Playmaker Capital Inc. (PMKR:TSX.V; PMKRF:OTCQX) outperformed in Q4/22 such that revenue and EBITDA were "a large step function" above forecasts, reported Echelon Capital Markets analyst Rob Goff in a March 21 research note.
"Results across 2022 support our bullish view towards Playmaker's organic and inorganic growth as management has assembled high-growth, entrepreneur-driven partners onto its platform, where additional investment, greater platform reach, and an in-house tech stack drive growth and monetization," Goff wrote.
Attractive Investment Opportunity
The analyst also highlighted that Playmaker's enterprise value:EBITDA multiple is "irrationally cheap," and Echelon rates the company Speculative Buy. Playmaker's current share price is about CA$0.48 per share, and Echelon's target price on the Ontario-based company is CA$1.20 per share. This price difference indicates a potential 150% return for investors.
Noteworthy Organic Growth
Goff discussed Playmaker's Q4/22 and full-year 2022 (FY22) revenue and EBITDA, highlighting the company's outperformance due to the strength of its acquisitions.
Revenue in Q4/22 was US$18.7 million (US$18.7M), which surpassed Echelon's US$11.1M estimate and consensus' US$11.9M forecast. Likewise, Q4/22 EBITDA was beat at US$6.6M versus Echelon's US$4.2M projection and the Street's US$4M estimate. Goff noted these figures exclude any revenue contribution from the World Cup.
Q4/22 pro forma revenue (US$19M) and EBITDA (US$6.8M) reflect 102% and 96% year-over-year (YOY) growth, respectively.
Playmaker's impressive organic growth in Q4/22 was due to a 25% YOY increase in overall user sessions over the whole platform, Goff pointed out. Yardbarker performed the best, achieving 86% YOY growth. Also, Wedge, the newly acquired affiliate marketer, yielded US$5.7M in only two and a half months of Q4/22, "one of the key positive surprises on the quarter," wrote Goff.
Looking at Playmaker's FY22 results, pro forma revenue and EBITDA came in at US$47.4M and US$15.3M and also were beat, Goff pointed out. As well they reflect YOY growth of 51% for revenue and 36% for EBITDA.
The company ended Q4/22 with US$8.9M of cash and about US$10M of undrawn credit.
Model Estimates Revised
Based on Playmaker's "significant outperformance" in Q4/22, noted Goff, Echelon raised its 2023 revenue estimates on it by US$6.6M. The updated amount is US$50.5M.
Echelon modestly increased its forecasted EBITDA to US$15.7M from US$15.2M to allow for greater expenses as Playmaker continues growing.
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Disclosures for Echelon Wealth Partners, Playmaker Capital Inc., March 21, 2023
U.S. Disclosures: This research report was prepared by Echelon Wealth Partners Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Echelon Wealth Partners Inc. is not registered as a broker-dealer in the United States and is not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Any resulting transactions should be effected through a U.S. broker-dealer.
ANALYST CERTIFICATION
Company: Playmaker Capital Inc. | PMKR:TSXV
I, Rob Goff, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.
IMPORTANT DISCLOSURES
Has the Analyst had an onsite visit with the Issuer within the last 12 months? - Meeting with management/investor at Playmaker’s head office (Nov 17, 2022) - Yes.
