Skip to main content

Revenue down slightly but EBITDA unchanged

We have reviewed our forecasts post the release of the 3Q2023 result a couple of weeks ago and made some minor adjustments. The key change is a 2% downgrade in our revenue forecasts in 2023, 2024 and 2025 driven by lower average revenue per paying circle (ARPPC) which has reduced our subscription forecasts. There is no change in paying circles forecast in 2023 and we have actually modestly increased our paying circles forecasts in 2024 and 2025. Despite the revenue downgrades there is negligible change in our EBITDA/adjusted EBITDA forecasts as we continue to expect good cost control and a trajectory to modest positive EBITDA in 2025. Note our 2023 forecasts are consistent with the guidance and we now forecast revenue of US$306m (vs guidance of US$300-310m) and unchanged adjusted EBITDA of US$13.9m (vs guidance of US$12-16m). That is, we expect the company to report within both guidance ranges and do not expect a beat in either.

Investment view: PT down 2% to $11.00, Maintain BUY

We have updated each valuation used in the determination of our price target for the forecast changes and also rolled forward the DCF by a year given we are getting close to year end. There are no changes in the key assumptions we apply which are a 3.75x multiple in the EV/Revenue and a 9.5% WACC in the DCF. The net result is a 2% decrease in our PT to $11.00 which is >15% premium to the share price so we maintain our BUY recommendation.

Q4 and 2023 result still a potential catalyst

Despite expecting a 2023 result consistent with the guidance we still see the result as a potential catalyst for the share price given the anticipated continued strong growth in paying circles (we forecast q-o-q growth of 82k to 1.83m) and also the provision of initial 2024 guidance. We forecast 2024 revenue and adjusted EBITDA of US$357m and US$24.2m which equate to growth of 17% and 74% respectively. Guidance consistent with our forecasts would be well received in our view and would also
suggest that cash will grow by around US$15m or more over the year.

To read the full report click the button below.

View Detailed Report
Authored by Chris Savage – Analyst – at Bell Potter Securities, 28 November 2023
Important Disclaimer—This may affect your legal rights: Because this document has been prepared without consideration of any specific client’s financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. This is general investment advice only and does not constitute advice to any person.
Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended.