System1 Share Discussion Threads

[homebrewruss] 14/7/2021 10:34

Not sure if this was posted previously but here's an interview with Maynard Paton where he talks about SYS1 back on 24th June, from about 7 minutes onwards.

[boonkoh] 14/7/2021 10:27

Headcount increasing modestly last few months, good amount of open roles being advertised.You don't hire to grow in an agency unless you're already at breaking point or have new client wins needing to staff up. The best leading indicator of near term upcoming revenues.

[cockerhoop] 14/7/2021 10:25

Upgrades from Canaccord this morning

revenue: 2021A 22.8m, 2022E 27.1m (up from 26.1m), 2023E 31.1m

ebit: 2021A 3.3m, 2022 1.9m(up from 1.3m), 2023 2.2m

eps: 2021A 20.8p, 2022 10.1p(up from 6.5p), 2023 12p


2023 numbers introduced suggest good revenue growth but increased investment. 2022 upgrades suggest current trading going well and good marginal conversion of revenue to ebit.

[simon gordon] 14/7/2021 10:12

p1nk,

Mimetic Theory is fascinating, I've just been plugging into that scene:

Gary Tan - 1/6/21

What is Mimetic Theory? Philosophies of René Girard with Luke Burgis

Ever wondered why humans often act like sheep? Learn why in this video where we explore the philosophies of René Girard with Luke Burgis - one of my favorite experts in the space.

[apad] 14/7/2021 10:10

System1 Research 21,237 followers 41m •
41 minutes ago
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For the last few months, we’ve been running a competition with ITV for a free slot in the Euro 2021 final broadcast. The slot got a lot more precious with the Three Lions in the final. So who was the winning ad that got aired during the final? Find out in this write-up. We’ll tell you who won, who came close, and the lessons to be learned from how our high performers have handled the tricky task of navigating a historic Euros.

[simon gordon] 14/7/2021 10:03

Eezy,

Yes, the downside is probably 100p or just share price stagnation and watching paint dry.

It's the CEO that makes me a little more confident. You need high octane characters who are pushing and training the front line staff. Getting the best out of everyone and letting go those who don't meet the exacting standards. He looks to have it. The Founder can get on with developing and networking, you need someone who totally actualises the operational team. The CMO guy looks good as well and the new non-exec is top quality.

[eezymunny] 14/7/2021 09:55

That sums it up well simon IMO.

For an EV of a little over 20m you get maybe 25m revenue this year and a product set that has had a lot of investment, and is starting to gain traction. It would hardly be surprising if they were bought out at a significant premium.

But there is downside too of course...

[hydrus] 14/7/2021 09:54

I'm a big fan of founder led businesses where the founder has a decent stake. The market in which SYS1 operates wouldn't normally interest me but there is a decent chance that the scars of previous failures have healed and management now have a clear understanding of what they need to do to take this business to another level in their market. Happy to leave it a year or two and see how they get on.

[hydrus] 14/7/2021 09:51

Yep Simon this is a quite exciting prospect. As you suggest there is a valid ad agency consultancy business here whatever happens with their data products so would limit downside. Hopefully a trading update in October will provide the market with more evidence of the success of their test your ad rollout.

[simon gordon] 14/7/2021 09:46

As a bet (investment) it looks excellent.

BoD are indicating it could be a 37x bagger and that share buy backs are returning which will help manage a floor.

Top team have been installed and integrated, partnerships are flourishing and some top brands are biting.

They've got a long flight path ahead and will be super cash generative if they pull it off.

If they achieve a tenth of their ambition it still won't be a loser.

So if you put a £1,000 in, you could possibly lose c.£500 and win £37,000.

Horse and gift.

[longshanks] 14/7/2021 09:43

The company has always been good at painting a colourful picture and this year the FY results are no different.You get the feeling that they remain fresh, fun and focused and have somehow navigated to the other side of a disastrous rebranding exercise. The ambition is admirable and appear to be garnering a core group of strong industry partners. The relationship with LinkedIn is particularly interesting and could become a massive springboard.

[cockerhoop] 14/7/2021 08:46

Eezy,

I'd take somewhere between 'tick over' and 'cash generating monster' :-)

[boonkoh] 14/7/2021 08:37

The way I see it, the outlook this year is for good revenue growth. However, costs will increase in line with revenue, so EPS will roughly stay the same. Maybe a slight increase, so I'm pencilling in 14p EPS.As they are cash positive, high gross margin, and top line growing my estimate is that they'll trade on a PE of 17-25 earnings. So that's a share price range of 238p to 350p.Wouldn't be surprised if we get back to up to the 230s or 240s in the next few days. And before the HY results, gyrate and go as high as 280. But the leg up past 300 will depend on a good confirmatory trading statement or HY results.

[eezymunny] 14/7/2021 08:32

Indeed. I guess if the products are market leading, their lofty goals are achievable and they become a cash generating monster. If not I guess they tick over... We´ll see!

[cockerhoop] 14/7/2021 08:30

Simon,

Pretty uncharacteristic too, I previously held as they started developing ad-ratings a few years ago and I can't recall such a positive narrative from the company. It's clear they're (finally) excited by the prospects for their data products.

As Pireric suggests with the Canaccord numbers, investment in scale will likely suppress FY2022 EPS but further strong growth in data revenue may help investors look beyond the short term.

Found the adidas example of testing (& back testing) a customer requested new category very interesting.

[simon gordon] 14/7/2021 07:10

Can't say they lack ambition:

We believe that System1 could be worth £1 billion eventually. Management owns 30% of the business, excluding shares under option. We take every decision with our medium term £100m+ Revenue milestone in mind. Aside from the automated product strategy, our choices on the calibre of our talent, the workflows in the company, our supply chain, the IT systems, and much more support achieving this goal.

[hydrus] 13/7/2021 19:27

Thanks Pireric - I'd be comfortable with that if they can achieve strong revenue growth and it is clear what the investments are going towards. Could be a bid target I guess if they really nail it as the company is very cheap without the dialled up costs.

[pireric] 13/7/2021 18:10

FWIW, the broker is forecasting 6.5p of EPS for the current financial year, down from ~18p in the financial year just gone, on higher costs. That's despite revenues increasing from ~22.6m to 26.1m this year

Eric

[p1nkfish] 13/7/2021 15:57

Hydrus, yes, market will discount it in advance if the path looks clear.

Each to their own but my attitude has been to take a position and assume its 12-18 months as that way I won't be throwing toys out of the pram if its not much sooner.

Margins should expand as they scale off the investment in the automation.

Quite interested to see if this develops as suspected.
Could be lucrative.

[hydrus] 13/7/2021 14:37

The investment in their data offerings might mean that profits only grow in line with, or possibly behind revenue growth but I suspect the market will respond to fast revenue growth and re-rate accordingly. I don't think we will be waiting until it all falls through to the bottom line.The big question is whether the Q4 growth continues and if so how quickly revenue from data grows.

[p1nkfish] 13/7/2021 14:12

It's the future potential rate of change that interests me, on scale. You can end up with 2 or 3 effects compounding and really see decent appreciation. Let's see. Give it 12-18 months to show through imho.

GLA.