Digital classifieds vertical search leader Mitula Group has delivered strong growth in the first half of 2016 and says it will now commence the roll out of its growth strategy.
Key financial highlights for the six month period include:
- Revenue increased by 52.7% over the corresponding period to $13.6 million
- Adjusted EBITDA1 increased by 83.8% to $7.1 million
- Adjusted EBITDA margin increased from 43.7% to 52.5%
- Profit for the half year increased by 160.3% $4.7 million
- Operational cash flow increased by 147.6% to $6.1 million
- Cash balance was $22.2 million as at the end of the period.
Mitula Group CEO Gonzalo del Pozo says particularly pleasing is the 52.7 per cent revenue growth which was achieved while keeping a tight control on expenses.
“This has led to a growth in the adjusted EBITDA margin to 52.5 per cent as well as a 160.3 per cent increase in profit,” he says.
Expansion, strong KPIs
During the half Mitula Group added 26 new vertical search sites to its network.
With the acquisition of Nuroa Internet SL in February, 17 new sites were added and a further nine new sites were launched of which five were in new countries.
“We now operate 79 vertical search sites across real estate, employment and motoring in 49 countries and 19 languages,” del Pozo says.
Mitula sites had 190 million visits during the June quarter and generated 276 million click outs to its advertisers.
“We are extremely happy with the continued growth of the underlying KPIs of the business,” del Pozo says.
“In particular we are becoming less reliant on organic search for visits as our direct traffic grows.
“This is primarily driven by the increase in consumers going directly to Mitula sites in emerging markets, the continued roll out of our mobile applications, and the strong growth in our email alert subscribers, which was 50.7 per cent year-on-year with 11.0 million subscribers as at the end of the June quarter.”
Growth strategy based on segmentation
Del Pozo says Mitula’s main focus for the second half of the year will be the continued roll out of its growth strategy.
He says the company has segmented its markets into those delivering strong revenue streams:
(Tier 1 Established Markets), those that are growing rapidly but slow to be monetised (Tier 2 Emerging Markets) and those that are in early stages of growth (Tier 3 Early Stage / Small Markets).
“For Tier 1 established markets, we have commenced providing advertisers with new products that allow them to brand themselves and their customers across our sites,” del Pozo explains.
“The results of this initiative can be seen in the initial new product revenue in the June quarter.
“For Tier 2 emerging markets, where Mitula has significant visits that are not being fully monetised, we will roll out a combination of products that allow end advertisers (e.g. agents, car dealers, and employers) to advertise directly with the Mitula Group.”
Mitula Group Chairman Simon Baker adds Mitula Group is entering a new and exciting phase of its growth.
“We expect our AdSense and cost per click (CPC) products to continue to perform well, and we will add new revenue streams, which we expect to drive strong revenue growth for the company,” he says.
“This is particularly the case in the Tier 2 markets, which provide strong growth opportunities for the company.”
New revenue streams
Del Pozo points out the emergence of new revenue streams for Mitula relating to the sale of branding products to the Tier 1 established market advertisers is of particular note.
“While these contributed only 3.8 per cent of revenue in the June quarter, it is expected that these new revenue streams will grow particularly with the rollout of direct products for the Tier 2 emerging markets,” he says.
On a regional basis, Europe, Middle East and Africa (EMEA) delivered 99.5 per cent growth in revenues while APAC delivered 48.3per cent growth.
Revenues from the Americas were flat year-on-year (in AUD) primarily driven by the devaluation of local currencies versus the USD resulting in a decrease in the volume of clicks purchased.
Click out volumes decrease
The only sour note to the Mitula Groups’s stellar first half results comes in the form of a 10.8 per cent drop in the volume of click outs sold when compared to the corresponding period last year.
“This was due to a combination of two factors,” del Pozo says.
“Firstly, there was a decrease in sales of clicks in the Americas market due to the devaluation of local currencies.
“Secondly, the company ceased sales of ‘remnant’ clicks to some of its advertisers who were purchasing high volumes of clicks at extremely low yields.
“Offsetting the decrease in the volume of clicks sold was a 52.4 per cent increase in the yield per click-out sold to an average of 3.9 cents per click,” he says.
Outlook
Mitula Group expects continued strong growth in both AdSense and CPC revenues during the second half of 2016.
AdSense should continue to grow in line with the growth of traffic to the sites, while CPC revenues are expected to grow through a combination of increased sales of click outs and an increase in yield per click.
Del Pozo and Baker confirm the company will continue to look for expansion opportunities in Mitula’s current vertical search business either through launching new countries or new verticals.
The company will also look to expand through the acquisition of related businesses.
Mitula Group is a gold sponsor of PPW Madrid, coming up September 27-20. Register now and meet them there!
Hurry, early bird prices end August 19.
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