Matomy Media shares tumble on profit warning

Matomy Media, the Israeli digital advertising group that is part-owned by Publicis, suffered a sharp share price tumble on Thursday after it issued a profit warning.

The company warned that both profits and revenues for the full year would be "below market expectations" following "weaker first quarter trading" and because some important suppliers of digital media had introduced "stricter internal regulations".

Matomy's share price fell 19 per cent to 140p by early afternoon in London on Thursday. It launched an initial public offering on the London Stock Exchange in July last year at a price of 227p.

The profit warning represents a blow for Publicis, the French advertising group, which acquired a 25 per cent stake in Matomy in November at the flotation price.

Matomy said the main reason for cutting its expected financial performance was that "various prominent media trading platforms", which it did not name, had introduced stricter internal regulations to prevent poor-quality publishers from selling inventory through them.

It said one of the biggest platforms had introduced "a new media verification and screening tool", which resulted in "an immediate decrease in the amount of digital media available for purchase".

Large media trading platforms include Google's DoubleClick and AppNexus, which is part-owned by WPP.

Peter McNally, analyst at Shore Capital, Matomy's house broker, said that the tighter controls on media trading platforms "will benefit sector over the long term". But he added: "Unfortunately, this change, as well as weaker trading, is affecting Matomy as it limits the supply of available traffic it can buy."

Founded in 2007, Matomy specialises in "performance-based advertising", meaning that it charges a customer only if its digital marketing campaigns achieve specific, measurable results, such as generating sales, business leads or page views. Its customers have included credit card company American Express, credit scoring group Experian and Zynga, the gaming company.

Matomy floated on the High Growth Segment of the London Stock Exchange - a special section with lower free-float requirements than the main market, which is designed to entice high-growth companies to list.

It is the only company still listed on the High Growth Segment. Just Eat, the online takeaway delivery service, was the first to use the platform but moved out of it a week after its initial public offering.

Matomy expects revenues for the year ending December 31 2015 to be within a range of $275m to $285m - about 10 per cent below what analysts had forecast.

It said that it expected its full-year adjusted earnings before interest, tax, depreciation and amortisation would be within a range of $26m to $28m - more than 15 per cent below expectations.

Matomy said that it "remains confident in the future growth of the overall performance-based advertising sector", as well as its own strategy and operating model.

The company had been accelerating growth through acquisitions. In April it acquired Maven Marketing Group, an email marketing company, and in October it bought MobFox, a mobile advertising platform.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation