1/ $TRMR vs $MGNI
Have had a few people reach out on $TRMR esp vs $MGNI – they arent quite similar.
But, $TRMR looks more attractive on relative valuation vs $MGNI – signifying 5-10x upside from here.
$TRMR should be trading at £25-£56/share vs £5.48 today
MEGA Thread!
Have had a few people reach out on $TRMR esp vs $MGNI – they arent quite similar.
But, $TRMR looks more attractive on relative valuation vs $MGNI – signifying 5-10x upside from here.
$TRMR should be trading at £25-£56/share vs £5.48 today
MEGA Thread!
2/
$TRMR is an “integrated” platform i.e. it has both a SSP (supply-side) and a DSP (demand-side)
SSP: works with “sell side”– publishers who have ad space to sell (eg. $MGNI is a SSP)
DSP: works with buyside or the advertisers (eg. $TTD is a DSP)
$TRMR is an “integrated” platform i.e. it has both a SSP (supply-side) and a DSP (demand-side)
SSP: works with “sell side”– publishers who have ad space to sell (eg. $MGNI is a SSP)
DSP: works with buyside or the advertisers (eg. $TTD is a DSP)
3/
However, unlike a $MGNI or a $TTD, $TRMR is only focussed on video – that is their expertise.
Both $MGNI and $TTD are multi-channel based, although $MGNI is also focussing on video as that is where the growth is
Both $MGNI and $TRMR are ultra-focussed on CTV at present
However, unlike a $MGNI or a $TTD, $TRMR is only focussed on video – that is their expertise.
Both $MGNI and $TTD are multi-channel based, although $MGNI is also focussing on video as that is where the growth is
Both $MGNI and $TRMR are ultra-focussed on CTV at present
4/
So what is $TRMR?
Tremor International ( $TRMR ) is a video focussed ad-tech business which offers a full stack solution to its clients through an integrated offering (i.e. SSP + DSP).
It has 3 divisions:
(1) Tremor Video (DSP),
(2) RhythmOne (SSP), and
(3) Unruly (SSP)
So what is $TRMR?
Tremor International ( $TRMR ) is a video focussed ad-tech business which offers a full stack solution to its clients through an integrated offering (i.e. SSP + DSP).
It has 3 divisions:
(1) Tremor Video (DSP),
(2) RhythmOne (SSP), and
(3) Unruly (SSP)
5/
$TRMR's vision is “To create one of the largest unified programmatic marketplaces specialized in video”. It has done this by acquiring 3 segments & integrating them into the core biz. These work together to create a unified offering in the video space
More details below:
$TRMR's vision is “To create one of the largest unified programmatic marketplaces specialized in video”. It has done this by acquiring 3 segments & integrating them into the core biz. These work together to create a unified offering in the video space
More details below:
6/ DSP - Tremor Video:
$TRMR acquired this DSP (called Tremor Video) from Telaria in 2017.
It uses data & creative to deliver impactful solutions to advertisers/brands.
This DSP is one of the largest video advertising companies in US – in CTV, in-stream & in-app
$TRMR acquired this DSP (called Tremor Video) from Telaria in 2017.
It uses data & creative to deliver impactful solutions to advertisers/brands.
This DSP is one of the largest video advertising companies in US – in CTV, in-stream & in-app
7/ Video SSPs:
RhythmOne: acquired in 2019 (CTV rich clients). This is $TRMR's media side which works in multiscreen ads (so across desktop, mobile, tablets, etc)
Unruly: acquired from NewsCorp in Jan’20. Has 2k+ publisher relationships + NewsCorp gives it a strong foundation
RhythmOne: acquired in 2019 (CTV rich clients). This is $TRMR's media side which works in multiscreen ads (so across desktop, mobile, tablets, etc)
Unruly: acquired from NewsCorp in Jan’20. Has 2k+ publisher relationships + NewsCorp gives it a strong foundation
8/
The Unruly acquisition is particularly relevant. It gave $TRMR the “EXCLUSIVE” right to sell outstream video on all News Corp titles in UK, US and AUS.
This is a big deal especially on the SSP side, while it will also help generate revenue on the DSP side.
