Q2 2021 Logiq Inc Earnings Call
[music].
Good morning, and thank you for joining us today to discuss.
For logic second quarter ended June 30th 2021.
Joining us today, our logics President Brent Sun is Chief Executive Officer, Tom from Carla They are joined by Chief Financial Officer of the Companys Dialogic subsidiary rather narrow.
Following their remarks, we'll open the call to your questions.
Then before we conclude today's call I'll provide some important cautions regarding the forward looking statements made by management during the call.
I'd also like to remind everyone that today's call is being recorded and will be made available for telephone replay following the instructions provided in today's press release.
Now I'd like to turn the call over to logics President Trump Sun sure. Please go ahead.
Thanks Rocco.
And good morning, or good afternoon to everyone and some of you is even good evening. So thanks for joining us.
Earlier, we reported our financial results for the second quarter ended June.
We showed another sequential quarter of improvement as we continued to transform our business and focus on higher margin and higher quality revenue streams.
Revenue climbed 3% sequentially to $8.3 million in the second quarter, which followed a record revenue jump in the first quarter of 23%.
But more importantly, our gross margin on this revenue increased sequentially by 190 basis points to a record 29, 5% gross margin.
This compares to just 13, 1% gross margins in the same year ago quarter again for the quarter, we had gross margins of 29, 5% compared to 13, 1%.
In the year ago quarter.
I have to repeat that because I'm actually quite proud of that as our team.
Gross profit increased more than 100% from $1.2 million to $2.4 million from the year ago quarter.
Despite a $1 million decline in revenue. However, this validates the decision we took to move away from the low margin business in favor of higher quality revenues and higher margin revenue in fact, the sequential top line and margin expansion exceeded our expectations, especially when considered.
We had such a strong Q1.
In the second quarter, we also made great strides in expanding and strengthening our business across many fronts in preparation for and ensuring some very strong future growth.
On the App logic front, we released create out 4.0, which.
Which included critical features that were requested by our merchants to simplify stocking and inventory management processes. Additionally.
Additionally, we reported an exciting update with pay logic, the mobile payment technology that is operated by our Indonesian associates, which we call with wip.
We formed a new partnership with mental too, which is the exclusive government license provider for psychological testing that is required for all drivers license applications and renewals in Indonesia.
Using pay logic mental who is going to offer a mobile payment option for testing services.
And this is a huge win for us it's potentially worth millions in annual revenues for web once fully deployed in cars com.
Consequently, enhancing the value of logics strategic investment.
This win is very welcome after months of Lockdown challenges in Indonesia. Even currently however, there are several other exciting developments underway on this and the B P. J S. Social security initiative in Indonesia and over the next few weeks, we'll be detailing those to shareholders.
Also during the quarter and the data logic segment, we launched a new audio marketing channel on the logic digital marketing platform or L. D M for short.
In addition to web mobile and connected television.
Digital marketing agencies and brands on our platform can now add audio based advertising to their overall multichannel e-commerce marketing campaigns via search channels.
As digital radio and podcast.
This is a huge growth area for digital marketing that we can now tap and we have attracted more clients onto our platform because of it in fact more and more agencies are now signing on to L. D M <unk>.
Since our launch just in in April of this year we.
We've been ramping many media buying programs for brands they represent and the account growth of L. D. M is extremely exciting, especially given that gross margins.
For that segment are significantly higher than corporate average again F 'twenty over 29%.
Yeah.
Now, perhaps the most significant event of the quarter was the IPO on the Neo exchange, which is considered candidates premier exchange for emerging growth companies like ours.
Incidentally.
If you look at someone's listings that have that have recently happened there.
Google Tesla and Amazon.
All have their C D ours or Canadian depository receipts, which were just listed on the neo instead of the T. S X.
The IPO on the Neo raised $6.5 million Canadian dollars or $5.3 million U S. Dollars in total gross proceeds and was followed recently by a post IPO raised an additional $4 million which are.
All non Canadian investors, who were not able to participate in the IPO.
We believe that these additional capital resources will support our growth initiatives near term and drive us toward higher margin and profitability goals.
Other near near term catalyst that I will share with you.
First I'm going to turn the call over to the data logic CFO Rod Green Arrow, who will take us through our financial results for the quarter and then our CEO, Tom will walk us through the business development initiatives with our digital marketing technology, which is creating bigger and bigger market opportunities.
Then I'll return with more about these near term growth catalysts and our outlook for the remainder of the year.
Rod.
Thank you, Brian and good afternoon, everyone.
Earlier today, we issued a press release with the results of our second quarter of 2021, which I'll review shortly.
