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Taptica transforms

The mobile advertising group enjoyed strong sales growth, but acquisition costs weighed on earnings
March 27, 2018

Taptica's (TAP) sales were buoyed by contributions from new international offices, and by two acquisitions which management says “transformed the business”. In July, the group bought a majority stake in Japan-based Adinnovation for a maximum of $5.7m (£4m). A month later, it expanded its geographic presence through a $50m deal to acquire US-based Tremor Video. Both transactions enhanced the group's presence in growth hubs for digital advertising – the latter being its largest market by revenue. 

IC TIP: Buy at 360p

The recent expansion into the Asia-Pacific region enabled Taptica to beat expectations for sales and cash profits, even though profitability was held in check by R&D costs linked to the integration of Tremor. But the new subsidiary achieved profitability ahead of schedule, while opening up a new revenue stream - brand advertising. Meanwhile, consumers in the Asia-Pacific region continue to increase their use of the internet on their mobiles, including rapid growth in the utilisation of apps. 

Berenberg forecasts pre-tax profits of £35m and EPS of 41.7¢ for the year to December 2018, against $30m and 40.9¢ in 2017.

TAPTICA (TAP)   
ORD PRICE:360pMARKET VALUE:£ 243m
TOUCH:355-365p12-MONTH HIGH:513pLOW: 268p
DIVIDEND YIELD:1.1%PE RATIO:23
NET ASSET VALUE:96¢*NET DEBT:6.2%
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201343.38.514.2nil
201463.18.210.62.3
201575.82.83.30.78
2016**12619.626.310.1
201721117.322.55.4
% change+68-12-14-47
Ex-div:19 Apr   
Payment:19 Jun   
*Includes intangible assets of $61.6m, or 91¢ a share **Includes special cash dividend of 5.79¢, paid on 15 Nov 2016 £1 = $1.42