Logiq Inc posted second-quarter financial results that demonstrated that the digital consumer acquisition solutions company continued to pivot to higher-margin opportunities.
For the period ended June 30, 2022, the New York-based company reported consolidated revenue of $4.9 million, down 40.4% from $8.3 million in 2Q 2021. Logiq explained that the revenue dip was due to a strategic shift to pursue a higher gross margin business, which resulted in attrition of lower margin business and an increase in sales and marketing expenses.
Logiq said its DataLogiq platform contributed $3.3 million in revenue, or 67.4% of second quarter consolidated revenue, down 39.3% from $5.5 million in the same period a year earlier. The decrease was due to Medicare enrollment and a newly-implemented focus on a direct-to-customer (D2C) portal.
READ: Logiq completes distribution of GoLogiq spin-off shares to shareholders
The company emphasized that the D2C portal reduces Logiq’s dependence on third-party aggregators. Instead, it enables Logiq to go directly to end-consumers through consumer facing portals like Angie’s List or Porch.com, generating considerably higher gross profit margins that can, when scaled, track upwards to 50-to 60%, said the company.
Logiq reported a net loss of $6.5 million for the quarter. As of June 30, 2022, the firm’s cash, equivalents, and restricted cash totaled $0.4 million.
Significantly, Logiq’s consolidated gross margins increased 730 basis points to 36.8% over the comparable quarter a year earlier. GoLogiq’s gross margin shot up 1,480 basis points to 46.5%. It is a result of targeting high-margin end-customers, compared to low-margin high-volume white label resellers, noted the company.
Meanwhile, Logiq completed the spinoff of its majority-owned fintech and mobile solutions business segment, GoLogiq Inc, as a publicly-traded company on July 27, 2022. Going forward, GoLogiq’s financials will no longer be consolidated with Logiq.
In a statement accompanying the numbers, Logiq co-founder and CEO Brent Suen said: “We are pleased with the successful spin-off of our GoLogiq business, through which we transformed our business into two standalone companies. We’re confident that going forward this transaction will unlock both companies’ fullest value.”
He added: “As we noted in our first quarter report, our quarterly revenue remains inconsistent, as was reflected in the second quarter. However, our commitment to executing on our strategy to pursue a higher margin business was reflected in our robust gross margin results.”
Suen noted that Logiq is in “a transition period in which it is shifting its resources to securing larger corporate customers,” in part to capitalize on its Battle Bridge acquisition made earlier this year.
“(The) consolidation has synergistically produced a company with a broader range of services and greater depth of expertise – which we believe will enable us to bid on and win far bigger customer accounts,” said Suen. “While those sales cycles are longer, I strongly believe that this strategy is gaining solid traction and we fully expect to report strong progress in the months ahead.”
Bright outlook
Logiq reiterated its projected 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.
Logiq provides e-commerce and digital customer acquisition solutions by simplifying digital advertising.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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