Thankfully for its long-suffering shareholders, the Mobile Embrace Ltd (ASX: MBE) share price has taken a step in the right direction today following a positive announcement out of the mobile commerce company.
At the time of writing its shares are up a whopping 49% to 7.3 cents.
Thanks to the strong performance of the company’s Performance Marketing business unit, Mobile Embrace reaffirmed its full-year guidance of revenue of $52 million and EBITDA of between $5 million and $6 million.
In recent times management has increased its focus on building marketing transaction volumes through the progressive development of its Performance Marketing business unit, and it appears to have paid off.
The unit is now the company’s dominant revenue and earnings driver with transactions increasing and delivering a higher EBITDA margin than its Carrier Billing unit.
For the nine months to March 2017, the Performance Marketing business unit has delivered average monthly marketing transactions of 1.9 million per month. This is a 46% increase on FY 2016’s average of 1.3 million monthly marketing transactions.
Impressively the company has over 200 simultaneous client campaigns now live and boasts retention rates in excess of 90%.
Management believes that generating traffic and leads are two of the top marketing challenges for businesses. As a result it feels the industry outlook for performance marketing is encouraging.
Should you invest?
Despite today’s huge gain Mobile Embrace’s share price is still down almost 80% in the last 12 months.
While this could potentially make it a bargain buy, I wouldn’t necessarily be rushing into an investment just yet.
The company’s shift away from carrier billing looks to have been a success so far, but it is still early days and a highly competitive environment.
I would suggest investors hold off an investment for now and wait to see how the Performance Marketing business unit develops over the next 12 months.
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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Altium and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.