Logiq Inc, a provider of e-commerce and fintech business enablement solutions, posted first-quarter results that saw its revenue powered by rapid growth in its AppLogiq platform-as-a-service business branded as GoLogiq.
For the period ended March 31, 2022, the New York-based company reported $8.1 million in revenue, which matched revenue earned in the corresponding period a year earlier.
Significantly, Logiq’s Lovarra subsidiary’s GoLogiq branded CreateApp platform contributed $3.3 million, or 40.8%, of 1Q consolidated revenue, up 35.5% from $2.4 million in 1Q 2021. The company said the increase was driven by the “strategic shift,” towards targeting the "high-margin end-customer segment," compared with low-margin high-volume white label resellers.
READ: Logiq completes acquisition of Battle Bridge, including Section 2383 LLC
Meanwhile, Logiq’s DataLogiq platform contributed $4.8 million, or 59.2% of consolidated revenue, a 14.9% decrease from the 1Q in 2021. The revenue decline was due primarily to a shift away from lower-quality business that now carries lower gross profit margins, according to the company. Logiq said the shift is expected to become more evident in the 3Q and 4Q.
The company’s business development continues to pivot to higher-margin opportunities. As a result, gross margin increased another “230 basis points to 32.4%,” said the company.
During the quarter, Logiq’s consolidated gross profit decreased 1% to $2.2 million on a 27.2% gross margin, compared to $2.2 million, or 27.6% in the same quarter a year earlier.
In a positive, Logiq shrunk its net loss to $3.9 million during the quarter due to lower operating expenses, compared to a net loss of $5.3 million in 4Q 2021, and $4.1 million in 1Q 2021.
As of March 31, 2022, Logiq had cash, equivalents, and restricted cash which totaled $3.8 million, compared to $1.6 million on December 31, 2021.
In a statement accompanying the numbers, Logiq CEO Brent Suen said: “Our business remained solid in the first quarter of 2022 as we focused on securing higher-margin customers which have a somewhat longer sales cycle compared with high-volume lower-margin resellers.”
He added; “Our industry is all about vertical expertise and economies of scale, and 95% of our business comprises four verticals: home improvement, insurance, solar, and mystical services. Accordingly, while we continue to grow those verticals organically, we are pursuing high value-added acquisitions or partnerships in other cyclically or fundamentally undervalued or underserved verticals – with strong ‘rising tide’ potential.”
The company said its M&A pipeline remains a "key catalyst" for growth.
Logiq said it has completed the transfer of AppLogiq (GoLogiq) assets into its majority-owned public entity Lovarra and spin-off of those shares to shareholders is expected to close in mid-2022. Logiq has also restructured the senior leadership team to accommodate the spin-off of AppLogiq.
Logiq has successfully executed on its M&A strategy by closing the acquisition of Battle Bridge Labs companies, including Section 2383 LLC assets. The acquisition will be synergistic and accretive to 2022 earnings, said Logiq.
“In this way, we plan to capture market share leadership and acquire successful management teams seeking scale through smart synergistic business combinations,” said Suen. “While we are actively considering various verticals, we like the undervalued regulated verticals for their high barriers to entry, such as cannabis, cryptocurrency, online wagering, and pharmaceutical/MedTech. Once we successfully enter one regulated vertical, the ad-tech and mar-tech tools and techniques required are largely fungible and easy to repurpose to enter the others.”
Revises 2022 guidance
Logiq projects annualized revenue for the fiscal year 2022 to be in the range of $40-to-$50 million, and reaching breakeven earnings before interest, taxes, depreciation, and amortization (EBITDA) run rate by the end of 2022 while attaining profitability in early 2023. The company noted that the forecast is based on its “potential deal pipeline, which includes M&A and potential partnerships and client relationships.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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