Team Internet — Upgrading FY25 EPS by 7% on Shinez

Team Internet Group (AIM: TIG)

Last close As at 24/06/2024

GBP1.90

−1.60 (−0.84%)

Market capitalisation

GBP492m

More on this equity

Research: TMT

Team Internet — Upgrading FY25 EPS by 7% on Shinez

While the weak advertising market suppressed growth in Online Marketing in the (seasonally quiet) Q1, Online Presence continues to perform robustly and group margins continue to expand. The acquisition of Shinez is now complete and should add further robustness to Team Internet’s revenue profile, diversifying its partnership base and creating good opportunities to capture more value in the conversion funnel. We leave our standalone estimates unchanged, but upgrade FY24 and FY25 EPS by 5% and 7% to reflect the acquisition of Shinez.

Written by

Dan Ridsdale

Head of Technology

TMT

Team Internet

Upgrading FY25 EPS by 7% on Shinez

Q1 results and acquisition

Software and comp services

13 May 2024

Price

£1.52

Market cap

£399m

US$1.25/£

Net debt ($m) at 31 March 2024

80.6

Shares in issue (excluding treasury shares)

259.2m

Free float

76%

Code

TIG/TIGXF

Primary exchange

AIM

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

7.9

12.5

36.8

Rel (local)

2.1

1.5

25.9

52-week high/low

152.2p

109.0p

Business description

Team Internet Group is a global internet company that derives recurring revenue from privacy-safe, AI-based customer journeys that help online consumers make informed choices, as well as from the distribution of domain names.

Next event

H1 trading update

July 2024

Analyst

Dan Ridsdale

+44 (0)20 3077 5700

Team Internet is a research client of Edison Investment Research Limited

While the weak advertising market suppressed growth in Online Marketing in the (seasonally quiet) Q1, Online Presence continues to perform robustly and group margins continue to expand. The acquisition of Shinez is now complete and should add further robustness to Team Internet’s revenue profile, diversifying its partnership base and creating good opportunities to capture more value in the conversion funnel. We leave our standalone estimates unchanged, but upgrade FY24 and FY25 EPS by 5% and 7% to reflect the acquisition of Shinez.

Year end

Revenue (US$m)

EBITDA* (US$m)

PBT*
(US$m)

Diluted EPS* (c)

DPS
(p)

EV/EBITDA
(x)

P/E
(x)

12/22

728.2

86.0

64.3

15.4

1.0

6.6

12.2

12/23

836.9

96.4

80.1

22.4

2.0

5.8

8.4

12/24e

983.6

109.8

89.6

27.1

2.3

5.1

7.0

12/25e

1,081.8

116.8

96.6

29.0

2.5

4.8

6.5

Note: *EBITDA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Steady start, changing mix, expanding margins

Team Internet’s Q1 results reflect a shift in mix towards the company’s higher-margin businesses. Gross revenues grew by 1% to $195.9m, with Online Marketing reducing by 2.5% y-o-y to £145.9m, suppressed by the weak advertising market, while Online Presence grew 10.6% to $50.0m. EBITDA grew by 4% to $22.2m (11.3% margin vs 10.9% in Q123) and operating profit by 44% to $11.1m. Operating cash conversion at 80% was affected by cash receipts from a major customer being collected in April, but is expected to normalise to 100% for the rest of the year. With $11.5m worth of shares bought back over the quarter, net debt was $80.6m (vs $74.1m at FY23).

Shinez boosts EPS, scope for revenue synergies

Our underlying estimates are largely unchanged, with the Shinez acquisition adding 5% and 7% to FY24 and FY25 EPS respectively. This does require an element of catch up from Online Marketing operations, but key events such as the US elections and the Olympics are expected to boost the advertising market. Visitor sessions increased by 19% in Q1, so Team Internet looks to be in a good position once demand recovers. We see good scope for revenue synergies from Shinez and between other online marketing entities through greater vertical integration through the e-commerce conversion cycle as the company develops its Omni-media, Omni-monetisation (OM2) strategy.

Valuation: Discount valuation looks unjustified

On our revised estimates, Team Internet trades at an EV/EBITDA multiple of 5.2x and a P/E of 7x. On a fundamental basis, we believe that this is remains too low for a business with Team Internet’s track record, prospects and cash generation. It is at a slight discount to global ad-tech peers to the online marketing business and a very significant discount to the online presence peers (albeit a small subset).

Shinez: Diversification and vertical integration

The acquisition of Shinez was completed on 29 April and we have updated our forecasts to reflect this. Strategically, the acquisition looks a good fit as the company executes its OM2 strategy, diversifying the company’s partner base and providing comprehensive online marketing solutions across the entire customer journey.

