Pure Profile sells off troubled Cohort business

ASX-listed Pure Profile is to sell its troubled Cohort performance marketing arm for $500,000 to call centre company Unit4 following what the company described as continuing challenging conditions in the wake of the banking Royal Commission.

The deal, announced to the stock exchange yesterday, will see Pure Profile offload the lead-generation business it purchased in 2016 for $25m which subsequently triggered a shareholder revolt against the struggling company’s board.

Pure Profile CEO Nic Jones: “Following the sale, we will continue to make our business more simple”

Pure Profile’s announcement comes five months after the company told the stock exchange it would be writing off the Cohort investment and shutting down its technology.

The sale, expected to be complete by March 1, will see privately-held Sydney cloud call centre operator Unity4 pay for the Australian and New Zealand performance operations in two tranches – $250,000 on completion of the deal and the balance paid by 31 June. Pure Profile will retain the UK operations of its performance marketing arm.

Pure Profile told the stock exchange: “The ANZ Performance business continued to face declining revenues under increasingly challenging conditions in Australia. Most recently, the royal commission into banking precipitated the Company’s insurance clients ceasing all lead-generation projects. These developments, coupled with its existing cost and operating model would have made the business unit unsustainable to continue.”

Nic Jones, Pure Profile’s CEO and managing director, said in the ASX statement: “The ANZ arm of the Performance business faced some very tough external conditions. Since I came on board as CEO, most of my time – and indeed much of the Senior Leadership team’s time – has been focused on stabilising the Performance business.

“But with revenues continuing to decline and with our existing operating model, it became apparent that it would become loss-making. At our AGM, I said we were looking at all strategic options to address this problem and the sale of this business to Unity4 is an optimal outcome.

“Following the sale, we will continue to make our business more simple, and this will include some changes to the management team so that it is better aligned to focusing on the remaining core businesses, which have continued to grow solidly. We are well aware that the issues surrounding the ANZ Performance business have been a subject of concern. Now, with its sale and with a renewed focus on a simpler, growing business, we must continue to look forward and I am truly excited by the future opportunities that this will present Pure Profile.”

Pure Profile is hoping the sale will improve the company’s gross margin percentage and EBITDA and allow the business to allocate existing resources and further investment in its core areas.

News of the deal bought a mixed reaction on the ASX, with Pure Profile’s stock initially slumping from 3c to 2.6c. However the shares recovered to the 3c mark by the day’s close of trading.

Pure Profile was the second-worst performing media and marketing stock on the ASX last year, falling nearly 60% to 7c over 2018.

So far in 2019, the news has been little better for investors with the company sliding from 7c to 3c over the first six weeks of the year – a fall of 57%.

The 2016 acquisition of digital agency Cohort has been fraught with issues for Pure Profile, including a dispute with shareholders Oceania Capital Partners – who sold  Cohort to Pure Profile in late 2016 – over “poor financial stewardship”.

Oceania Capital Partners unsuccessfully attempted to replace executive chairman Andrew Edwards’ place on the board with Cohort founder Marcelo Ulvert.

During the tussle, Pure Profile hit back by suggesting it was misled during the $25 million acquisition of Cohort.

A truce was eventually called after Oceania was granted a seat on the board.

Since the Cohort acquisition, Pure Profile has seen a series of senior management changes, with Nic Jones appointed CEO in December 2017, shortly followed by founder Paul Chan leaving the following February.

In June, former AdRoll Australia boss, Ben Sharp, was appointed head of revenue and operations after his brief stint heading industry body, ADMA.



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