The Unruly acquisition is particularly relevant. It gave $TRMR the “EXCLUSIVE” right to sell outstream video on all News Corp titles in UK, US and AUS.
This is a big deal especially on the SSP side, while it will also help generate revenue on the DSP side.
9/
NewsCorp took a 6% stake in $TRMR, with 18mth lock-up (expires Jun’21?) + agreed to contribute cash towards integration of Unruly (now complete)
I don’t expect NewsCorp to sell anytime soon given potential significant upside. Also, Rebekah Brooks (CEO, News UK) is now a NED
NewsCorp took a 6% stake in $TRMR, with 18mth lock-up (expires Jun’21?) + agreed to contribute cash towards integration of Unruly (now complete)
I don’t expect NewsCorp to sell anytime soon given potential significant upside. Also, Rebekah Brooks (CEO, News UK) is now a NED
10/
$TRMR has some amazing clients. Sample of DSP clients or advertisers below. Big names!
$TRMR has some amazing clients. Sample of DSP clients or advertisers below. Big names!
11/
Even on the SSP side, $TRMR's network is strong.
Interestingly, the depth of their reach goes far beyond the US – although the US still accounts for c80% of group revenue.
Even on the SSP side, $TRMR's network is strong.
Interestingly, the depth of their reach goes far beyond the US – although the US still accounts for c80% of group revenue.
12/
$TRMR's current STRATEGY is to focus on 3 distinct areas within video.
These are:
(1) CTV – $95m FY20 gross rev,
(2) Private Market-Place (PMP) - $55.3m, and
(3) Self-Serve - $35m
….all of which are showing very promising signs.
Together, they total 46% of group rev
$TRMR's current STRATEGY is to focus on 3 distinct areas within video.
These are:
(1) CTV – $95m FY20 gross rev,
(2) Private Market-Place (PMP) - $55.3m, and
(3) Self-Serve - $35m
….all of which are showing very promising signs.
Together, they total 46% of group rev
13/ CTV
We have seen many reports of the (a) shift from TV to digital video, and (b) increased spending in video advertising
$TRMR notes that US digital video ad spending is expected to grow 82%, with 2.5% expected decline in US TV ad spending - from 2018 to 2022
We have seen many reports of the (a) shift from TV to digital video, and (b) increased spending in video advertising
$TRMR notes that US digital video ad spending is expected to grow 82%, with 2.5% expected decline in US TV ad spending - from 2018 to 2022
14/ CTV will benefit significantly from this trend
The charts below – highlighted by both $MGNI and $TRMR – are self-explanatory.
The charts below – highlighted by both $MGNI and $TRMR – are self-explanatory.
15/
$MGNI highlights the CTV market opportunity with this chart
$MGNI highlights the CTV market opportunity with this chart
16/
CTV is a massive growth area for $TRMR
- $MGNI reported CTV revenue of $11.1m for Q3’20
- $TRMR reported gross CTV revenue of $26.1m for Q3 – but assuming a 45% take-rate – $TRMR's net rev from CTV in Q3’20 was $11.7m
Both have similar sized CTV exposure (pre-SpotX TX)
CTV is a massive growth area for $TRMR
- $MGNI reported CTV revenue of $11.1m for Q3’20
- $TRMR reported gross CTV revenue of $26.1m for Q3 – but assuming a 45% take-rate – $TRMR's net rev from CTV in Q3’20 was $11.7m
Both have similar sized CTV exposure (pre-SpotX TX)
17/
$TRMR already released a Q4 trading update
Q4 CTV gross revenue was $41.1m in Q4’20 (vs $26.1m in Q3).
Taking out the 45% take rate again to make it comparable to $MGNI, this means $TRMR generated $18.5m net rev in Q4 (vs $11.7m in Q3)
BIG GROWTH!
$TRMR already released a Q4 trading update
Q4 CTV gross revenue was $41.1m in Q4’20 (vs $26.1m in Q3).
Taking out the 45% take rate again to make it comparable to $MGNI, this means $TRMR generated $18.5m net rev in Q4 (vs $11.7m in Q3)
BIG GROWTH!
