ParrotStock's avatar
$257.4m follower assets
Getting the urge to buy again
I haven't been buying much lately. The 9-5 has been keeping me busy during trading hours since last week, but I'm getting the urge to buy again.

I've only got about 6% cash, so there's only so much I can do, but there is a bargain under every ticker it seems.

I'm trying to decide if I want to start adding back some large caps like $DIS and $AAPL, or if I want to add more to names already in my portfolio like $TTD $ATY and many others.

How are you guy's on CommonStock feeling? Is it fearful enough for you yet, or still too early?

Love to hear how y'all are feeling 👇

🦜
I never really stopped buying, but I gotta say my sense of urgency has eroded lol
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ParrotStock's avatar
$257.4m follower assets
A Quarter Billion!
Wow... $250,000,000 in Follower Assets on CommonStock! 🤯🤯

It's a crazy big number, and one I don't take for granted.

You guy's (and this platform) are amazing. Meeting and discussing investing ideas with people across the world was something unimaginable to me just a couple of years ago.

The hardest thing in any company to get right is culture. You can't teach it, it has to grow naturally, and it's supper sticky and tuff to change. The secret sauce of CommonStock for me is their culture. A multinational public forum for people to discuss one of the most divisive topics on the planet (money) is also one of the safest spaces available to discuss finances, ask questions, and give opinions.

I'm excited to continue being a part of this community and watching it grow.

Thank you all for letting me be on this journey with you!

*Also, we could pool our money and buy a nice size small cap company. My vote is for AcuityAds $ATY 😊

Any Micro/Small caps you guys suggest we collectively buy? 🤣👇

🦜
Sachiv's avatar
$772.8k follower assets
Adtech legislation in progress
Below is a link to NY Posts article on adtech scrutiny of companies like $GOOG $GOOGL. In short, if you participate in buying and selling ads, AND have them displayed on your own properties on which you get user data, this law will force a breakup of some parts of that business.

⬆️ for $TTD $PUBM $MGNI and $ATY, although I’m only long $TTD

⬇️ for $GOOG and maybe $AMZN at some point???

FYI WSJ also has an article about this, but it’s behind a paywall.

ParrotStock's avatar
$257.4m follower assets
AcuityAds $ATY
Ugh, No home run...

I'll dig into earnings and post more detail later, first thoughts are...

First the headline numbers:

Net Loss: ($4.49M) vs $1.36M YoY
Adj EBITDA: $174,800 vs $4,541,454 YoY
Revenue: $24.8M vs $30.9M QoQ
Cash: $99.5M vs $102M QoQ

On the bright side, illumin revenue was up 145% YoY, and is now 33% of overall revenues.

They've also gotten approval to purchase up to 5.5 million commons shares of the company with their large cash position.

This is not the Q I wanted to see. There are a lot of details I need to dig into before making any decisions long term. At first read, they are probably doing enough for me to stick around, but I likely won't be adding more for a while.

If you follow the company... what's your take? 👇

🦜
The Stock Market is largely expectations and forecasting what people think in the future. I think this was an expected reaction.
Looking at Trade Desk’s transcript they outlined US mid-term season, streaming platforms running ads, and Europe’s ad spending recovering in April as tailwinds for growth. Now, will that trickle down for ATY growing again? Sure, but not 20%-25%. They also miscalculated on the Tourism and Hospitality verticals picking up again, at least for this time being.

I like the share buybacks but they should just take it private.
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ParrotStock's avatar
$257.4m follower assets
Ad Tech looks stable if not bullish
With the rest of the market missing expectations and giving poor guidance, Ad Tech (businesses) have so far been pretty stable.

Granted, stock prices have dipped with the rest of the market, but the businesses are still performing.

$MGNI reported EPS in line at $0.08, a 166% increase YoY; with sales coming in at $118M, beating the estimate of $107M by 10%, +95% YoY.

$TTD EPS of $0.21 beat the $0.15 estimate by 40%, a +50% YoY gain. Sales came in at $315M, beating the estimated $304M by 3%, a +43% YoY gain.

$PUBM, I don't own anymore, beat EPS estimate by nearly 200% coming in at $0.14. Sales and Q2 guide were in-line with estimates as well.

$CTV just missed the EPS estimate of ($0.05), coming in at ($0.06), however sales beat by 21%, coming in at $25.9M. They reported organic YoY revenue growth of 30%, and +40% revenue growth including their new acquisition of TV Squared. Losses are expected to narrow next Q, and FY'22 revenue is expected between $135-$140M.

$ZMDTF had a +183% YoY Q with revenue of $18.7M and FY'21 revenue of $52.6M, +107% YoY. They also finished the year with a positive EBITDA of $5.8M for FY'21. The company is guiding for a FY'22 revenue of $74M-$80M, approximately +50% YoY.

We're still waiting on reports dates from $APPS $MOBQ $MVVYF.

$KBNT is on the bubble from last Q., they report on May 16.

