Contact

Valuation analysis of 20 Advertising companies


, ,
Integral service around a transaction
BY : SAMUEL REGATONovember Mon, 2021

This post analyzes the values of 20 Advertising companies listed on different European stock exchanges. The Advertising companies sector is a very large sector, with a remarkable consolidation, but with a great future due to the forced integration of technology in the sector, giving rise to new specialized companies. In this article, we will show the main variables to be taken into account for the valuation of companies and, on the other hand, the analysis of the valuation by multiples.

Analysis of the main variables

Revenue growth

The average growth rate is 14% and the median is very close (10%), which indicates the uniformity of the data. Despite this, there is a maximum of 96% growth compared to last year, and a minimum of -39%. The maximum belongs to Mirriad, a leading UK content advertising company with unique AI and data processing technology.


"advertising companies", such as those in AdTech, which have withstood the pandemic best. A report is available here link.

Profitability in the advertising sector
Invoicing companies Advertising

The average growth rate is 14% and the median is very close (10%), which indicates the uniformity of the data. Despite this, there is a maximum of 96% growth compared to last year, and a minimum of -39%. The maximum belongs to Mirriad, a leading UK content advertising company with unique AI and data processing technology.




Revenue Growth table Advertising
Growth in turnover of Advertising companies

Profitability

The gross margin shows that the companies are mostly profitable, with an average of just over 50%. Despite this, they are not as high gross margin values as other sectors, Cloud Computing, for example. In other words, these companies earn less revenue per sale made than other companies, such as software technology companies, for example, without taking away from the fact that advertising companies are attractive.

Gross Margin graph


In terms of EBITDA margin (EBITDA/Revenues), it shows that more than half of companies Advertising analysed have positive EBITDA, thus having a positive margin. The average does not have a significant value, given that there is a outlayer negative and very low, belonging to the aforementioned Mirriad. This is due to the fact that the English company, despite having such a high growth, revenues are small (2.93M$) and its EBITDA is negative and very low (-11.3M$).



Companies Advertising analysis valuation

The company with the highest EBITDA margin is the well-known Tencent, a Chinese company that offers Internet, mobile telephony, telecommunications and online advertising value-added services. Its margin is 60%, with revenues of $60 billion and EBITDA of more than $36 billion.

Valuation analysis by multiples

EV/Revenues vs EV/EBITDA

In general, the EV/EBITDA multiple is usually more meaningful than the EV/revenue multiple because it shows less dispersion. Therefore, we will use this ratio. While it is true that the mean of the ratio is negative, at (-21.56), the median has a positive value of 11.67. This is due to an outlayer belonging to the Israeli company Fiverr, a freelance services platform specializing in the fields of gigs, online marketplace, services, small business, freelance and logo designs.



Advertising companies: TOP20 rating

As can be seen in the graph, most companies have a positive ratio of at least double digits (9 companies to be exact). The company with the highest ratio, that maximum of 272.2, is Magnite, an American digital marketing company.






EBITDA Advertising sector



Annual Valuation Performance by multiples 2020 vs 2019

In this table we can also observe the ratio of the value of the company with respect to revenues. In this case, growth is observed in all directions, reaching a ratio value of 12.70 on average.



Evolution of advertising companies

On the other hand, with the EBITDA ratio, we observe that the average decreases, remaining at a negative value, due to the existing outlayer present in the minimum (-920.4).  On the other hand, the median, which is more significant in this case, increases in value, almost doubling that of last year.

Conclusions


Business growth Advertising

Advertising companies have decreased in the last year mainly due to the pandemic, although it is true that the previous year they had grown considerably, so maintaining those numbers was not easy.

Benefi

The profit of the studied companies, as we have seen, has decreased. Gross margins are not as large as in other sectors, even though their average is somewhat higher than 50%, which is not a negligible value.


EV/EBITDA and EV/Revenue performance

Growth in both ratios, with the significant values of both ratios in 2020 being close to 12.

The M&A Professionals

Meet our services

CONTACT US

MEET
OUR
METODOLOGY

Do you want to be up to date?

SUSCRIBE OUR NEWSLETTER

Our diferentiation

Market Research Technology
Our team of market analysis specialists is continuously analyzing the investments of the most active markets in the industry in order to unceasingly contribute ideas of the current market situation and identify the most relevant trends for senior management. We integrate the most relevant sources of information which allows us to discover the most interesting companies for venture capital and similarly helps us to identify the investors with the highest probability of involvement in an M&A process to ensure the success of our sell-side operations.

The reports and deductions of our advisors provide a broad view of the sector, both geographically and from the complementary or adjacent markets perspective.
Technology Data Analytics
for M&A
Advanced data anlytics is a weapon". Intelfin is an artificial intelligence tool we use for investing and creating value in SMEs through competitive analytics and the enterprise environment.

IntelFin consists of a cognitive system, which, through the application of advanced analytical technologies, facilitates the automation of investment and financing decisions in the field of non-listed companies and especially SMEs in high-growth sectors.

The information related to these companies is characterized by their lack of transparency and heterogeneity; thus, it is necessary to develop an advanced analysis which is as much predictive as prescriptive and is developed in a natural language custom, suitable to obtain greater clarity and knowledge of the investment scope.

The IntelFin system focuses especially on analyzing the variables that define and influence the competitive environment of a sector and the positioning of a company, analyzing their influence on future value creation. Therefore, IntelFin supports strategic decision-making to senior management by resolving questions such as:

¿What are my competitors' priorities, strategies and expansion plans? Who's my competition? Which competitor is most likely to grow at a higher rate?
Which areas of activity/business models will receive the most investment? Which sectors are most attractive to investors?
Which companies are going to experience the most growth in the near future? Which companies are most likely to receive investment or be acquired?
Training Methodology
We have developed training programs in an innovative set-up which guarantees our teams the acquisition of technical competences both in the field of corporate finance and in the field of psychology, that is much needed when it comes to negotiation processes.

We have a culture of continuous improvement of our processes, closely related to the use of information systems that allow the enhancement of internal communication between our teams, as well as external communication with our customers. Hence, we extend best practices identified internally in an efficient and rapid manner among our members.

Are you one of those who prefer to be well informed when making decisions?

M&A NEWS
INDUSTRIAL REPORTS
crossmenu