18/
$TRMR's CTV revenue has grown +172% in FY20 despite the C19 impact (Est net rev of $15.8m in FY19 & $43m in FY20)
YoY CTV revenue growth rates below
Q1’20 +535.3% yoy
Q2’20 +258.7% yoy
Q3’20 +141.7% yoy
Q4’20 +127.1% yoy
Chart below shows gross revenue on a quarterly basis
$TRMR's CTV revenue has grown +172% in FY20 despite the C19 impact (Est net rev of $15.8m in FY19 & $43m in FY20)
YoY CTV revenue growth rates below
Q1’20 +535.3% yoy
Q2’20 +258.7% yoy
Q3’20 +141.7% yoy
Q4’20 +127.1% yoy
Chart below shows gross revenue on a quarterly basis
19/ Private MarketPlace (PMP)–2nd Growth Engine
Aimed at agencies that prefer to work with certain preferred publishers. Eg - Agencies may want to have pre-defined agreements with publishers/ad-sellers – so that they can guarantee delivery on those sites to their own clients
Aimed at agencies that prefer to work with certain preferred publishers. Eg - Agencies may want to have pre-defined agreements with publishers/ad-sellers – so that they can guarantee delivery on those sites to their own clients
20/ PMP
This is a growing trend seen in ad-tech. Brand Safety is probably the biggest reason – for eg, if it’s a good publisher, then brands know that their ad is in a “brand-safe” environment – so demand for those spaces are high.
$TRMR is capitalizing on this trend
This is a growing trend seen in ad-tech. Brand Safety is probably the biggest reason – for eg, if it’s a good publisher, then brands know that their ad is in a “brand-safe” environment – so demand for those spaces are high.
$TRMR is capitalizing on this trend
21/ PMP
$TRMR facilitates this by providing inventory/video supply to such agencies and also provides data & insights to complement the offering. HIGHER MARGIN!
PMP revenue is showing crazy levels of growth
Q2’20: +527.5% yoy
Q3’20: +1,520% yoy
Q4’20: 1,214% yoy
$TRMR facilitates this by providing inventory/video supply to such agencies and also provides data & insights to complement the offering. HIGHER MARGIN!
PMP revenue is showing crazy levels of growth
Q2’20: +527.5% yoy
Q3’20: +1,520% yoy
Q4’20: 1,214% yoy
22/ Self-Serve –3rd Growth Engine
$TRMR gives agencies & advertisers a full platform to run their campaigns supplemented with data & insights provided by $TRMR.
It also offers a DSP with connectively to its own exchange and a rich CTV portfolio
$TRMR gives agencies & advertisers a full platform to run their campaigns supplemented with data & insights provided by $TRMR.
It also offers a DSP with connectively to its own exchange and a rich CTV portfolio
23/ Self-Serve
As clients (Brands, Agencies, etc) are managing it themselves, the costs associated with this is lower, meaning HIGHER MARGIN for $TRMR
Also rev growing massively:
Q1’20: 151% yoy
Q2’20: +144% yoy
Q3’20: +650% yoy
Q4’20: +639% yoy
As clients (Brands, Agencies, etc) are managing it themselves, the costs associated with this is lower, meaning HIGHER MARGIN for $TRMR
Also rev growing massively:
Q1’20: 151% yoy
Q2’20: +144% yoy
Q3’20: +650% yoy
Q4’20: +639% yoy
24/ Summary of $TRMR Growth Drivers in this chart
25/ $MGNI vs $TRMR
Despite being a similar-sized business to $MGNI, $TRMR trades at a fraction of $MGNI’s valuation. $TRMR highlighted this valuation differential in its H1’20 preso.
Implies that $TRMR is c78% the size of $MGNI (in rev terms), yet trades at 30% of $MGNI's val
Despite being a similar-sized business to $MGNI, $TRMR trades at a fraction of $MGNI’s valuation. $TRMR highlighted this valuation differential in its H1’20 preso.
Implies that $TRMR is c78% the size of $MGNI (in rev terms), yet trades at 30% of $MGNI's val
26/
One would expect this differential to have converged – but in fact it has diverged.
