Friday, March 10, 2017

Key Quotes from Cogint's Q4 2016 Earnings Call COGT

Cogint (ticker: COGT) reported earnings results and hosted an earnings call yesterday. Here are some key quotes from CEO Derek Dubner and CFO Dan MacLachlan:

"It was a terrific quarter and solid full year of 2016 -- BUT we have much to do. This is just the beginning of our story. We're intensely focused on the expansion of our technology, our data, our solutions, and our delivery of those solutions into our markets. 
...we're in the early stages of our incredible growth story. 
We're swimming in opportunities...."
Business Model
"The results we announced today demonstrate the power and scalability of our business model which makes us very excited about our opportunities for 2017 and beyond.
Our 2016 results reaffirm the execution of our business model and the solid foundation we've created leading into 2017 to achieve our vision of being a multi-billion dollar company."
Gross Margin
"Gross margin was 33% for the 4th quarter 2016 compared to 21% for the same period in 2015. Gross margin increased 900 basis points from the 3rd quarter."
Operating Leverage
"We have tremendous operating leverage in our model and are well positioned to capitalize on our data assets and analytical capabilities. And as a result, we're VERY optimistic about 2017. 
As you can see from our margin expansion of 900 basis points and our 100% adjusted EBITDA growth from 3rd quarter we executed and positioned ourselves extremely well extracting the inherent operating leverage in our business model."
"The goal and the path is to extract profitability and grow top line as we move through 2017 and into 2018 with the expectation of being able to accomplish that in short order."
Marketing Business
"In our marketing services business, our consumer interactions have increased from 700,000 to 800,000 consumer interactions daily largely via mobile generating over 7 million insights daily and 225 million insights monthly. We now have over 130 million consumer profiles in our unique first party database in the marketing services business which we integrate into solutions across the enterprise."
"In information services, specifically our idiCORE offering, we've transitioned from primarily a development driven company to a sales driven company. Now that our solutions are achieving scale we're entering new markets and significantly expanding within existing markets.
We've built extraordinarily valuable technology. Our cloud based next generation data fusion platform idiCORE continues to evolve at a fast pace. This platform exhibits speed, flexibility and scaleability like none I've seen before in legacy platforms that this team has built at previous companies. We're confident that this platform's future evolution powered by machine learning will set the standard for delivering real time insights to our markets enabling organizations to make better decisions faster."
Market Trends
"Taking a macro view of the marketing landscape, the market is moving away from cookie and pixel based targeting to people based marketing where marketers are able to deterministically target their exact customers and prospects across any channel and device....and this trend plays right into our strengths."
Customer Focus
"We're intensely focused on customers -- listening to their needs and desires -- and we're building products that solve their problems, deliver efficiencies and increase their ROI. We know it's working. We're testing against competitors head to head and we're winning business, and we're driving ROI. We fully expect these trends to continue as we continue to execute upon our roadmap."
More COGT analysis HERE.

Disclosure: Long COGT

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Milton Heath said...

Cogint's 130 million consumer profiles made me think of Snapchat's 150 million users. So where's the similarity besides the numbers? Cogint has the personalized information that tells advertisers how much of a car they can afford, are they renting or owning, etc., and how to reach those users any time.

Also, I just can't help but think that Cogint's input could be used by advertisers to qualify ads they put on Smapchat, Twitter, google, any app, yes even Facebook. Beats me if that is a current or future service provided by Cogint. But this type of personalization of ads is the future - that's one of my takeaways from the CC. It just makes so much more financial sense to advertise an Audi to a Facebook user where the probabilities are much higher that they can afford it, in addition to them recently admiring their friend's Audi or the Audis at an auto show.

Also, FWIW, there's typo in the SeekingAlpha transcript. The text should state for the cost of revenue decreased 3.6 million for the "fourth quarter" not the third quarter.

"Cost of revenues were 36.1 million, compared to 8.5 million for the fourth quarter 2015. Our cost of revenue decreased 3.6 million for the third quarter, a result of greater optimization of our consumer traffic through data rich media buying and thus reducing publisher spend."

From 3Q16 earnings report, the cost of revenues is 39.658M. then
39.658M (3Q) - 36.1M (4Q) = 3.558M;

So, the 4Q cost of revenues is 3.6M less than 3Q cost of revenues.

Anonymous said...

With all of the positive news are there any thoughts as to why the current valuations are so low?