Playmaker Capital is heading higher, says Echelon

Echelon Capital Markets analyst Rob Goff reiterated a “Speculative Buy” rating on Canadian digital sports media company Playmaker Capital (Playmaker Capital Stock Quote, Charts, News, Analysts, Financials TSXV:PMKR) after viewing PMKR’s fourth quarter results. In a Tuesday report to clients, Goff called the quarterly numbers a blowout, ones that highlight the strength of the company’s recent acquisitions.

Toronto-based Playmaker reported its Q4 2022 on Monday, showing revenue up 168 per cent year-over-year to $18.7 million and operating income of $3.1 million compared to $0.5 million a year earlier. (All figures in US dollars except where noted otherwise.)

Playmaker, which has a portfolio of sports media brands aimed at delivering fans to sports betting companies, said the FIFA World Cup 2022 pushed up engagement across its platforms, reporting 624 million user sessions across its owned and operated web properties, representing a 27 per cent year-over-year increase.

“During 2022, our team continued to expand Playmaker’s sports-centric audience by increasing the Company’s digital content distribution channels with additional audio, video and social offerings,” said CEO Jordan Gnat in a press release. “2022 was about integrating our operations and levelling up our team and infrastructure to deliver for our clients and to create deeper connections to our fans.”

The quarterly top and bottom lines were a “large step function” above estimates, according to Goff, who said Q4 revenue and EBITDA at $18.7 million and $6.6 million, respectively, compared to his forecasts at $11.1 million and $4.2 million, respectively, and the consensus estimates at $11.9 million and $4.0 million, respectively.

“Results across 2022 support our bullish view towards Playmaker’s organic and inorganic growth as management has assembled high-growth, entrepreneur-driven partners onto its platform, where additional investment, greater platform reach, and an in-house tech stack drive growth and monetization,” Goff wrote.

Looking under the hood, Goff noted an 86 per cent year-over-year growth rate in US user sessions from 2021 acquisition Yardbreaker along with $5.7 million in revenue coming from newly acquired Wedge in just two-and-a-half months.

The Wedge results were a surprise to the upside, Goff said.

“We look for greater cross-selling momentum to provide upside beyond our baseline forecasts and a measure of macro-induced caution. We anticipate Wedge’s integration to kick in later this year in Q2/Q3, as both Q422 and Q123 were simply too busy with multiple marquee sporting events and OSB launches to focus on the upside. We see further ad yield gains providing upside to our 2023 forecasts, as the pick-up associated with Playmaker Bench gains momentum across the year,” Goff wrote.

With the update, Goff maintained a 12-month target of C$1.20 per share, representing at press time a projected return of 150 per cent.