$MGNI was valued at $4.6B ($40.5 share px) pre SpotX announcement vs $0.95B for $TRMR
The summary analysis below shows $TRMR has between 4.7x – 10.2x upside vs $MGNI
One would expect this differential to have converged – but in fact it has diverged.
$MGNI was valued at $4.6B ($40.5 share px) pre SpotX announcement vs $0.95B for $TRMR
The summary analysis below shows $TRMR has between 4.7x – 10.2x upside vs $MGNI
27/
$TRMR should be trading at £25.7-£56.1/share not £5.48/share
$TRMR is a better run biz vs $MGNI with better FCF. Both had c16% EBITDA margin (FY19) but $TRMR generated +$38m FCF (26% margin) vs $12M for $MGNI (7.7%)
LTM H1’20 - $TRMR +$25M FCF vs -$16m (burn) for $MGNI
$TRMR should be trading at £25.7-£56.1/share not £5.48/share
$TRMR is a better run biz vs $MGNI with better FCF. Both had c16% EBITDA margin (FY19) but $TRMR generated +$38m FCF (26% margin) vs $12M for $MGNI (7.7%)
LTM H1’20 - $TRMR +$25M FCF vs -$16m (burn) for $MGNI
28/
So, $MGNI's acquisition of SpotX valued it at 10x P/S – this suggests there is AT LEAST 2x upside on $TRMR from here as it trades at 5x P/S !!!
So, $MGNI's acquisition of SpotX valued it at 10x P/S – this suggests there is AT LEAST 2x upside on $TRMR from here as it trades at 5x P/S !!!
29/
$TRMR is an integrated platform – so, a direct comp with $MGNI not quite apt – ideally, we should use a combo of $MGNI & $TTD to comp
But $TTD is trading at a much much higher valuation (54x P/S). So let’s not get carried away with where $TRMR should ACTUALLY be trading!!
$TRMR is an integrated platform – so, a direct comp with $MGNI not quite apt – ideally, we should use a combo of $MGNI & $TTD to comp
But $TTD is trading at a much much higher valuation (54x P/S). So let’s not get carried away with where $TRMR should ACTUALLY be trading!!
30/
To affirm, I’m not saying $MGNI is rubbish – it is anything but!!
To be fair, $MGNI is doubling its revenue with the SpotX acquisition – yet, the share price only jumped 26% on Friday - it actually has more room to run (acquisition is part funded with shares ofc)!
To affirm, I’m not saying $MGNI is rubbish – it is anything but!!
To be fair, $MGNI is doubling its revenue with the SpotX acquisition – yet, the share price only jumped 26% on Friday - it actually has more room to run (acquisition is part funded with shares ofc)!
31/
What I am saying is $TRMR offers much more upside vs $MGNI from just RelVal. Growth will just propel this even further.
So why now, you ask?
(a) $10m share buyback,
(b) Marketing of US Investors (potential dual listing?), and
(c) more growth from CTV, self-serve & PMP + M&A
What I am saying is $TRMR offers much more upside vs $MGNI from just RelVal. Growth will just propel this even further.
So why now, you ask?
(a) $10m share buyback,
(b) Marketing of US Investors (potential dual listing?), and
(c) more growth from CTV, self-serve & PMP + M&A
32/ Dec’20 – Board approved $10m share buyback–shows that they think valuation is whack! As of 5 Feb’21, $TRMR has only spent $2.1m – so $7.9m left to spend by Jun’21
Prior history of fully spending approved amts on buybacks. Board approved $10m in Mar’20 - fully spent by Sep’20
Prior history of fully spending approved amts on buybacks. Board approved $10m in Mar’20 - fully spent by Sep’20
33/ US Investors Marketing
Noting the valuation diff vs $MGNI, $TRMR appointed Stifel as joint broker in Oct’20.
Whilst this just covers marketing US investors for now, perhaps a dual listing will follow later?
Noting the valuation diff vs $MGNI, $TRMR appointed Stifel as joint broker in Oct’20.
Whilst this just covers marketing US investors for now, perhaps a dual listing will follow later?
