2021 financial forecast I always enjoy trying to make informed guesses how the company will perform over the next year and then checking to see how the story plays out. When I originally estimated 2020 financials, I had no idea the revenue would be that much higher or that the company shifted its strategic focus. Based on managements guidance, we have about 30% gross margins going forward with ebitda margins closer to 2017 which was at 15%
Ive put a lot of thought about this and I've concluded that the company could achieve at least $30 m (US) in revenues with about $10 m in gross profits. If we use a similar 15% margin as 2017, then we get ebitda of around $4.5 m. Keep in mind that the company has been spending more on marketing and r&d which will lower net income but these investments should be viewed as growth capex investments.
How do I come up with $30m in revenue? I've assumed that the new customers in q4 will remain as customers over the next year. With q1 being the weakest quarter, they should at the very least be able to achieve $6-7 m in revenue. Over the first 3 quarters we get an approximate revenue of $18-21 million and "at least" $10 m in q4 for 2021. In fact, I believe they will comfortably beat these estimates but this is my personal target.
If we look at a company such as Izea, they have achieved about $18 m in revenue with about $10 in gross profits. They have a market cap of about $269 million (US) which gives a potential market cap target for Adcore. With about 60.7 million diluted shares and an exchange rate of $1us= $1.26 Cad, we get 269*1.26/60.7 =~ $5.58/share
I believe a $5 target over the next 12 months is very reasonable and could happen if the market conditions are right.