Locafy Reports Fiscal Third Quarter 2024 Results
May 01 2024 - 8:00AM
Locafy Limited (Nasdaq: LCFY, LCFYW)
(“Locafy” or the “Company”), a globally recognized
software-as-a-service technology company specializing in
“entity-based” search engine optimization (SEO), today reported
financial results for the 2024 fiscal third quarter ended March 31,
2024. All financial results are reported in Australian Dollars
(AUD).
Recent Operational Highlights
- Announced in early April, Locafy’s new proprietary
Performance-Based SEO Pricing
Model allows customers to access “pay-per-click SEO.” The
Company believes that this model is the first of its kind for the
SEO software space. Performance-based SEO is expected to boost
Locafy revenues through increased sales velocity, scalability, and
its subscription revenue opportunity.
- Since announcing the release of Locafy’s Performance Based SEO
solutions, the Company has presented approximately 50 qualified
proposals to customers, totaling more than $750,000 in new
potential SEO services revenue. As of the date of this press
release, several of these proposals have already been converted to
deals.
- In February 2024, Locafy announced a $500,000 services contract
with Localista, an Australian directory business. As of the date of
this press release, the Localista contract is on track to be
completed during the 2024 fiscal fourth quarter. Once completed, as
pursuant to the contract, Locafy will also share in any advertising
revenue growth demonstrated by Localista.
- Cost reduction initiatives resulted in cost of
sales and operating expenses decreases of
59% and 47% compared to the 2023 fiscal third quarter,
respectively; gross margin increased to Locafy's
quarterly record of 83.6%.
- Services revenue increased 26.6% to $126,000
from $100,000 in the comparable year-ago period. Under the revamped
pricing model, the company expects these revenues to continue to
grow, which is expected to drive increased subscription revenues
once services are delivered.
Management Commentary“In our 2024 fiscal third
quarter, we focused on completing our product offering and
go-to-market strategy revamp,” said Locafy CEO Gavin Burnett. “We
listened to the feedback from our advertising and publishing
clients, and successfully launched our proprietary pay-per-click
SEO model for which they have indicated interest. We believe that
this model allows us to improve our targeted marketing efforts and
streamline our cost structure, as it can be supported by
significantly leaner sales and operational teams. Even as we faced
sales delays in our subscription and advertising revenue segments
in the 2024 fiscal third quarter, our subscription revenue decline
ended in January, and we are now poised to rebound well in the
coming quarters. Also, we have successfully lowered our cost of
sales and operating expenses by 59% and 47% over our 2023 fiscal
third quarter, respectively, and believe that we are nearing a
steady run rate and break-even profitability point for our business
in the coming quarters.
“We now define our three core markets as digital agency
resellers, who provide our technology to clients,
publishers, who monetize their digital properties
through advertising, and direct clients, who
publish their online business data through our directory assets,”
continued Burnett. “We are seeing significant business development
success and preliminary contracts signed with clients in each
market and look forward to completing the onboarding processes for
early adopters in the coming months. We believe that our underlying
SEO solutions have proven their effectiveness through a wealth of
trials and paid engagements in recent quarters. With this product
offering revamp complete, we are ready to capitalize on our
technology and drive Locafy revenue that matches the value we
provide. We are confident that this model will help us unlock
significant growth opportunities both for clients and for our
business as we head into fiscal 2025.”
2024 Fiscal Third Quarter Financial
ResultsResults compare the 2024 fiscal third quarter end
(March 31, 2024) to the 2023 fiscal third quarter end (March 31,
2023) unless otherwise indicated. All financial results are
reported in Australian Dollars (AUD).
- Total operating revenue decreased 28.3% to
$2.9 million from $4.1 million in the comparable year-ago period.
- Subscription revenue decreased 36.9% to $2.0
million from $3.1 million in the comparable year-ago period.
