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Taptica International: DEEP DIVE

Taptica set to merge with fellow video marketing specialist RhythmOne

The merger is structured as an offer by Taptica that will see it owning 50.1% of the enlarged group and Rhythm One owning the remaining 49.9%
mobile marketing
OVERVIEW: TAP The Big Picture
Video marketing requires scale, say experts
  • Mobile advertising group

  • Uses ‘big data’ and AI to target adverts at its clients’ desired audience

  • Set to merge with RhythmOne, formerly known as Blinkx

  • More than US$50mln of cash in the bank


What it does

Taptica International PLC (LON:TAP) uses technology based on AI and machine learning at a large scale to enable data-driven mobile targeting and user acquisition.

Specifically, Taptica focuses on two core revenue streams: mobile performance-based marketing (Taptica) and branded-video advertising (Tremor Video which was acquired in 2017).

The performance-based marketing segment focuses on a mobile technology advertising platform which helps brands reach their most valuable users with a wide range of traffic sources.

Tremor Video is a programmatic video platform which matches advertisers to their audiences and delivers custom video experience across screens.


What’s going on

The big news, which emerged in late-January, is that Taptica is merging with RhythmOne – formerly known as Blinkx, the digital ad specialist spun out from Autonomy in the noughties.

The deal is structured as an offer by Taptica that will see it owning 50.1% of the enlarged group and Rhythm One owning the remaining 49.9%.

“A merger will form one of the leading video advertising companies in the US, delivering significant economies of scale, product offering, revenue synergies and supply chains to compete with the industry leaders,” said the statement.

According to reports, the new, enlarged company will operate under the Taptica and be run by Ofer Druker, currently the head of Taptica’s US business.


How is it doing

Investors haven’t had a ‘proper’ trading update since the interim results at the beginning of September, but all seems to be going well.

A brief announcement in mid-January confirmed that cash totalled US$54.4mln at the end of December, while Taptica also said that trading in 2018 had been “in line with management expectations”.

September’s more lengthy half-year report showed a jump in first-half income and profits, largely thanks to Tremor Video which it acquired in 2017.

The AIM-listed firm reported adjusted underlying earnings (EBITDA) of US$21.6mln in the first six months of 2018, up from US$13.1mln in the same period last year, while revenues jumped to US$144.0mln from US$65.6mln previously.

The strong performance allowed bosses to up their guidance for the year, with the company saying it expected 2018 EBITDA to be “ahead of market expectations”.


What the boss says

“Following the major acquisition of Tremor Video DSP in the second half of last year, our main focus for H1 2018 was improving the financial performance of the Tremor unit,” said then-chief executive Hagai Tal, who has since stepped down.

“We added household brands to our list of Tier 1 clients at Tremor and established key partnerships. These results also demonstrate good growth in our performance-based business unit reflecting the successful execution on our strategy to expand into new geographies.

“Looking ahead, we entered the second half with increased momentum in both the Tremor Video DSP and performance-based businesses, which continue to execute on their strategies of expanding their reach and winning new customers. We expect sustained improvement in margins through.”

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The merger is structured as an offer by Taptica that will see it owning 50.1% of the enlarged group and Rhythm One owning the remaining 49.9%

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