And the one I'm most anxious/excited about, AcuityAds $ATY, reports on May 12th. They also just got approval for a stock buyback plan. I'll be watching this one closely.

I'd like to consolidate some of these Ad Tech positions after earnings season is over, but so far I've been mostly pleased with the sectors results.

How are you guy's feeling about the Ad Tech sector over the next few Q's? 👇

🦜
I've seen some interesting buzz surrounding $TTD recently. Their earnings report was very strong, and their partnerships, especially with $WMT, could drive further growth
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ParrotStock's avatar
$257.4m follower assets
AcuityAds Update
Acuity $ATY has been sitting on $100M cash for some time, while remaining cash flow positive, and has stated numerous times that they're focused on M&A. However, we still haven't seen any moves.

You guy's know I'm a big fan of the opportunity with AcuityAds, I've written a lot about the risk reward with this company.

As a long term shareholder, I've been impatiently waiting on the next M&A target, but at the same time I'm glad they haven't made any acquisitions just to make a move and please the market.

Today they announced a stock repurchase program for up to 10% of the float (over 5M shares), while reiterating that they are focused on M&A.

"While M&A remains a key focus for management, the strength of our balance sheet with over $100 million in cash, generating approximately $20 million in annual cash flow from operations, and our growth outlook creates an opportunity to surface additional value for our shareholders while continuing to execute against the Company's long-term strategic plan", said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds.

They haven't found the perfect target, and they recognize the share price is undervalued compared to their company performance. I like the strategy of returning some of that cash back to shareholders through reduced float.

Also, they know what's coming and what deals they have in the works, signing a few of those "whale" advertisers could re-establish Acuity as the growth company they are and reset their multiple, unlocking a lot of value.

I think this is a message of confidence from management and shareholders, and a positive sign for future growth.

🦜
It's been a moment since I've looked at $ATY and I was surprised to see the stock is up 60% since they reported in March... 👀

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ParrotStock's avatar
$257.4m follower assets
AcuityAds Making a Move
Like a lot of stocks in growth land, AcuityAds $ATY looks like it may be catching some momentum.

It's up 50% from their March 14th low, and breaking out of the Feb 9th high resistance.

Not a technical expert, but looks like the next resistance is around $3.50, then $4.00

Would love to see this company get some solid momentum, such an undervalued name imo.

Any technical experts want to weigh in on this one? 😊

🦜
ParrotStock's avatar
$257.4m follower assets
AcuityAds FY21 Earnings
After taking a hard look at AcuityAds $ATY back in November, I was convinced they were severely undervalued. They were trading around $4.35/share, or a $270 million market cap, at the time. You can see that write-up “HERE”.

Since then, they’ve continued to trade down, currently around $2.50/share, or a $150 million market cap. They were down 11% after earnings yesterday.

Let’s look at the numbers…

Acuity... What they do

First, if you don’t know anything about Ad Tech or AcuityAds, you can get a complete breakdown in this issue of “Stock Squawk: The World of Ad Tech”.

AcuityAds is a DSP (like The Trade Desk), a 3rd party software that is used by advertisers to buy mobile, search, and video ads from a marketplace on which publishers list advertising inventory. A DSP allows for the management of advertising across many real-time bidding networks, as opposed to just one (like Google Ads).

Traditional DSPs predominately work with ad agencies and large companies with big ad departments, however Acuity is focused on it’s self-service platform Illumin. This could potentially allow advertisers to cut out the ad agency middleman, and their 30%-50% cut of ad fee’s.

In addition, the Illumin platform has the potential to give small local business’s the opportunity to efficiently and affordably advertise in their local area (something that is not commercially available to them currently).

In regards to Illumin, CEO Tal Hayek stated in their 3Q21 earnings call that they plan to move all clients off their legacy system, and onto Illumin, buy the end of 2022. That goal may be in jeopardy, but they plan to be close.

So what makes Illumin special?

  • The ability for advertisers to set up, monitor, and adjust their own ad campaigns, without the assistance of an Ad agency.
  • The ability for small advertisers ($500/mo.) to have affordable access to pragmatic advertising in their local area.
  • The ability for advertisers to see their full advertising campaign from top of funnel awareness, to bottom of funnel buying, across multiple audience targets. Where they can view and adjust spending to their highest conversion audiences. Done in real-time on a single dashboard.

