Good note on Acuity from their IR firm newsletterAcuityAds (TSXV:AT)
· Reported Q2 financial results: $7.01M Q2 revenue representing 53% YoY growth. The SaaS-based Self-Serve segment has now grown by 198% YoY and comprised 46% total revenue on the year. The company was Adjusted EBITDA positive at approximately $200K. The plan has always been for the SaaS-based Self-Serve side to completely overtake the managed services, however managed services continues to grow at a very healthy rate.
· The company’s plan for this year was to achieve three goals: 1- Expand its US business, which has been very successful (grew by 38% to over $2.4m in Q2). 2- Focus on growing its SaaS-based Self Service business, which is highly scalable at minimal cost (grew by 198% to $3.2M in Q2) 3- Achieve Adjusted EBITDA positive as it works its way towards profitability (reported close to $200K of Adjusted EBITDA in Q2, and expect to continue being Adjusted EBITDA positive). Even though the company has been growing aggressively organically, management has been focusing on accelerating growth through potential acquisitions. They were successful in doing this, as evident by the recent acquisition of Silicon Valley company, 140 Proof.
· Acuity acquired 140 Proof, a social media and mobile targeting company. A very logical acquisition in an adjacent space that Acuity has had limited focus on. The deal is both promising for the company and shareholder friendly - no shares had to be issued, and only required a relatively small cash payout of $3M with the rest of the compensation defined to earn-outs. 140 Proof did ~$10m of revenue over trailing 12 months and were EBITDA positive. The deal will contribute to both Acuity’s top line and profitability going forward.
· Going forward, Acuity’s focus is on growing both organically and through further acquisitions, scaling the Self-Service business, managing expenses and making sure the company continues to stay EBITDA positive as it works its way towards profitability.
AcuityAds is covered by Haywood, Paradigm, Beacon and Echelon for an average price target of $2.48.