Ebiquity Plc (LON:EBQ): H117 results mirror the current media environment with the demand for greater transparency benefiting the contract compliance business but creating some headwinds in the US. While H1 results were mixed, the pipeline is strong and progress has been made on a number of fronts in delivering the Growth Acceleration Plan; the potential uplift this could bring to growth in the next few years is yet to be factored into the share price.
US headwinds affect H1 performance
H117 revenues increased 5.6% with like-for-like (lfl) revenues flat. MVM grew by 9.1%, with the contract compliance business performing well as clients seek greater transparency from their media budgets, offset in part by client budgetary pressure in the US media business. The launch of Portfolio Media in Q316 along with the impact of the launch of the Portfolio Digital platform helped to return the MI practice to growth of 4.4%. Within the MPO practice however, while the Marketing Effectiveness practice continued to grow, the US Multi Channel Analytics (MCA) practice was affected by client churn and overall MPO revenues decreased 5.2%. MCA stabilised in Q2; however, operating margins, which decreased by 5pp to 15.1%, were affected and we trim our EPS estimates by 1-2% to reflect the shortfall.
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