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TICKERS: ADCO

Q2 Earnings Soar for AI-Assisted Advertising Technology Firm

Source:

This small-cap firm saw rapid growth and reported a record second quarter.

Adcore Inc. (ADCO:TSX.V), the developer of machine-learning powered advertising technologies, reported record second quarter financials, including an increase in revenue growth of 53% year over year.

Adcore uses artificial intelligence (AI) algorithms to automate online search and shopping advertising and is used by digital agencies and advertisers to enhance and maximize search engine marketing.

The second quarter was filled with several notable milestones:

  • Completed in May a go-public transaction with County Capital One Ltd. and began trading on the TSX Venture Exchange under the symbol ADCO.

  • Raised gross proceeds of CA$4 million as part of its go-public effort.

  • Opened a Toronto office in July to complement its Tel Aviv headquarters and Melbourne, Australia, office. Adcore's Head of Sales relocated to the office to accelerate North American sales.

The company also announced two major contracts for online advertising, one with the Israeli Government Advertising Agency for CA$125 million over five years, and the second with Experience Oz, Australia and New Zealand's number one site for travel experiences, with an online advertising budget of up to CA$5 million per year.

Adcore reported the following financial highlights for the second quarter:

  • Total revenue was CA$3.59 million compared to CA$2.35 million for the same period in 2018, an increase of 53%.

  • Adjusted EBITDA was CA$1.08 million compared to Adjusted EBITDA of CA$0.87 million for the same period in 2018, an increase of 24%.

  • As of June 30, 2019, total working capital was CA$3.56 million compared to (CA$161,000) for the year ended December 31, 2018, an increase of $CA3.72 million.

"Our growth continues to outpace the market and our competitors, with yet another record quarter of revenue and earnings, said Omri Brill, Adcore's CEO. "Our outlook for the second half of the year, historically the stronger half of the year, remains extremely bullish and we expect to make several exciting announcements over the coming months to drive shareholder value."

The firm has developed three sets of tools to assist advertising agencies and advertisers with digital media marketing.

  • semdoc2 is a real-time campaign dashboard, Brill explained, designed with digital agencies and campaign managers in mind. Semdoc2 allows account managers to discover critical errors, growth opportunities and generates a real-time account analysis. "Semdoc2 is the most powerful account auditing technology on the market," Brill stated. "Adcore's system analyzes an existing advertising account and, using 52 account and campaign metrics, determines how efficiently clients are running their campaigns. The system gives a detailed report on exactly what advertisers are missing with their existing campaigns, and what they should do to improve their advertising."

  • Adcore Views is the "ultimate automation tool for search marketing professionals," Brill noted. "From campaign creation to smart bidding, Adcore Views' machine-learning bidding algorithms allows clients to set target ROAS (return on ad spend) and CPA (cost per acquisition) goals to their campaigns with a click of a button." The company notes that Adcore's algorithms are trained to work with minimal amount of conversions and are effective for any campaign size. Adcore Views dynamically creates campaigns, ads and keywords in real time straight from a client's data feed.

  • feed:itor is the "ultimate shopping solution, from feed management to campaign creation. It is powerful enough to create, optimize and export data feeds to over 200 shopping channels and price comparison websites," Brill explained. Adcore's technology uses AI and deep learning to automatically optimize the product feed that clients submit to sites like Google Shopping, Amazon or eBay. Feed:itor can provide inventory and price management in real time with a customer's database or product base. For instance, a travel website will have lots of hotels in its database, with inventory constantly changing. The system will apply the appropriate price, based on market conditions, and stop advertising a specific hotel when there is no more inventory for that hotel. Adcore is able to provide inventory management, linking to the customer's inventory database and automatically populate the relevant ad copy and keywords associated with each product.

Ben Mann, founder and director of Experience Oz, stated, "Adcore is the perfect partner to take our search and shopping to the next level. Their ability to analyze and adapt our digital campaigns in real-time means every dollar we spend delivers far better results than we ever could achieve on our own."

According to the company, more than $500 million of ads have been placed using Adcore's platform by over 250 agency and direct clients, with year-over-year client growth of 310%.

From an investment perspective, the firm has approximately 55 million shares outstanding and 65.5 million fully diluted. It currently trades around CA$0.46 a share, giving it a market cap of CA$25.4 million. The founders and directors hold approximately 83% of the shares.

Adcore has caught the attention of technical analyst Clive Maund, who wrote on May 28, "With the founder and CEO of the company holding the majority of the stock and the balance tightly held, the stock price looks like it will respond very positively to any influx of new demand.

"Due to the dynamic growth prospects for this sector, Adcore should be relatively immune from the vagaries of the broad stock market, which is a reason why it is of interest to us here. It looks like a good stock to add to a portfolio of new tech stocks," Maund concluded.

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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Adcore. Please click here for more information.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Adcore, a company mentioned in this article.

Additional Disclosures

Clive Maund does not own shares of Adcore and neither he nor his company has been paid by Adcore.




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