Location Sciences - Verify product gaining presence
Location Sciences, the world leader in location verification for mobile advertising, recently released a trading update for the financial year to December 2019. The main focus remains the Verify product which verifies location data for targeted mobile advertising campaigns.
The company reports that revenues were £1.2mln, a 60% increase versus 2018. Within this, the contribution from Verify increased almost tenfold to around £500,000. The Verify product is now in use by more than 20 media agencies and suppliers globally, and more than 100 brands.
Underlying earnings (EBITDA) are now expected to be “significantly ahead of market expectations”, and we are raising our forecast from -£2.1mln to -£1.75mln. The company also reports that year-end net cash stood at £1.3mln versus our previous expectation of £600,000. In August 2019 the company announced a restructuring of the business to align its cost base with the market uptake for Verify in the US, and we believe that the improved EBITDA and cash figures demonstrate that the restructuring has delivered on its objectives and evidence that the company is reacting quickly to changing market circumstances.
Looking further forward we see strong potential for further revenue growth from Verify. This product is currently unique in the market place and offers customers a powerful tool for optimising mobile advertising campaigns. The overall global market for mobile advertising is more than US$160bn, and within this, we believe the revenue opportunity for Verify is up to US$500mln. We present some details on p2.
A strong end to 2019
Location Sciences offers a unique verification solution into a mobile advertising market of more than US$145bn. On p2 we present an overview of some of the addressable market. We see a revenue opportunity for Location Sciences of up to US$500mln, which offers significant upside to the current share price in our view.
Market potential and valuation
Year end Dec 31 · 2018 · Current · 2020 · 2021
Revenue £M · 0.8 · 1.2 · 1.9 · 3.0
Gross profit · 0.4 · 0.8 · 1.3 · 2.3
EBITDA (£M) · (1.2) · (1.8) · (1.8) · (1.0)
Net cash/ (debt) £M · 2.6 · 1.3 · (1.1) · (2.8)