April 14, 2024

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This Ad Tech Stock Jumped 975% in 2020. Can It Retain Surging in 2021?

4 min read

The ad tech sector has been one particular of the largest winners through the pandemic.

A surge in display screen time and tech dependence mixed with a rise in Connected Television, or ad-primarily based streaming, look to be driving a tipping stage in the sector. In 2020, a selection of industry gamers, together with The Trade DeskMagnite, and Roku, all surged as the chart under demonstrates, and they’ve ongoing to obtain in 2021.

TTD Chart

TTD details by YCharts

On the other hand, a person below-the-radar advert tech company based mostly in Canada outperformed all of them. AcuityAds (OTC:ACUI.F) finished the yr up nearly 1,000%, gaining in the next 50 % of the year on hopes for its new self-provide platform, illumin, and the broader development in advertisement tech, primarily as Linked Television (CTV) is fast getting share in the significant video clip promoting current market.

Will Acuity retain climbing in 2021? This is what traders need to continue to keep an eye on.

A woman looking at a glass wall showing different TV screens

Impression resource: Getty Illustrations or photos.

A quick begin to illumin

Following launching illumin in October, AcuityAds delivered its to start with update past month. General performance topped expectations as illumin generated much more than $1.5 million in the fourth quarter. Though that may possibly not sound like a lot, hold in mind that AcuityAds’ current market cap is nonetheless below $1 billion, and this is just the 1st quarter that illumin has been on the market. In an interview previous 7 days, CEO Tal Hayek said he anticipated profits to accelerate from the fourth quarter to the very first quarter.

In the beginning, the business experienced projected that illumin would have a good impact on total revenue by the 2nd 50 percent of the 12 months, because of in section to a for a longer period predicted product sales cycle for the platform as it is really a new product in the industry. On the other hand, high desire has led the corporation to pull that timeline forward, giving fourth-quarter income a modest increase. Acuity has also been hustling to expand its team to assist the amplified desire, which include in its gross sales pressure and on the tech aspect. 

Speaking about buyer desire and desire for illumin, Hayek mentioned: “Our pipelines are obtaining even bigger and greater by the day.”

Customers also seem delighted with the new platform. Just one illumin customer stated by e mail: “Illumin is unlike any of the other prime DSPs (Desire Aspect Platforms) that we work with. Most companions are caught on campaigns that map creatives to significant audiences but really don’t conveniently enable the consumer self-determine when they are ready to be moved to a different advertising and marketing path.”

It’s critical for traders to fully grasp that advert tech, or platforms like the need-aspect system Acuity operates, is not a winner-acquire-all industry. In actuality, providers really don’t even have exclusivity with particular person shoppers, as several use several DSPs, which includes Trade Desk or Roku’s Dataxu, according to want and campaign. This customer, a major DTC brand that works with numerous DSPs, mentioned that it evaluates every single one particular on return on expense targets and called Acuity a “major performer.”

Other components to check out

Hayek stated that Acuity, which is traded in Toronto and above the counter, is aiming for an original general public featuring on the Nasdaq in the subsequent couple of months. That need to be a constructive catalyst for the stock, as it will convey a lot more attention from Wall Avenue and boost the potential pool of investors.

Somewhere else, Acuity’s functionality has experienced through COVID-19, as about a 3rd of its revenue base came from the vacation and hospitality sector, which has been tough-strike through the pandemic. Revenue slipped 3% to $26.1 million in the 3rd quarter, but the corporation has identified new customers in locations like e-commerce and client packaged items to substitute that shortfall. The excellent news there is that small business from the travel sector should really return as the pandemic fades, giving the business a secular tailwind. Furthermore, like other advert tech companies, Acuity is benefiting from the growth in Linked Tv, where by its income surged 353% in the most recent quarter, evidence of one more promising development possibility.

Acuity hasn’t however announced its fourth-quarter earnings date, but Hayek expects the report to occur out in the first 7 days of March. Whilst the pandemic is probable to still be a headwind, buyers should appear out for additional updates on illumin and a prospective IPO.

With much better-than-expected development from illumin, a future Nasdaq providing, and the economic reopening just after pandemic, the elements are in place for this small-cap inventory to deliver one more sturdy efficiency in 2021.

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