Rhythmone Share Discussion Threads

[loafofbread] 20/9/2018 22:54

sikh,

I think house prices went up by 40%, but don't let a true fact get in your way!

[sikhthetech] 20/9/2018 22:04

The classic was Shroder and Big Bear, from iii, with there convincing, well written, in depth posts about 1R....


Did Shroder know about Leadimpact...

Shroder, what's your view on LeadImpact...
You seemed to have forgotten to mention them as part of your posts on Blnx businesses...

Shroder 31 Mar'15 - 15:52 - 7548 of 11757 0 0

<...>
stt, I have no idea what that company is or does, only the current blinkx business model which is complicated enough.

[sikhthetech] 20/9/2018 21:56

Not everyone needs to post well written, in depth analysis to understand business and finances...
Just because some of us choose to...

I mentioned the house prices are going to crash by 40%, qxl are worth £300, pace takeover at 500p.. all years before they actually happened...

[sikhthetech] 20/9/2018 21:44

1gw, you're struggling to understand the industry and how the industry challenges, especially when the biggest advertiser demands changes, would affect everybody...

All that evidence about industry challenges, 1R's history and you believed your own narrative...

No shame in that, that's why it's good to have a bulletin board with posters who have different strengths so that we can all learn in areas where we are weak.
;-)

[1gw] 20/9/2018 21:34

stt - you don't seem convinced. There are a lot of questions there but no actual coherent alternative point of view. Do you have one?

Perhaps just as a reminder, I have been complimented in the past on the strength of my analysis. I feel embarrassed to have to offer testimonials, but I can see that you're not at all convinced about my analysis. There may well be a bit of undue flattery in some of them, but they can't all be fibs can they?

sikhthetech - 09 Jun 2016 - 20:45:10 - 3404 of 3454
Blinkx - 2014 onwards - BLNX
1gw, thanks, as always, for your great analysis...

sikhthetech - 15 Feb 2016 - 10:17:19 - 2701 of 3454
Blinkx - 2014 onwards - BLNX
1gw, thanks for the figures...
great analysis...

sikhthetech - 04 Feb 2016 - 15:50:56 - 2611 of 3454
Blinkx - 2014 onwards - BLNX
1gw, thanks for that...
Great analysis...

sikhthetech - 25 Apr 2015 - 19:31:01 - 46290 of 51358
PACE: PIC a winner for HDTV, IPTV, VOIP, PVR - PIC
1gw, interesting...and great analysis..

sikhthetech - 28 Jul 2014 - 15:47:33 - 13502 of 14598
BLINKX (2013 and beyond) discussion - pros n cons - BLNX
1gw/gl, great analysis/posts...

sikhthetech - 13 Jul 2014 - 18:24:28 - 12972 of 14598
BLINKX (2013 and beyond) discussion - pros n cons - BLNX
Gl, 1gw has been doing some great analysis. .. I wonder whether he is an accountant or has an accountancy background. ..

sikhthetech - 20 Jun 2014 - 09:51:46 - 11291 of 14598
BLINKX (2013 and beyond) discussion - pros n cons - BLNX
1gw, great analysis and breakdown...

sikhthetech - 17 May 2014 - 20:41:17 - 43223 of 51358
PACE: PIC a winner for HDTV, IPTV, VOIP, PVR - PIC
1gw, thanks for the great analysis...

sikhthetech - 16 May 2014 - 20:49:59 - 43214 of 51358
PACE: PIC a winner for HDTV, IPTV, VOIP, PVR - PIC
1gw, great analysis...

[sikhthetech] 20/9/2018 21:27

and when they kitchen sink the 'low margin' operations, how much will the exceptionals be???

How much revenue and cash will they lose as a result?


Distinct lack of clarity, eh????

[1gw] 20/9/2018 21:02

Quite right, STT, it is perhaps naïve of me to assume that everyone can be bothered to read the annual report when considering investing in a company. I tend to find that business context, strategy, strengths (and occasionally weaknesses) are laid out in excruciating detail in most companies' annual reports.

My strengths tend to be in analysis of the numbers and interpretation of the financial statements, which I find is where many investors and potential investors appear to be grateful for a bit of help. So for me, I take the context, strategy and strengths as a given and focus on the numbers.

But for stt and any others without the time to look at company reports, the non-financial side of the business case as I understand it, drawing heavily on the company's annual report, is basically:

MARKET OUTLOOK
Robust sector growth;
Dominance of programmatic trading;
Growth of Mobile, video and OTT/Connected TV;

COMPANY STRATEGY
Focus on differentiation and growth in three key areas:
Enhance unified programmatic advertising platform;
Grow base of data-driven engaged audience segments;
Innovate around video and connected TV advertising.

