Yesterday, AcuityAds reported its Q1, 2017 results. The company lost $1.24-million on revenue of $11.52-million, a topline that was up 122 per cent over the same period last year.
“We are delighted with both the revenue increase and positive EBITDA [earnings before interest, taxes, depreciation and amortization] we were able to deliver in what is typically the weakest period of the year for the advertising industry,” said CEO Tal Hayek. “Q1 was extremely busy for the company as we announced the closing of the acquisition of Visible Measures, the concurrent $11.7-million bought deal financing and securing a revised $10.0-million (U.S.) debt facility from Silicon Valley Bank. Also during the quarter, considerable effort was spent developing our strategies on the Visible Measures acquisition, including the identification and execution of cost and revenue synergies which have been substantially completed as we entered Q2.”
Sangha today reiterated his “Buy” rating and one-year price target of $6.25 on AcuityAds, implying a return of 45.3 per cent at the time of publication. The analyst explained the math behind his target.
“We believe Acuity is undervalued, currently trading at 1.3x EV/Revenue and 15.0x EV/EBITDA multiple of CY18 estimates, which is lower than the peer group at 2.9x EV/Revenue and 18.6x EV/EBITDA multiple of consensus CY18 estimates. Our target price implies a 2.0x EV/Revenue and 21.2x EV/EBITDA multiple to our CY18 estimates.”
Sangha believes AcuityAds will post Adjusted EBITDA of $4.2-million on revenue of $79-million in fiscal 2017. He thinks these numbers will improve to EBITDA of $9.8-million on a topline of $109-million the following year.