Illumin $ILLM is a highlight in a recent TMM. The company popped up as insiders have been quite active on the open market. The company had a few tough years but topline growth has been returning, along with operating leverage.

I’m seeing ~7.5x forward ev/ebitda for potentially >50% ebitda growth p.a. over the next few years, with 50% of the market cap in net cash – plenty of reason for me to take a look.

Adtech has been a brutal industry over the past few years. We had a privacy crackdown, then a tech selloff, followed by a grinding slowdown in digital ad spend, in part due to the hype during covid and the subsequent hangover. Most of the small- and mid-cap players were left in the ditch – some deservedly, others just collateral damage. Illumin, formerly AcuityAds, definitely felt the pain.

At a high level, $ILLM is a programmatic ad platform focused on what’s called ‘journey advertising’ – essentially using consumer path data to serve highly contextual ads across devices. While competitors leaned heavily into volume and scale, Illumin tried to differentiate by mapping entire consumer decision flows across channels, offering brands more transparency and control. The pitch: better targeting, higher ROIs, and fewer wasted impressions.

In practice, this took time to deliver. Execution stumbles, some platform rollout delays, and broader macro headwinds weighed heavily from 2021 through 2023. Revenue growth stalled, profitability cratered.

But 2024 has marked a shift, accelerating growth and getting back to profitability. Illumin cut costs, sharpened its go-to-market, and leaned into a more efficient sales structure – in the US, where they’ve struggled historically. ebitda is swinging positive again, and the company has guided toward sustained growth with expanding margins.

Now it should be a story of continued growth and operating leverage, with the shares not yet reflecting the inflection.

There are still some headwinds, with pressures from a large client reducing spending and gross margin pressures given shifts in mix. But Illumin seems to be doing a good job attracting new clients and increasing spend / client, all the while gearing up for growth. And this in a tough macro environment.

Insiders seem to indicate where this is heading. Management has been actively buying in the open market. Add to this a 10% buyback.

As mentioned, ~7.5x forward ev/ebitda, with over half its market cap in net cash. That doesn’t seem much a business potentially growing ebitda 50%+ annually over the next few years. And unlike many of its peers, Illumin doesn’t need to burn (much) cash or raise more to hit its targets.

Is this a no-brainer? Certainly not. The adtech space is crowded and volatile, visibility remains murky, and Illumin is still a small player fighting for relevance.

But the bar seems pretty low, execution has improved, and there’s a non-zero chance this turns into a respectable compounder.

A small cap with accelerating fundamentals, clean financials, and strong insider alignment certainly worth checking out.

We highlighted $ILLM recently in our event-driven monitor. Check it out at ToffCap