Copy of the release is available in the Investor Relations section of our website.
As many of you know, we manage our business under two reportable segments.
Logic is our mobile commerce enablement, which is delivered by our platform as a service create up.
And data logic, with our consumer marketplace and digital marketing platform offerings.
Now starting with our statement of operations for the second quarter.
Our consolidated revenues for the quarter ended June 30th 2021 totaled $8.3 million.
This marks another quarterly sequential increase compared to $8.1 million in Q1 of 2021, an increase of zero point $2 million or two 8%.
As Brent mentioned, the revenue and most importantly, our gross margins demonstrate the positive trends based on key strategic decisions made by management.
This quarters revenue compared to $9.3 million in the same period, a year ago, a decrease of 10, 9%.
We successfully moved to higher margin revenues consolidated revenues were down from the same period a year ago.
This was partially offset by an increase in Dealogic Robyn.
Up logic contributed 2.8 million or 34, 2% of our consolidated revenues in the second quarter as compared to $5.7 million for the same period, a year ago, a decrease of $2.8 million or 49, 7%.
The decrease from the year ago revenue was primarily due to the transition away from bulk white level distributors to higher margin direct end users.
However, op logic revenue increased 16, 5% sequentially from $2.4 million in the first quarter of this year.
Dana logic contributed $5.5 million or 65, 8% of our consolidated revenues in the second quarter.
This compares to $3.7 million for the same period, a year ago, an increase of 1.8 million or 49, 1%.
Sequentially data logic revenue slightly decreased from $5.6 million in the previous quarter to $5.5 million.
Our gross profit more than doubled in Q2 of 2021 exceeding our expectations.
Our consolidated gross profit for the second quarter was $2.4 million or 29, 5% of revenues compared to $1.2 million or 13, 1% in the same period, a year ago, an increase of $1.2 million or 108%.
<unk> gross profit increased from 0.7 million in Q2 of 2022.0.9 million in Q2 of 2021, an increase in Europe, and $2 million or 37, 9%.
Gross margins also increased from 11.6 million in Q2 of 2020 to 31, 7% in Q2 of 2021.
The improvement in both gross profit and gross margins was primarily due to the Companys plan to transition away from bulk buy level label distributors to direct end users.
<unk> gross profit increased from zero point $6 million in Q2 of 2020 to $1.5 million in Q2 of 2021, an increase of $1 million or 173, 2%.
Gross margins also increased from 15, 5% Q2 of 2020 to 28, 5% in Q2 of 2021.
The improvement in both gross profit and gross margins was due to new customer or consumer marketplace offerings for calls sales in other results driven intent distributed to buyers along with additional depth and intelligence for traffic sellers.
Our operating expenses for the second quarter of 2021 increased to $7.8 million compared to $2.6 million in the same period, a year ago, an increase of $5.2 million or 197, 9%.
The increase in operating expenses was primarily due to the increase in general administrative expense of $3.8 million depreciation and amortization expense of Europe on $6 million and research and development expenses in Europe and $6 million.
The increase in G&A expenses is mainly due to increases in stock based compensation of $1.7 million legal and professional fees associated with the IPO in Canada, and the M&A acquisition, which are one time nature of $1.2 million and an increase in data logics G&A of 0.8 million, mainly from the additional head count to <unk>.
<unk> growth and the addition, so pixel AI unravel AI.
As we further upgrade our technical and operating infrastructure, we will continue to evaluate and implement opportunities to reduce overall operating costs.
Our Q2 of 2021 consolidated net loss totaled $5 million or 27 cents per basic and fully diluted share as compared to a net loss of one 7 million or 14 cents per basic and fully diluted share in the same period a year ago.
<unk> incurred a net loss of $3.7 million in the second quarter FY 'twenty, one as compared to a net loss of four zero point $4 million in the same period a year ago.
This increase was largely due to the increase in operating expenses as previously discussed.
Intelogic incurred a net loss of $1.3 million in the second quarter of 2021 as compared to a net loss of $1.2 million in the same period a year ago.
The increase is due to the additional net losses from fixed salt from the pixel and rebel AI acquisitions of $1.1 million offset by a decrease in the net loss of our legacy business.
Now looking at the performance highlights for the first half of the year.
Consolidated revenues totaled $16.4 million down 32, 6% versus the first half of last year.
The decrease from the same period, a year ago was primarily due to a decrease in the company's plaza platform revenues, which was partially offset by an increase in data logics revenues.
The op loss a decrease in revenues was part of management's strategic decision to transition to market directly to end users, which resulted in higher margins.
