Good morning! Paul's in Croatia, although that doesn't mean we won't be hearing from him at all. I'll be holding the fort until he gets back.

Taptica International (LON:TAP)

  • Share price: 346.5p (pre-open)
  • No. of shares: 61.7 million
  • Market cap: £214 million

Interim Results

This is an Israeli mobile (and now video) advertising firm, generating most of its revenues in the US. I've covered it a couple of times in recent months, as it announced some acquisitions expanding its international reach, and moving into video. Now we have the H1 results to June.

From the financial highlights:

  • Revenues increased by 27% to $65.6 million (H1 2016: $51.8 million)
  • Gross profit increased by 45% to $25.8 million (H1 2016: $17.8 million), with improvement in gross margin to 39.4% (H1 2016: 34.4%)
  • Net cash inflow from operating activities of $13.7 million (H1 2016: $4.5 million)

Also worth mentioning the outlook for the rest of the year: strong growth is anticipated which will be in line with market expectations

Digging a little deeper, the growth is said to have been driven particularly by Asia-Pacific. Taptica has offices in China, South Korea and Japan. It also opened an office in the UK during H1, while the $50 million acquisition it made last month is US-based. So it certainly has no lack of ambition!

As noted in the highlights, gross margin improved 5%. It seems to be getting better at what it does:

Cost of sales, which consists primarily of traffic acquisition costs that are directly attributable to revenue generated by the Company and based on the revenue share arrangements with audience and content partners, decreased as a proportion of revenue compared with the prior year due to increased technology efficiency gains resulting from improved use of the big data collected thereby significantly improving the gross margins.

That is the sort of thing that can become a competitive advantage, I think - when a company has so much data and becomes experienced at analysing it, new entrants face the double problem of not having the data and also not having the analysis techniques. See Google!

Taking a quick look at the statements, I see that the net cash inflow from operating activities is flattered by a $5.4 million favourable movement in working capital ($7.5 million receivables increase minus $2.1 million payables decrease).

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