Dolat Capital: Revival In MPS’ Publishing Business, Highwire Integration Drives Growth
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Dolat Capital Report
MPS Ltd. reported strong Q1 FY21 results, with a 3.2% QoQ growth in revenue (our estimate 6.0% QoQ de-growth), led by content business growth of 12.6% QoQ and platform business growth of 23.6% QoQ.
Operating profit margin improved 90 basis points QoQ to 20.6% (our estimate 7.7%) primarily due to strong revival in content business margins to 33.2% from 8.1% QoQ.
MPS acquired HighWire Press, a publishing-business peer for $7.1 million, and is expected to be integrated fully from second quarter with potential annualised revenues of $13 million - $17 million (break-even OPM).
MPS expects to cross sell complimentary tech across the huge HighWire client base (150 service relationships with clients). Publishing business revival and HighWire integration solves the growth concern for the company and focus now shifts toward timely revival of profitability in acquired business to company average (30%).
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