For the first half of the year, our op logic platform contributed $5.2 million or 32, 3% of consolidated revenues a decrease of 69, 7% as compared to $17.4 million in the same period a year ago.
Revenues decreased primarily due to management's decision to transition away from bulk light level distributors to higher margin direct marketing and users.
Intelogic contributed $11.1 million or 67, 7% of consolidated revenues in the first half of 2020, one, which result, which increased 61, 9% from $6.9 million in the same period a year ago.
Revenue increased due to additional consumer marketplace offerings and its continued customer growth.
Our consolidated gross profit increased 21% to $4.7 million or 28, 5% of revenues.
Purchased $3.9 million or 15, 9% of revenues in the same period a year ago.
This increase in both gross profit and gross margins further solidifies management's decision to transition to higher margin offerings.
<unk> gross profit decreased to $1.6 million in the first half of 2021 as compared to $2.7 million in the same period a year ago. However.
However, <unk> gross margin in the first half of 2021 was 31% up from 15, 7% in the same period a year ago.
The decrease in gross profit and improvement in gross margin were the result of the change in strategic focus from bulk what level distributors to direct marketing and users.
Their largest gross profit increased to 3 million in the first half of 2021 as compared to $1.1 million in the same period, a year ago, an increase of $1.9 million or $1.71, 4%.
Gross margin in the first half of 2021 was 27, 4% up from 16, 3% in the same period a year ago.
The increases in gross profit and gross margins are due to an increase in data monetization revenues and a decrease in overall customer acquisition costs.
Our total operating expenses in the first half of 2021 increased to $14.1 million compared to $8.1 million in the same period, a year ago, an increase of $6 million or 74, 8%.
The increase in operating expenses was primarily due to an increase in general administrative expenses of $4.8 million depreciation and amortization expense of Europe was $8 million and sell some marketing zero point $6 million.
The increase in G&A is mainly due to increases in stock based compensation of $2.5 million legal and professional fees associated with the IPO in Canada, and the M&A acquisitions, which are onetime in nature of 0.6 million and an increase in data logics G&A of $1.4 million, mainly from the additional head count to support its growth.
The additions of pixel AI and rebel AI.
Consolidated net loss totaled $9.1 million or <unk> 53 per basic and fully diluted share in the first half of 2021 compared to a net loss of <unk> 5 million or <unk> 38 cents per basic and fully diluted share in the same period a year ago.
Our <unk> platform incurred a net loss of $6.5 million in the first half of 2020, one up from $2.2 million in the same period, a year ago <unk> net loss was $2.6 million compared to $2.3 million at the same year ago period.
Now turning to our balance sheet as of June 30, 2021 our cash and cash equivalents and restricted cash totaled $5.8 million compared to cash and cash equivalents and restricted cash of $2.9 million as of March 31st 2021.
Earlier this month, we completed a 4 million financing in the U S.
We believe our current cash levels are sufficient for the foreseeable future.
This wraps up our financial review now I'd like to turn the call over to Tom for an update on our business development Tom.
Alright, Thank you Rod Hello, everyone and thank you very much for joining us today.
Over the course of the past year, we have built an incredibly powerful and robust new technology stack, which is really beginning to bear fruit.
But before I get into the details of business development initiatives with our digital marketing technology I would first like to touch again on the financial performance of our data logic business.
As Rob mentioned Q2 was another record quarter for data logic.
With its revenue up 49% to $5.5 million.
This represented about two thirds of consolidated revenue. This improvement was primarily due to strong revenue generation in our Medicare and finance verticals.
Now looking at Dealogic gross margin it improved from a low 15, 5% in Q2 of 2020 to a record 28, 4% in Q2 of 2021.
This nearly doubling of gross margin demonstrates how we are successfully executing on our consumer marketplace data monetization strategy and objectives.
Our consumer marketplace builds and sells first party data to businesses that require consumer profiles of people, who have expressed a level buying intent for our type of product or service. We operate this business across more than 14 verticals that includes Medicare solar and home improvement home run.
The nation.
And we continue to scale this business by increasing our internal traffic generation efforts, while also enlisting more industry verticals.
It has increased our intelligence defined more engage consumers across a greater number of offerings for potential buyers of our profiles.
Additionally, as many of you know last quarter, we launched logic digital marketing our LDR.
<unk> is an e-commerce marketing platform that helps F&B brands and agencies increased online sales more easily and cost effectively.
In order for F N b's to compete with larger agencies and brands.
Has traditionally required a large ad spend and supporting resources.
Now with L. D M agencies and brands have a partner who can provide them the benefits of enterprise scale and reach but without the associated costs and commitments. They can now reach the same consumers add to their larger competitors, but a fraction of the cost.