All the above, basically headlines from the Business Overview section of the annual report, with lots more detail available under those headlines in the report. The outlook statement is also worth taking into account:

"The Company anticipates continued growth throughout FY2019, led by its programmatic capabilities and augmented by its recent acquisitions. The industry is characterized by fewer, dominant, better integrated players that are able to deliver sustainable value to both demand and supple sides of the value chain. The Company now has the unique combination of technology, talent and relationships in place to scale both organic and inorganic growth as the industry continues to evolved and consolidate.
...
RhythmOne enters FY2019 in a confident position, with a product portfolio that is well aligned with industry growth trends."


I think that last statement is one of the key ones. We've seen an awful lot of posts on this board about what's happening in the ad tech world. It seems to me that the bull case for R1, without numbers, is that it's beautifully positioned to ride the wave of change. It was a (forced) early adopter of verification and filtering and as a result has established itself at or near the top of the independent industry quality and trust ratings published by Pixalate. It has made some significant acquisitions last year, which appear to propel it to the type of scale where it can not only become increasingly profitable, but also can increasingly become a home to those companies that are sub-scale and looking to be consolidated. Looking further ahead it seems success in that direction may ultimately lead to it becoming a very attractive target itself to be taken out by a telco or other large company looking to buy a ready-made AdTech business.

[sikhthetech] 20/9/2018 19:58

there absolutely nothing in 1gw's post about what 1R does, how they fit in with the industry.. how the industry is changing... how industry changes/challenges might affect 1R... The acquisitions ...


Just a load of figures and forecasts, which 1R have a history of missing...

So what's the bull case?
That the forecasts look good????

JAM TOMORROW THEN...

[sikhthetech] 20/9/2018 19:53

and why would any company close an operation just weeks after describing it as a 'pioneering' operation and when the Yume deal was announced... seems a very odd thing to do... will the new management find any skeletons whilst trying to improve reporting...


SupportFreeContent was described as a Pioneering Initiative in fy2017 results...

"Another pioneering initiative designed to enhance the experience for RhythmOne publishers is called Support Free Content. This initiative arose out of the need to recapture revenues lost due to ad blocking. Support Free Content helps publishers address ad blocking by offering consumers choice - gating their access to publisher content via a set of monetization options that range from subscription, to white listing within their ad-blocker, to downloading a browser extension that provides alternative avenues for monetization."



According to Alexa, seems like it was closed around Aug/Sept 2017, during the latest reported fy, fy2018



So it seems like it was closed around Sept 2017, possibly when the rthm/Yume deal was confirmed..

23/08/17 - press speculation:


04/09/17 - confirmation of Yume deal:

[sikhthetech] 20/9/2018 19:48

and quite possibly those 'significant costs', together with the hugely reduced revenue expectations from closing those 'low margin' operations will result in them having to use their secured Credit facility ...

So lack of clarity and we won't know until after they announce the results, will we?


Page 43..

"significant costs", Substantial managment time", "adversely affect...operating results..in the future."

"The combined company will incur significant costs and devote substantial management time as a result of becoming subject to reporting requirements in the United States, which may adversely affect the operating results of RhythmOne in the future.

As a company subject to reporting requirements in the United States, the combined company will incur significant legal, accounting and other expenses that RhythmOne did not incur as a public company in the United Kingdom. For example, RhythmOne will be subject to the reporting requirements of the Exchange Act and is required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Compliance with these requirements will increase RhythmOne’s legal and financial compliance costs and will make some activities more time consuming and costly, while also diverting management attention. In particular, RhythmOne expects to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when it is no longer an emerging growth company as defined by the JOBS Act. "

[1gw] 20/9/2018 19:12

The rational bull case.

Perhaps it's time to step away from the blizzard of ad-tech posts (often repeated ones at that) and look at the big picture bull case.

Below is the post I put up, in response to a request from precinct I think, to flesh out the optimism I initially expressed when the full year trading update came out back in April.

I think it pretty much still holds water. Basically they've done what they said they would over the last couple of years, the financial trends look good and they are guiding to analyst consensus, which last time I saw looked pretty exciting.

There are a couple of wrinkles since then. Firstly, revenue expectations seem to have come down a bit, with Eric Singer expressing surprise at the AGM that anyone would have an objection to cutting out marginal revenue - so revenue expectations down, but adjusted ebitda expectations unchanged as far as I am aware. And secondly, the operating cash picture is a bit tricky to unpick because of exceptionals and working capital movements. A more detailed post can be found here for anyone interested:



And finally, in the interests of transparency, some disclosure. Firstly I am very long R1 (one of my top 2 holdings) and secondly, because I am long, I am looking for an opportunity to reduce and currently intend to sell a very small proportion of my holding if the share price gets to around 270p.

-------------------------------------
1gw 19 Apr '18 - 22:52 - 13673 of 16440 Edit 0 8 2

Fleshed out optimism then.

