System1 Share Discussion Threads

[soultrading] 18/4/2019 07:54

Great incentive.

[dangersimpson2] 15/4/2019 14:06

I don't get why they are so vague on reported profits. They give an exact profit figure for the core business of £3.7m and then say Ad ratings cost £3.1m, some of which will be expensed and some capitalised. Means their reported profit could be anywhere from £0.6m to £3.7m - share-based payments + exceptional rates rebate.

They must be able to guide better than this even if they don't have the precise level of capitalisation signed off by auditors.

[woozle1] 15/4/2019 13:56

The lack of top line growth is a worry. Good to see the costs are under control. Very sketchy dets on Ad Ratings. Still too early for me.

[longshanks] 15/4/2019 08:17

Good to see the business stabilising: and clearly still strongly cash generative.The Ad rating business is slowly gaining some traction - very slowly. It is too early yet to assess how successful it will be and - indeed - if it will be. The company is confident enough to reinvest a significant chunk of cash into it for the next year or so - let's hope it is well founded.

[capercaillie] 15/4/2019 07:36

Looks well set for today.

[gsbmba99] 05/2/2019 21:26

Apparently the Superbowl ads this year were more entertaining than the game. SYS1 was live scoring the ads ( ). If you are a real ad person you can compare results to other industry professionals - The 5-star Microsoft ad generated a fair amount of buzz -

[gsbmba99] 15/11/2018 08:56

If I've read the terms and conditions section 5. "Charges" correctly and counted properly, there are 25 "categories" (26 in US) that are separately charged - .

[gsbmba99] 09/11/2018 07:06

W1 - I think I misread your comment. At the AGM Kearon and Hunt said the business line of rating ads before they are televised was going well. I think this is called "Communications". Not to be confused with AdRatings which at the time of AGM was in friends and family mode but has since soft launched.

[gsbmba99] 08/11/2018 20:10

W1 - that's true. But the AGM was on 25 July. Since then, the AdRating service has undergone a soft launch.

[woozle1] 08/11/2018 17:48

gsbmba99,
Maynard Paton said in his blog of the AGM that Adrating was experiencing teething probs and that is was just been trialled by "friends and family".
w1

[gsbmba99] 08/11/2018 13:15

The results presentation has a couple of snippets( ). P. 15 says AdRatings covers "8 core industries" lending more to a broad interpretation of "category". It also says that it covers all UK/US ads over 12 months but AdRatings website says "since May 2017". AdRatings database count is now up to 27k which, I imagine, skews very heavily to the US. What continues to intrigue me is the cost reduction breakthrough they appear to have achieved for the AdRating process itself. From "around £20-30k (more for multi-country studies) over a 3-4 week period" to "£1k per ad when part of a larger study" at the AGM. This usually leads to demand stimulation. Hunt and Kearon both said at the AGM that the ad rating product was doing very well. I thought it might show in the results. Could it be that the radically lower price point is (temporarily) masking underlying "volume" performance?

[tmfmayn] 08/11/2018 12:03

H gsbmba, yes I was surprised at the number of categories, too. I had thought like you that the categories were much broader. I suspect discount s may be available for multiple categories. You wrote that you attended agm. I was there too, and should be there next year.

[gsbmba99] 07/11/2018 22:07

Maynard Paton has written a blog post on the 1H results which is worth reading: There's also a website up for AdRatings. There's rather a lot more "categories" than I had anticipated. I had understood it was £10k/year/region/category. But there are "categories" like "Consumer current account" and "Consumer savings account". Are Santander and Halifax meant to pay £20k for UK access because they are in two "categories"? Or do they pay £10k for the category "Financial"? Not sure.

