Babylon Gains Most in 6 Months on New User Boost: Tel Aviv MoverShoshanna Solomon
Babylon Ltd. gained the most in more than six months on bets the translation software maker will see a surge in revenue as it increases efforts to attract new customers and further reduces dependence on Google Inc.
Shares of the Or Yehuda, Israel-based company, which has advertising revenue-sharing agreements with Google and Yahoo! Inc., advanced 7.6 percent, the most since Jan. 28, to 25.8 shekels at the close in Tel Aviv. Trading in the stock was more than triple the three-month daily average volume. The benchmark TA-25 Index was little changed at 1,203.47.
The stock has rebounded 40 percent from a low of 18.33 shekels on March 28, when it fell on investor concern changes to its partnership agreement with Google were slowing sales. The company cut its dependence on the world’s largest search-engine operator to less than 50 percent of revenue, Chief Executive Officer Alon Carmeli said in April. The company is boosting efforts to attract new customers, he said in a July 29 e-mailed statement.
“Investors are seeing that the company has successfully come through the Google crisis,” Beni Dekel, an analyst at Tel Aviv-based Union Bank of Israel, said today by phone. “The announcement that it will restart user acquisitions means we are likely to see an even greater surge in revenues going forward.”
Babylon shares have advanced 17 percent since the company on July 29 reported a 3 percent increase in second-quarter revenue to 163 million shekels and a 74 percent gain in profit to 40 million shekels.
“In the past quarter, we focused on diversifying our income sources,” Carmeli said in the statement that day. The second half of the year will see a “significant increase in user acquisition cost,” he said.
The company in April signed a four-year accord with Yahoo! as it seeks to diversify income sources. Second-quarter revenue from that relationship more than tripled to 32 percent from 10 percent in the previous period.