Shinez is a digital content production and promotion company. It operates a network of niche content sites (eg ourfashiontrends.com, falafelandcaviar.com and travelerdreams.com) and listicles (eg how to guides, top 10, 5 tips for…), which are hosted on either the company’s demand-side partner’s platforms (Facebook, Instagram, X) or on native platforms (Yahoo, Taboola, Google). The company monetises its audience through leveraging its media buying, ad-exchange relationships and programmatic technology platform to display targeted advertising from supply-side partners and charging on a per impression basis.

Exhibit 1: Shinez business model

Source: Team Internet

From a diversification point of view, the key media platform partners of Shinez are Instagram, Meta and X, with indirect native access via Taboola, Yahoo and Google. This expands and deepens Team Internet’s key platform relationships (via Tonic) with Meta, TikTok and Instagram. With direct relationships with key brands, the Shinez acquisition also more than doubles the Online Marketing segment's revenue generated independently of Google.

Shinez also gives Team Internet capability in the earlier ‘awareness’ or brand building stage of converting consumers to brands, complementing Tonic, which comes in at the ‘consideration’ stage, and VGL, for conversion. Management believes that this diversification will also support revenue stability in that budget is allocated to different stages of the funnel depending on seasonality (eg early in the year focus on branding, focus on conversion for the festive season) and economic cycle.

Management also sees good opportunities for creating revenue synergies through vertical integration. These include, for example, delivering ad inventory to the Shinez sites using Tonic, or even selective placement of VGL transaction sites where it is seen not to conflict with the platforms’ advertiser customers.

Exhibit 2: Team Internet’s Omni-media, Omni-monetisation (OM2) strategy

Source: Team Internet

Q1 results review

Management is confident that Team Internet will meet market expectations for the full year, and our estimates are essentially unchanged excluding Shinez.

Q1’s muted growth but continued margin expansion reflect movement in the company’s key growth drivers over the period and highlight the benefits of the company’s diversification strategy.

Gross revenues grew by 1% to $95.9m, while net revenues (gross profit) grew 4% to $47.6m. EBITDA grew by 4% to $22.2m (11.3% margin vs 10.9%) and operating profit by 44% to $11.1m. albeit supported by a $1.3m foreign exchange gain versus a $1.5m loss last year.

Weak advertising suppresses Online Marketing, but well placed for a recovery

Gross revenues in Online Marketing reduced by 2.5% y-o-y $145.9m, suppressed by the weak advertising market, with gross profit essentially flat at $30.5m. Performance has been affected by the weak advertising market and advertiser uncertainty with TikTok (eg Universal Music dispute and potentially competitors using the threat of a US ban to gain share). As a result, Meta overtook TikTok as the company’s largest demand supply partner over the quarter.

Over the trailing 12 months to Q124 (TTM), visitor sessions increased by 19% to 6.0bn, while revenue per thousand sessions (RPM) decreased by 10% to $91, indicating that revenues could recover strongly as demand improves. Key events such as the Olympics and the US elections are seen as good catalyst to drive demand later in FY24.

We also understand that VGL is now performing more strongly, having shifted its strategy towards more paid search in the face of regularly changing algorithms at Google. VGL is now also scaling in France and is expected to generate a small profit in FY24, expanding iinto FY25, which we see as a positive indicator for the unit economics of this business as it internationalises its footprint. Management is now assessing which other market or markets to enter beyond Germany and France.

Online Presence: Robust performance continues

Online Presence sustained its double-digit growth trajectory from last year, with revenues growing by 10.6% to $50.0m driven by the structural shift in demand towards top level domains, where Team Internet is competitively strong, as well as price optimisation initiatives. Gross margins expanded to 34.2% from 33.4% and while the company does not disclose segmental operating margins, management comments that they have improved substantially year-on-year.

Cash conversion expected to normalise

Operating cash conversion at 80% was affected by cash receipts from a major customer being collected in April, but is expected to normalise to 100% for the rest of the year. With the company buying back $11.5m worth of shares over the quarter (average price £1.33), net debt stood at $80.6m versus $74.1m at end FY23. Net debt/EBITDA was 0.95x on a TTM basis pre the Shinez acquisition, and with strong cash generation, we expect it to drop to well below 1x (0.66x) by FY24Y leaving plenty of scope for accretive acquisition, further share repurchases or dividend increases.

Estimate changes

Our estimate changes are set out below. Our underlying estimates are largely unchanged, with Shinez providing mid to high single-digit EPS accretion in FY24 and 25. Our FY24 estimates do require an element of catch up from Online Marketing operations but, as discussed, key events such as the US elections and the Olympics should provide a boost and management is confident of meeting consensus estimates.