Compared to the 2024 fiscal second quarter, subscription revenue
decreased 8.9%. The decline in subscription revenues ceased in
January 2024, forming a base from which the Company expects to grow
in the coming quarters.
- Advertising revenue decreased 10.8% to
$213,000 from $239,000 in the comparable year-ago period. The
Company is currently implementing advertising technology from
diDNA, a leading ad tech provider, to its digital properties
through the recently announced partnership between Locafy and
diDNA. When combined with Locafy’s existing Keystone technology,
which is also applied to these digital properties to improve search
traffic, Locafy expects this initiative to drive increased revenues
and higher advertising yields to produce a synergistic result for
Locafy and diDNA.
- Data revenue decreased 2.5% to $645,000 from
$662,000 in the comparable year-ago period.
- Services revenue increased 26.6% to $126,000
from $100,000 in the comparable year-ago period. The revenue in the
2024 fiscal third quarter included the recognition, on a
project-complete basis, of $101,875 out of the $500,000 total
contract fee in relation to the Company’s SEO consulting engagement
with Localista. Management expects to complete the remaining
project within the 2024 fiscal fourth quarter.
- Other income decreased 91.0% to $26,000 from
$285,000 in the comparable year-ago period. As previously reported,
the variance is attributed to the Company’s assessment (as at the
respective reporting period) of the extent and likelihood of its
ability to claim a Research & Development tax incentive in
Australia, as was possible in prior years.
- Cost of sales decreased 58.9% to $483,000 from
$1.2 million in the comparable year-ago period.
- Gross margin for the 2024 fiscal third quarter
improved to 83.6% from 71.5% in the comparable year-ago period.
This is attributable to a reduction in third party technology
costs.
- Operating expenses decreased 47.0% to $5.0
million from $9.4 million in the comparable year-ago period. This
is primarily due to a significant reduction in headcount and
associated costs, a reduction in third party technology costs, and
the capitalization of certain R&D activities. These cost
reductions resulted from technology upgrades implemented during the
past 12 months, including incorporating technologies acquired from
Jimmy Kelley Digital, resulting in the introduction of new SEO
solutions that the Company is now bringing to market.
- Net loss for the year to date was $2.1
million, or $1.63 per diluted share, compared to a net loss of $5.1
million, or $4.91 per diluted share, in the comparable year-ago
period.
Key Performance Indicators (KPIs)In accordance
with its revamped go-to-market strategy, Locafy no longer views its
traditional KPIs as adequate indicators of the long-term success of
the Company’s business. Therefore, Locafy has updated its KPIs to
focus on Monthly Recurring Revenue driven across the platform.
Unless otherwise specified, KPI data has been recorded as of the
2024 fiscal third quarter end (March 31, 2023).
- Monthly recurring revenue (MRR) for the 2024
fiscal third quarter was $266,000, a 34.8% decrease from the
comparable year-ago period, and a 15.5% decrease compared to the
2024 fiscal second quarter.
For more information, please see Locafy’s investor relations
website at investors.locafy.com.
About LocafyFounded in 2009, Locafy's (Nasdaq:
LCFY, LCFYW) mission is to revolutionize the US$700 billion SEO
sector. We help businesses and brands increase search engine
relevance and prominence in a specific proximity using a fast,
easy, and automated approach. For more information, please visit
www.locafy.com.
About Key Performance IndicatorsLocafy defines
MRR as the value of all recurring subscription contracts with
active entitlements as at the end of each month. MRR across a
period is the average of each month’s MRR within that period.
Locafy’s recent platform upgrade caused a significant change to
the calculation of average page metrics, and Locafy management no
longer views total active reseller count and total end user count
as relevant indicators of the performance of Locafy’s technology.
The Company may introduce additional KPIs in future quarters if
deemed relevant long-term indicators of performance.
