Proxama (to be renamed Location Sciences on 21 March) is a mobile location data intelligence business that analyses consumer behaviour using its proprietary location technology. Over the past few months a new management team effected a complete restructuring of the business positioning the company at the forefront of this rapidly evolving part of the wider £5.4bn UK digital media sector. The company has built a large and growing footprint in terms of consumer reach and monetises its data products in sectors including retail, city and transport planning and financial services as well as media. As at year end 2017, the Location Sciences’ UK consumer base exceeded 7.3m and its data lake had amassed 14bn data points. These market leading figures, combined with the company suite of data products, in our view positions Location Sciences as a leading UK player in this high growth sector.
The business underwent a wholesale restructuring in 2017. The Payments division was divested in October, enabling the group to focus on the more scalable location data and intelligence division – Location Sciences. A new board of directors was established to drive the group’s new strategy, the cost base has been aggressively streamlined and the £3.1m equity raise in July means the group ended the year with net cash of £1.1m, providing a solid foundation for Location Sciences. The company plans to change its name to Location Sciences Group at the AGM on 21 March thus we refer to the company as such throughout the note.
Management considers the data being collected to be of unrivalled accuracy, enabling a precise but anonymous picture of consumer habits to be built. While online ads to online store conversion is established, Location Sciences can verify or predict a user’s behaviour in the physical world making it valuable to a range of sectors; in particular for media or advertising attribution – a potentially vast market.
The company already has a footprint of c 7.3m consumers and 14bn data points providing the base data for its recently launched products. The platform capabilities are in place and the sales pipeline has been built. Our forecasts assume steady conversion of this sales pipeline on a much-reduced cost base, but at this early stage in development forecasts are subject to significant uncertainty.
There have been a number of deals in this segment over the last year, which should underpin the value of the group until more traditional financial metrics can be used; eg Snap’s $135m acquisition of Placed. As well as building a pipeline of customers, delivery of key milestones such as consumer base growth, sales growth and data growth are the main metrics we will use to gauge the group’s progress and value.