Financials

Key numbers: 4Q21

Revenue: $36.8 million (+33.9% QoQ)

Adjusted EBITDA: $5.9 million (+34% QoQ)

Illumin Revenue: $10.2 million (+37% QoQ); 28% of total revenue (Illumin went from $0 rev to $27 million revenue in 5 quarters, not a bad start)

CTV: We did not get historical context, but they did guide to approximately 10% of FY22 revenue being attributed to CTV. (this is in line with 3Q21 commentary)

Gross Margin: 52%, in line with 4Q20

Net revenue/Gross Profit (less media costs): $19.2 million (+33% QoQ)

Operating cash flow: $3.6 million

Cash Balance: $102.2 million

Key numbers: FY21

Tal Hayek states, “As we enter 2022, illumin continues to propel our growth while it fundamentally changes the world of advertising. Our success with illumin adoption, reinforced our actions to support its future growth by strategically investing in sales and marketing activities as well as R&D, enhanced organizational capability and our people. Complementing this, we are also seeing encouraging signs of recovery in COVID-affected industries such as travel, and leisure and entertainment, which represents further potential upside. All of these trends, in combination with initial traction we’ve seen from our strategic investments, make us very confident in our long-term growth. We expect to see the benefits of our strategic actions take hold in the second part of the year.”

Outlook

My outlook really hasn’t changed. Remember back in November I was looking at a 2yr business case.

In November it was trading (minus cash) at a $170 million Market Cap; that is now down to less than a $50 million Market Cap (minus cash).

My base case for FY22 was/is $163 million, or a 33% growth from FY21. The company is guiding to a slowdown in the 1st Q, with an acceleration into the end of year, and are estimating 20%-25% revenue growth for FY23; approximately $150 million. Per CFO Elliot Muchnik, this is a conservative guide that does not assume any large wins. I still think $163 million is achievable.

I laid out several scenarios back in November, and all of them are still viable. But just looking at these numbers, they are trading at 0.33x forward P/S (minus cash). For a cash flow positive company with plenty of liquidity, that seems extremely cheap.

My Take

Here were my expectations back in November:

I fully expect the 4th Q to be under whelming. But I’ll be looking for signs that the thesis is playing out. Did they do any M&A? Did they land any Tier 1 clients? Has Illumin growth continued at a 40%+ growth rate? Is Total revenue growing, or staying flat while Illumin continues to grow? Are current clients continuing to increase spend? Did that mystery Shopify deal come to fruition?

At this point, I don’t need them to knock it out of the park in 4Q21, I need to see definitive progress towards my 2022 outlook. I think 2022 will be the make or break turning point for Aquity, and their Illumin platform.

I was “hoping” for a blowout quarter, but as you can see, my expectations were not quite that high. For the most part the thesis is playing out. We obviously didn’t get any M&A (although they are in conversations with several potential targets). There are 62 clients using Illumin, 26 of which are tier-one clients. 70% of Illumin revenue is from new business (not existing customers). The 4 legacy customers that moved over to Illumin from their legacy software combined to increase spend by 118%. Most importantly, Illumin revenue and Total revenue are both continuing to grow at a brisk pace.

No word on that mysterious Shopify deal though???

In prior calls Tal mentioned they were generally against a share buyback because they want to use cash for growth. When asked on the call Tal responded, “When we talked (previously) about the share price it was a different place, and now it’s coming to a place that it’s starting to be very hard not to do it. So I’m going to say that we’re now in very, very serious discussions with our board and (are) strongly considering it.”

I’m not necessarily interested in them buying back shares, but I like that they agree it is warranted by the current company valuation.

Some negative…

We are likely to see a slowdown in YoY revenue in Q1 due to the loss of a large one time 1Q21 client. We will also see increased spending on sales and marketing in Q1. They expect EBITDA to remain positive, but barely. The good news is that they anticipate revenue to ramp up throughout the year and FY22 top line growth to still be 20%-25%.

Tal was also questioned pretty hard on their reliance to cookies. I’m not sure he was prepared for the question, and sounded a little indifferent to the fate of the cookie. He did mention that they are working with others, and on their own version of universal ID. I don’t think this is an issue for them, but the question wasn’t handled as smoothly as I would have liked.

Summary

They didn’t have that home run quarter I was hoping for, but it was solid, and doesn’t change the overall thesis.

I think the 2 year plan is still intact, but the share price will probably trade with the rest of the small cap growth market for a while yet.

My plan is to scale out of OTM options plays and continue to accumulate shares at these prices.

You can find the full Newsletter (and sign-up so you never miss a new edition) "HERE"

Always glad to hear others opinions.

🦜
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@parrot, a couple weeks ago I doubled down on $ATY because I was anticipating a much better quarter. But at 0.66x trailing EV/revenue and 0.5x forward EV/revenue (assuming the midpoint of guidance) I wonder if the market is voting that they have little faith in this big Illumin story management is selling. In other words: I agree the valuation is paltry. But is it for a reason? I thought management was all quite self congratulatory on the call...but also pointed to factors like COVID, supply chain issues, and the war in Ukraine. I don't think the thesis is broken but I have management on a tight leash. They said 2022 revenue is supposed to be up 20% to 25% and that over half of that should be from Illumin. I'll be holding management to that.
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Ian Gray's avatar
$33.5m follower assets
March Portfolio Update
$AAPL and $NVDA continue to grow as portions of the portfolio without me adding at all.

I’ve added a bit to $ATY, and I started a position in $WIX which I’m considering adding to. If I added to it, it would show up in my top 10 next month.
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