Looking further forward, we see good scope for revenue synergies from Shinez and between other online marketing entities through greater vertical integration through the e-commerce conversion cycle, as the company develops its OM2 strategy.

Exhibit 3: Estimate changes

Reported

Old

New

Old

New

US$'000

2023

Y-o-y growth

2024e

2024e

Change

Y-o-y growth

2025e

2025e

Change

Y-o-y growth

Gross revenue

836,900

15%

909,572

983,572

8.1%

18%

964,461

1,081,806

12.2%

10%

Net revenue

191,100

8%

203,363

218,913

7.6%

15%

209,255

225,492

7.8%

3%

Adjusted EBITDA

96,400

12%

103,017

109,767

6.6%

14%

106,091

116,835

10.1%

6%

EBITDA Margin

12%

11%

11%

11%

11%

Profit Before Tax (norm)

81,100

26%

87,683

89,646

2.2%

11%

90,682

96,626

6.6%

8%

Profit Before Tax (reported)

29,300

98%

45,083

46,046

2.1%

57%

48,082

54,026

12.4%

17%

Net income (normalised)

67,100

62%

70,147

71,717

2.2%

7%

72,546

77,301

6.6%

8%

Basic average number of shares outstanding (m)

272

262

257

258

258

EPS - basic normalised (c)

23.22

49%

26.76

27.94

4.4%

20%

28.12

29.97

6.6%

7%

EPS - diluted normalised (c)

22.41

45%

25.79

27.06

4.9%

21%

27.09

29.02

7.2%

7%

Revenue growth (%)

14.9

9.1

17.5

6.0

10.0

Gross Margin (%)

22.8

22.9

21.5

21.7

20.8

Adjusted EBITDA margin (%)

11.5

11.3

11.2

11.0

10.8

Adjusted EBITDA/net revenue (%)

50.4

49.5

50.1

50.7

51.8

Closing net debt/(cash)

74,127

15%

35,109

71,964

(23,618)

5,852

Source: Edison Investment Research, Team Internet data

Valuation

On our revised estimates, Team Internet trades at an FY24 EV/EBITDA multiple of 5.2x and a P/E of 7x, with the shares re-rating upwards only slightly, as earning upgrades have offset the 21% rally in the shares since the start of FY24. On a fundamental basis, we believe that this remains too low for a business with Team Internet’s track record, prospects and cash generation. The estimated FY24 unlevered free cash flow yield is 16%.

The net debt/EBITA rating of 1x means the company has plenty of scope to deliver further accretion through further buybacks or additional accretive acquisitions or dividend increases, while a market recovery or revenue synergies could drive organic upside. Management’s upper threshold for Net debt / EBITDA is 2x.

The valuation is a substantial discount to the company’s global ad-tech peers, which trade at a median forward year EV/EBITDA of 8.4x and a P/E of 12x. The relative outperformance of Online Presence is also interesting given the higher peer multiples of this segment, at 16.5x EBITDA and 25x P/E on a one-year forward basis.

Exhibit 4: Financial summary

$'k

2021

2022

2023

2024e

2025

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Gross Revenue

 

 

410,540

728,237

836,900

983,572

1,081,806

Cost of Sales

(292,041)

(550,541)

(645,800)

(764,659)

(856,314)

Gross Profit (net revenue)

118,499

177,696

191,100

218,913

225,492

EBITDA

 

 

46,251

86,024

96,400

109,767

116,835

Normalised operating profit

 

 

42,737

83,045

93,100

105,331

112,311

Amortisation of acquired intangibles

(18,291)

(36,399)

(38,800)

(38,100)

(38,100)

Exceptionals

(7,087)

(7,395)

(8,500)

(1,000)

0

Share-based payments

(5,006)

(5,698)

(4,500)

(4,500)

(4,500)

Reported operating profit

12,353

33,553

41,300

61,731

69,711

Net Interest

(10,798)

(18,736)

(13,000)

(15,685)

(15,685)

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

0

0

0

0

0

Profit Before Tax (norm)

 

 

31,939

64,309

80,100

89,646

96,626

Profit Before Tax (reported)

 

 

1,555

14,817

28,300

46,046

54,026

Reported tax

(5,097)

(16,895)

(5,000)

(17,929)

(19,325)

Profit After Tax (norm)

25,551

41,409

67,100

71,717

77,301

Profit After Tax (reported)

(3,542)

(2,078)

23,300

28,117

34,701

Minority interests

0

0

0

0

0

Net income (normalised)

25,551

41,409

67,100

71,717

77,301

Net income (reported)

(3,542)

(2,078)

23,300

28,117

34,701

Basic average number of shares outstanding (m)

227

266

272

257

258

EPS - basic normalised (c)

 

 

11.24

15.59

23.22

27.94

29.97

EPS - diluted normalised (c)

 

 

10.91

15.44

22.41

27.06

29.02

EPS - basic reported (c)

 

 

(1.56)

(0.78)

8.56

10.95

13.45

Dividend (p)

0.00

1.00

2.00

2.33

2.50

Revenue growth (%)

71.0

77.4

14.9

17.5

10.0

Gross Margin (%)

28.9

24.4

22.8

22.3

20.8

EBITDA Margin (%)

11.3

11.8

11.5

11.2

10.8

EBITDA/Net Revenue (%)

39.0

48.4

50.4

50.1

51.8

Normalised Operating Margin

10.4

11.4

11.1

10.7

10.4

BALANCE SHEET

Fixed Assets

 

 

271,830

365,062

347,196

366,464

336,483

Intangible Assets

254,169

347,938

327,038

343,838

311,738

Tangible Assets

8,601

7,358

7,258

9,726

11,845

Investments & other

9,060

9,766

12,900

12,900

12,900

Current Assets

 

 

128,391

193,650

199,603

206,962

283,868

Stocks

895

646

200

237

265

Debtors

71,363

98,231

106,730

107,789

118,554

Cash & cash equivalents

56,133

94,773

92,673

94,636

160,748

Other

0

0

0

4,300

4,300

Current Liabilities

 

 

137,129

197,712

208,300

214,101

227,340

Creditors

117,016

190,348

187,800

193,601

206,840

Tax and social security

0

0

0

0

0

Short term borrowings

18,276

5,456

18,900

18,900

18,900

Lease liabilities

1,837

1,908

1,600

1,600

1,600

Long Term Liabilities

 

 

149,110

193,667

184,692

180,892

180,494

Long term borrowings

119,251

145,872

147,700

147,700

147,700

Other long term liabilities

29,859

47,795

36,992

33,192

32,794

Net Assets

 

 

113,982

167,333

153,807

178,433

212,517

Minority interests

0

0

0

0

0

Shareholders' equity

 

 

113,982

167,333

153,807

178,433

212,517

CASH FLOW

Op Cash Flow before WC and tax

23,360

54,195

70,400

88,581

96,650

Working capital

4,091

7,245

(7,700)

11,705

2,646

Exceptional & other

15,804

24,434

17,300

20,185

20,185

Tax

(2,230)

(8,399)

(5,600)

(17,929)

(19,325)

Net operating cash flow

 

 

41,025

77,475

74,400

102,543

100,155

Capex

(4,810)

(6,543)

(10,200)

(7,967)

(8,006)

Acquisitions/disposals

(18,344)

(81,396)

(5,600)

(53,200)

(200)

Interest paid

(8,695)

(7,766)

(12,100)

(15,685)

(15,685)

Equity financing

0

58,187

(39,700)

(14,730)

0

Change in borrowing

24,721

34,691

15,000

0

0

Dividends

0

0

(3,600)

(6,529)

(7,635)

Other

(3,700)

(30,730)

(24,500)

(2,468)

(2,517)

Net Cash Flow

30,197

43,918

(6,300)

1,963

66,112

Opening net debt/(cash)

 

 

84,985

81,394

56,555

74,127

71,964

FX

(2,718)

(5,278)

3,200

0

0

Other non-cash movements

(23,888)

(13,801)

(15,272)

0

0

Closing net debt/(cash)

 

 

81,394

56,555

74,127

71,964

5,852

Source: Team Internet, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Team Internet and prepared and issued by Edison, in consideration of a fee payable by Team Internet. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Team Internet and prepared and issued by Edison, in consideration of a fee payable by Team Internet. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Team Internet Group

View All

Latest from the TMT sector

View All TMT content

Research: Healthcare

SIGA Technologies — Optimizing the TPOXX value proposition

SIGA’s Q124 results were marked by material BARDA and international TPOXX deliveries and highlighted the company’s strategic push towards international expansion, reflected in its revised deal terms with partner Meridian. Robust product revenues of $23.9m (not including $1.6m in R&D income) made up of high margin oral TPOXX deliveries (gross margin upwards of 85%), translated to strong operating profitability of $11.3m compared to an operating loss of $2.1m in Q123. We expect the remaining c $140m option from BARDA for TPOXX to be exercised this year. Despite the $43m dividend payout in April 2024, SIGA retains a healthy balance sheet (pro-forma, post-dividend cash of c $100m and no debt), which we expect will improve further in FY24 with anticipated product deliveries. Reflecting the Q124 results, dividend payout and adjustments to our near-term estimates (to capture the slight uncertainty in IV TPOXX deliveries), we readjust our valuation to $16.01/share ($16.51/share previously).

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free