Wednesday, August 23, 2017

Key Quotes from Cogint's Q2 2017 Earnings Call $COGT

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

"Gross profit margin increased 300 basis points to 31%"
Second Half of 2017
"We experienced strong broad-based customer demand from existing and new products across both our risk management and marketing services business with strengthening momentum transitioning into Q3" 
" will see growth in Q3 and then substantial growth going into Q4" 
"Going into Q3, I think you’ll see some consistency at the margin level and really see a breakout in Q4 as we really start to expand the Information Services side of the business as well as continued traction in growth on the Performance Marketing side of the business"
"And we expect the third quarter to continue on the path of growth, and if you will buck any seasonality pressure that we’ve seen historically"
"...we are very excited about the remainder of 2017 and beyond. Based on our performance year-to-date and underlying metrics, we are reaffirming our previously issued revenue outlook for 2017 in the range of $233 million to $239 million"
"Our Performance Marketing and Digital Marketing side of the business continue to be, of course, the lion’s share of the business, and that side of the business has done a magnificent job not only scaling at the revenue side, but also leveraging their first-party data asset to grow the gross margin in their business as well"
"Our Performance Marketing segment continues to drive consistent growth across multiple verticals and channels. This positions us well for rapid growth in the second half of 2017"
New Strategic Relationships
"We have entered into several strategic relationships with leading mobile identity authentication and background screening solutions providers. These relationships present great opportunity as these providers serve large industries of banking, financial services, insurance, healthcare and technology. As these companies deliver their innovative solutions to their markets, we are powering the backend of these solutions.....While these relationships are early stage, we expect that they will provide meaningful revenue"
Return of James Reilly
"We’re pleased to report that James Reilly returned to the company as President, as of July 1st. For those unaware, James has a long history in the data and analytics industry, including his work with this management team, building a prior company which was sold to TransUnion. James was responsible for building the revenue from startup to sale. As a result of a non-compete agreement entered into by James and the company that was acquired by TransUnion, James ceased performing services for us for the non-compete period. We’re happy to report that this dispute is now resolved and James has rejoined the team. James is a thought leader in our industry and he brings tremendous value to this team. We are excited to have him back in the role and we are already experiencing the benefits derived from his presence and efforts"
Key Differentiator
"The custom analytics is really – that is our core competency, that is our secret sauce and that’s really what makes us so valuable, and special in my view. We aggregate billions of records as we’ve discussed, and many of those data points are obtainable by others in raw data, but it’s when we take those massive datasets, when we perform those custom analytics on that data, our brilliant team both here and especially in Seattle where they’re doing much of the hard work. When we fuse that data together and we create a connection that is otherwise unattainable, that is that proprietary data point of ours that’s extremely valuable. And the custom analytics is built into the secret sauce. We’ve done that since the day we created this company and that will continue to be our mantra forever at this company, and that’s what really differentiates us from other providers out there"
TransUnion Settlement
"I would like to turn to our settlement of multiple litigation matters with competitor, TransUnion. We are happy to conclude these matters and are very pleased with the settlement. Until recently, we had been devoting hundreds of thousands of dollars per month to legal fees to prosecute and defend these complex matters, and this litigation could have carried on for years to come. These matters were disruptive to the business, not only financially, but due to the requisite expenditure of significant time and focus by management. While the terms of the settlement agreement are confidential, we were happy to report that the parties had come to an agreement to resolve all disputes between them and to focus on their respective businesses. The settlement requires company subsidiary IDI Holdings, LLC to pay to TransUnion $7 million over the course of a one-year period. As a result of the settlement, we have taken a one-time charge, which negatively impacted our net income. This settlement eliminated all material litigation of the company, removed a significant impediment to our continued expansion and immediately freed up resources to devote to focused investment and development efforts. We are very pleased with this outcome"
Full transcript HERE.

More COGT analysis HERE.

Disclosure: Long COGT

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