Pureprofile Ltd (ASX:PPL) H1 FY25 Earnings Call Highlights: Strong Revenue Growth and ...

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Thu, Feb 27, 2025, 12:01 AM 4 min read

Revenue: $29.2 million, up 22% year-on-year.
Net Profit After Tax (NPAT): $1.6 million for H1 FY25, compared to $41,000 in H1 FY24.
EBITDA: $3.3 million, up 38% from the previous year.
EBITDA Margin: Improved by 1 percentage point year-on-year.
ANZ Business Growth: 16% growth compared to flat in H1 FY24.
Rest of World Business Growth: 30% growth, compared to 22% in the prior year.
Platform Revenue: $6.1 million, 39% growth.
Foreign Currency Gain: $462,000 due to currency exposure.
Bad Debt Expense: $200,000 from a key client in India.
Cash Balance: $5.1 million as of the reporting period.
Capital Expenditure: Flat investment over the last couple of years.
Operating Cash Flows: $1 million higher than the same period last year.
Revenue Guidance for Full Year: $57 to $58 million.
EBITDA Guidance for Full Year: $5.2 to $5.8 million.

Warning! GuruFocus has detected 8 Warning Signs with ASX:PPL.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Pureprofile Ltd (ASX:PPL) reported a significant increase in NPAT to $1.6 million for half one FY25, compared to $41,000 in half one FY24.
Revenue grew by 22% year-on-year to $29.2 million, with a strong Q2 showing 30% revenue growth.
EBITDA increased by 38% to $3.3 million, with an improved EBITDA margin.
The company's rest of world business saw a 30% growth, highlighting successful international expansion.
The i-Link acquisition contributed positively to revenue and margin improvements, exceeding initial expectations.

Negative Points

The company experienced a bad debt expense of $200,000 from a key client in India.
Foreign currency exposure remains a risk, although it resulted in a gain of $462,000 in the first half.
Q3 is expected to be seasonally softer due to the ANZ market's influence, potentially impacting margins.
There are no new LTI plans, which might affect long-term employee incentives.
The company faces challenges in maintaining high growth rates as platform revenue growth begins to slow.

Q & A Highlights

Q: Half one saw 22% growth in revenue, how is momentum looking going into half two? A: Martin Filz, CEO, stated that the company expects continued growth levels consistent with the first half, as indicated by the upgraded guidance in January. The company is gaining market share in the US, UK, and other international markets, which helps insulate it from economic uncertainties. Melinda Sheppard, CFO, added that while Q3 is seasonally softer due to ANZ centricity, Q4 is traditionally strong, and no new one-off investments are planned for the second half.

Q: Your EBITDA was 3.3 for the half. Can we annualize that? A: Melinda Sheppard, CFO, advised considering the $462,000 FX gain in the first half when thinking about annualizing for the full year. The upgraded guidance provides a more accurate view of expectations for the second half.

Q: Rest of world growth was 30%. Is this growth rate expected to continue? A: Martin Filz, CEO, confirmed that the growth rate is expected to continue as the company has invested heavily in international markets like the UK and US, which have significantly larger addressable markets compared to Australia.

Q: Where do you expect the cash to end up at the end of the fiscal year? A: Melinda Sheppard, CFO, expects the cash balance to be slightly up from December 31, despite the second and final payment for the i-Link acquisition impacting cash balances in the second half.

Q: Annuity revenue is now at 13.2%, up from 10.4% at June reporting. What's driving that? A: Melinda Sheppard, CFO, explained that annuity revenue includes ongoing license fees and long-term projects like multi-period studies. These are sticky revenue streams, and the company continues to win more of these types of studies, contributing to the increase.

Q: How is Pureprofile's offering fitting into the AI landscape, particularly in supplying data to AI companies? A: Martin Filz, CEO, highlighted that Pureprofile is transitioning to provide high-quality data for training large language models (LLMs). The company plans to introduce its data sets to LLMs, with a new solution release expected in March. This represents a new revenue stream, although it will take time to establish.

Q: What is the contribution of the i-Link acquisition to revenue and margin improvement? A: Melinda Sheppard, CFO, noted that i-Link's revenue was around $2.7 million when acquired. The integration allowed for margin improvements by utilizing Pureprofile's panels and reducing third-party sample costs. The acquisition has performed better than expected, contributing to revenue and margin improvements.

Q: Is platform revenue expected to become the largest part of the business? A: Martin Filz, CEO, stated that while managed services still make up a large part of the business, platform revenue offers higher margins and scalability. The company is seeing more clients adopting technology-led solutions, and this trend is expected to continue as clients catch up technologically.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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