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Taptica raises full-year profit expectations

The mobile advertising group enjoyed a whopping 119 per cent rise in revenues, thanks to Tremor Video
September 5, 2018

Following market jitters over companies that leverage big data, Taptica’s (TAP) first-year results to June 2018 allayed investor concerns. On top of stellar revenue growth, the mobile advertising group’s gross profits more than doubled to $58.5m and the gross margin edged up 1.2 percentage points to 40.6 per cent. Such momentum was buoyed by the acquisition of Tremor Video last August, which contributed $71.9m in sales from brand advertising. Meanwhile, the existing Taptica business benefited from greater contributions from the Asia-Pacific region. 

IC TIP: Hold at 378p

Trading in the second half has got off to a solid start, with the international offices expected to make a greater contribution to sales than in the first half. What's more, the brand advertising business has not only been winning new customers, but improving the margins from campaigns by applying machine learning practices to enhance its audience matching abilities. Both factors led management to guide towards cash profits for the full year that exceed market expectations.  

Within Taptica’s full-year report back in March, it confirmed that the recent press coverage on Facebook “does not affect its business model”. And following the latest numbers, management said Facebook is not material to its business. Moreover, Taptica is not involved in selling users’ personal data to third-parties.

FinnCap has upgraded its adjusted pre-tax profit expectations for 2018 from $37.8m to $42.3m, and EPS from 43.5¢ to 49.4¢. ($31.2m and 40.7¢ in 2017).

TAPTICA (TAP)   
ORD PRICE:378pMARKET VALUE:£256m
TOUCH:370-385p12-MONTH HIGH:513pLOW: 266p
DIVIDEND YIELD:1.9%PE RATIO:20
NET ASSET VALUE:156¢*NET CASH:$42.1m
Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201765.610.314.40.0
201814414.216.13.98
% change+119+38+12-
Ex-div:20 Sep   
Payment:20 Nov   
*Includes intangible assets of $57.5m, or 85¢ a share.  £1 = $1.28