Integral Ad Science Posts Mixed Q2 Results

Integral Ad Science Holding Corp. (IAS), a global leader in digital media quality, reported mixed debut second-quarter earnings results since its IPO in June.

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The company reported strong revenue growth driven by robust performance across all segments. However, the quarterly loss was worse than the prior-year period. (See Integral Ad Science stock charts on TipRanks)

Revenues jumped 55% year-over-year to $75.1 million compared to $48.3 million in the prior-year quarter. The increase in revenues reflected a 94% surge in programmatic revenue to $31.8 million and a 40% increase in advertiser direct revenue to $35.3 million.

Furthermore, gross margins jumped 100 basis points to 83%, and adjusted EBITDA margin improved to 34% compared to 8% in the prior-year quarter.

However, the company reported a net loss of $0.26 per share in Q2 versus a loss of $0.12 per share in the prior-year period.

IAS CEO Lisa Utzschneider commented, “More customers are partnering with IAS to make every impression count in key growth areas including programmatic, social, connected TV (CTV), and international markets.”

Last week, the company revealed its plan to acquire the CTV advertising platform, Publica, for $220 million. The addition of Publica will enhance the company’s capabilities to tap potential growth in digital media quality in CTV.

IAS Introduces Fiscal 2021 Guidance

Based on strong revenue growth in Q2 and expected synergies from the Publica acquisition, management introduced its guidance for the third quarter and Fiscal 2021.

For Q3, revenues are forecast to be in the range of $74 – $76 million. Adjusted EBITDA is expected to range between $16 million and $18 million.

For FY2021, the company expects revenues to be in the range of $308 – $312 million. Furthermore, adjusted EBITDA is expected to range between $87 million and $91 million.

Following the Q2 results, Barclays analyst Raimo Lenschow increased the price target on the stock from $21 to $22 (34.80% upside potential) and maintained a Hold rating.

Overall, the stock has a Strong Buy consensus rating based on 7 Buys and 1 Hold. The average Integral Ad Science price target of $23.38 implies 43.3% upside potential from current levels.