“Edison’s accessible and high-quality research gives us the opportunity to communicate an independent perspective of Tyman to a wide variety of potential stakeholders.”
Currency in -
Last close As at 26/05/2023
-4.75
▲ 1.25 (26.32%)
Market capitalisation
GBP13m
Research: TMT
Mirriad’s decision to exit the Chinese market, following weaker than expected trading and restructuring of the Tencent contract, is a clear setback and we adjust our estimates accordingly. Nevertheless, the opportunity in North America dwarves all other markets, and here the company reports good progress. We look to see evidence of new partners being signed up and the progression of existing ones towards revenue generation to demonstrate that the company is still well placed to monetise its IP and platform.
Mirriad Advertising |
Pulling out of China, progress in the US |
Trading update |
Media |
27 July 2022 |
Share price performance
Business description
Next events
Analysts
Mirriad Advertising is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||
Mirriad’s decision to exit the Chinese market, following weaker than expected trading and restructuring of the Tencent contract, is a clear setback and we adjust our estimates accordingly. Nevertheless, the opportunity in North America dwarves all other markets, and here the company reports good progress. We look to see evidence of new partners being signed up and the progression of existing ones towards revenue generation to demonstrate that the company is still well placed to monetise its IP and platform.
Year end |
Revenue (£m) |
EBITDA |
PBT* |
Diluted EPS* |
P/E |
Yield |
12/20 |
2.18 |
(8.63) |
(9.09) |
(4.20) |
N/A |
N/A |
12/21 |
2.01 |
(11.58) |
(12.02) |
(3.93) |
N/A |
N/A |
12/22e |
2.01 |
(15.52) |
(15.72) |
(5.63) |
N/A |
N/A |
12/23e |
4.92 |
(14.75) |
(14.90) |
(5.34) |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
China retrenchment
Mirriad’s trading update flagged that revenues are expected to be flat year-on-year at £2m in FY22 (Edison estimate was £3.3m), which is attributed largely to weakness in China. As a result, the company will wind down its Chinese operation in time for the end of the Tencent contract, in March 2023. This process will reduce costs by £1m pa with a cost control programme expected to deliver an additional £1.5m in savings by end FY23.
US remains the main opportunity – good progress
The company continues to make good progress with multiple partners in the key North American region, where the total advertising market is estimated to be worth $378bn (Zenith), more than China, Japan, UK, Germany and France combined ($234bn). Management reports receiving an increasing number of substantial RFPs and inbound enquiries. Heightened competition in the streaming market has increased the imperative for media companies to find new monetisation streams, and the addition of non-interruptive, in-content advertising is an obvious route to achieve this. On top of the large, vertically integrated media players, the collaboration with Magnite should start to contribute revenues from the programmatic advertising ecosystem late in the year or early next year.
Valuation: Success in the US the catalyst for upside
Our revised estimates are overleaf with Chinese revenues pulled back significantly, and a cautionary cut to FY22 revenues from other regions, but unchanged in FY23. Costs are also brought down, although not enough to offset profit at the EBITDA level and further funds will be required in the next 12 months to support growth (which was the case before this estimate revision). With limited visibility, traditional multiples are unhelpful. However, we do believe that with good execution Mirriad’s opportunity can support a valuation significantly above the current level. We will look to see announcements of new partners and evidence of progression with existing partners as the key data points to demonstrate that the company is still well placed to monetise its IP and platform.
H1 financial performance
H1 revenues were £577k, down from £1,137 last year. Revenues from China dropped £820k year-on-year to £123k, with COVID-19 lockdowns creating significant weakness in the advertising market, while the restructured agreement with Tencent removed the guaranteed minimum payment threshold.
US revenue grew by 57% to £418k, with a much stronger H2 expected driven by seasonal strength and further progression of the sales pipeline.
Cash at the end of the period was £17.7m (June 2021: £29.8m), which was better than management’s expectations due to cost savings and below budget bonus provisions.
Estimate changes
Our estimate changes are shown below. Given the lack of visibility, these are clearly illustrative rather than definitive. Our revenue estimate for 2022 reflects the shortfall in China, plus a cautionary reduction in other regions, reflecting the duration of the commercialisation cycle. For 2023, the downgrade to our revenue forecast reflects the significant reduction in revenues from China, with other regions unchanged.
Our cost estimates reflect the managed wind down of the Chinese operations, expected to release £1m of savings per annum once complete, together with a broader cost reduction programme expected to reduce costs by a further £1.5m per annum by the end of next year, although this will be somewhat offset by senior hires in the expensive US market.
Our estimates indicate that the group will still have around £8.5m of cash by the year-end (materially unchanged from our previous estimate) but would need to look for additional funding during FY23. If the business executes to plan, we would anticipate that management would be able to announce multiple commercial milestones over the course of the next six to 12 months to give investors confidence in Mirriad’s ability to monetise its IP and platform.
