Q4 2021 Logiq Inc Earnings Call
Good morning, ladies and gentlemen, and thank you for joining us today to discuss the results of logics fourth quarter and full year 2021 ended December 31st 2021, joining us today are <unk>, Chief Executive Officer, Brett Sun President of data logic, Hegg, Newton Chief Financial Officer of data <unk>.
Rick why don't show.
Following their remarks, we will open the call for your questions.
Some important cautions regarding forward looking statements made by management during today's call I would also like to remind everyone that today's call is being recorded.
Available for telephone replay following the instructions provided in today's press release that was issued premarket.
At this time, well, if you're more or less serious was dialing in I'll read the obligatory safe Harbor statement.
This tough conference contains certain forward looking statements and information as defined within the meaning of section 27, a of Securities Act of 1933 as amended and section 21 E of Securities Exchange Act of 1934 as amended and is subject to the safe Harbor created by those sections.
This press release also contains forward looking statements and forward looking information within the meaning of Canadian Securities laws.
Legislation that relate to <unk> current expectation and views of future events any statement that expresses are involved discussions as to expectations beliefs plans objectives assumptions or ford or future events.
Our performance is often but not always through the use of the words or phrases such as will likely result are expected to expects will contain as anticipated anticipates believes estimates intends plans forecast projection strategy objective and outlook are not historical facts and maybe forward looking statements and may involve.
Estimates assumptions and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in such forward looking statements no assurance can be given that these expectations will prove to be correct.
Such forward looking statements included in this press release should not be unduly relied upon.
He spent statements speak only as of the date of this conference teleconference. Forward looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, which may.
Which are beyond <unk> control, which could cause actual results and events to differ materially from those that are disclosed or implied by such forward looking statements in particular in particular without limitation. This press release contains forward looking statements regarding our products and services.
They use and or ongoing demand for our products and services expectations regarding our revenue and the revenue generation potential of our products and services, our partnership and strategic alliance potential strategic transactions the impact the global pandemic, including COVID-19, I'll live with demand of our products and services industry.
<unk> overall market.
Growth rates, our growth strategy and continued.
Truth of the addressable market for our products and solutions, our business plans and strategies, including without limitation, our ability to successfully negotiate and finalize purchase agreement governing the terms of such acquisition.
The structure of this transaction timing of the transaction the value of the success of the company's prior press release and in its filings with the Securities and Exchange Commission SEC, including its annual report on Form 10-K and any subsequent.
Public filings and filings made pursuant to Canadian Securities legislation that are available on the www dot.
Theater Dot com include.
Including under the heading risk factors in the company's Canadian prospectus.
Logic undertakes no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise, except as may be required by law.
New factors emerge from time to time and it is not possible for logic to predict all of them are assets.
Impact of each such factor or the extent to which any factor or combination of factors may cause results to differ materially from those contained in any forward looking statements any forward looking statements contained in this press release are expressly qualified in their entirety.
By this cautionary statement at this time I'd like to turn the conference over to Brent <unk> Chief Executive Officer. Please go ahead.
Thanks Keith.
I wanted to thank everyone for joining us today.
<unk> for any convenience has caused from the postponement.
Of our call from a day before yesterday we.
We actually had to strongly positive corporate developments in the past 72 hours that converged concurrently with closing out the audited fiscal year in preparation for this call.
As we announced yesterday, we closed the Battle Ridge acquisition right on schedule.
An important and exemplary deal. It is an acquisition of accretive cash flow and what we believe to be excellent synergistic business fundamentals. This is the type of deal that we plan to replicate.
Over the year.
Secondly, we also just completed a $3 million equity capital raise strengthening our balance sheet with the liquidity to do more deals like Battle Bridge, we issued 3 million shares or approximately $3 million.
Certainly no one has been happy with the share price recently leased them all myself.
Having bought.
145000 shares in the open market last year at a cost average of about $3 60.
Not necessarily making me the savviest stock ticker, but I believe it does indicate my belief in what we're doing.
I'd like to address the fourth quarter and fiscal year results and outlook and then circle back for further discussion of the Battle Bridge highlights.
After which we'll open up for questions.
As Keith our operator mentioned joining us today are Haig Newton, who is the incoming president and Chief strategy Officer of logic Hague, founded push interactive, which we acquired.
