Playmaker Capital has a 134 per cent upside, says Eight Capital

Canadian digital sports media company Playmaker Capital (Playmaker Capital Stock Quote, Charts, News, Analysts, Financials TSXV:PMKR) just released its third quarter financials, with Eight Capital analyst Adhir Kadve giving us the goods in a report to clients on Thursday. Kadve reiterated a “Buy” rating on the stock, saying with the World Cup coming up, the upcoming fourth quarter should be a good one for PMKR.

Toronto-based Playmaker, which owns a collection of sports media brands aimed at delivering engaged sports fans to sports betting companies, announced its Q3 results on Tuesday, showing revenue of $8.8 million compared to $4.8 million a year earlier and adjusted EBITDA of $2.3 million compared to $3.3 million a year ago. (All figures in US dollars except where noted otherwise.)

Operationally, Playmaker hit a monthly high of 95 million users and 715 million sessions in the quarter while acquiring iGaming affiliate operator Wedge Traffic. Pro forma of acquisitions, the company’s Q3 revenue was $10.1 million.

“Our vertical focus on sports, continued momentum of direct sales, organic audience growth, differentiated content, and diversified revenue streams, is serving us very well. Our acquisition of Wedge Traffic in October was a bullseye. We identified the need to add meaningful affiliate revenue and now we have the team and the business that can deliver that at scale. We remain on track, continue to deliver strong results, and we are looking forward to Q4 and the FIFA World Cup,” said CEO Jordan Gnat in a press release.

Looking at the quarterly results, Kadve said the $8.8 million topline was a beat of his call at $7.3 million and the consensus at $7.4 million, while the $2.3 million in EBITDA was also a little ahead of his and the Street’s forecast at $2.1 million. Kadve said earnings were impacted by a slower sports calendar and delays in two projects in Playmakers’ agency businesses. 

Kadve said the company’s audience metrics continue to be strong and that PMKR’s business may be somewhat protected from a broader pullback in advertising.

“With the World Cup set to begin on November 20, Playmaker has seen strong advertising revenue from World Cup related pre-buying on its platform, which has the Playmaker team optimistic that it will be able to attract strong advertising dollars from its clients as the tournament progresses,” Kadve wrote.

“Further, management believes its platform has a level of insulation from the broader pullback in digital advertising spend levels given its focus on the sports vertical and its diversified revenue streams and geographic footprint. When combined with a seasonally stronger Q4, we like the setup for Playmaker for the balance of the year and beyond given the uncertainty in the macro environment,” he said.

Kadve is now forecasting fourth quarter revenue of $10.9 million ($10.2 million previously) and adjusted EBITDA of $4.0 million ($3.9 million previously). With the update, Kadve reiterated a 12-month target of C$0.90 per share, which at the time of publication represented a projected return of 134 per cent.