Key statistics: ASX: MUA
Closing share price 04.04.17: $0.950
52-week high: $1.250
52-week low: –
Most recent dividend: –
Annual dividend yield: –
Mitula is a digital classifieds group headquartered in Madrid, Spain, and listed on the ASX.
It is a truly global group with website advertising in more than 50 countries and in 19 different languages. It operates more than 100 vertical search and portal sites across property, employment, motoring and fashion as well as 10 property portals.
Vertical search is a more specialised form of web search. A typical web search on Google, where you type in a search term and click search, is referred to as a general search. Google also gives you the option to narrow your search to certain verticals, by clicking on images, or news, shopping etc.
Vertical search engines like Mitula’s focus on specific topics. For example, Mitula will aggregate information from a number of property websites and present the consolidated results to the user. When the user clicks on one of the results, the user is directed back to the original source site and Mitula receives a referral fee. It generates around 60% of its revenue this way.
About 34% of revenue is generated from Google AdSense. This is an advertising partner program operated by Google. When a user types a search query on one of Mitula’s sites, in addition to the search results, there will be some related advertising banners. These are supplied by Google. If the user clicks on one of these ads, the advertiser pays a fee which is shared between Google and Mitula.
The final 6% of revenue comes from Mitula’s own property portals, which are based in Asian markets, and from transaction revenue models. The transaction revenue model is a new concept which Mitula sees as being one of the keys to its future. For example, if a user clicks on an ad for a fashion item, they are directed to the source website.
If they then purchase that item, Mitula takes a 10% commission. The seller is happy as they are only paying where the ad has resulted in a direct sale, and Mitula is happy as it gets a much higher cut of the revenue. By using user data effectively, it is able to present more relevant items to users, thus increasing the likelihood of a transaction.
Whilst Mitula is not a well known brand in Australia, it is well established in Latin America and Europe.
It has been growing strongly both through acquisitions as well as organic growth.
The balance sheet is strong with no debt and plenty of cash, providing the scope for further expansion. The company is profitable and generating substantial cash flow.
Mitula listed on the ASX in 2015.
Given its growth profile its valuation does not look excessive with a forward PE ratio of about 17, however it should be put in the higher risk basket.
Mitula is a relatively small company, operating in a constantly evolving sector, and competing against some formidable competitors. But if it can carve out a niche and continue to build on its good track record, then the company’s future may be bright.