[modform] 07/11/2018 14:53

Looks like a good recovery stock with the possibility of some future recurring revenue and better revenue visibility

[gsbmba99] 06/11/2018 12:53

Yes and the 30k at 190 this morning might have been the last of Pie Funds Management, NZ whose most recent announcement accidentally revealed they had 30k remaining. It's unclear what Mr. Barden's role with the company is. The announcement says he's a PDMR (person discharging managerial responsibility) but is no more specific. His public persona would suggest he's a portfolio NED but he's not on the board. His most recent position was CEO of Wiggle. It looks like he and Kearon may have intersected at Unilever many years ago or he may have been a previous client at Heinz.

[longshanks] 06/11/2018 11:38

Stefan Barden seems to be clearing up any overhang.Good to see such solid support.

[gsbmba99] 02/11/2018 18:56

Most of this info comes from attending AGM, careful reading of company blogposts and watching some of the videos from company personnel. Some snippets from (house broker) Cannacord ( ): 1) "This is a differentiated subscription product designed to improve advertising efficiency (and save money) for agencies and advertisers. If successful, it could generate material incremental high margin/high visibility profits for SYS1," said Canaccord. 2)"The Canadian broker left its forecasts unchanged for the most part- flat revenues of £27m, and pre-tax profits of £3.4m, but did upgrade its EPS estimates from 17.9p to 19.4p to reflect lower tax rates. It also now assumes a flat dividend for FY19, given projected year-end net cash of £4.3m."

[longshanks] 02/11/2018 12:43

You are so very well informed - I am in awe!Thank you for sharing your research

[gsbmba99] 02/11/2018 10:47

My £2m/yr guess may be on the high side. The running costs of AdRatings will depend on the number of Ads reviewed which depends on annual releases of ads in UK and US. About 23k ads in database but unclear what proportion outside of company's 18/19 fiscal year. The company typically charges £1k for ad testing in advance of an ad launch (when purchased as part of a larger package). So, the actual review of the ads is a very significant investment ("retail" value £23m). They are also importing third party data from Ebiquity (amongst others) that will have an ongoing cost. I imagine we'll get a clue as to how well AdRatings is doing if we see them expand the number of categories or expand the geographic coverage (continental Europe, Asia Pac, LatAm and Africa not covered). I could have sworn I've already seen a reference somewhere in company literature of expansion to 21 categories.

[longshanks] 02/11/2018 10:12

Thanks for that update. Not sure that the costs of running Ad Ratings will be as high as £2m pa - certainly in terms of overhead.All costs to date have been on development of the tool so running costs could/should be much lower.They talk in this statement of it being a scalable service. In this respect I would expect this could become a very profitable SAAS tool should uptake meet expectations.

[gsbmba99] 02/11/2018 08:20

AdRatings has a soft launch on 5 November ( hxxps://pages.system1research.com/s1r-ad-ratings-pilot ). The launch categories appear to be Automotive, Financial, FMCG, Health & Beauty, Tech and Charity (about 10:20 of this interesting video - ). The price for a subscription was said to be £10k/region/category/year. If we assume ongoing running costs of about £2m per year (could be less, depends on the investment into the "historic" ads portion of database), they need each of their 200 clients to buy one region or half of their clients to buy both regions (UK and US) to break even. Let's hope for news of a positive launch.

[woozle1] 02/11/2018 08:10

Sensible to cut the dividend and conserve cash or buy back shares at cheap levels.
w1

[longshanks] 02/11/2018 07:51

Admirably frank and open interim statement.Whilst revenues are clearly under pressure there are lots of positives buried in the detail.They disclose that the final dividend could be cut which would be disappointing although they position this as being that capital could be spent instead on share buybacks.The new Ad Ratings innovation is due to be launched imminently and it seems that much rides on the success or not of this new service.Much to be interested in but I can't see any major rerate in the share price in the short term.

[gsbmba99] 15/10/2018 11:41

On the surface, £1.9m of 1H "underlying" PBT excluding the AdRatings investment would appear to be reasonable in the context of a full year forecast, as near as I can tell, of £3.5m. I suppose the quibble would be that "underlying" PBT increased because expenses declined year on year by more than the decline in gross proft.

[topvest] 22/9/2018 12:46

Yes, good to see. Still watching at the moment though myself.