In the U S alone.
Mega brands with a top 500 controlled nearly 70% of the U S e-commerce market.
Along with the rising digital media cost hit in marketing technology fees, and fast evolving laws and regulations surrounding consumer data and privacy.
<unk> had been underserved by the fragmented marketing technologies available to them.
We built our largest digital marketing platform specifically to address these challenges.
This means Odeon has been purpose built for both agencies and in house marketing teams.
It is largely based on proprietary technology, we acquired from rebel AI in March of this year.
The technology with rapidly integrated into existing logics operation and quickly made available for new clients to launch there in marketing or e-commerce marketing campaigns.
And in just a short span of time.
More than a dozen agencies such as vegetable sway group in digital have come are contracted with IBM and are ramping up their media buying programs for many brands they represent.
L. D. M enables these agencies as well as in house marketing team strategize and execute more powerful and cost effective e-commerce marketing campaigns by.
By making this platform available through an easy to use fully integrated dashboard ODM enables smbs to more effectively compete against competitors of any size.
A key upgrade we introduced into LTM last quarter. It was audio as a marketing channel.
For example, if your extreme music on platforms, such as Spotify sound cloud or tune in you.
You probably have heard audio ads in between songs.
Audio has become a critical marketing channel for the brands. We serve so we recently launched a new audio marketing channel and L. P M.
L. D. M provides our clients an unprecedented level of insight and transparency into audio marketing channels and enables actionable steps.
<unk> Van software design allows us to easily add and further enhance it with new marketing channels like audio as demand for such channels of lives.
This flexibility and interoperability enables our digital marketing partners to be nimble and responsive and help build campaigns that can deliver unmatched valued and powerful results. We believe these many benefits of more make our <unk> offering highly differentiated compared to other e-commerce marketing platforms.
We are now executing effectively on our data monetization strategy and objectives. In fact subsequent to the second quarter, we announced advances that expand the reach and enhance the capabilities of our E Commerce marketing solutions.
We will further we will be further discussing these advances and others throughout this quarter. So please stay tuned.
Now what's key is that they address head on market opportunities. We are seeing in today's digital marketing ecosystem 20.
20 years ago digital advertising was purchased by negotiating directly with publishers. However, today millions of ads per second our purchase via real time auctions, otherwise known as programmatic advertising.
In 2021, the programmatic market and just in the United States is expected to reach 98 billion and that's been making up 68% of the total market for digital media advertising. According to a report from the zenith decided by the Iab.
Recent advances we made to L D and helps us better serve this huge and rapidly growing market.
We recently announced forming strategic interoperability partnerships to add pre bid contextual data.
Capabilities to LTE M.
This will enable marketers to access in real time, the context of potential media placements.
We also recently expanded our direct media buying access across the Asia Pacific region.
We look forward to providing an update on these new initiatives later this year.
Now, let's transition to key developments in southeast Asia, with our mobile commerce product line create it.
As Brent mentioned, we released create a $4 zero, which marks a significant set of enhancements and an E store modules, allowing simplified stocking and inventory management of Configurable similar products with the three different skus.
The release simplified invoicing and receipt management in the eastern module.
These are the most requested and a way to feature by our merchants representing menu prototypes.
For example for a pair of merchants the E store enhancements allows clients to quickly stock and maintain their inventory and their E stores. This is particularly helpful.
Merchants with a large range of similar but very products, which vary by size style and material variations.
Similarly, digital product merchants with Skus have been different storage memory will display configurations can set up and manage the inventory much more effectively.
The release also includes an enhanced merchant pickup and delivery options, which allows access to delivery services like Golar Jake.
Looking ahead, we anticipate a strong second half driven by increased digital spending compared to the first half of the year.
We will continue to add new verticals to a consumer marketplace.
Expect deeper market penetration in existing verticals that will help drive continued topline growth and margin expansion.
Now before I finish I just wanted to say a huge thank you to the team members in data logic and App logic for your dedication commitment and execution. We are also proud of the things that we're accomplishing that logic.
And with that now I'd like to turn the call back over to Brent.
[laughter].
Wow.
Thanks, Tom.
It's a it's funny when I when I listen to Tom described the evolving products and services that logic offers.
It's actually really impressive because this tiny single product company that we started six years ago in Asia.
<unk> really evolved.
And I think that over the near future actually I know that over the near future.
You will see some amazing progress from us.
As we covered earlier Apple logic revenue was greatly impacted by our decision to refocus on higher margin distribution partners and Furthermore, COVID-19 related shutdowns in Indonesia have impacted sales both for create app in Indonesia, as well as for Wayland isn't it.
In Egypt for cost or wet as a.
Salt, we've actually scaled back on marketing and advertising related.
Cost to Appalachia.
Create absolution until business activity returns to a more normal level.
However, we are developing key partnerships in Indonesia, as we build off of our presence there in order to monetize our mobile intellectual property.
So as mentioned earlier. This includes the relationship with mental too which is the exclusive license provider of government mandated psychological testing for drivers license applications in renewals right.
Right now we are in the process of integrating the pay logic mobile payment solution, which we actually we market under the name of the <unk> PE within Indonesia into the mental to mobile App and payment terminals at in person testing centers. This actually represents the first time that more.
<unk> payments can be made.
Via the mental to app or even if the testing centers in person and this makes it much easier for millions of Indonesian.
Drivers.
To pay for the required tests and to put this in perspective every year, Indonesia issues about $14 million driver's licenses.
It's a huge growth opportunity.
Both for <unk> and certainly for for logic, we will be talking more about that as we move ahead.
But we believe that the partnership with mental two represents further digitization of government services and has the potential to help millions of people more conveniently apply for drivers licenses seamless and contactless alternative to in person testing.
Mental who users will also gain access to our asos go digital wallet, which they can then use to make other types of payments as well as access additional financial services.
Our more convenient payment solution is in line with the government's mandate to encourage more digital participation lower cost and move away from a cash based economy, which it has been for.
Many years now.
We've also been developing a new micro loan program in Indonesia, which is designed to provide mobile fintech services to $5 million contract and delivery drivers of Garda digital Indonesia, which is the membership Oregon.
[laughter] membership organization overseen by B P. J S. T K, who serves as the social security agency in Indonesia.
They also manage the pensions and health benefits for their members.
Fintech platform that we're rolling out makes these micro loans available to their members for both personal or business use.
And this can be used for things such as purchasing configuring, our repairing their mobile vehicles.
This will eventually be introduced to the entire universe of B P. J S is 48 million members actually thats incorrect, it's not 48, I think its 53 million now.
And 600600, 20000, smbs as well as through affiliated organizations, such as mental too which supports the motor vehicle license administration and their members will also be able to access our pay logic E wallet and go logic hyper local food delivery mobile platforms.
So opportunities like this for new revenue streams for micro lending mobile payments and our E. Commerce solutions with this huge user base are tremendous we plan to provide an update in the coming weeks regarding regional expansion and updates on the micro lending initiatives. So please stay tuned I know a lot of people.
If asked about that and we will we will be updating everyone. Shortly.
So.
That being said we are extremely excited about the growth prospects in Indonesia, and some things that I've I've spoken about in the past three calls.
Or that.
Investors are going to start to see it.
Indonesia, and southeast Asia based companies start to go public in the U S. I've said that in the last three calls and also indicated that and live streams and on Investor calls.
As well.
Previously the only public company was with FCA, we've talked about that a lot I think over the past year.
That stock has gone from $40 to over $300 and their market cap is 200 billion.
However.
Two months ago grab also out of the region announced a $45 billion merger with altimeter growth, which is a back here in the U S.
Finn Excel and victory Park are emerging fin excel is out of Singapore and has a specific focus in Indonesia.
<unk> Park is a Chicago based stack. This is a $2.5 billion merger and then there was recently an IPO.
The company name Blucher, Pollock, which is a $6.5 billion dollar valuation so in the past two months, we've had three transactions which give.
Retail investors and U S institutional investors.
Opportunities to invest in growth in the region. So I think it's a it's something that has certainly come to pass and we're going to see a lot more of that what does that do for us what does that do for you all as shareholders.
I think that our original goal of setting out to position ourselves in in the hottest emerging market.
It's coming to fruition and I believe very strongly that as we move ahead, you will see foreign companies interested in the region as well as Super regional parties.
We're into discussions with us on strategic initiatives partnerships or even an outright sale or spinoff of the business, we've been talking about that and I believe.
We'll be talking a lot more about it pretty soon.
As well as <unk>.
Indicating some details.
So yes.
Now that being said these discussions with potential suitors have absolutely picked up this quarter and we're very excited about that.
We're also looking at licensing opportunities of our mobile IP into two other large neighboring countries in South East Asia, which will also be describing soon.
So overall, we believe that data logics offering of a robust digital marketing solution, which now has greater market reach and contextual AD capabilities for brands and agencies combined with the App logic micro lending E wallet in upcoming regional expansion initiatives will absolutely drive.
Increased overall market penetration.
