Blogs -Top Ad-Tech Stocks: Q3 2022 Sector Overview

Top Ad-Tech Stocks: Q3 2022 Sector Overview


August 23, 2022

author

Beth Kindig

Lead Tech Analyst

This article was originally published on Forbes on Aug 18, 2022,12:37pm EDT

The ad-tech sector's performance is closely linked with the macroeconomy. This sector has been hit hard in the last few months due to global uncertainty. We believe this sector will recover when the economy starts picking up. It is practically impossible to time the market. However, we believe that being prudent and buying stocks during the downturn helps to outperform the market in the long term.

Below we review the stocks in the sector to find out which companies have performed well in the recent quarter results and which companies stand out in revenue growth, profits, cash flows, and earnings surprise.

Top Ad-Tech Stocks with the highest revenue growth rates in Q2

Charts: Top Ad-Tech Stocks with the highest revenue growth rates in Q2

Source: YCharts

FuboTV led the ad-tech sector with the highest revenue growth rate in the recent Q2 results. The company’s revenue grew by 70% YoY to $221.9 million. North American revenue grew by 65% YoY to $216.2 million. For the next quarter, it expects North American revenue from $200 million to $205 million, representing a YoY growth of 29% at the mid-point of the guidance.

The company also announced that it would place Fubo Gaming under strategic review due to the changing macro environment. David Gandler, co-founder and CEO of the company, said, “We recognized that the market has changed and therefore, we have made the decision to place fubo Gaming, our online sports wagering business under strategic review. We will no longer pursue this opportunity on our own and are exploring the best path forward to scale the business. We look forward to continuing to update you as conversations progress.” The market reaction was positive following the strong results and the announcement on gaming.

The company’s first investor day on August 16th drew interest as the stock closed the day with 45% gains. The company’s CFO, John Janedis, said"We continue to work towards long-term targets of adjusted EBITDA profitability and positive cash flow in 2025, and the Fubo flywheel will help us track towards that goal, as we execute a plan of controlled growth, alongside margin expansion."

Quarterly Revenue Surprise

Chart: Quarterly Revenue Surprise

Source: YCharts

DoubleVerify has crushed the analysts’ revenue estimates by 8% in the Q2 results and leads the ad-tech sector. It was followed by PubMatic, which beat analysts’ revenue estimates by 4%. PubMatic’s Q2 revenue grew by 27% YoY to $63 million, and the company reported an adjusted EPS of $0.23, which beat the analysts’ estimates by $0.08. The company’s CFO, Steve Pantelick, said“We saw broad strength in the Americas region, led by fast-growing ad formats CTV, online video and mobile, and continued momentum in Supply Path Optimization.” The company also benefitted from the diversified portfolio of advertisers from over 20 different verticals.

Sign up for I/O Fund's free newsletter with gains of up to 403% - Click here

Top Ad-Tech stocks with the highest revenue growth estimate for Q3

Chart: Top Ad-Tech stocks with the highest revenue growth estimate for Q3

Source: YCharts

The Ad-Tech stocks are expected to show strong growth rates in Q3. IAC leads the sector, with the analysts’ expecting its revenue to grow 44%, followed by FuboTV, which is expected to grow 37%, and DoubleVerify is expected to grow 32%. Advertisement measurement and analytics company DoubleVerify shares got listed in April 2021. The company’s revenue in Q2 grew by 43% YoY to $109.8 million. The company’s CEO, Mark Zagorski, said, “We delivered an outstanding second quarter and surpassed our expectations for growth and profitability fueled by record Activation revenue and continued momentum on Social and CTV platforms,” The company also raised the full-year revenue guidance from a 33% YoY growth to 35% YoY growth of $449 million at the mid-point of the guidance.

Top Ad-Tech stocks with the highest revenue growth estimate for Q4

Chart: Top Ad-Tech stocks with the highest revenue growth estimate for Q4

Source: Seeking Alpha

The Trade Desk leads the sector with the strongest expected revenue growth rates for Q4. The company’s revenue in the recent quarter grew by 35% YoY to $377 million and beat analysts’ revenue estimates by 3%. Truist analyst Youssef Squali, said in a note to the clients. "Strength in [connected TV] and record new client relationships drove this performance, which is likely sustainable in [second-half 2022] given 100% Solimar adoption, continued momentum in CTV, in shopper [marketing] and in international, with the additional kicker of political spend around the midterms."

Top Ad-Tech stocks with the highest revenue growth estimate for the current fiscal year

Charts: Top Ad-Tech stocks with the highest revenue growth estimate for the current fiscal year

Source: YCharts

For the current fiscal year, analysts expect FuboTV to have the highest revenue growth estimate among ad-tech stocks. It is followed by IAC, which analysts expect to grow by 49%, and DoubleVerify is expected to grow by 35%.

Sign up for I/O Fund's free newsletter with gains of up to 403% - Click here

Ad-Tech Stocks based on forward P/S ratio

Chart: AD-Tech Stocks based on forward PS ratio

Source: YCharts

Ad-tech stocks are trading at a very low valuation. We can see from the above chart that the majority of the ad-tech stocks are trading at a forward P/S ratio of below 5.

The P/S ratio chart below shows how Meta Platforms and Netflix are trading at a discount compared to the past five-year period. Companies like Netflix lost cash in 2019 when the company was building the original content pipeline. Now, the management is guiding for free cash flow of $1 billion this year and ‘substantial’ free cash flow in 2023.

P/S ratio chart of Meta Platforms and Netflix

Source: YCharts

Top ranked Ad-Tech stocks based on Free Cash Flow Margin

Chart: Top ranked Ad-Tech stocks based on Free Cash Flow Margin

Source: YCharts

Magnite leads the ad-tech sector with the highest free cash flow margin of 27%. It is followed by The Trade Desk, which has a free cash flow margin of 23% and DoubleVerify has 18%.

Top ranked Ad-Tech stocks based on Net Profit Margin

Chart: Top ranked Ad-Tech stocks based on Net Profit Margin

Source: YCharts

Meta Platforms leads the ad-tech sector with the highest net profit margin. The company’s revenue declined for the first time in Q2. Revenue fell by 1% YoY to $28.8 billion. The company is looking to reduce its expenses due to the revenue slowdown to maintain strong margins. For the full year, it expects total expenses of $85 billion to $88 billion, down from the last quarter’s guidance of $87 billion to $92 billion and the prior estimate of $90 billion to $95 billion.

Royston Roche, Equity Analyst at the I/O Fund, contributed to this article.

Gains of up to 403% from our Free Newsletter.

Here are sample stock gains from the I/O Fund’s newsletter --- produced weekly and all for free!

+344% on Nvidia

+403% on Bitcoin

+218% on Roku

*as of March 15, 2022

Our newsletter provides an edge in the world’s most valuable industry – technology. Due to the enormous gains from this particular industry, we think it’s essential that every stock investor have a credible source who specializes in tech. Subscribe for Free Weekly Analysis on the Best Tech Stocks.

If you are a more serious investor, we have a premium service that offers lower entries and real-time trade alerts. Sample returns on the premium site include 324% on Zoom, 601% on Nvidia, 445% on Bitcoin, and 4-digits on an alt-coin. The I/O Fund is audited annually to prove it’s one of the best performing Funds on the market with returns that beat Wall Street funds. 

beth

More To Explore

Newsletter

Cybersecurity Apps

Cybersecurity Stocks: CrowdStrike Soars While Palo Alto And Zscaler Fall

This year has led to a split landscape for cybersecurity stocks, with two of cybersecurity leaders up more than 20% YTD while others are negative YTD. In the past, we’ve discussed the resiliency of th

March 10, 2024
The Magnificent 7 Are Falling Like Dominos; Only 3 Remain

The Magnificent 7 Are Falling Like Dominos; Only 3 Remain

The Magnificent 7 of 2023 have now become 2024’s Magnificent 3: Nvidia, Meta and Amazon. Of these, Nvidia’s saw a stellar start to the year as shares have gained nearly 60% YTD due to the GPU leader’s

March 05, 2024
Nvidia Stock Gained $1.5 Trillion To Surpass The FAANGs - Apple Is Next

Nvidia Stock Gained $1.5 Trillion To Surpass The FAANGs - Apple Is Next

Today, Nvidia surpassed a $2 trillion market cap compared to Apple’s $2.8 trillion. The company has surpassed Amazon, Google, Tesla, Meta and Netflix. The only one left standing is Apple and we have 2

February 28, 2024
https://images.prismic.io/bethtechnology/93644c8f-e9e6-4b61-944f-d7ebc957628a_Palantir+Stock+Surges+From+Artificial+Intelligence+Platform.jpg?auto=compress,format

Palantir Stock Surges From Artificial Intelligence Platform

Palantir’s Q4 earnings confirmed an acceleration in its US commercial business as it closed out its first GAAP profitable year. Shares are reflecting the optimism surrounding Palantir’s commercial seg

February 20, 2024
AI Chip

AI Driving Acceleration For Big 3 Cloud Stocks

Big Tech’s participation in the market’s push to all-time highs is becoming increasingly narrow, with Nvidia, Meta, Microsoft and Amazon serving as the primary contributors to 2024’s rally.

February 13, 2024
Apple Can't Save This Tech Rally

Apple Can’t Save This Tech Rally

In this article, I lay out both the bull and bear cases for 2024 and beyond. Interestingly, both are calling for a level of volatility in 2024 that will, at least, retrace the rally we’ve seen since N

January 31, 2024
Coinbase, Robinhood: Examining The Impact Of Spot Bitcoin ETFs

Coinbase, Robinhood: Examining The Impact Of Spot Bitcoin ETFs

The SEC approved nearly a dozen spot Bitcoin ETFs on January 10 in what was heralded as a “watershed” moment for the crypto industry, opening the door for investors to gain exposure to Bitcoin without

January 30, 2024
Tesla Store

Tesla Q4 Earnings Preview: Margins Likely To Slip Again

Tesla’s Q4 earnings are on tap after the market close on January 24, closing up a year in which aggressive price cuts helped the automaker top Q4 delivery estimates reach a new record and narrowly bea

January 23, 2024
Social Media Stocks: One Metric Shows Meta's Clear Leadership

Social Media Stocks: One Metric Shows Meta’s Clear Leadership

Social media stocks Meta (META), Pinterest (PINS), and Snapchat (SNAP) enjoyed strong gains in 2023 as the broader ad market stabilized and fundamentals improved. Social media ad spend is expected to

January 16, 2024
Nvidia Building

Five Top Stocks Of 2023: Year In Review

The Nasdaq 100 capped off 2023 with a return of +53.8%, erasing 2022’s losses and recording its highest annual return since 1999. This year had countless winners, but 5 stocks surprised and shocked th

January 09, 2024
newsletter

Sign up for Analysis on
the Best Tech Stocks

https://bethtechnology.cdn.prismic.io/bethtechnology/e0a8f1ff-95b9-432c-a819-369b491ce051_Logo_Final_Transparent_IOFUND.svg
The I/O Fund specializes in tech growth stocks and offers in-depth research for Premium Members. Investors get access to a transparent portfolio of 30 positions, a private forum, webinars, and real-time trade notifications. Sign up for Premium.

We are on social networks


Copyright © 2010 - 2024
Get Free Weekly Analysis on the Best Tech Stocks