iSentia Limited jumps 5% as net profit soars

Has iSentia Limited (ASX:ISD) got what it takes to become a $1 billion company?

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published February 18, 2015 12:06 pm AEDT

Media monitoring company iSentia Limited (ASX: ISD) has seen its share price climb more than 5% in mid-morning trading, after posting a strong half year result.

iSentia bills itself as Asia-Pacific's leading media intelligence company, with more than 5,000 clients. The company's software and systems capture real-time data from over 5,500 mainstream media outlets, 55,000 plus online news sources and 3.4 million user-generated content sources, such as Facebook, Twitter and Weibo.

Revenues come from a variety of sources, mainly from subscription fees to the company's software platforms (SaaS), as well as value-added services (VAS). VAS now represents 21% of the company's revenue, with much of the remainder being subscription fees. Around 11% of revenue is passed directly to publishers as copyright fees.

In the six months to December 2014, revenues grew 18% to $62.2 million – with 11% of that organic growth – compared to the previous year. $11.6 million came from Asia, with $50.5 derived from Australia and New Zealand.

By product line, $13.1 million came from Value-added services (VAS) with $49 million from software subscriptions, fees etc. VAS revenues jumped by nearly 30%, thanks to growth in social media product.

A jump in the number of customers for VAS by 82 to 362 unique clients also helped to deliver growth in Asia.

Thanks to the excellent half year result, iSentia has reaffirmed its 2015 financial year forecasts. The company expects to see $124.4 million in revenues (exactly double the first half result), and $41.3 million in earnings before interest, tax, depreciation and amortisation (EBITDA).

iSentia declared a first half dividend of 3.1 cents per share, unfranked, and is targeting a total of 6.8 cents per share this financial year.

Given the growth rates achieved in the past six months, iSentia may well go on to beat those forecasts. It's one reason why I named the stock one of my preferred picks of 2015.

With plenty of opportunities to drive growth and a dominant market leading position in Australasia, iSentia could easily be a $1 billion market cap company in the near future, and you might want to add the company to your watchlist.

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