Revenue growth and increased margins over the coming quarters.
So with that I'd like to open up the call to questions. Rocco. If you could go ahead with the instructions that would be great.
Sure.
You'd like to ask a question. Please press Star then one on your Touchtone phone.
We are using a speakerphone please pick up your handset before pressing the keys and please remember on mute your line.
Remember yourself from queue. Please press Star then two.
And today's first question comes from Lisa Thomson Zacks investment Research. Please go ahead.
Hi, guys.
Hey, Lisa.
Hey, Lisa.
I'm, putting in a vote call back at one o'clock.
I'll give everybody more time to look at the numbers.
That's my first of all.
Okay.
Okay.
Well it looks like you had a great quarter revenues.
Better than expected.
That's my first question on my question on that would be I noticed that data logic doesn't actually grow sequentially is there any explanation for that or.
No.
What are we supposed to think about it.
Yes sure sure.
So yes, we did have a slight decrease.
It's also I think it's important to reiterate that.
Obviously, we had great growth overall, but one thing that that affected Q1, so Q1 greatly exceeded expectations, mainly because of the.
ACA enrollment period.
So that actually brought in a lot of.
A lot of activity lots of revenue for US Q1 was a record quarter.
And then some of the Medicare enrollment pause and are expected to resume actually in the latter half of the year in the second half.
So also at the same time, we've introduced additional verticals as we discussed on the.
On the call today that will give us more penetration into home improvement, but the biggest thing that I think we overachieve in Q1.
So the way I look at it is we were close to the record Q1 numbers and then we're also looking really good for that for the second half.
Great. That's a rational explanation. Thank you.
Yeah, you're welcome.
Okay.
I couldn't write as quickly as I would've liked to could you just repeat what you said the one time expenses words too.
Yes, Rob do you want to yes.
Yeah, let me pull it up real quick.
Thank you.
Jody.
Stock base. So go ahead, yet one.
One seven stock based compensation.
Then the one one time in nature, which were mainly like legal and professional fees of $1.2 million, which are more onetime in nature.
Obviously, the IPO and that can in Canada, as well as finalizing the acquisition of rebel which happened in <unk>.
<unk> Q1, there were some expenses that flow into Q2.
So if I take out that one point to from this quarter is that kind of what he's going to look like.
Yeah.
Yeah, Yeah yeah.
I would also.
I think that our stock based compensation is not going to be as high as it was in the first half.
So, yes, I would imagine that if you take out of the one two that basically our normalized operating expenses going forward.
Okay great.
Well they get back and then well I've got you what was that 422000 and other income.
And is that a one oh that wasn't what is that yes that is a one time thing that's the forgiveness of the PPP loan that was recorded under other income.
Oh, okay good to know.
Okay.
Yeah.
So.
Brent of the driver license.
How much is that test cost I assume youre going to get a few cents per test or something.
That's a good question it is about well it depends on the it.
It depends on whether they will they'll be using the app or going in in person they've historically charged the equivalent of about eight U S dollars.
No.
What we're what we're most interested in though is not necessarily the participation in the transaction fee.
Fee, but the data.
Because if they're using the app.
The Q&A on there there <unk>.
I'm, a graphic and personal information all of that is captured too so.
That's.
Probably quite a quite compelling, especially to companies that are.
Or in the motorcycle scooter and.
Auto.
Insurance and aftermarket.
Aftermarket.
Ah Okay.
Interesting and want to start.
We are in pilots now.
We expect to start the rollout within the next well we were hoping to.
This month, but they've they've had a series of Lockdowns Covid is actually.
At the worst point right now in Indonesia. Unfortunately.
Which is.
Not unique to that country, apparently there's resurgence that's going on elsewhere, but.
That that I think actually drives further.
The point to not have the in person tests and creating this the scenario where people use the app more so and with the app they have to use our E wallet.
So are they just not renewing a driver's license.
Like this income Scott.
Even with the renewals you have to have the psychological tests, especially when when it's.
Drivers drivers on scooter or motorcycle that either do deliveries of goods or do ride sharing and there is currently about $5.5 million of those that need to be tested everything I think it's every three months, but all drivers license renewals and new applications.
I have to add the tests as well.
Wow.
Complain about the eye test.
Okay.
Alright.
Okay.
Sure.
Those are my main question. So what do we look for next.
Something of permanent in nature.
From there.
Would that be the next thing we might hear from you.
Without giving away too much.
As I said, a few minutes ago, the discussions that we've been having about a spin off or.
Sale of a stake in the business have stepped up a lot.
I think it's more it's less due to COVID-19 and more due to the liquidity events that have just started I mean, those two spacs went IPO.
