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If you thought the last one had some dodgy assumptions wait for this. Adj EBITDA seems a mystery to most investors so I've looked at FY18 and made a few guesses to come up with a version for H1 and H2 FY19
H1 Adj EBITDA bridge
- Finance Income / Expenses 0.1M (same as prior year)
- Taxation 0 (same as prior year)
- Depreciation & Amortisation 14M (increase from 7.7M H1 FY18 for impact of acquisitions)
- Share based payments 0.8M (similar to prior year plus a bit as they like shares for free)
- Exceptionals 7M (as per Stat profit assumed level)
Total 21.9M
H1 Adj EBITDA Profit 21.8M v 3M H1 FY18
FY19 Bridge (these are full year numbers not just H2)
- Finance Income / Expenses 0.2M (same as prior year)
- Taxation 0 (assumed the FY18 -9M tax benefit was a one off)
- Depreciation & Amortisation 28M (H1 assumption doubled)
- Share based payments 2.5M (similar to prior year plus a bit as they like shares for free)
- Exceptionals 10M (as per Stat profit assumed level)
Total 40.7M
This would give a full year Adj EBITDA profit of 48.6M
Well it's all a bit slow so I thought I'd post my very dodgy views on trading, adj ebitda and cash across 3 posts for H1 and H2. I will add any assumptions as with this year being so different to last year it is a case of shooting in the dark on some areas, not least operating expenses, depreciation & amortisation and exceptionals as well as working capital being impossible to guesstimate from last year's numbers - but key to H1 cash position. I'm sure people will have their own views so do post them but I've tried to be balanced (honest). So, Part 1 is on PBT: Everything in dollars.
H1 Revenue: 205M (Q1 87m and Q2 using CPM from Q1 and volume & fill rate from Q2 FY18 +3m. This doesn't account for YUME but it doesn't feel like they'll smash 200m in the first half)
H1 Gross Margin: 87.8M (using 42.8% margin from H2 FY18 which reflects YUME inventory. They may improve margin further but don't see a big jump)
H1 Operating Expenses: 81M (this could be some way off. I've added YUME and R1 Op Ex to get 162M and halved it. I have assumed at this level the cost savings on people will be offset by increased Depn and Amortisation following the acquisitions. I doubt they'll comment on this at the TU so will have to wait for H1 actuals in November).
H1 Operating Profit: 6.8M
H1 Exceptionals: 7M (no acquisitions but they will have exited a number of people and other changes integrating YUME so I think we're in for a fairly hefty number, plus of course closing Support Free Content!)
H1 PBT: A small loss <0.5M
For H2...
H2 Revenue: 215M same assumption as H1 using CPM from Q1 and fill/volume from FY18 +5% growth
H2 Gross Margin: 92.1M same margin as H1
H2 Op Ex: 81M same assumption as H1
H2 Operating Profit: 11.1M
H2 Exceptionals: 3M Assumes most of changes have been implemented in first half
H2 PBT: 8.1M
This would mean a real profit for the year of around 7.5M on a statutory basis.
this time next year stevie....
Rubicon very positive on video growth and PMPs. Good job R1 have heard of both and well positioned.
https://rubiconproject.com/insights/press-releases/record-video-growth-h1-2018/
Well, more doom and gloom in ad world, mobile video ad spend only growing at 70-700% year on year...
From the second quarter of 2017 to the second quarter of 2018, mobile video ad spend increased by 239% -- including 688% year-over-year growth via apps, and 73% year-over-year via mobile web.
https://www.mediapost.com/publications/article/324688/in-app-ad-spend-rises.html?utm_campaign=Weekly%20Newsletter&utm_source=hs_email&utm_medium=email&utm_content=65768967&_hsenc=p2ANqtz-_s6kAgcWqdBzsKXjgoR4NgUkF332jBnmbflqx-lfxfx-aa100IbI_O87004rUIpB2NBGbUwSUWhHbK0afQCiXc6YElGw&_hsmi=65768967
We’ll have now read their results release. Don’t they know about the industry challenges? It’s all very upbeat around video and future prospects. Couldn’t see any mention of GDPR having a devastating impact. They seem to think they’ll survive the clamour for ads.txt and fee transparency too as they don’t mention these either. Ignore those at your peril I’d be surprised if they’re still in business at Christmas with the industry challenges they’re ignoring. They’re being blinded by all those positive revenue trends on video and mobile.
