RE:Stockchase Insights A hold makes more sense. I have personally sold my position a while back.
I see plenty of risks ahead:
1) slowdown in adspend
2) Google phasing out third party cookies by end of 2023
3) how they transition all of their clients to Illumin is going to be a challenge. If they lose tier 1 clients that are still using the legacy platform then that could be a big blow. I am not convinced that this will be a smooth transition and I think they will lose some clients. This is certainly true if they are adamant about clients only using Illumin going forward.
4) The company has to effectively give up $2 of revenue in exchange for $1 in revenue when clients transition to Illumin self serve.
5) gross margins on self serve is only 30% versus about 55% for managed service. At $200m in revenue, this would produce about $60m in gross profits which is the same level as the company has today. However, in order to achieve $200m in revenue, they will need to acquire, many more clients which is a negative on free cash flow. The only benefit is the sales and marketing costs can decrease once these clients are using Illumin as a self serve.
Too many things have to go right imo.