I heard that.
Every one of the 25 Unicorn valued companies there are in discussions with with U S based snacks.
Investment banks for IPO.
As well as the secondary list I think there's probably a 100 companies valued between $100 million and $999 million.
Which are in discussions to I mean, it's everyone's active there.
So I think we're going to see a lot more of this and so which has trickled down to our level as well.
Great that sounds great.
Likewise item.
I'll, let somebody else ask them. Thank you.
Cool Thanks, Lisa Thank you Lisa.
Our next question comes from Christian whereas Phase for research. Please go ahead.
Hi, Thanks for taking my questions.
Lisa actually asked one of my segmentation questions and so I'm going to try and ask for a little more color.
Guys actually trough, a little earlier than I thought I mean, you guys beat the estimates like she said and it looks like Youre going forward from here.
So if you did two point what was it it was a 2.8 on the App logic side that beat my estimate by a couple of hundred thousand. So I'm trying to find out is that in a S. P. Raised is that more clients, where where is that coming from and whoever can answer that color that'd be great.
Yes sure Tom.
Yes.
To give some context and then I'll have rod go into more of the numbers.
And so the first half.
Well, we talked about so Q1, we would be definitely and beat our own expectations as well with Medicare growing.
And as we started to look at.
The data logic and really the the the selling of our.
The data and.
And we started to really become.
I guess really good and become profitable and very specific vertical segments.
So we mentioned things like home renovation.
Solar.
Those are doing well in addition to Medicare and so what we've done is started to add more verticals.
Things around insurance for example, and so that part of the business and their logic is continuing to grow and we can leverage our best practices, our infrastructure as well as our data to be able to enter more and more I would say adjacent verticals. That's really interesting. So are each of these new verticals growing at same rate, let's call. It.
I mean, they're very very much different in terms of growth, but they're also very established and that if we provide high quality data that <unk> insurance company you can then.
Really used to be able to find more customers.
We start to do those type of things and we continue to succeed in providing quality results, we get more and more business and.
Okay partnership Yeah, So Uh huh.
How many then the question is then how many more verticals do you got to go.
Yeah, I mean right now we're in over 12, I think it is going to be doubling that but maybe adding a few more.
Let's say, maybe two or three in each of those verticals could have.
Pretty pretty good.
The revenue and also we're very much careful to ensure that the margin profiles are always increasing bit by bit and that's another part of our businesses, we could jump into a bunch of different things and just focus on revenue, but what's important is the margin profile, increasing along with the revenue and Thats why were.
It got to enter each new vertical carefully we got to test it make sure that the entire supply chain is working well and then we will spend more money into it which gets me to data logic. Okay. So you guys came in with what was it five eight.
That's right yeah, something like that.
Just to clarify that data logic.
Yeah, Yeah, yeah yeah.
Yeah.
Yeah, yeah, Okay. So that kind of beat my estimate to buy half million and so was that a salvaging of higher gross margin clients was that in the well you know how it gives me color around how you were able to have that.
Now be salvaged enough to sequentially grow from Q1.
I mean Q1 over total revenue.
So sorry could you can you can ask your question again in terms of okay.
On the data logic side, it kind of beat my revenue estimate by about a half a million or so and I'm trying to find out how that did that so it was that again was that salvaging some of the revenue in a in a different part that you saw that didn't have to be sacrificed was that actually a new clients you know what was that.
That actually did that revenue beat there. Thank.
So that one yeah, yeah that was I guess more on my previous question as you know for US it's deeper penetration into existing verticals are in and then adding additional.
That contributed to the increase in revenue and then she asked the question that I had which was you know how much was fixed cost out of there so $1.2 million being kind of like taking out for next quarter is kind of how we should be thinking about the expenses going forward.
And that's it so okay. So you said a casual foreseeable future are you quantifying foreseeable future.
Yes, Rob you want to take that one so what was the question again, just how long do you think I mean, the cash you know it was for the.
For the foreseeable future are you quantifying that are putting anything around that because you know you guys are ramping up it looks like gross margins are going the right way if cash could get you to somewhat profitability or somewhere breakeven or cash flow.
That would be terrific.
Yeah, no absolutely and you know.
As Brad mentioned with the Canadian IPO that we did army our gross profit were roughly $5.3 million and the subsequent financing round that we did here in the U S last week earlier this month of $4 million.
I think that'll give us some runway, but we'll probably have to do a subsequent event later in the year, probably closer to the end of the year because as you mentioned, where we're growing.
Were having new businesses you know entering that are also growing with the acquisitions of both fixed one rebel.
