MediaValet keeps Buy rating with Eight Capital

Encouraging signs from Canadian digital asset management company MediaValet (MediaValet Stock Quote, Charts, News, Analysts, Financials TSX:MVP) have analyst Christian Sgro from Eight Capital staying positive on the stock. In a Thursday update, Sgro reviewed the latest quarterly results from the company and reiterated a “Buy” rating.

Vancouver-based MediaValet, which provides digital asset management (DAM) solutions for mid to large enterprises worldwide, announced its third quarter 2022 financials on Wednesday, featuring revenue of $3.3 million compared to $2.4 million a year earlier. Gross margin came in at $2.7 million or 81 per cent of revenue and the EBITDA loss was $2.3 million compared to $2.1 million a year ago. Basic and diluted earnings per share was a loss of $0.06 per share compared to a loss of the same a year earlier.

Management said the macro environment is proving challenging but the company has faith in its unique go-to-market strategy, its ability to execute and the resilience of the overall DAM market, which has a number of tailwinds including the ongoing digital transformation across all industries.

“We continue to deliver record levels of [annual recurring revenue] ARR growth despite the uncertain economic environment and lengthening enterprise sales cycles,” said David MacLaren, Founder and CEO, in a press release.

By the numbers, MVP’s $3.3 million topline was in-line with Sgro’s forecast at $3.3 million and the consensus estimate at $3.4 million, while the adjusted EBITDA loss of $2.3 million was also in-line with Sgro’s call at negative $2.3 million and the Street’s negative $2.4 million. 

Sgro noted MediaValet’s ARR for the quarter was up 36 per cent year-over-year and said the company has been executing well against a strong pipeline such that it could very well close out the year with a stronger-than-expected finish. 

“MediaValet’s September quarter met expectations across the income statement as the company delivered on stable growth. Management remains confident in the stability of the DAM market, underscored by MediaValet’s fourth consecutive quarter of 100 per cent NRR,” Sgro wrote.

“We see the need for creative solutions as well as productivity enhancements to drive continued market demand. We see MediaValet delivering on its goals for the year, driving continued strong ARR growth with disciplined operational cost management,” he said.

Looking ahead, Sgro’s Q4 2022 forecast hasn’t changed, at revenue of $3.6 million and an adjusted EBITDA loss of $2.1 million. For the full 2022 year, he is expecting $12.8 million in revenue and negative $9.4 million in adjusted EBITDA, moving onto $19.8 million in revenue for 2023 and negative $6.5 million in EBITDA. 

With his “Buy” rating, Sgro also maintained a one-year target price of $2.50, which at press time represented a projected return of 116 per cent.