NEW YORK, NY / CRWEPRESSRELEASE / August 27, 2015 /SeeThruEquity, a leading independent equity research and corporate access firm focused on small-cap and micro-cap public companies, today announced it has issued an update on SITO Mobile Ltd. (NASDAQ: SITO) highlighting NASDAQ Uplisting and other recent developments.
The report is available here: SITO Update Note. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack’s. The report will be available on these platforms. The firm also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.
SITO Mobile Ltd. (NASDAQ: SITO, “SITO Mobile”) is a leading mobile engagement platform provider based in Jersey City, NJ, whose messaging and location-based advertising platforms are used by major consumer brands and retailers in the US to interact with their customers via mobile communications. SITO Mobile has made impressive progress since we initiated coverage on the company in February 2015 – demonstrating impressive growth, improving its capital structure, completing a strategic acquisition, and recently achieving an uplisting to the NASDAQ Capital Markets. We see continued catalysts ahead for the company due to the growing traction of its location-based platform and synergies from HipCricket transaction, which we believe is operating at a annual revenue run rate of $5-$6mn in addition to adding complementary technology and highly attractive customers.
Highlights from the Update Note are as follows:
NASDAQ listing caps a year of significant progress for SITO
On August 10, SITO shares officially began trading on the NASDAQ Capital Market. The NASDAQ listing capped a year of significant work for he company, which included strong revenue growth, improvements to its capital structure, acquiring HipCricket’s mobile advertising business, and executing a 1:10 reverse stock split in July. In our view the NASDAQ listing is a major milestone for SITO, as the move should raise the company’s profile in its industry, with advertising clients, and with investors. We expect the NASDAQ listing to improve SITO’s trading liquidity and enable access to a broader group of potential institutional investors.
Top line continues to rise rapidly in 3Q15
SITO reported powerful annual revenue growth in its fiscal 3Q15, with the company’s top line rising nearly 72% from year-ago levels to reach $3.7mn. Media Placement sales represented 59% of revenues and grew over 30% sequentially, led by increased traction in the company’s real-time mobile location-based advertising platform. We continue to see SITO as an intriguing emerging player in the fast-growing $30Bn programmatic mobile advertising market. SITO also reported gross margins ahead of our expectations, with 3Q15 gross margins of 60.7%, above our long-term expected range of the mid-to-high 50%.
Acquisition positions SITO as a leader in mobile engagement
On July 9, 2015, SITO completed the acquisition of the mobile advertising business of distressed rival HipCricket for $3.7m in a cash and stock transaction, marking the completion of a year long process. The acquisition appears to be well matched for SITO, as Hipcricket specializes in mobile engagement solutions and marketing analytics, complementary areas to the SITO core business. In addition to complementary technology, the HipCricket mobile advertising business should significantly expand SITO’s customer base. The company’s disclosed that they only had a 5% overlap in customers, and the HipCricket mobile ad business counts some of the nation’s the largest telecom carriers among its customers – key strategic additions for SITO. Our research suggests that the acquired HipCricket business should be operating at an annual run rate of between $5-$6mn, with gross profit margins in the mid-50% range.
Price target moves to $7.40 in light of share consolidation
We are adjusting our SITO price target to reflect the company’s recent 1:10 share consolidation. Previously, our target for SITO was $0.74. We have been impressed by the myriad accomplishments from SITO management since we initiated coverage on the company in February. If achieved, the price target of $7.40 suggest potential upside of 90.7% form the recent price of $3.88.
Please review important disclosures on our website at www.seethruequity.com.
About SITO Mobile Ltd.
SITO Mobile provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales. For more information visit www.sitomobile.com.
SeeThruEquity is an equity research and corporate access firm focused on companies with less than $1 billion in market capitalization. The research is not paid for and is unbiased. The company does not conduct any investment banking or commission based business. SeeThruEquity is approved to contribute its research to Thomson One Analytics (First Call), Capital IQ, FactSet, Zacks, and distribute its research to its database of opt-in investors. The company also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.
For more information visit www.seethruequity.com.