Our L D M as we call them so.
Yes, we expect cash to last.
For for the foreseeable future, but we will have to do subsequent races.
More towards the end of the year.
It's going in the right direction. Thank you so much.
No question I think to add to that I think it's safe to say the the large one time expense.
It was really behind us.
Q2 to represent the peak cash burn if you will especially the one time expenses, but the area that we're investing in is really within sales engineering and marketing.
And that's so that's going to be really tied to the continued growth of data logic. Because we are in the right verticals, we're seeing really good customer success with the with a dozen or so agencies on the platform.
And then really we want to set up set us up for scaling significantly next year. Yeah. No. It's certainly lived all integrated yeah. It looks all integrated in and ready to go and invest it yes. Thank you so much youre welcome.
Thanks Christian.
If you'd like to ask a question. Please press Star then one our next question today comes from Tony.
Investor. Please go ahead.
Yeah, Hi, Brian This question is for Brent.
I know Ah congrats on the earnings release, I know you've been working very hard to increase the gross margins.
I also know that you are particularly aware of the market difficulties and listing on the OTC.
Which can contribute to low multiples.
Cause institutions generally wary about investing there.
Lifting on the Jennie O is a great first step.
My question basically is when do you believe logic will be able to list on the either the New York stock change on NASDAQ and does the company have any preference.
Oh good good question Toni Thanks.
Speaking to the Neocart, it's a it's actually been pretty exciting.
Since the IPO.
Actually about two weeks after the IPO.
We started receiving regular requests for calls from.
Brokers and institutional investors, there's around I think 14000 wealth managers in Canada.
And that's the equivalent of <unk>.
Brokers here in the U S.
I'd say I'd, probably have a call every day, sometimes two a day.
From individuals who manage.
Fair amounts of.
If money for clients, so that's been quite exciting.
And since we are now listed on our primary exchange.
I think that's really stepped up some confidence from institutional investors of which we've had a number of requests and calls as well so things have absolutely stepped up on that front.
As far as uplift uplifting the OTC shares we don't really have a preference.
What I would say is that we meet all of the requirements and if at least $3.
Per share number we qualify as well so ideally what you want to see us.
Consecutive trading for call. It 20 days and then submission of an application that's generally.
<unk>.
The way to do it so.
When we do.
We will absolutely, let our shareholders know where.
We've mentioned before that we're intent on doing that.
And we will update everyone when we do.
Thanks, very much for the answer Brent.
Yeah absolutely.
And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Mr. Sun's. Please go ahead Sir.
Thanks, Rocco I would like to thank everyone for taking the time to join us for the call today.
We had a strong second quarter, which was highlighted by sequential revenue and margin improvement.
We believe this reflects how we've created a very strong foundation for growth in 2021 and beyond.
We look forward to keeping everyone updated on our progress and in the Meanwhile, please feel free to reach out to us with any questions.
Our thoughts you'd like to share.
Incidentally many of you do since my number and email are published so the rest of you. Please reach out love to catch people up on what we're doing because it's extremely exciting.
Thanks, again, everyone and look forward to speaking again in the next quarter Rocco. Please go ahead and wrap up the call.
Thank you.
To conclude today's call I would like to provide the Companys safe Harbor statement that includes important cautions regarding forward looking statements made during today's call statement.
Statements made by management during today's call may contain forward looking statements within the definition of section 27, a and the Securities Act of 1933 as amended and section 21 E.
The Securities Act of 1934 as amended.
Forward looking statements should not be used to make an investment decision.
All statements other than statements of historical fact included herein are forward looking statements, including statements regarding the continued growth of the E Commerce segment and the ability of the company to continue its expansion into that segment.
The ability of the company to attract customers and partners and generate revenues.
The ability of the company to successfully execute its business plan.
Business strategies strategy plans and objectives of the company and any other statements are not historical information.
These forward looking statements are often identified by the use of forward looking terminology, such as believes expects or similar expressions.
I have known and unknown risks and uncertainties.
Although the company believes that the expectations reflected in these 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 conference call.
Actual results could differ materially from those anticipated in these forward looking statements as a result of a variety of factors, including those discussed in the company's periodic reports filed with the Securities and Exchange Commission.
On its website www Dot S E C dot 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 securities laws. The company does not assume any duty to update these forward looking statements.
Before we end today's conference I would like to remind everyone that this call will be.
A replay starting later this evening.
Please refer to today's press release for dial in replay instructions available via the company's website at Www Dot logic Dot com.
Thank you for joining US today. This concludes today's conference call. You May now disconnect your lines and have a wonderful day.