A couple of years ago and have rebranded it as data logic.
Our Chief operating officer, Jon Mcneill, Who's been working with us for.
Six and a half years now and then our Chief Financial Officer.
<unk> Chung.
Who has been with us for nearly eight years since we started.
Although most of you have communications with me or have heard me speak on calls and interviews I thought. It was it's important for you to know that there are many talented people who work here and incidentally I just got back from our main offices in Minneapolis, where the team overview their growth and strategic plans and I can.
Readily say that this is the highest morale and sense of optimism I've seen.
And I'm extremely proud of the team there.
I'm happy to report this morning that logic posted solid fiscal year 2021 results or financial performance and business achievements were excellent and we have built a solid foundation to set our business upon a good trajectory of revenue growth and margin expansion.
Through this year and beyond.
I'm also happy to say that we closed the battle bridge deal on schedule as per the letter of intent announced on February 17th.
And as that's the newest news I'll discuss it before circling back to fiscal year results.
That'll bridge is a leading boutique provider of digital brand marketing services that include what are called pay per click management.
Social media marketing.
Funnel creation optimization CEO .
<unk> web design conversion optimization a lot more.
Sometimes the jargon a bit daunting.
In the tech sector. So we will try our best to make it simple.
They have a number of big tech partner accurate accreditations, and they've been solidly visible and the trade media over the years.
We anticipate booking approximately $3 million to $4 million in revenue over the next 12 months of operations and more importantly, we expect the acquisition will be accretive to our EBITDA numbers.
Adding over $1 million in EBITDA cash flow in the same timeframe.
We acquired the Battle bridge assets, which include their customer lists and contracts trade names and trademarks.
Marketing resources and assets proprietary tech and processes.
And more and especially their team.
For $3 million to $5 million, which the total consideration is predominantly restricted stock.
And as part of this deal we are very happy to be retaining.
Numerous key employees with many years of digital marketing expertise.
The valuation is approximately three times this year's EBITDA.
And to put that in perspective, the average price to EBITDA.
On acquisitions this past year, we've seen between eight to 10 X. That's that's actually those are actually benchmark numbers.
Per the databases that track merger and acquisition activity.
We've also seen them as high as 12 to 15 X. So a three X. It was an extremely attractive valuation. This was made possible by both our teams' understanding that our evaluation that logic is.
Extremely attractive.
I'll add that our industry is highly fragmented and ripe for consolidation and while every deal is different Battle Bridge is a perfect example of the solid businesses in Smart management teams that we're currently evaluating that only need scale to reach their full potential.
There are a lot of companies that we're seeing that that are offered at low valuation multiples and they saw their business go away during the pandemic and have struggled to regain their footing.
We are looking at acquisitions and integrations of others.
Some are much larger some are smaller.
And as we pinpoint them and move forward on them, we'll certainly.
Let everyone know.
That reminds me of the acquisition of push interactive.
Back in January 2020.
Most of you all know it is data logic I wanted to speak to this because.
Not as a Pat on the back, but I think as as.
Being exemplary of what strategic acquisitions can do.
The team there.
Revenues in 2019 of $9 million.
In 2020, they expanded to $15 million and then last year contributed nearly $24 million in revenue and at the same time increased gross profit margins significantly.
Or almost a 40% compound annual growth rate, which I think many of you will agree that that is significant.
Again, I point this out because the importance of a business and the team's ability to execute on growth.
It's something that is Paramount we firmly believe that the babble bridge acquisition combined with logic will create the same type of growth opportunity.
Going back to the fourth quarter and fiscal year, we have pivoted our business to focus on higher quality and more profitable revenue streams and this is already more than doubled our fourth quarter gross margins to 30% from one year ago, We also announced record fourth quarter revenues, which also double.
Over the previous year to $13 1 million and exceeded our company's January 6th pre announcements by $800000.
Excluding the App logic business, which we have rebranded as <unk> logic, which is the spin off.
Logic 21, 2021 full year revenues increased 51, 8%.
Last year.
Our strong revenue growth and margin expansion achieved last year demonstrates that our retooled business plan is succeeding it is still early in the phase.
In 2021, we took several steps to enable much higher levels of growth and profitability on our advertising Tech and marketing Tech digital platforms that we expect will now allow us to scale to over $100 million in annual sales without significant capital expenditures.
