Adslot Limited: Adslot Limited (ASX: ADS) is an Australian-based company engaged in delivering trading technology and services. ADS’ trading technology platforms include Adslot Media and Symphony.

Q1FY22 Financial Performance:

Adslot Media:

• Total Transaction Value (TTV): TTV for Q1FY22 quarter registered $5.63 million, edged up 14% sequentially, while down by 10% PcP. The TTV growth was primarily driven by key partner marketplaces.
• Volume of Trades: Total trades for the quarter clocked 570, depicting a 14% sequential incline and 23% PcP uptick. The volume growth was primarily attributed to surged trading activity in all major markets where the company is active.

Symphony Update:

• Total Annualized Spend: The total annualized media spend in Symphony’s management for the Q1FY22 stood at $7.16 billion, up by 13% sequentially and 6% PcP. During the period ADS announced its extended term with GroupM pursuant to multi-market Symphony Master Service Agreement.
• Negotiations: ADS confirms its negotiations for developing additional Symphony markets along with multiple holding companies. First market deployments are expected to commence in FY22.

Cash Flow Commentary:

• Cash Flow Update: Net cash outflow from operations stood at $0.98 million (Q4FY21: $0.26 million outflow). Ongoing cash payments for the quarter stood at $5.44 million, up by 14% QoQ, primarily driven by increased publisher payments.
• Cash Position: Cash receipts for Q1FY22 was registered at $3.59 million, up by 8% on previous quarter’s receipts. Cash balance in the end of 30 September 2021 stood at $5.15 million.

Technical Analysis: On the weekly chart, ADS stock price broke the horizontal trendline support and sustaining below the trend line levels. Moreover, the prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a resistance zone.  However, the momentum oscillator RSI (14-period) is trading at ~49.036 levels on a daily chart. An important support level for the stock is placed at AUD 0.0165 while the key resistance level is placed at AUD 0.025.

Key Risks: Operating in trading technology and services, ADS is exposed to substantial competitive pressures from big players. Considering the business’ online operations, its efficiency is highly dependent on prompt use of technology, frequent upgrades, and bugs mitigation.

Outlook: Adslot Media platform has witnessed improved sales pipeline for trading, primarily driven by continued progress from activation with large buyers, especially via partner marketplace development. ADS has made substantial efforts in developing custom features, publisher on-boarding, and curated inventory for partner marketspace.

Stock Recommendation: The stock of ADS gave a negative return of ~27.58% in the past one year. The stock is currently trading lower than the 52-weeks’ average price level band of $0.018- $0.032. Considering current trading levels, technical analysis and cash outflow update, we give a “Sell” recommendation on the stock at the closing market price of $0.021, as of 28^th January 2022, up ~16.67%.

Daily Technical Chart, Data Source: REFINITIV

Note: The purple line reflects the RSI (14-day period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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