Forward-Looking StatementsThis press release
contains “forward-looking statements” that are subject to
substantial risks and uncertainties. All statements, other than
statements of historical fact, contained in this press release are
forward-looking statements. Forward-looking statements contained in
this press release may be identified by the use of words such as
“subject to”, “believe,” “anticipate,” “plan,” “expect,” “intend,”
“estimate,” “project,” “may,” “will,” “should,” “would,” “could,”
“can,” the negatives thereof, variations thereon and similar
expressions, or by discussions of strategy, although not all
forward-looking statements contain these words. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, they do involve
assumptions, risks, and uncertainties, and these expectations may
prove to be incorrect. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. The Company’s actual results could differ materially
from those anticipated in these forward-looking statements as a
result of a variety of factors and risk factors, including those
discussed in the Company’s filings with the Securities and Exchange
Commission (the “SEC”), including the Company’s Annual Report on
Form 20-F filed with the SEC on October 11, 2023, and available on
its website (http://www.sec.gov). All forward-looking statements
attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these factors. Other than
as required under the securities laws, the Company does not assume
a duty to update these forward-looking statements.
Investor Relations ContactTom Colton or Chris
Adusei-PokuGateway Investor Relations(949)
574-3860LCFY@gateway-grp.com
-Financial Tables to Follow-
Locafy Limited Consolidated Statement of
Profit or Loss and Other Comprehensive
Income(Unaudited) |
|
|
3 months to31 Mar 2024AUD
$ |
|
|
9 months to31 Mar 2023AUD
$ |
|
Revenue |
911,839 |
|
|
2,947,522 |
|
Other income |
25,641 |
|
|
32,241 |
|
Technology expense |
(225,833 |
) |
|
(676,447 |
) |
Employee benefits expense |
(721,580 |
) |
|
(2,322,417 |
) |
Occupancy expense |
(27,959 |
) |
|
(75,055 |
) |
Advertising expense |
(46,287 |
) |
|
(179,151 |
) |
Consultancy expense |
(193,137 |
) |
|
(657,926 |
) |
Depreciation and amortization
expense |
(360,382 |
) |
|
(1,079,660 |
) |
Other expenses |
(4,628 |
) |
|
(46,962 |
) |
Reversal / (Impairment) of
financial assets |
- |
|
|
67,146 |
|
Operating
loss |
(642,326 |
) |
|
(1,990,709 |
) |
Financial cost |
(19,372 |
) |
|
(97,660 |
) |
Loss before income
tax |
(661,698 |
) |
|
(2,088,369 |
) |
Income tax expense |
- |
|
|
- |
|
Loss for the period
after tax |
(661,698 |
) |
|
(2,088,369 |
) |
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
Items that will be
reclassified subsequently to profit and loss |
|
|
|
|
|
Exchange differences on
translating foreign operations |
(26,895 |
) |
|
(9,251 |
) |
Total comprehensive
profit/(loss) for the period |
(688,593 |
) |
|
(2,097,620 |
) |
|
|
|
|
|
|
Earnings per
share |
|
|
|
|
|
Basic loss per share |
(0.51 |
) |
|
(1.63 |
) |
Diluted loss per share |
(0.51 |
) |
|
(1.63 |
) |
|
|
|
|
|
|
Locafy Limited Consolidated Statement of
Financial Position |
|
|
As at31 Mar 2024AUD
$(unaudited) |
|
|
As at31 Dec 2023AUD
$(audited) |
|
|
As at30 Jun 2023AUD
$(audited) |
|
Assets |
|
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
484,590 |
|
|
724,581 |
|
|
3,174,700 |
|
Trade and other
receivables |
1,011,347 |
|
|
868,492 |
|
|
1,288,513 |
|
Other assets |
523,506 |
|
|
453,763 |
|
|
356,782 |
|
Total current
assets |
2,019,443 |
|
|
2,046,836 |
|
|
4,819,995 |
|
Non-current
assets |
|
|
|
|
|
|
|
|
Property, plant and
equipment |
286,419 |
|
|
317,618 |
|
|
380,018 |
|
Right of use assets |
245,539 |
|
|
268,558 |
|
|
314,596 |
|
Intangible assets |
4,652,855 |
|
|
4,022,887 |
|
|
3,720,272 |
|
Total non-current
assets |
5,184,813 |
|
|
4,609,063 |
|
|
4,414,886 |
|
Total
assets |
7,204,256 |
|
|
6,655,899 |
|
|
9,234,881 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
1,853,108 |
|
|
1,289,251 |
|
|
2,507,573 |
|
Borrowings |
271,600 |
|
|
271,600 |
|
|
301,600 |
|
Provisions |
214,082 |
|
|
226,547 |
|
|
214,465 |
|
Accrued expenses |
379,464 |
|
|
357,776 |
|
|
512,611 |
|
Lease liabilities |
124,795 |
|
|
120,287 |
|
|
85,165 |
|
Contract and other
liabilities |
132,529 |
|
|
139,120 |
|
|
152,211 |
|
Total current
liabilities |
2,975,578 |
|
|
2,404,581 |
|
|
3,773,625 |
|
Non-current
liabilities |
|
|
|
|
|
|
|
|
Lease liabilities |
237,011 |
|
|
269,500 |
|
|
332,578 |
|
Provisions |
32,656 |
|
|
33,559 |
|
|
48,271 |
|
Accrued expenses |
90,450 |
|
|
90,450 |
|
|
90,450 |
|
Total non-current
liabilities |
360,117 |
|
|
393,509 |
|
|
471,299 |
|
Total
liabilities |
3,335,695 |
|
|
2,798,090 |
|
|
4,244,924 |
|
Net
assets |
3,868,561 |
|
|
3,857,809 |
|
|
4,989,957 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Issued capital |
48,398,895 |
|
|
47,805,798 |
|
|
47,930,486 |
|
Reserves |
2,774,951 |
|
|
2,696,635 |
|
|
2,404,933 |
|
Accumulated losses |
(47,305,288 |
) |
|
(46,644,624 |
) |
|
(45,345,462 |
) |
Total
equity |
3,868,558 |
|
|
3,857,809 |
|
|
4,989,957 |
|
|
|
|
|
|
|
|
|
|
Locafy Limited Consolidated Statement of
Cash Flows(unaudited) |
|
|
3 months to31 Mar 2024AUD
$ |
|
|
9 months to31 Mar 2024AUD
$ |
|
Cash flows from
operating activities |
|
|
|
|
|
Receipts from customers
(inclusive of GST) |
653,810 |
|
|
2,492,938 |
|
Payments to suppliers and
employees (inclusive of GST) |
(869,017 |
) |
|
(4,183,032 |
) |
R&D Tax Incentive and
government grants |
- |
|
|
561,501 |
|
Financial cost |
(19,372 |
) |
|
(97,660 |
) |
Net cash used by
operating activities |
(234,579 |
) |
|
(1,226,253 |
) |
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
Purchase of intellectual
property |
(483,422 |
) |
|
(1,673,644 |
) |
Maturity of term deposit |
- |
|
|
40,000 |
|
Net cash used by
investing activities |
(483,422 |
) |
|
(1,633,644 |
) |
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Proceeds from issue of
shares |
567,632 |
|
|
567,632 |
|
Payment for share issue
costs |
(45,747 |
) |
|
(291,333 |
) |
Repayment of borrowings |
- |
|
|
(30,000 |
) |
Leasing liabilities |
(27,981 |
) |
|
(55,937 |
) |
Net cash from
financing activities |
493,904 |
|
|
190,362 |
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents |
(224,097 |
) |
|
(2,669,535 |
) |
Net foreign exchange
difference |
(15,894 |
) |
|
(20,575 |
) |
Cash and cash equivalents at
the beginning of the period |
724,581 |
|
|
3,174,700 |
|
Cash and cash
equivalents at the end of the period |
484,590 |
|
|
484,590 |
|
|
|
|
|
|
|
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