While that entailed letting some low margin customers go through attrition and shifting to somewhat longer sales cycles to close larger higher margin customers.
We believe that that pivot is largely behind us and we now have an active and growing pipeline of more profitable customers with whom we will build our business by helping them build theirs.
We've also restructured our management to provide dedicated expert teams for both logic and go logic.
In the fourth quarter and in the first first part of the first quarter of this year, we transferred the go logic assets two Lavarra, which is currently on the OTC market.
Logic controls, 97% until the spin off of those shares is completed to our shareholders of record of December 30th last year that will happen in another three months or so.
And all of this frees up both companies to focus on their respective businesses and markets.
By spinning off the go logic assets.
It allows go logic to more nimbly pursue highly scalable profitable businesses, and it's underserved southeast Asian marketplace and focus on its own higher quality customers and revenue.
Applied to FINRA to change the name to go logic and secure a new corresponding ticker symbol. So it will change from Lavarra.
Incidentally.
FINRA is currently taking about three to four months for things.
Benign as name change.
But.
That's that's.
That's their issue. Additionally.
Additionally, the separation that logic and go logic.
<unk>, both the ability to close strategic accretive mergers and acquisitions in fast growing and highly fragmented industries.
Logics acquisition criteria, while screening for accretive EBITDA is specifically targeting prospects that provide excellent customer base cross selling and up selling opportunities as the post acquisition growth driver.
And I would finally add that the management team at go logic led by Matthew Brent and Chris Metcalf, our operating with a high level of discretion and will only announce things on there and when they are required to by regulators being on the board of directors there I am privileged to see the rapid progress and believe.
Shareholders will be duly impressed when things start getting announced.
COVID-19 has obviously had a depressing effect on most small businesses and their current valuations and we see that the pursuit of strategic accretive acquisitions, as a fast and logical way to gain operational and financial scale to drive growth and margin expansion will also increase.
<unk> market share and penetration.
Our strategic M&A pipeline of accretive acquisitions is expected to be a key catalyst for this year revenue growth and certainly onwards.
Margin expansion and market share gains.
So looking ahead through 2022, we are also actively planning to create and integrate our own Nf.
In Ftes non.
Fungible tokens I know many of you have heard that as a buzz word.
Haig Newton, who will speak about it.
By no means a.
Late stage.
Participation.
It's something that we've been looking at for a long time Hague and the team have been working on it and we will start to describe that as we approach the go to market.
At this time I would like to turn the call over to our Chief operating Officer, John Mcneil, who will quickly review, our fourth quarter and full year 2021, and the results John .
Thanks, Brent we want to leave plenty of time for Q&A. So I'll go through these numbers quickly.
For the fourth quarter of 2021 consolidated revenue increased 99, 5% to a record of $13 $1 billion compared with $6 6 billion in the year ago quarter as the COVID-19 impacts began fading and we shifted our focus and business mix to higher margin revenue.
For the App logic segment soon to be known as go logic R. M Commerce platform as a service contributed $6 $2 million or <unk> 47, 3% of fourth quarter consolidated revenue, increasing by 193, 7% from $2 1 million in the year ago period the.
The increase was driven by the strategic shifts toward higher margin end customers and away from low margin high volume White label resellers.
Turning to the data logic segment data logic platform.
Revenues contributed $6 9 million or 52, 7% of consolidated revenue, increasing 55% from $4 5 million a year ago. The revenue increase was primarily due to a large increase in our data monetization business, particularly in the Medicare and home improvement verticals.
Fourth quarter consolidated gross profits.
Increased by 193, 6% to $4 1 million or 31% gross margin compared to $1 $4 million or 21, 1% in the year earlier quarter. So good improvement there.
The gross profit improvement reflects better scale from higher revenues as well as the strategic shift to higher margin and customer segments.
Total operating expenses increased just nine 8% to $9 4 million from $8 5 million in the year ago period, largely due to the inclusion of the operations of rebel II and increased sales commissions associated with higher revenues.
<unk> operating expenses were $2 $9 million in general administrative expense sales and marketing of $1 $1 million and research and development of $3 $4 million. The fourth quarter net loss was $5 $3 million versus net loss of $7 $1 million a year ago. So an improvement there.
