Australian data analytics firm Pureprofile (ASX:PPL) is ready for sizeable growth following a recapitalisation of the business.

The business offers customers access to consumers through its proprietary data platform, which operates on a software-as-a-service (SAAS) basis, and has already attracted roughly 600 clients.

But the company’s profitability was previously hampered by a number of debts incurred to acquire two media businesses (Sparc and Cohort).

Now, a new report from independent investment research firm Research as a Service (RaaS) says the company has gone through a corporate turnaround, refocusing on the core data analysis offering, alleviating its debt burden and returning to profit, the RaaS report noted.

And the new recapitalisation plan – conducted via an 8-for-1 entitlement offer at 2 cents per share with the goal of raising $18.8 million – will see the business’ debt burden drastically reduced, it said.

The bulk of that – $15.3 million – has been underwritten by the company’s largest lender, Lucerne Finance, through a debt to equity swap.

The changes are expected to pave the way for the business to move into higher margin opportunities or expand the online panels used for data collection, according to the RaaS report.

“[The capital raise] will leave Pureprofile with a debt facility of $3 million ongoing and sufficient working capital to execute its growth plans,” the report said.

RaaS expect the business’ base case valuation is for Pureprofile shares to hit $0.046 per share after the entitlements offer – a figure the company arrived at using the discounted cash-flow valuation method.

“With data privacy increasingly becoming a major issue, Pureprofile delivers a valuable tool to decision-makers through its technology platform and consumer panels,” RaaS said.

“The value it delivers is evident by the fact that 85% of its revenues are derived from repeat business.”

Data analytics to undergo massive growth

In 2018, the collective volume of the world’s data hit 33 zettabytes according to the International Data Corporation (IDC), with each ‘zettabyte’ worth about one trillion gigabytes.

By 2025, that figure is expected to have surged to 175 zettabytes (a 430% increase on 2018).

To put that number into perspective, it would take almost 1.8 billion years for someone to download all that data at the current average download speed of 25 megabytes per second.

As the volume of data grows, so too does demand from researchers, advertisers, and marketers looking to understand and engage with consumers, evidenced by the forecast growth in the value of the global data analytics industry – tipped to reach US$274 billion by 2022, up from US$189.1 billion in 2019.

But changing privacy regulations and consumer backlash following the misuse of their data is prompting major online platforms like Google and Facebook to ban the use of third party cookies from 2022 – significantly reducing the availability of data.

Pureprofile’s disruptive first-party data acquisition platform is already established and profitable, and leaves them primed for the coming changes.

On Monday, 2^nd November we have invited Pureprofile CEO Martin Filz to speak at a special live investor briefing. If you would like to attend you can book your spot here.

Reach Markets have been engaged by PPL to help manage their investor communications.

Sources:

• CISCO, The Zettabyte Era Officially Begins (How Much is That?)
• IDC, The Digitalization of the World from Edge to Core
• Mumbrella, Pureprofile says it will be more ‘agile’, but is still hampered by debt
• Mumbrella, Pure Profile sells off troubled Cohort business
• Mumbrella, Pure Profile sells Sparc Media unit back to original owners in $600,000 deal
• Pureprofile, ASX Announcement: Pureprofiles raises $18.8m in recapitalisation plan to strengthen balance sheet 
• Pureprofile, ASX Announcement, Pureprofile Pro Rata Renounceable Rights Issue to raise $18.8m opens today
• Research as a Service, ASX: PPL Pureprofile RaaS Positioning Paper
• Statista, Big data market size revenue forecast worldwide from 2011 to 2027
• The Verge, Google to ‘phase out’ third-party cookies in Chrome, but not for two years