They have basically delivered over the last 2 years in my opinion. If you look at the trends they are exciting, albeit starting from a low base. If I have the numbers right, some key metrics are:

Revenues:
FY16 $167m
FY17 $175m (including discontinued ops)
FY18 $255m

Adjusted EBITDA:
FY16 -$10m
FY17 +$1m
FY18 +$14m

Profit/Loss:
FY16 -$92m
FY17 -$19m
FY18 -$?m {-$8m in 1H)

Cash from operations:
FY16 -$6m (Net cash used in operating activities)
FY17 -$6m
FY18 +$7m (corrected)

If I then look at the specific "guidance" for FY18, a year ago, before RadiumOne and YuMe, they pointed to the "consensus" estimates of $220m revenue and $15.1m adjusted EBITDA.

Revenue guidance
Radium One did $20m in financial 2Q, so maybe $40m in 3Q+4Q, $60m for FY18.
YuMe was doing around $40m/quarter, so maybe $25m in Feb-Mar
So adding $220m+$60m+25m, you get to about $305m
Even allowing for some closing down of "non-core" in RadiumOne and YuMe it seems they've come in a bit light on revenue compared to the original consensus.

Adjusted EBITDA guidance
RadiumOne was originally expected to be adj EBITDA neutral over the first 12 months, but then they said synergy delivery was behind schedule. So we can expect an adj EBITDA loss from RadiumOne in the FY18 numbers. YuMe was adjusted EBITDA profitable, so this would help to offset the RadiumOne loss.
It seems to me they must have come close to guidance (adjusted for acquisitions) on adjusted EBITDA

Plus they've done 2 major acquisitions in the year.

So light on revenue, close on adjusted EBITDA and 2 acquisitions. But the acquisitions give them scale, so the revenue miss is outweighed (I would say) by the acquired revenue and improved profitability going forward.

So I'd say a resounding success for FY18. Sort of guided, came reasonably close to guidance and also delivered 2 big acquisitions which vastly increase scale. Then on cash, they're actually significantly operating cashflow positive it appears, which would be a huge change and testament (so far) to the logic of the scale-giving acquisitions.

But the real reason for optimism is the actual guidance for FY19. No longer just pointing to consensus but stating that they believe they "are well-positioned to deliver a further strong performance in FY2019 - fully in line with current consensus estimates in market"

And as others have posted market estimates (Whitman Howard, Numis) are mouth-watering.

And all that against the background of a huge sell off in the share price over the last year - which must have left many shareholders fearing that the TU would reveal an obvious (in hindsight) reason for the sell off.

How's that for considered optimism?

.No advice intended of course and please do your own research.

[barkboo] 20/9/2018 17:25

Yes - a good day for most investors, not so good if you are all in TLY? lol

Anyone remember if Johnny Boy kitchen sinked TLY at 24p.....lol less than a year ago Johnny Boy, Gowlane and a few other rags backed it as a winner and smashed it in the 50's.... I do hope they still think it's the dogs.

[sikhthetech] 20/9/2018 16:29

it's really charitable of McSean, on FBT, to collect on Football's behalf by using his referral links - 6 EXACT SAME links..
;-)


mcsean2164 - 11 Jun 2018 - 12:52:02 - 2376 of 3211 2018: The Blackbird Soars - FBT
30 FREE plusone coins here but running out fast so don't miss out!!!








SSB can correct me but I believe 30 is worth about Â&Acirc;£0.50. Anyway... handy to use on advfn if interested...



football - 16 Jun 2018 - 12:55:07 - 4297 of 4318 MXC Capital 2014 Vehicle for acquisitions - MXCP
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[football] 20/9/2018 16:26

So rocket you're not getting worried about them closing in on Boiler Room Traders

[football] 20/9/2018 16:24

Anyway stt I'd rather be a rapper let everyone know where I stand and someone that says they want to hear both sides of the story but then takes out short but continually crashing the company

[seball] 20/9/2018 16:24

Thanks for the heads up footie

[football] 20/9/2018 16:22

Watch out for the links below stt is making you give him free coins nothing to do with the company it's just a con or as usual a scam with him

[sikhthetech] 20/9/2018 16:15

1000 (200 coins per link) free Plus 1 coins:

to help combat the rumpers and their multiple ids...;-)








1 coin:

[jonc] 20/9/2018 15:54

BARKBOO20 Sep '18 - 15:53 - 6740 of 6740
0 0 0
30 degrees on the beach - water seasoned to perfection and old Johnny Boy still pumping away...no change ah?

Let’s get the regulators to investigate all of us.

Footy - keep nibbling away, sounds like you are getting close.


to the edge......


Blimey even the dullard barky has noticed.

[barkboo] 20/9/2018 15:53

30 degrees on the beach - water seasoned to perfection and old Johnny Boy still pumping away. (wrong choice of phrase there lol)..no change ah?

Let’s get the regulators to investigate all of us.

Footy - keep nibbling away, sounds like you are getting close.