Yesterday, AcuityAds reported its Q2, 2016 results. The company lost $420,791 on revenue of $7-million, a 53 per cent topline increase over the same period last year.
“I am delighted to report another strong quarter of revenue growth, as well as positive adjusted EBITDA,” said CEO Tal Hayek. “The company grew revenue by 53 per cent compared to Q2 last year primarily as a result of strong demand from both our self-serve segment and U.S. growth strategy.
The second quarter of this year also saw us go into production from our European data centre and achieve our first revenue dollars from this important initiative.”
Sangha says this was a very strong quarter from AcuityAds, but its also a result he expected. With a seasonally strong second half on deck, the analyst says he expects AcuityAds’ revenue will climb 42.5 per cent in fiscal 2016 to $29.5-million and a further 39.1 per cent to $41.0-million the following year. He notes that management is committed to remaining EBITDA positive going forward. Sangha thinks the stock is currently cheap compared to its peers.
“We believe Acuity is undervalued, currently trading at 1.4x EV/Revenue based on our FY16 estimates, which is lower than its peer group average of 3.0x,” says Sangha. Our target price is based on an EV/Revenue multiple of 1.6x our FY17 revenue forecast.”
In a research update to clients today, Sangha maintained his “Buy” rating and one-year price target of $2.50, implying a return of 86.6 per cent at the time of publication.