by 13 Dec they will pretty much have finished Q3 so the outlook comments will be crucial when they do release H1 results
I suspect that would now enable them to consider starting the buy back. It would have been difficult PR wise to be buying back shares whilst having an area rated as inadequate. Should help transform their contract tendering as much better to be able to say no area rated inadequate. A couple of material contract wins would do more for the share price than a buy back I think.
Allenby Capital have put a note out this morning. They haven't changed any of their forecasts for FY19 or FY20. With £1.4m EBITDA in FY19 and £2.4m EBITDA in FY 20.
In summary...... "With the Group enjoying a strong cash position equivalent to 81% of its current market capitalisation, the potential for higher gross margins, increased funding for the NHS and a strong pipeline of contract opportunities, we believe that the shares are undervalued."
Assume people have seen the Criteo results, link below
https://www.prnewswire.com/news-releases/criteo-reports-results-for-the-third-quarter-2018-announces-acquisition-of-an-attractive-app-install-advertising-solution-and-announces-a-80m-share-repurchase-program-300740887.html
Revenue, Adj EBITDA and cash flow down but still managing a $80m buy back.
Interesting to see what R1 come up with soon...
Instadeth, I’m not surprised they didn’t include cash in the TU just before month end. I suspect many invoices are raised at the end of each month with payment due at roughly 30, 60 or 90 days so always at or around a month end so the final week will be very volatile in terms of cash in. We’d normally have a TU around now which would have stated the cash position at the end of the half, ahead of the formal H1 results. I’m not expecting a big jump in their cash pile despite c20m adj ebitda. Cash at 30m would be a good outcome for H1. I would expect a big jump in H2 though with the seasonal working capital unwind which will dampen the H1 number. All things being equal around 50-60m at end of FY19 is still the forecast.