In 2000, $0.90 of every ad dollar went into TV and print, but 6.64 billion people use a smartphone today. That has sent companies scrambling to grab consumer attention online. A rapid shift to online advertising has been a radical catalyst for disruptors like The Trade Desk Inc and Logiq Inc (NEO:LGIQ.AQN, OTCQX:LGIQ).
New York-based Logiq provides ecommerce and digital customer acquisition solutions by simplifying digital advertising. The mobile marketing software as a service (SaaS) provider helps brands increase online sales cost effectively. It owns DataLogiq, an all-in-one data, artificial intelligence (AI), media buying and marketing technology platform.
“DataLogiq has positioned itself as The Trade Desk for small and midsize businesses (SMBs), affording smaller entities similar digital marketing capabilities as The Trade Desk without the high minimums and costs,” noted analysts at Zacks.
Logic co-founder and CEO Brent Suen said Datalogiq as “The Trade Desk for smaller companies” can provide “excellent cost savings” on ad spending for brands.
“The Trade Desk has had a phenomenal run and commands a massive valuation. Yet they didn't exist 10 years ago. Now they give brands the ability to buy online advertising, bid for and buy ads. Their customer base is Walmart, Amazon, eBay…companies that are responsible for 50% of all online advertising,” Suen told Proactive.
“It’s hard for smaller companies to compete so our customer acquisition technology tries to provide a level playing field. Our value lies in providing the same tools that the Trade Desk does for SMBs, enabling them to succeed against competitors of any size. We provide cost transparency and give them the same set of tools to compete so that they can save 15% to 30%.”
As an investment banker for over three decades focused on telecom, media, and technology (TMT), Suen knows the competitive digital landscape and multiple technologies like the back of his hand. He has solid operational experience with companies in Silicon Valley, emerging markets in Asia, Eastern Europe and Latin America, and more recently mobile and internet companies in Southeast Asia.
The DataLogic advantage
Suen created DataLogiq when Logiq bought PUSH Interactive for $25 million in stock in 2020. The cautious risk taker then augmented this with other acquisitions — Fixel AI, Rebel AI, and more recently Battle Bridge — to expand the company’s capabilities and boost its customer base.
As a result, Logiq’s digital marketing business now includes a holistic, self-serve ad tech platform. Its data-driven, AI-powered solutions allow brands to advertise across digital and Connected TV advertising.
Logiq also offers lead generation services and digital advertising and data management software.
“The tools we have are based around AI and give businesses the ability to run advertising campaigns. It shows the effectiveness of the campaigns as our platforms are learning from the campaigns and reporting back to our customers — telling them what’s working and what’s not,” said Suen.
“This helps our clients focus on the things that are working so we are constantly delivering cost savings and efficiency.”
Synergies with Battle Bridge
On April 1 this year, DataLogiq completed the acquisition of certain assets of Battle Bridge Labs, a Tulsa, Oklahoma-based digital brand marketing agency for $3.36 million comprised of $250,000 in cash and $3 million in stock.
Battle Bridge provides digital brand marketing services, including pay-per-click management, social media marketing, funnel creation and optimization, SEO, web design and more. It is a certified partner of Google, Shopify, Bing ads, and IMA.
According to Suen, Battle Bridge is focused on Facebook and Google ads, but through Logiq it will now be able to offer its customers additional programmatic ad buys. Battle Bridge is expected to generate $3.8 million in revenue over the next 12 months, but new potential wins could push that higher.
“Bear in mind that Battle Bridge was only doing a certain type of marketing and advertising for its customer base which consisted of Facebook and Google ads. When we acquired Rebel AI, that gave us the ability to do programmatic advertising,” said Suen.
“The whole value proposition for Battle Bridge is that they can now offer their customers the ability to do everything in-house, including programmatic advertising, so it is accretive in more ways than one.”
Significantly, Battle Bridge brings Logiq new customers, entry into fresh verticals, greater creative capabilities, and potential economies of scale.
Unlocking value
Breaking apart a company can, in theory, unlock value. Corporate spinoffs as an asset class have done well historically.
On July 27, 2022, Logiq completed the spinoff of its majority-owned fintech and mobile solutions business segment, GoLogiq Inc (OTCMKTS:GOLQ). Going forward, GoLogiq’s financials will no longer be consolidated with Logiq.
“When we first acquired Push Interactive and then subsequently Fixel AI and Rebel AI, we believed that the sum of the parts would be interesting to investors,” said Suen.
“But investors in the US were either interested in the DataLogic business, or in the emerging markets business. The two never really met. As a result, we successfully transformed our business into two standalone entities to enhance value for our shareholders.”
Logiq recently announced its last quarter as a combined company with GoLogiq Inc. For its second quarter ended June 30, 2022, Logiq reported consolidated revenue of $4.9 million with solid execution in pursuing higher margin businesses with larger customer accounts. DataLogiq contributed $3.3 million in revenue, or 67.4% of 2Q consolidated revenue.
Strong outlook
Logiq now projects annualized revenue for the fiscal year 2022 to be in the range of $40-$50 million, reaching breakeven EBIDTA, or earnings before interest, taxes, depreciation, and amortization by the end of 2022. Importantly, it expects to be profitable in early 2023 if planned M&A activity and new customer wins occur as expected.
To raise cash, Logiq has the key Ionic ventures agreement in place, and it can also factor receivables if needed.
High growth potential
Compared to other companies in its space, Logiq is sharply undervalued.
“Our current valuation in itself is compelling not because of where the stock price has been and where it is now. But in terms of absolute valuation compared to our peers, we are trading at a big disparity,” noted Suen.
“It currently trades at approximately $8.9 million enterprise value or 0.3 times estimated 2022 sales of $26 million. Its peers trade at an average of 2.3 times,” pointed out analysts at Zacks.
Based on comparable valuations of its peers at 2.3 times enterprise value to sales, Zacks estimates that Logiq’s stock is worth $1.73 per share. Logiq shares currently trade at around $0.47 on the OTC Markets.
Analysts expect Logiq’s valuation to climb through improved profitability, revenue growth and acquisitions.
“We've done everything right by making wonderful accretive acquisitions. There are plenty more we could make. We're very solid in terms of intellectual property and competitive advantage,” noted Suen. “So, it's almost a self-fulfilling prophecy as we climb back up.”
The pure-play New York-based digital marketing company has operations in California, Colorado, Minneapolis, Minnesota, and with its Battle Bridge acquisition, Texas, and Oklahoma.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive