System1 Share Discussion Threads

[tmfmayn] 06/3/2022 12:55

SYSTEM1: Data Services Reaching 43% Of Revenue Supports Long-Term ‘Platform’ Ambitions Although Q4 Consultancy Warning Emphasises Risk Of Transition Mishaps #SYS1


"An influx of new Data clients suggests the partnership with ITV is working"


[p1nkfish] 22/2/2022 21:48

I think they have burst their balloon. Not just the loss of business but loss of confidence in management's ability to forecast with confidence = increased risk/uncertainty.

Just mho.

[adamb1978] 22/2/2022 10:59

The 13 day gap between the previous trading statement and this one is a large part of the difficulty with today's announcement.

The consulting part should be very forecast-able, so this sudden drop suggests either they have a limited/no pipeline of projects such that even if one customer cancels something, they dont have replacement projects which can be brought forwards OR they have a very very large customer and a cancellation by them is too big to be replaced.

I think H2 will now be loss making given H1 PBT was £1.3m and the forecast before today was £1.8m for the year, so now £0,8m for the year in total. So perhaps 6p-7p EPS, which is low but you can look past that given the cash balance and if you feel you have a good view on where next year is heading

The problem now is that the future is very uncertain given the slowig data part in Q3 and now this. Plus the cost base is fatter - this sort of business should be generating say 15%-20% operating margins - if they can get to that then the price now looks cheap, but H1 was 11% and the FY will be around 5% I think

All highly uncertain with SYS1 now I'm afraid (aside from the cash in the bank)

[pugugly] 22/2/2022 10:30

Yet another board making, with hindsight, a strategically wrong buyback decision wasting shareholder funds down the drain buying back shares over the last month at significantly higher prices than current price-

Message communicated they - for some reason - had lost touch with the progress of the sales teams when they took the decision to commence the buyback programme on " 7 January 2022 Share Buyback Programme

System1 Group PLC (AIM: SYS1), the marketing decision-making platform, announces its intention to commence a share buyback programme (the "Buyback Programme"), using the Company's existing cash resources to make market purchases of System1 ordinary shares for an aggregate value of up to GBP0.75 million (the "Maximum Amount") in order to enhance shareholder returns and to satisfy obligations in relation to employee share schemes.

The Company has entered into an agreement with its broker, Canaccord Genuity Limited ("Canaccord Genuity"), to carry out purchases under the Buyback Programme on its behalf on an irrevocable and non-discretionary basis. The Broker will make its trading decisions under the Buyback Programme independently of, and uninfluenced by, the Company. The Company has agreed the Buyback Programme will commence immediately and run to no later than 31 March 2022". .

Very lucky however sale by Kearon in November " that John Kearon, Founder and Executive President of the Company, sold 100,000 ordinary shares ("Shares") at a price of 320 pence each. Following this transaction, Mr. Kearon holds 2,818,235 Shares, representing 21.96 per cent of the issued share capital of the Company.

However only a small percentage of his holding so he is certainly the biggest loser today. If he had suspected (but of course not known of) problems ahead might have sold more. So something seriously gone wrong after his sale decision but reason for slowdown not clear (to me anyway from the rns)

Prominent Shareholders
No. of 1p ordinary shares % of voting rights
John Kearon (Director) 2,818,235 21.85%
University of Notre Dame 1,200,000 9.30%
Inv.AG f. langfr. Invest. TGV 1,020,000 7.91%
Ruffer Investment Mgt 770,000 5.97%
Motley Fool Funds Trust 645,000 4.33%
Ennismore Fund Management 558,012 5.00%
Compagnie Odier SCA 557,476 4.32%
Heritage Capital Management UK 494,342 3.83%

One to watch to see how the sales/contracts/revenue position is improved (imo) before taking action.

[topvest] 22/2/2022 10:20

All a bit disappointing. Cash position is still good. Data is the future and so there is some risk on the consultancy revenues if they are spending most of their time on the data side. Q3 data announcement was already disappointing, so Q4 equally so. Still optimistic long term. Remember, that they had always warned of significant cost increases this year as 1. they are investing more; and 2. Last year had lots of furlough income. We will no doubt see buy-backs support the price at the £2.50 level. It's actually good news for the company to buy-back the shares 50% off!

[p1nkfish] 22/2/2022 09:29

Management certainly took eye off the ball.
No excuses for that.

[boonkoh] 22/2/2022 09:05

Management must think we're idiots. Clearly something else wrong going on, not just the £1m revenue loss from consultancy.A £1m revenue loss does not directly produce a £1m PBT loss. No business has 100% operational gearing. You can't trust these guys, they are hiding something and not doing a good job at it.Probably costs increase (ie headcount, etc) overran but no good financial controls and realised too late to warn the market. But then conveniently a project loss came along to use as a flimsy excuse.

[adamb1978] 22/2/2022 08:56

Implies that H2 will be loss-making right?

[eezymunny] 22/2/2022 08:41

Err f/c was 1.8m pretax, so 1m announced so late in the year is rubbish by any standards IMO...

It was easy to see this coming IMO. Directorspeak and all that.

[babbler] 22/2/2022 08:32

way overdone for 1m less profit no? Almost 20m wiped off mcap.

[topvest] 22/2/2022 08:25

Not a good update this morning. Consultancy revenues are always lumpy. Data revenue growth in the final quarter is not able to plug the gap. A big drop likely today. Unusual that they were buying back shares so recently, but maybe the projects have only just been cancelled. I suspect they will now opportunistically take up the slack and buy-back shares aggressively, so the shares may recover a bit once that kicks in later on in the day.

[eezymunny] 09/2/2022 08:23

Not really gaining any great momentum, revenue wise.

One wonders about similar Ad rating offerings from Kantar and others, will limit ambition here.

[topvest] 08/2/2022 13:00

Chart looks very positive here.

[longshanks] 01/2/2022 10:10

Got that wrong!!

[longshanks] 10/1/2022 17:10

We should get a trading update soon to report on what is historically their busiest trading period.If the recovery is continuing to plan, we could see this breaking GBP 5 on the back of the buy-back rally and could easily be north of GBP 6 by end of January.

[longshanks] 07/1/2022 11:34

Not sure I would describe the business as 'borderline profitable': and cash flow has always been excellent.Clearly, the agreement with Cannacord on the buyback process took longer than anticipated to put in place, but the delay is negligible really.Buybacks totalling GBP 0.75m is less than I was expecting.

[boonkoh] 07/1/2022 11:14

About time the delayed buyback started! Also means trading is going well, otherwise they wouldn't have given the green light?A pity I've now completely sold down my stake, as I'm positioning to not be high multiple growth shares that are borderline profitable atm. And I can't buy back within 30 days for compliance reasons. Had also thought since the share buyback hadn't started in Dec, something was wrong. But that's now been shown as a false assumption on my part...

[p1nkfish] 07/1/2022 07:48

About 1.4% of the company (at current market cap) targetted to be bought back by end of March. Current average volume per day is about 18K shares over past 3 months.

Interesting to watch price response unless there is some larget holder prepared to spool stock out to satisfy the butyback.

[cockerhoop] 05/1/2022 11:05

Stefan Barden was brought in to do a specific job in the transition of the business and as it said in the RNS it was not planned for him to be a permanent executive director.

[boonkoh] 04/1/2022 16:07

If this goes up any further it would be >25% in less than two weeks. Surely company would have to issue a statement whether there is anything share price moving that isn't public yet.The volume today has just been relentless. Loads of trades at the full ask, picking up small quantities all day.

[apad] 04/1/2022 15:04

Looks to me like 'personal circumstances' AdamB. Illness, whatever.
apad

[adamb1978] 04/1/2022 14:57

Odd management change? Relatively recent CEO leaving to become an advisor again and former CEO coming back in?

If anyone speaks to the company, would be good if they could try to get an explanation. THe RNS could have done with more of an explanation why...

[miti 1000] 04/1/2022 10:56

Yep thought as much, np.