20 December 2019
By Maynard Paton
Results summary for System1 (SYS1):
- Another unremarkable performance, with underlying gross profit up 4% and profit (without AdRatings) rebounding 24% due mostly to improved cost control.
- The start-up AdRatings service continues to lose £2m a year and is increasingly dictating the company’s progress, potential and valuation.
- An ITV competition to determine the most “emotionally engaging” advert during Euro 2020 could create extra recognition for System1-type marketing and SYS1’s services.
- The accounts remain cash rich and the business (without AdRatings) exhibited a healthy 21% margin.
- The P/E could be anywhere between 8 and 26 depending on how AdRatings, share-based payments and the cash position are viewed. I continue to hold.