iSentia Group Ltd

ISD Details

Earnings downgrade for FY17: Shares of iSentia Group Ltd (ASX: ISD) tumbled 20.7% after the company reduced its full year guidance due to challenging competitive environment faced in FY17. The Media Intelligence (SaaS/VAS) business is expected to report 4% yoy growth in revenue at $141million, while ANZ is expected to report a revenue increase of 1% and in Asia, a revenue increase of 16% for FY17. However, Media Intelligence (SaaS/VAS) EBITDA (including corporate overhead) is expected to decline 3% yoy to $46 million. Notably, Content Marketing is expected to report revenue decline of 30% yoy at $14.2 million and an EBITDA loss of $4.4 million compared with an EBITDA profit of $3.6m in FY16.


FY17 Earnings Guidance; (Source: Company reports)

The revised expectations are due to $0.5 million impact from bad debt clean-up in Asia, $0.3 million currency translation impact on Asia earnings, $1.4 million increase in expected operating losses from Content Marketing. Additionally, delays in the deployment of Mediaportal in Korea and price increases in ANZ, impacting Q4 revenue, while VAS sales campaign which drove strong billing momentum but did not benefit Q4 revenue as expected. We give a “Hold” recommendation on the stock at the current price of $1.76


ISD Daily chart; (Source: Thomson Reuters)

Freelancer Ltd

FLN Details

Disappointing with poor results for H1FY17: Shares of Freelancer Ltd (ASX: FLN) crashed 23.7% after announcing the disappointing results for H1FY17. During the half-year ended 30 June 2017, the Group generated net revenue of $26.3 million, flat on the prior corresponding period (1H16: $26.2 million). Importantly, the Gross Payment Volumes (unaudited) declined by 18% yoy led by a decline in volume in the Escrow.com payments segment.


Key financial highlights H1FY17; (Source: Company reports)

Gross profit for the half-year ended 30 June 2017 was $22.5 million, flat on the prior corresponding period (1H16: $22.7 million), with a gross margin of 85% - slightly down on prior corresponding periods due to the Escrow.com business having a naturally slightly higher cost of sales. Total operating expenses were $23.2 million (1H16: $23.5 million) reflecting a slight decrease, driven by reaching scale in employment costs as the business demonstrates operating leverage headcount in engineering, support and functional areas, along with consolidation of the Escrow.com business and investment into its near-term growth. Hence, the Group reported an operating net loss after tax of $(0.5) million (1H16: $(0.1) million) and an operating EBITDA loss of $0.2 million (1H16: $(0.09) million).Further, operating cash flow declined 66% yoy to $1.5 million (1H16: $4.5 million). We give a “Hold” recommendation on the stock at the current market price of $0.50


FLN Daily chart; (Source: Thomson Reuters)

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