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illumin Holdings Inc T.ILLM

Alternate Symbol(s):  ILLMF

illumin Holdings Inc. provides a journey advertising platform, which enables marketers to reach consumers at every stage of their journey by leveraging advanced machine learning algorithms and real-time data analytics. It enables advertisers to connect intelligently with audiences across online display, video, social and mobile campaigns. Its Programmatic Marketing Platform, powered by machine learning technology, is at the core of its business, accompanied by patented solutions for analytics-led video and mobile targeting that leverages data. It enables marketers by offering near real-time reporting and analytics, bringing accountability to programmatic advertising to deliver business results and help solve the challenges that digital advertisers face. Its illumin software offers advertising automation technology that offers planning, media buying and omnichannel intelligence from a single platform.


TSX:ILLM - Post by User

Post by Torontojayon Nov 09, 2021 10:36am
167 Views
Post# 34104614

Part 2

Part 2
Acuity... What they do
 
Acuity is a DSP (like The Trade Desk), a 3rd party software that is used by advertisers to buy mobile, search, and video ads from a marketplace on which publishers list advertising inventory. A DSP allows for the management of advertising across many real-time bidding networks, as opposed to just one (like Google Ads).
Traditional DSPs predominately work with ad agencies and large companies with big ad departments, however Acuity is focused on it’s self-service platform Illumin. This could potentially allow advertisers to cut out the ad agency middleman, and their 30%-50% cut of ad fee’s.
In addition, the Illumin platform has the potential to give small local business’s the opportunity to efficiently and affordably advertise in their local area (something that is not commercially available to them currently).
Acuity is going all in on Illumin. On their latest earnings report, CEO Tal Hayek stated that they plan to move all clients off their legacy system, and onto Illumin, buy the end of 2022.
So what makes Illumin special?
  • The ability for advertisers to set up, monitor, and adjust their own ad campaigns, without the assistance of an Ad agency.
  • The ability for small advertisers ($500/mo.) to have affordable access to pragmatic advertising in their local area.
  • The ability for advertisers to see their full advertising campaign from top of funnel awareness, to bottom of funnel buying, across multiple audience targets. Where they can view and adjust spending to their highest conversion audiences. Done in real-time on a single dashboard.
Financials
Key numbers: 3Q21
Revenue: $27.5 million (+5.4% YoY, +11% constant currency basis)
Adjusted EBITDA: $4.4 million (+9.5% YoY)
Illumin Revenue: $7.4 million (+42%; new Tier 1 clients grew 53%, Illumin accounted for 27% of total revenue)
CTV: +220% YoY; no dollars given, but Tal hinted at just under 10% of revenue; so I’m hypothesizing roughly $2 million from a $600k base
Gross Margin: 51.9%, in line with 3Q20
Net revenue (less media costs): $14.3 million (+5.4% YoY)
Net income: $3.4 million (+265% YoY)
Operating cash flow: $9.5 million (+41.8% YoY)
Cash Balance: $100 million
Revenue increase attributed to strong sequential revenue growth from Illumin, which more than offset lower advertising spend partly related to supply chain disruptions from some of their legacy customers. Revenue growth was also aided by newer emerging verticals such as pharmaceutical, technology, automotive and direct-to-consumer brands.
What’s driving the Illumin growth today? Let’s hear strait from Tal:
“Mid-market. Mid-market is what’s driving the revenue of Acuity today, or Illumin, I would say, today. So mid-market are still large brands but not as large as the Fortune 1000 brands and they’re more flexible and they move faster and they tried Illumin, and there’s been a success with Illumin and they’re increasing their spend on Illumin. And so we’re turning a little bit more attention to them as well. So we can see even bigger growth from that market. I’d like to share some examples of those mid-market companies. So there was an e-commerce company that started using Illumin in Q1 of this year; they spent $22,000. They liked it so much that in Q3 they spent $152,000; a clothing retailer, that spent only $5,000 in Q1, spent $175,000 in Q3; a large auto manufacturer started with $98,000 and in last quarter spent $216,000 on this; and a healthcare company who spent $194,000 in Q1, spent $648,000 in Q3. Purina, which we’re vocal about before spent $49,000 in Q1 and $169,000 in Q3. So as you can see, it’s working, they try it, they really like it, they see the ability to control the consumer to have it as a conversation with their consumer and then they see the insights and those learnings they get from it, all of that with a fact that it’s very easy to use, very intuitive, brings them back for more and spending more and more and more, and we expect that trend to continue.”
That’s 5 clients increasing spend from $368k to $1.36M in two quarters, a 370% increase.
As I’m writing this, $ATY shares are down from a high of $26/share, to $4.35/share. Roughly $270 million current market cap, with an estimated 2021 revenue of $115 million and $100 million in cash.
Minus cash; Acuity is trading at 1.47 P/S
For reference: Magnite P/S is 10; The Trade Desk P/S is 32 (40 after Monday’s pop)

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