This is the latest in a series of excellent articles on IDI (ticker: IDI) from Jeff Geygan and his team at Global Value Research Company (articles one & two). The following is published with permission:
IDI (ticker: IDI) completed the acquisition of Fluent, Inc, immediately positioning the joint concern to capture additional market share in the large - $10 billion plus - and rapidly growing people based digital marketing business.
As a result of IDI’s industry leading data fusion know-how, supported by data fusion pioneer Ole Poulsen and his Seattle based team of data scientists, Fluent will be able to offer enhanced customer data records for its growing business.
Fluent generated $126 million in revenue over the past twelve months (Sept 14-Sept 15) with EBITDA of roughly $20 million.
Fluent generated $126 million in revenue over the past twelve months (Sept 14-Sept 15) with EBITDA of roughly $20 million.
The following financial data was provided in SEC form 8-K on 12/2/15:
| Revenue | Gross Profit | EBIT | Time Frame | |||
| $126 | N/A | $20 | LTM est | |||
| 103 | 28 | 9.9 | 2015 through 9/30 | |||
| 68 | 19 | 1.9 | FY 2014 | |||
| 53 | 16 | 4 | FY 2013 |
We believe Fluent is on track to generate roughly $160 million in revenue for the full year.
Conservatively speaking, calendar year 2016 combined revenue could reach $180 - $200 million:
IDI : $20-30 million
Fluent : $160-170 million
TOTAL : $180-200 million
The synergistic opportunities are enormous between these two businesses with their data collection methodologies. The combined business can generate 20% EBTIDA margins, or roughly $35 - $40 million.
Along with the announced completed acquisition in the December 9th press release, IDI added a new and very significant Director to its Board: Donald Mathis.
Mr. Mathis is the CEO and co-founder of Kinetic Social. The following link provides a better understanding as to why he is an ideal Board member who can offer tremendous insight and access to IDI. See HERE.
The other previously mentioned new Board member is Dr. Phil Frost. Dr. Frost is the largest shareholder and a long-time investor in the company. His addition to the Board after nearly 7 years of stock ownership and continued financial support – numerous capital contributions including $47 million in the recent financing package - speaks volumes about his depth of interest and confidence in the company.
In addition, it's noteworthy that the co-founders of Fluent accepted $150 of the $250 million purchase price in IDI common equity, a huge vote of confidence in the future of the joint enterprise. They are clearly willing to ‘Eat Their Own Cooking,’ a commendable quality for any public company officer or director.
The obvious merits of this investment will become clear after Q1 2016 when IDI reports its first full quarter of operating results with the combined entity. Q2 2016 will further validate the economics of the business by demonstrating period over period growth and margin improvement.
Furthermore, on December 21st IDI announced the release of phase one of idiCORE. IDI’s flagship product will revolutionize its product offering by providing more benefit at a lower cost per search than its competition. To date, idiBASIC has been well received by customers. IDI has in excess of 1,000 customers using the idiBASIC service, many of whom will immediately migrate to idiCORE.
If the company fails to successfully roll out its idiCORE and execute on the potential synergies of the combined entities shareholders will have reason for concern. Dr. Frost and Mr. Mathis have clearly risked their professional reputations by associating with IDI, a fact that should allow investors to sleep well.
Finally, on December 14th Fluent announced a new hire of Daryl Colwell as Senior Vice President of Sales. Mr. Colwell has extensive digital marketing industry experience having worked 15 years at Matomy Media Group and previously at Relevance-X, the online behavioral and life-stage targeting division of Acxiom. Colwell is a highly regarded industry thought leader and solid addition to the team at a transformational point in time for the company.
Looking ahead, IDI may soon announce a resolution of its outstanding litigation with TransUnion (ticker: TRU).
Court filings indicate a pre-trial conference is scheduled for March 8, 2016.
However, according to court records, the two companies engaged in 14 hours of, “...extensive settlement discussions which commenced on or about September 16, 2015 and which essentially have been conducted continuously since that date. Unfortunately a settlement has not been reached.” This may lead to a negotiated settlement preceding the pre-trial conference.