34/
$TRMR's Stifel mandate announcement on 29 Oct’20 states:
“Tremor has appointed Stifel to assist the Company in broadening its investor base across both Europe and North America, where initial outreach has been positively received”
$TRMR's Stifel mandate announcement on 29 Oct’20 states:
“Tremor has appointed Stifel to assist the Company in broadening its investor base across both Europe and North America, where initial outreach has been positively received”
35/
Wonder if this "US marketing" has contributed to $TRMR's share price increase, from £2.27 on 30 Oct’20 to £5.48 on 5 Feb’21, on top of better than expected trading updates.
But hey, the differential in valuation with $MGNI got worse in the same time! Lots more room to grow
Wonder if this "US marketing" has contributed to $TRMR's share price increase, from £2.27 on 30 Oct’20 to £5.48 on 5 Feb’21, on top of better than expected trading updates.
But hey, the differential in valuation with $MGNI got worse in the same time! Lots more room to grow
36/ M&A – company generates cash and has c$100m as of Dec’20. Consolidation is ripe in this sector; so don’t expect $MGNI + SPOTX to be the last we see.
Maybe, $TRMR will acquire or merge with a competitor to grow further
Maybe, $TRMR will acquire or merge with a competitor to grow further
37/
France based Altice has been looking to monetize its ownership in video adtech firm, TEADS, which is a SSP competitor to both $MGNI and $TRMR.
Will Teads merge with $TRMR? I wonder….
France based Altice has been looking to monetize its ownership in video adtech firm, TEADS, which is a SSP competitor to both $MGNI and $TRMR.
Will Teads merge with $TRMR? I wonder….
38/ OWNERSHIP – 68% held by long term investors – instos, strategic & insiders
On initial view, it may SEEM that insiders are selling– this isn’t the case.
The sales are automated selling of RSUs when they vest – to pay the taxes due on vesting.
Insiders are NOT SELLING.
On initial view, it may SEEM that insiders are selling– this isn’t the case.
The sales are automated selling of RSUs when they vest – to pay the taxes due on vesting.
Insiders are NOT SELLING.
39/ FINALLY – the HISTORY
Let me just touch on the intertwined histories of $MGNI & $TRMR
$MGNI used to be called Rubicon Project. They rebranded to Magnite in Jun’20 after acquiring a company called Telaria ($TLRA, was listed in NYSE) in Apr’20.
Stay with me here.
Let me just touch on the intertwined histories of $MGNI & $TRMR
$MGNI used to be called Rubicon Project. They rebranded to Magnite in Jun’20 after acquiring a company called Telaria ($TLRA, was listed in NYSE) in Apr’20.
Stay with me here.
40/
$TLRA was originally called “Tremor Video”. They rebranded to “Telaria” in Sept’17 after selling their DSP platform to UK based Taptica
$TLRA was an integrated player – but it was not able to run both an SSP & DSP successfully – so instead decided to focus on being an SSP.
$TLRA was originally called “Tremor Video”. They rebranded to “Telaria” in Sept’17 after selling their DSP platform to UK based Taptica
$TLRA was an integrated player – but it was not able to run both an SSP & DSP successfully – so instead decided to focus on being an SSP.
41/
Taptica (which bought the DSP from Telaria) then changed its name and rebranded to Tremor International– or $TRMR. Bit confusing, but hope that makes sense.
The reason I touch on this history is because I’ve had many questions on this
Taptica (which bought the DSP from Telaria) then changed its name and rebranded to Tremor International– or $TRMR. Bit confusing, but hope that makes sense.
The reason I touch on this history is because I’ve had many questions on this
42/
So if Telaria found it difficult to work as an integrated player, what makes $TRMR different?
A> Telaria were perhaps a bit too early in the game. CTV was just starting to pick up…
B>Telaria didn’t have strong enough SSP partnerships to make the DSP work
So if Telaria found it difficult to work as an integrated player, what makes $TRMR different?
A> Telaria were perhaps a bit too early in the game. CTV was just starting to pick up…
B>Telaria didn’t have strong enough SSP partnerships to make the DSP work
43/
$TRMR has made it work - through RhythmOne and Unruly acquisitions
The exclusive relationship with NewsCorp & global relationships that both entities has brought into the mix has helped propel the overall biz further. Cross-selling!
