19th Mar 2019 10:34
LONDON (Alliance News) - Israeli video advertising firm Taptica International Ltd reported a sharp rise in revenue and profit ahead of its merger with UK-listed, US-based peer RhythmOne PLC in April.
In early February, Taptica and RhythmOne agreed an all-share merger to create a combined company worth around GBP300 million. RhythmOne shareholders will hold a 49.9% stake in the combined firm with the remainder held by Taptica shareholders.
On completion of the merger, Taptica explained it intends to launch a USD15 million share buyback programme. This will begin immediately after the close of the deal.
In 2018, Taptica saw a 57% increase in pretax profit to USD27.2 million from USD17.3 million in 2017. The company's revenue jumped 31% to USD276.9 million from USD210.9 million.
Taptica's total administrative costs increased 35% to USD84.7 million from USD62.9 million.
The company said its earnings in 2018 were in line with management expectation but "significantly ahead" of the guidance given at the start of the year.
"2018 was another year of continued progress for Taptica, during which we successfully executed on our strategy to deliver higher-margin revenues and broaden our blue-chip client base internationally," said Chair Tim Weller.
Weller continued: "What is particularly pleasing is the performance of the company's brand advertising platform, Tremor Video DSP, which has reported a significant improvement in earnings for the year. Tremor is an excellent example of the company's ability to acquire and integrate businesses and therefore realising significant operating efficiencies in order to improve performance."
The company's Branding revenue - where Tremor Video DSP sits - more than doubled in 2018 to USD146.1 million. Taptica acquired video platform Tremor Video in August 2017.
Taptica's other core unit, Performance-Based Marketing, saw its revenue slip 5.8% to USD123.9 million. The decrease was attributed to "industry movements" resulting in a decreased level of "online inventory supply available".
Looking ahead, Taptica said the merger with RhythmOne has the potential to be a step-change for the company.
The company said its trading at the start of the current year has been "mixed" between its two core units. Its Branding unit remains "strong", but Performance-Based Marketing is struggling with previously guided for headwinds.
Taptica previously warned how "industry wide headwinds across the supply chain" could hinder the unit.
Weller added: "The outlook for the company remains positive with Taptica continuing to benefit from the global shift in advertising spend away from traditional advertising methods and towards specialist data-driven technology providers and digital video.
"The proposed merger with RhythmOne has the potential to open up the required quality of advertising supply to the Taptica performance-based division, as well as to create one of the foremost video advertising companies in the US, with the scale to take advantage of the global trend towards Connected TV and over-the-top media services."
The merger is due to be completed in April.
Shares in Taptica were up 1.7% Tuesday at 175.98 pence each. RhythmOne was trading 4.3% higher at 149.20p.
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