Isentia boss Croll insists he won’t resign over King Content acquisition as share price plummets
Isentia CEO John Croll has insisted he is still the right man to lead the company despite this morning’s share price collapse which saw the value of the business fall by 40% in a matter of minutes.
The fall on the ASX came after Croll revealed the media monitoring company is winding up its troubled content marketing division and is facing a profit drop of up to 23% for the financial year.
Croll was asked about his position as CEO during a hastily arranged investor conference call this morning.
Many of Isentia’s woes are as a result of its purchase of content marketing agency King Content for a headline price of $48m. Isentia, which had already written off the investment, today said that it would be exiting the content marketing business altogether.
“I’m one of the key guys in the industry,” Isentia CEO John Croll
But Croll insisted: “I’ve been the CEO since 1999 and I grew this business to be pretty much the leading media intelligence business on a global scale. Pretty much the business that everyone came to have a look at to see what is the strategy and where we are moving forward.”
He added: “Definitely the execution on King Content was a mistake but as we focus on the core media intelligence business, I’m one of the key guys in the industry who people look at and say ‘he’s a leader and understands where the business goes’.”
Under Croll’s guidance, Isentia floated on the ASX in 2014 at a share price of $2.36. It peaked at $4.93 in late 2015, which meant it was closing in on a market capitalisation of $1bn.
But today it fell to its historic low of $1.10, valuing it only just over $200m.
Today’s share price fall | Source: Google Finance
While Isentia showed strong growth up until 2016, the last two years have seen the company struggle as its core Australia and New Zealand market has been flat, the losses from King Content have mounted and the restructuring of licensing agreements has added to the company’s cost base.
CFO Nimesh Shah resigned in March as it began to emerge that King Content was hitting trouble.
Isentia’s share price since floating on the ASX | Source: Google Finance
Croll said: “From a strategy and where media intelligence is going, I’m still the right CEO for the business. That’s part of the strength of bringing guys like Jim (new CFO James Orlando) in, and the rest of the team to get this business to the next level. I made mistakes, but I’m not a guy who runs away from anything either.
“I think I’m the right guy to lead a media intelligence business and I’ve got a track record on that and I’ll make sure the team around me is the right team to improve, focus on what we’re doing and then get the financial results.”
“The organisation has gone through a tough period,” Croll said when asked by Mumbrella what mistakes he’d made as CEO.
“We’re in the situation of closing a business we thought was a strong strategic move. If we’d done a good job on the execution, we wouldn’t be doing that,” he said.
Croll maintained that with the shutting down of the content arm, management was now “free of distractions” and could focus on its “core business.”
When asked by Mumbrella if Asia was part of the core business, Croll emphasised the region is critical to the company’s growth beyond Australia.
“Asia is a core part of our business, every product we invest in now is ready for the Asian marketplace as well. Our communications directors in the region see very much about bringing all the Asia-Pacific onto one platform so Asia is very much part of the Isentia story.”
Croll has big tickets on his ability and self-inflated sense of importance in the industry. Perhaps with more humility, he could have integrated the King Content acquisition. Now that is the mark of an effective CEO
iSentia are a legacy company pretending to be a tech company [edited under Mumbrella’s comment moderation policy]
Having run a smaller successful intelligence subscription service for many years where the fundamental model is always cash positive, content is essentially free, capital expenditure is
non existent and client churn is minimal I find it incredible that
Isentia has run off the rails. Unfortunately I’m not so smart I
should have got out a year ago. Ouch!
Yeah, nice try mate, but you should resign.
And shareholders should rightly be furious.
This whole saga reminds me of the kind of waste that went on during the very early 2000s dotcom days.
Most of us learned from those days. These guys apparently didn’t.
Possibly years of bad karma accruing
It’s surely a bit of humbling, expensive iSentia analysis, but it’s their core management team’s maiden mistake acquisition.
Acquisition is fine, but iSentia has a proven records in poor integrations. Look how all people in the acquired company have left, and they were the people who earn all those profits!
You are looking at getting clients base from the acquisition, but the talents who were previously with these company have left. New hires will not be able to get them back.
A business that generates c20% roe (Fy17: $90m equity, $20m np) vs alternatives such as cash in the bank that earns c2%, property investment whilst at the peak of the cycle earning 3-4%, which inflation will eat up most of it.
This company has a small moat, selling at a discount (10x p/e vs market x16), with a growing international business unit with revenues increasing at 16%, with only 2% market share..
The best time to invest is when the market is most irrational, this creating an inbalance ,now that the price has come down significantly, along with new CFO, capex reduction, sales team refocused and strategy re-set, that sounds like a turnaround situation. I would think, as a value investor, that this presents an opportune time to take cash out of the bank and consider an investment case.
(Bill owns shares in iSentia)
Some old news, but this clip has given us a glimpse of how iSentia was trying to change from a press/broadcast clipping company to provide online and social content to their customers, where a lot of other companies have been doing it now, or even get it free using some of the tools.
https://www.youtube.com/watch?v=8trbTC7qy0o&t=5m0s
Can’t believe such a bright company, suddenly lost 75% of its market value within a year due to this unbelievable mistake. 48 million for nothing, I only hope Google or whoever can buy isentia, which I will vote YES
Some really talented and pleasant people worked for King Content. Hopefully some phoenix will rise from the ashes for them.
Isentia has gone downhill ever since the King Content acquisition and listing on the ASX. Hundreds of workers at the bottom end have lost their jobs because of it. What used to be such a great company has now turned into an absolute disaster.
A lot of former employees will not be surprised that the growth by acquisition strategy finally backfired for iSentia.
Karma