Exhibit 1: Estimate changes
Year end 31 December (£m) |
2020 |
2021 |
2022e |
2023e |
|||
Old |
New |
Old |
New |
||||
Revenue |
2.18 |
2.01 |
3.30 |
2.01 |
7.75 |
4.92 |
|
Cost of Sales |
(0.24) |
(0.29) |
(0.50) |
(0.30) |
(1.16) |
(0.74) |
|
Gross Profit |
1.94 |
1.72 |
2.81 |
1.71 |
6.59 |
4.19 |
|
EBITDA |
(8.63) |
(11.58) |
(15.00) |
(15.52) |
(12.85) |
(14.75) |
|
Operating profit (before amort. and excepts.) |
(9.09) |
(12.02) |
(15.20) |
(15.72) |
(13.00) |
(14.90) |
|
Exceptionals |
0.00 |
0.00 |
0.00 |
(0.15) |
0.00 |
(0.18) |
|
Profit Before Tax (norm) |
(9.09) |
(12.02) |
(15.20) |
(15.72) |
(13.00) |
(14.90) |
|
Profit After Tax (norm) |
(9.06) |
(10.97) |
(15.20) |
(15.72) |
(13.00) |
(14.90) |
|
Net income (normalised) |
(9.06) |
(10.97) |
(15.20) |
(15.72) |
(13.00) |
(14.90) |
|
EPS - normalised fully diluted (p) |
(4.20) |
(3.93) |
(5.45) |
(5.63) |
(4.66) |
(5.34) |
|
EPS - basic reported (p) |
(4.36) |
(4.22) |
(5.73) |
(5.97) |
(4.94) |
(5.69) |
|
Closing net debt/(cash) |
(35.42) |
(24.50) |
(8.54) |
(8.55) |
4.27 |
7.17 |
|
Source: Mirriad Advertising accounts, Edison Investment Research
Exhibit 2: Financial summary
£m |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
0.874 |
0.416 |
1.140 |
2.180 |
2.010 |
2.014 |
4.924 |
Cost of Sales |
(0.181) |
(0.144) |
(0.178) |
(0.244) |
(0.294) |
(0.302) |
(0.739) |
||
Gross Profit |
0.694 |
0.272 |
0.961 |
1.936 |
1.716 |
1.712 |
4.186 |
||
EBITDA |
|
|
(10.359) |
(11.931) |
(11.505) |
(8.626) |
(11.579) |
(15.516) |
(14.750) |
Operating profit (before amort. and excepts.) |
|
(11.272) |
(14.429) |
(12.174) |
(9.092) |
(12.019) |
(15.716) |
(14.900) |
|
Amortisation of acquired intangibles |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Exceptionals |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
(0.150) |
(0.180) |
||
Share-based payments |
(1.675) |
(0.176) |
(0.360) |
(0.350) |
(0.815) |
(0.800) |
(0.800) |
||
Operating profit |
(12.947) |
(14.605) |
(12.534) |
(9.442) |
(12.834) |
(16.666) |
(15.880) |
||
Net Interest |
0.001 |
0.058 |
0.023 |
0.004 |
(0.001) |
(0.001) |
(0.001) |
||
Joint ventures & associates (post tax) |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Exceptionals |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Profit Before Tax (norm) |
|
|
(11.271) |
(14.371) |
(12.151) |
(9.089) |
(12.020) |
(15.717) |
(14.901) |
Reported tax |
0.209 |
0.042 |
0.056 |
0.032 |
1.048 |
0.000 |
0.000 |
||
Profit After Tax (norm) |
(11.089) |
(14.329) |
(12.095) |
(9.056) |
(10.972) |
(15.717) |
(14.901) |
||
Minority interests |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Discontinued operations |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Net income (normalised) |
(11.089) |
(14.329) |
(12.095) |
(9.056) |
(10.972) |
(15.717) |
(14.901) |
||
Average Number of Shares Outstanding (m) |
58.0 |
104.1 |
150.2 |
215.7 |
279.1 |
279.1 |
279.1 |
||
EPS - normalised (p) |
|
|
(19.1) |
(13.8) |
(8.1) |
(4.2) |
(3.9) |
(5.6) |
(5.3) |
EPS - normalised fully diluted (p) |
|
|
(19.1) |
(13.8) |
(8.1) |
(4.2) |
(3.9) |
(5.6) |
(5.3) |
EPS - basic reported (p) |
|
|
(22.0) |
(13.9) |
(8.3) |
(4.4) |
(4.2) |
(6.0) |
(5.7) |
Dividend (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Revenue growth (%) |
- |
(52.4) |
174.0 |
91.3 |
(7.8) |
0.2 |
144.5 |
||
Gross Margin (%) |
79.3 |
65.5 |
84.4 |
88.8 |
85.4 |
85.0 |
85.0 |
||
EBITDA Margin (%) |
-1185.0 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Normalised Operating Margin |
-1289.4 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
2.280 |
0.770 |
1.125 |
0.823 |
0.930 |
0.806 |
0.992 |
Intangible Assets |
1.641 |
