Tap into Taptica’s growth story

Not only is the market growing fast, but Taptica also appears to be on the right side of technological changes. Apple’s iOS 11 update limits cross-website tracking, but Taptica's focus on mobile and in-app integration means its core services should not be affected by browser tracking restrictions, which has the potential to boost demand.

Demand is not an issue, though. Revenues rose 27 per cent to $65.6m in the first half, while the increase in the proportion of revenue from mobile helped gross margin rise to 39.4 per cent from 34.4 per cent a year earlier. Performance was buoyed by the fact that customers remain loyal. Revenue from existing mobile app advertiser customers rose 18 per cent.

International expansion is also key to Taptica’s growth strategy. This year, the group has established an office in London, which represents its fifth region after the US, China, South Korea and Japan. The longer-term plan is to create 10 regional hubs. Meanwhile, its presence in the high-growth Japanese market has been enhanced by the decision to take a majority stake in mobile advertising specialist Adinnovation at a cost of $5.7m.

The US also offers significant growth potential and to this end Taptica recently announced the $50m acquisition of a video advertising optimisation platform from US-based Tremor Video. The US was already Taptica's largest market before the deal, accounting for 45 per cent of last year's revenue, but Tremor also increases its exposure to the digital video market, which along with social media is one of the fastest growing areas in the mobile advertising space. Tremor should be earnings-enhancing by 2018.

Recent spending means broker finnCap estimates that net debt will rise to about $15m compared with the net cash reported in our table. That said, Taptica expects to receive a net working capital balance of $22.5m when the Tremor acquisition completes.