Somoto issues strong Q4 guidance

Ben Garrun Photo: PR

The Israeli monetization software company's share price has soared 140% over the past year.

Israeli monetization software company Somoto Ltd. (TASE: SMTO), which deals with internet marketing, video and mobile advertisement, as well as distribution services for programs and applications, continues reporting better business results quarter after quarter. Today, the company reported preliminary results for the third quarter of 2016, indicating that revenue is expected to total $11.3-11.6, rising 82-87% compared with the corresponding quarter in 2016, as well as a slight, 1-3%, rise in revenue from the last quarter.

The quarterly EBITDA is expected to be $3.4-3.7 million, a 95-97% jump from the corresponding quarter and a 25% decline from the last quarter. Somoto also says that its cash at the end of the quarter totaled $10.6 million and net cash (without bank credit) was $4.4 million.

Strong forecast

As for the fourth quarter, the company, managed by Ben Garrun, provides a strong forecast predicting $17-18 million revenue, which reflects 119-143% growth compared with the fourth quarter of 2015. As a result, the company's annual revenue may reach $50 million, reflecting 70% growth compared with 2015, and $16.1-17.0 million EBITDA, 72-80% rise from 2015.

Today, Somoto's shares reacted to this announcement with a 3.7% rise, completing a jump of over 140% in the past year, which brought the company's market cap to NIS 193 million.

The goal has been attained

Garrun said today, "Our preliminary forecasts for the third quarter of 2016 demonstrate the fulfillment of the company's business strategy, which includes a diversification of revenue sources and a rapid increase in revenue based on organic growth alongside attractive acquisitions in the field of internet marketing. At the beginning of the year, we set a goal: making 50% of our revenue from video and mobile advertisement as early as 2016. According to the preliminary results, we have attained this goal. "Late in the third quarter, we completed the acquisition of Meme Video, a strategic and important acquisition. We estimate that the effect of this acquisition will help significantly increase annual revenue, with a larger share of revenue from video and mobile advertisement. Moreover, the fourth quarter also tends to be relatively strong in this field. Overall, we continue noting larger volumes of marketing budgets being diverted from tradition media to video advertisement and estimate that this trend will continue in the next few years. Therefore, an increase in revenue is expected to significantly raise value for Somoto's shareholders."

Somoto held its IPO in 2013, at a company value of NIS 135 million, after money. Its controlling shareholders are: Garrun, Jacob Tenenboem, Sol Tzvi, and Eyal Yaakov, and the company's chairman is former Clal Finance CEO Shuki Abramovich.

Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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Ben Garrun Photo: PR
Ben Garrun Photo: PR
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