On Tuesday, AcuityAds reported its Q2, 2017 results. The company lost $1.06-million on revenue of $17.27-million, a topline that was up 146 per cent over the same period last year.
“We are very pleased with our second quarter results as we continued to see revenue growth in both the self-serve and full-serve segments of our business,” said CEO Tal Hayek. “I am also delighted to report that the integration of Visible Measures, the analytics-led video advertising company we acquired at the end of March, is on track and delivering incremental wins as a result of our enhanced value proposition. Furthermore, our newly combined team and superior technology assets have played a significant role in meeting our key objective of continued revenue growth while remaining EBITDA positive.”
Krishnaratne says this quarter sets AcuityAds up for a strong second half to the fiscal year. The analyst says he thinks the Canadian company is one of the best ways to play the advertising technology space because it is set to capitalize on the industry trend of brands transitioning media spending from traditional to digital ad formats. He broke down the quarterly results.
“Q2 results featured gross spending growth of +146% y/y to $17.3M versus our estimate of $17.7M (Street $17.8M), with growth closer to 50% on an organic basis by our estimates,” the analyst explained. “Gross spending included the first quarter of Visible Measures, which was acquired at the end of Q1, as well as 140 Proof (deal closed in Q3/16). While Self-Service spending of $5.9M was shy of our $6.9M estimate, we were encouraged with the record 44 net new related clients added to the platform and see opportunities for continued strong trends in the seasonally strong H2. Managed services spending of $11.3M was above our estimate of $10.8M, which we think was driven by better trends in Acuity’s core business, with performance at recent acquisitions relatively flat as we had forecast.”
In a research update to clients today, Krishnaratne maintained his “Buy” rating and one-year price target of $8.00 on AcuityAds, implying a return of 80 per cent at the time of publication.
Krishnaratne thinks AcuityAds will generate EBITDA of $5.7-million on revenue of $82.4-million in fiscal 2017. He expects those numbers will improve to EBITDA of $50.8-million on a topline of $107.7-million the following year.
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