Berenberg raised their target price to 6.50 for Tap which would mean a market cap around 420m.
Well lots of positive stuff out there on ad trends...
Video Advertising growth of 9%/yr in US, 15.4% growth in Europe https://www.statista.com/outlook/218/104/video-advertising/north-america
Aussies enjoy a bit of video ad spend growth too https://www.iabaustralia.com.au/news-and-updates/iab-press-releases/item/22-iab-press-releases/2624-marketers-continue-to-reinvest-strongly-in-digital-advertising
Asia like a bit of adspend too http://www.nationmultimedia.com/detail/Corporate/30353379
It seems R1 are in a growth market that almost no-one seems to think will slow any time soon with video and mobile the place to be.
Well I think it's time to filter you out Stt. I'm a pretty reasonable guy but you are adding nothing to this board and won't respond to any issues and questions raised. I don't need a cuttings service, least of all one that's months old and repeats itself constantly. Your latest post is a classic, Dataxu for the 20 or 30th time and May's WFA press release, most of which is highly advantageous to R1's proposition - though that seems to have passed you by, focussing instead on one element of one item on the list. Mind numbing in the extreme.
I'll take you off filter when the next trading update comes out in October.
Stt, just seen your post on advfn, you really don’t get it do you? The open to all was targeted at you, just another post from me trying to get you to engage in debate. Any other poster would just post their opinion. It seems only you fail to engage in debate at any and every opportunity. Posting links isn’t a debate or discussion. You’ve never, as far as I can remember, ever posted your own thoughts and analysis on any discussion board. Are you incapable of independent thought? I’m more than happy to engage with a coherent discussion on the likely future for R1, be it a path to profitability or wider losses. I’ve posted many a time my views on why I think it’s the former of those. For one last time just post your view of H1 revenues and why/how you get to that number. You’d be amazed what a better quality debate the whole board would then have.
Still waiting for the revenue estimate Stt. In the meantime, here’s some discussion from me. I wonder if back in May when Videology filed for chapter 11 and kick started the bidding for its assets whether Ted wanted to bid for them? Eric and Tosca said no and so Ted felt he had to go? Plausible I think and could explain the timing of it all. Price of joining in a discussion on this topic is a H1 FY19 revenue estimate and rationale but it’s open to all!
Stt, just pop your own H1 FY19 revenue, cash and profit(loss) estimate on the end old boy. You must have posted that list 10-20 times before and it still doesn't add anything to the discussion without your view on what is likely to be the outcome for FY19.
Agree again Eddie.
Stt, why don't you simply give us your view of what H1 revenues will be and your logic for arriving at that figure. Should be a simple start.
Agree with that Eddie
Did they not see GDPR as their big strategic play to drive competitive advantage over the other adtech businesses 1GW? Stt still thinking about his reply before we can have some debate and discussion that he’s always banging on about.
Stt, can you explain how ads.txt can give a competitive advantage, it’s a file format? Can you explain how GDPR can give a competitive advantage, its the law? Any business can be transparent on fees so how do you get competitive advantage over that? Your views would be appreciated and a surprise if you actually gave them.
Quite Stt so the question is where can you get competitive advantage as a business in ad tech? This is partly why I think Pixalate is an important part of the R1 story as being the cleanest is a differentiator. Ads.txt, GDPR and fee transparency do not carry any opportunity of competitive advantage. I believe there will be more focus and quality of inventory in the future which should put R1 in a good place if they can keep the focus on this area.
Very long time that should have been
Just because that has been their history Stt. Bad news comes very quickly after quarter end. In line appears around week 2 or 3 after quarter end. I don’t know when they release ahead of expectations TUs as they haven’t had one for a very low my time.
Would be nice to see some concerted buying in the run up to Oct TU. just so long as TU doesn’t arrive first week in Oct as that would signal a profit warning. If no news in week 1 Oct then should be very positive.