Jag Sanger may have been unceremoniously removed from leading media house The Market Herald (ASX: TMH), but that has not derailed their pathways towards profitability with the Company confirming it has a new focus now: digital classified ads.
In August last year, The Market Herald acquired Australian online marketplace Gumtree, online car retailer Carsguide and Autotrader Australia (together dubbed GCA) to increase its exposure to the digital classified advertising market. Its new interim CEO, Tommy Logtenberg—appointed three days ago—has been helming the three companies for about three years.
Commenting on the strategy update, Logtenberg said, “Since the acquisition of the GCA business, a number of key revenue opportunities have been identified in the automotive listing segment.”
“Our management team is highly experienced and is driving the next phase of growth with a clear strategic roadmap to improve our top-line results whilst further increasing the success for the sellers and buyers on our platforms.”
The renewed focus has people hoping that The Market Herald can finally move on from all the drama and usher in profits where its balance sheet has been plagued by historic revenue streams generated by online investor forum HotCopper which sold advertising to ASX-listed companies and accepted payment in shares. It created a massive penny stock portfolio that came crashing down in value last year.
Gumtree is a well-known online marketplace used by 1 in 3 Australians and about 10 million households monthly. It has around 60,000 new listings daily, millions of users and app downloads.
Collectively, GCA is the second most popular automotive marketplace in Australia. And once it undertakes further product development, the Company is expected to deliver millions of users an end-to-end digital car buying experience and perhaps take the top spot.
A new goal for TMH is to cement its position in the motors (automotive) segment. Following a review of the GCA business, it was found that there are ample revenue growth opportunities. The GCA arm will leverage the more than 70,000 newly added listings every month in the private cars category. This is expected to drive revenue and EBITDA growth for GCA and, subsequently, TMH. It would be a much-needed financial relief for the Company.
In FY22, TMH’s EBITDA fell 112% from $15.7 million in FY21 to $1.8 million. The Company experienced a total comprehensive loss of over $21 million, and it burned over $8 million in cash with ambitious expansion plans for TMH’s news media business.
The low revenue, massive cash burn and overall weak popularity of its media business brings into question the long term profitability of the news media business. That’s probably what the revised focus is doing already, seeing as it didn’t even mention the TMH advertising business in its update.
Before Sanger was removed, he mentioned in an interview about the launch of TMH One—the Company’s dedicated classifieds network. Now that TMH has finally come around to Sanger’s vision, will TMH One become a reality or does a new rebranding separate from the Company’s most-known profile as a penny stock promoter?
Alinda is a Business Reporter for The Sentiment
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