11 Oct 2016
N+1 Singer - RhythmOne - Positive news flow continues
Today’s trading update confirms that both strategic and operational progress is continuing. Revenues (“at least US$80m”) look on track despite the faster than expected reduction of non-core revenues. With the Core said to be 80% of H1 revenues RTHM appears to have already achieved the mix change target it was aiming for by the end of the year. A faster reduction in non-core means that costs can be lowered further an efficiency improved. This bodes well for profitability and we flag the H1 EBITDA loss guidance is estimated to be less than US$2.9m and we expect consensus EBITDA of around breakeven to move slightly positive. The acceleration of Programmatic is driving the core and improvements in customer demand and international expansion point to a business on the front foot. News flow is likely to remain positive and the business looks likely to enter a growth phase that also delivers healthy profitability.