The recent months, due to the unfavourable market environment (seasonally high CPI), have resulted in a stabilisation of revenues while marketing budgets were reduced, which translated into the generation of a record first margin. With the upcoming Christmas season approaching rapidly, we anticipate further reductions in user acquisition spending in the last weeks of 2023.
This, on one hand, will lead to a decline in revenues, but on the other hand, it will allow the company to achieve a record level of adjusted EBITDA in 4Q'23, approximately 9,8 million PLN (+210% y/y, +26% q/q). We expect a renewed increase in advertising expenditures at the turn of the year.
These actions should unlock the potential of the changes made to the application in recent months and translate into its continued, dynamic progression of results from the beginning of 2024.
We assume that the implementation process of the largest change to 'Unsolved' (metagame) will commence in 2H'24. We expect the release of new functionalities to be gradual, thus the effect of improving KPIs as a result of this modification will be spread over several quarters. We would like to note that the application results from the recent months exceed our earlier expectations. Consequently, we are raising our forecasts for the upcoming periods. Throughout whole 2024, we forecast that the company will achieve 114,7 million PLN in revenue (+39% y/y), 39,9 million PLN in adjusted EBITDA (+33% y/y) and 29,9 million PLN in adjusted net profit (+45% y/y).
The results estimated by us imply an attractive multiple valuation for the company (adjusted P/E at a level of 7x). Additionally, there is a significant chance that, for the first time in history, the company will share profits with shareholders earned during the record-breaking 2023 (dividend or share buyback). We assume a DPS at the level of 0,6 PLN per share. With this in mind, we maintain our BUY recommendation for Artifex Mundi, while simultaneously raising the target price to 24,8 PLN per share, which is 49% above the current market price.