The results speak for themselves!
$TRMR has made it work - through RhythmOne and Unruly acquisitions
The exclusive relationship with NewsCorp & global relationships that both entities has brought into the mix has helped propel the overall biz further. Cross-selling!
The results speak for themselves!
44/ SUMMARY
A> $TRMR is a strong biz – better margins & FCF vs $MGNI
B> Valuation discount is unwarranted. See 5-10x upside from current levels
C> $TRMR's share price should be £25 - £56 (vs £5.48 today) on valuation convergence and growth
Disclosure: VERY LONG $TRMR
DYODD
A> $TRMR is a strong biz – better margins & FCF vs $MGNI
B> Valuation discount is unwarranted. See 5-10x upside from current levels
C> $TRMR's share price should be £25 - £56 (vs £5.48 today) on valuation convergence and growth
Disclosure: VERY LONG $TRMR
DYODD
@RihardJarc @anandchokkavelu @mukund @FromValue @BullishAngel @JonahLupton @msumak @PoundingDaTable @AviNMash @AnthonyOhayon @Soumyazen @adventuresinfi @TheMarkCooke @popflavius
@MartyChargin @skaushi @BahamaBen9 @jablamsky @dhaval_kotecha @ParrotStock @jeremymday @puppyeh1 @unai_k2 @kghufran @BuzzsawEJ @hhhypergrowth @OphirGottlieb @Beth_Kindig @SedsGoBlue @danielsparks @HedgeyeComm @cooking_numbers @mrjivraj @JoeySolitro @LuoshengPeng @GetBenchmarkCo
@threadreaderapp unroll
45/
UPDATE --> $TRMR / $TTTPF Price Target (11th Apr 2021):
Given mkt repricing on adtech names, thought its just worth updating the price target for $TRMR.
UPDATE --> $TRMR / $TTTPF Price Target (11th Apr 2021):
Given mkt repricing on adtech names, thought its just worth updating the price target for $TRMR.
46/
My current FV on $TRMR is GBp 1,900 to 2,270 (current share price is GBp 700); signifying a 170-225% upside.
I expect the valuation disparity to correct when $TRMR completes dual listing which I suspect will be in end May to mid Jun’21.
My current FV on $TRMR is GBp 1,900 to 2,270 (current share price is GBp 700); signifying a 170-225% upside.
I expect the valuation disparity to correct when $TRMR completes dual listing which I suspect will be in end May to mid Jun’21.
47/
The table below shows that $TRMR is still significantly undervalued vs fellow SSPs - $MGNI and $PUBM.
The table below shows that $TRMR is still significantly undervalued vs fellow SSPs - $MGNI and $PUBM.
48/
For $TRMR, the figures assume gross profit & EBITDA margins remain at a similar level to FY20
But this is very prudent as FY20 was impacted by integration-related costs, so FY21 margins should be much higher.
Despite this, $TRMR has the highest margins in its peers grp.
For $TRMR, the figures assume gross profit & EBITDA margins remain at a similar level to FY20
But this is very prudent as FY20 was impacted by integration-related costs, so FY21 margins should be much higher.
Despite this, $TRMR has the highest margins in its peers grp.
49/
On a prudent basis, I see 170-225% upside to $TRMR from current levels - or share price of GBp 1,900 - 2,270.
Table shows up to 420% upside if $TRMR converges to $MGNI ’s EV/EBITDA levels, but given P/S focus this is unlikely.
Happy to take a 170-225% upside from here :)
On a prudent basis, I see 170-225% upside to $TRMR from current levels - or share price of GBp 1,900 - 2,270.
Table shows up to 420% upside if $TRMR converges to $MGNI ’s EV/EBITDA levels, but given P/S focus this is unlikely.
Happy to take a 170-225% upside from here :)
Adtechs are selling for a min 10x EV/S nowadays (SpotX acq by $MGNI, TripleLift acq by Vista Equity) - so at an absolute min I expect $TRMR to reprice to GBp 1,250 at least or min 75% upside from here. Factor in rev grth and we have more to come.
Not bad for a worst case imo!
Not bad for a worst case imo!
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