I'm just getting my head around Pureprofile's update today, the headline being the shutting down of Pure.amplify Media in Australia. This follows the shut down of that business in the UK in the previous quarter. Pure.amplify Media is (soon to be was) a digital advertising business, fairly generic and typical of the breed. In the past it has contributed around 10% of the Company's revenue and a similar proportion of EBITDA. It's being wound down because it is currently contributing around 6% of revenue and negative EBITDA.

The half glass full version of that move is it removes a lower quality, fairly generic, non-core part of the overall business and allows management to focus on Data and Insights and the SaaS business. Certainly that's the way they spin it. The glass half empty version is that they're reacting instead of being proactive and making the right move at the wrong time. On balance I don't fault the logic, I just wish they'd made that move at a time Pure.amplify was actually worth something to another party. Now they will not only not receive anything for the business but incur the costs of winding it up. However, if the best time to divest the business was before, the second best time is now. I do give them credit for making the difficult decision and not trying to remediate it or hang on until conditions improve.

Goodwill, customer lists etc. had all been previously written down to zero so apart from the actual costs involved in winding up the business there shouldn't be major impairments in the FY result.

What is left is a higher quality business that is more likely to earn more predictable revenue at potentially higher margins. It also leaves three business units that are all still growing double digits and blended continuing revenue is up 22% vs Q3 FY22. I think visually so here's a picture:

It all looks great (from a continuing business perspective) but what they don't say is both D&I and Platform revenues are both down on the immediately previous quarter. Q3 has tended to be softer in previous years, with Q4 much stronger so hopefully this is the case here.

In light of the travails of Pure.amplify guidance was narrowed to the bottom of their previous disclosures. Revenue is expected to come in at $48m (previously $48-52m) and EBITDA margin at 9% (previously 9-10%). They are a bit of a serial share-based remuneration payer (below EBITDA) and they're not super capital light either so that should all get factored in. Overall I think the thesis still holds but it's getting very close to put up or shut up time. FY24 is shaping as an important year for them.

[Held]

Am catching up on some CEO meetings and Martin Fitz is a real standout for me. As a shareholder I have heard him speak a number of times and have been impressed but this slightly longer format gave an opportunity for him to explain things in more detail. There were a couple of things that stood out.

First, they plan to grow the topline at 30%+ a year and EBITDA at higher levels as they get operational leverage. Other than this year my valuation doesn't assume anything like that and I'm still getting a valuation around double what it is now.

Second, the way he spoke about employee engagement and their net promoter score. He does talk about this at every opportunity and I'll admit that when he does I tend to think 'that's nice but show me the money'. However, given the opportunity to talk about at greater length I get how that is their point of difference. That is the money (or will be) in terms of how it produces better client outcomes and how it results in longer staff retention. At my last employer I went through four restructures in just two years. Unfortunately I kept being translated into new roles (would rather have taken a payout) but plenty didn't and morale dropped so much that others decided to leave of their own accord. The IP drain was enormous. If you can keep people happy it's going to have a monetary benefit in terms of productivity and keeping people focused on their core roles and not having to retrain others constantly.

I think the recent selloff has resulted in many companies coming back to more sustainable multiples but there are some that are looking properly cheap - even in this new reality. I haven't started buying back in to the market yet (IRL) but when I do I feel like PPL is one I would happy to top up on.

[Held IRL only]

Relatively solid steady growth from Pureprofile.

• Revenue up 31% to $10.6m vs pcp (up 44% to $20.8m half vs 1H 21)
• all divisions had revenue up at least double digit
• EBITDA up 82% to $1.4m vs pcp (up 53% to $2.5m half vs 1H 21)
• Operating cash up 386% to $0.9m vs pcp (up 829% half vs 1H 21)

Two new partnerships were announced in the quarter with theAsianParent being a really crucial future growth driver, in my opinion, being able to tap into a market of highly motivated panelists.

This was the most interesting graphic for me showing a full year of consistent operating cash generation (with low capex requirements) - presumably no more 4Cs though.

They have plenty of volume to churn through at 0.064 and above but when you have a profitable and growing business short-term share price movements (which this experiences a lot of) don't keep you up at night.

The new management have set a very clear aspiration to align their financial metrics to their peers by FY24, which would mean without any revenue growth at all in the second half annual EBITDA would be $16m, which is about 4.3x current market cap. However, if they were to make revenue of $40m this year (they will do better than that) and revenue growth were to slow to 15% over the next two years (they'll probably do better than that), they would be be only 3x current MC. Mr Market is definitely angry at this company for past indiscretions but even he can't hold a grudge forever.

[Held IRL only]