TransUnion has been successful with its TLOxp product, meaning they will not easily give up their ability to sell their service, suggesting a royalty or revenue sharing agreement may ultimately be part of any settlement agreement, as opposed to a one time cash payment or otherwise.
IDI has gone on record publically as saying its current product offerings will NOT be impacted, regardless of the final suit resolution. Of course, legal proceedings have plenty of room for unexpected outcomes for all parties involved.
CONCLUSION
IDI continues to evolve into the data fusion industry’s dominant force. After it reaches critical mass, the company will generate enormous free cash-flow, further enabling it to accelerate its growth strategies as well as acquire new or competing technology. With each passing strategic event, IDI appears to be evolving to a greater potential.
NOTE: More IDI analysis HERE.
All statements or opinions contained herein that include the words "we", "us", or "our" are solely the responsibility of Global Value Research Company, a division of Global Value Investment Corp. and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.
This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results.
Along with the announced completed acquisition in the December 9th press release, IDI added a new and very significant Director to its Board: Donald Mathis.
Mr. Mathis is the CEO and co-founder of Kinetic Social. The following link provides a better understanding as to why he is an ideal Board member who can offer tremendous insight and access to IDI. See HERE.
The other previously mentioned new Board member is Dr. Phil Frost. Dr. Frost is the largest shareholder and a long-time investor in the company. His addition to the Board after nearly 7 years of stock ownership and continued financial support – numerous capital contributions including $47 million in the recent financing package - speaks volumes about his depth of interest and confidence in the company.
In addition, it's noteworthy that the co-founders of Fluent accepted $150 of the $250 million purchase price in IDI common equity, a huge vote of confidence in the future of the joint enterprise. They are clearly willing to ‘Eat Their Own Cooking,’ a commendable quality for any public company officer or director.
The obvious merits of this investment will become clear after Q1 2016 when IDI reports its first full quarter of operating results with the combined entity. Q2 2016 will further validate the economics of the business by demonstrating period over period growth and margin improvement.
Furthermore, on December 21st IDI announced the release of phase one of idiCORE. IDI’s flagship product will revolutionize its product offering by providing more benefit at a lower cost per search than its competition. To date, idiBASIC has been well received by customers. IDI has in excess of 1,000 customers using the idiBASIC service, many of whom will immediately migrate to idiCORE.
If the company fails to successfully roll out its idiCORE and execute on the potential synergies of the combined entities shareholders will have reason for concern. Dr. Frost and Mr. Mathis have clearly risked their professional reputations by associating with IDI, a fact that should allow investors to sleep well.
Finally, on December 14th Fluent announced a new hire of Daryl Colwell as Senior Vice President of Sales. Mr. Colwell has extensive digital marketing industry experience having worked 15 years at Matomy Media Group and previously at Relevance-X, the online behavioral and life-stage targeting division of Acxiom. Colwell is a highly regarded industry thought leader and solid addition to the team at a transformational point in time for the company.
Looking ahead, IDI may soon announce a resolution of its outstanding litigation with TransUnion (ticker: TRU).
Court filings indicate a pre-trial conference is scheduled for March 8, 2016.
However, according to court records, the two companies engaged in 14 hours of, “...extensive settlement discussions which commenced on or about September 16, 2015 and which essentially have been conducted continuously since that date. Unfortunately a settlement has not been reached.” This may lead to a negotiated settlement preceding the pre-trial conference.
TransUnion has been successful with its TLOxp product, meaning they will not easily give up their ability to sell their service, suggesting a royalty or revenue sharing agreement may ultimately be part of any settlement agreement, as opposed to a one time cash payment or otherwise.
IDI has gone on record publically as saying its current product offerings will NOT be impacted, regardless of the final suit resolution. Of course, legal proceedings have plenty of room for unexpected outcomes for all parties involved.
CONCLUSION
IDI continues to evolve into the data fusion industry’s dominant force. After it reaches critical mass, the company will generate enormous free cash-flow, further enabling it to accelerate its growth strategies as well as acquire new or competing technology. With each passing strategic event, IDI appears to be evolving to a greater potential.
NOTE: More IDI analysis HERE.
All statements or opinions contained herein that include the words "we", "us", or "our" are solely the responsibility of Global Value Research Company, a division of Global Value Investment Corp. and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.
This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results.
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