0.170 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Tangible Assets |
0.426 |
0.414 |
0.913 |
0.637 |
0.767 |
0.642 |
0.592 |
||
Trade & other receivables |
0.213 |
0.186 |
0.212 |
0.186 |
0.163 |
0.163 |
0.399 |
||
Current Assets |
|
|
27.667 |
16.466 |
20.193 |
36.970 |
27.510 |
11.026 |
3.058 |
Stocks |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Debtors |
1.074 |
0.974 |
1.025 |
1.476 |
1.892 |
1.214 |
3.778 |
||
Cash & cash equivalents |
26.384 |
15.204 |
19.092 |
35.421 |
24.501 |
8.695 |
(1.836) |
||
Other |
0.209 |
0.288 |
0.077 |
0.073 |
1.116 |
1.116 |
1.116 |
||
Current Liabilities |
|
|
(2.055) |
(1.659) |
(1.696) |
(2.317) |
(3.087) |
(2.290) |
(9.268) |
Creditors |
(2.055) |
(1.622) |
(1.298) |
(1.914) |
(2.867) |
(2.069) |
(4.047) |
||
Tax and social security |
0.000 |
(0.037) |
(0.025) |
(0.013) |
(0.002) |
(0.002) |
(0.002) |
||
Short term borrowings |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
(5.000) |
||
Lrease liabilities |
0.000 |
0.000 |
(0.373) |
(0.390) |
(0.218) |
(0.218) |
(0.218) |
||
Long Term Liabilities |
|
|
0.000 |
0.000 |
(0.423) |
(0.204) |
(0.412) |
(0.412) |
(0.412) |
Long term borrowings |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Long term lease liabilities |
0.000 |
0.000 |
(0.423) |
(0.204) |
(0.412) |
(0.412) |
(0.412) |
||
Net Assets |
|
|
27.892 |
15.577 |
19.200 |
35.271 |
24.941 |
9.130 |
(5.630) |
Minority interests |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Shareholders' equity |
|
|
27.892 |
15.577 |
19.200 |
35.271 |
24.941 |
9.130 |
(5.630) |
CASH FLOW |
|||||||||
Operating Cash Flow |
(10.359) |
(11.931) |
(11.505) |
(8.626) |
(11.579) |
(15.516) |
(14.750) |
||
Working capital |
0.980 |
(0.332) |
(0.237) |
0.165 |
0.560 |
(0.119) |
(0.586) |
||
Exceptional & other |
0.000 |
0.000 |
0.000 |
0.318 |
0.568 |
(0.150) |
(0.180) |
||
Tax |
0.184 |
(0.007) |
0.248 |
0.082 |
0.026 |
0.000 |
0.000 |
||
Net operating cash flow |
|
|
(9.195) |
(12.269) |
(11.494) |
(8.061) |
(10.426) |
(15.785) |
(15.516) |
Capex |
(1.309) |
(1.016) |
(0.062) |
(0.025) |
(0.159) |
(0.075) |
(0.100) |
||
Acquisitions/disposals |
0.003 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Net interest |
0.001 |
0.058 |
0.023 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Equity financing |
25.069 |
1.926 |
15.290 |
24.779 |
0.044 |
0.000 |
0.000 |
||
Dividends |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Other |
(0.202) |
(0.169) |
(0.389) |
(0.363) |
(0.380) |
(0.096) |
(0.096) |
||
Net Cash Flow |
14.367 |
(11.470) |
3.367 |
16.330 |
(10.920) |
(15.956) |
(15.712) |
||
Opening net debt/(cash) |
|
|
(12.017) |
(26.384) |
(15.204) |
(19.092) |
(35.421) |
(24.501) |
(8.545) |
FX |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Other non-cash movements |
0.000 |
0.290 |
0.520 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Closing net debt/(cash) |
|
|
(26.384) |
(15.204) |
(19.092) |
(35.421) |
(24.501) |
(8.545) |
7.166 |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
While currency headwinds reduced growth on a reported basis in H122, Boku expects to report constant currency growth of 14% for total payment volume (TPV) and 7% for Payment revenue. Local payment methods (LPMs) are seeing rapid adoption and are making up a growing proportion of volumes (up 11x y-o-y) and monthly active users (MAUs – up 8x y-o-y). On revised forecasts which reflect the stronger dollar, the stock trades at a large discount to peers. We expect this gap to close as LPMs start to make a material contribution to revenue growth.
Get access to the very latest content matched to your personal investment style.