As of December 31, 2021, the company's cash cash equivalents and restricted cash totaled $1 $6 million.
Now moving onto our full year financial results ended December 31, 2021, consolidated revenues decreased one 5% to $37 $3 billion compared with $37 9 billion for 2020, primarily due to the 37% decrease in App logic revenues due to the shift away from White label App resell.
And towards higher margin direct marketing customers.
Excluding the <unk> business logic revenues increased 51, 8% to $23 million from $15 2 million for 2020 gross profit increased a robust 73, 8% to $11 $1 million for a 29, 6% gross margin as compared to $6 $4 million and a 16.
8% gross margin for 2020, so a nice improvement there.
Total operating expenses increased 53, 4% to $31 6 million for the full year of 2021 up from $20 6 million in the year earlier period, primarily from higher data logic operating expenses that increased $8 $5 million in the year over year period.
Net loss was $20 $1 million or <unk> 95 per basic and fully diluted share in the full year of 2021 compared to a net loss of $14 5 million or $1 14 per basic and fully diluted share in 2020. The increase in the net loss was primarily due to the net loss from data logic higher R&D.
General and administrative expense as well as stock based compensation and an increase in depreciation and amortization. So a couple of noncash items in there.
As of the end of fiscal 2021 December 31, 2021 cash and cash equivalents.
The $1 6 million.
For the full year 2022, we are targeting revenue to be in a broad range of $50 million to $75 million with variance driven by the pace of M&A closing as Brian was referring.
At the lowered that range, we would expect to be breakeven on an EBITDA basis.
On an organic basis that is with deals that have already closed we would expect to be EBITDA breakeven by mid 2023 and would expect to attain profitability by late 2023 again. These expectations are based in part on our potential deal pipeline, which includes M&A partnerships and other client relationships.
Now I would like to turn the call over to Hank noted who heads our data logic business and he gives our incoming president and Chief strategy officer over to you Hague.
Thank you John .
<unk> results in Q4, and congrats to all teams on the efforts for a record quarter.
I wanted to briefly touch upon what we plan to do to improve upon the success, while capturing new bids into the current digital transformation phase.
It's an exciting time in the technology space and I'm happy to be able to discuss it with you today.
For context, our track record of success has been driven by creating harmonious relationships between both buyers and sellers that used paid advertising, creating a positive business outcome.
This outcome and harmony drives everything we do at logic.
Day, we execute this in two ways, which are commonly referred to as LCM logic consumer marketplace and L. D M logic digital marketing within our marketing collateral.
LCM as a performance based marketing unit that generates results or buyers on a cost per lead cost per sale basis, we utilize a portfolio of brands and a variety of markets that create first and zero party data.
This allows logic to capture consumer interest or intent into these vertical vertical markets.
L. D. M is SaaS driven digital marketing all in one platform that creates access where campaigns into any channel.
It combines a DNP and DSP for users to amplify messaging using our clients first party data.
This allows logic to provide actionable data for syndication quickly and easily.
Both LCM and LTM share core element. This core includes data insights brands placements and intelligence as a way to mine for those positive business outcomes.
When we refer to this as logics consumer intent core.
This flywheel of data provides us an advantage in capturing higher quality consumer data at a lower cost through intelligently targeting consumers activating smart campaigns and amplifying our messaging across any media channel or even within our brands and communities that we built.
To put it simply growing this core is a primary objective for logic in 2022, and we believe that our focus on creating actionable consumer intent will be a primary value driver for all aspects of our business.
The contribution LTM provides two logic are powered by our commitment to creating brands in communities, which address the pains of consumers across multiple verticals.
By adding Battle bridge, we gain a driver to grow and deepen our set of first party brands as communities.
We began working with Battle bridge, many months ago, completing an API integration and have recently launched our new brand called Copia aimed at the insured tech market.
This expands the reach of our lead generation team by offering the consumer deeper insights and experiences to make finding the right insurance plan easier.
That'll bridge also brings a seasoned team of digital marketing experts with a track record of success as a growth marketing agency.
With critical production and content resources from Battle Bridge logic can expand our presence into larger addressable markets faster.
Now logic and participate in an agency role.
As a SaaS do it yourself solution or in a results based format.
We look forward to working closely with the Battle bridge team as they integrate into logic.
From a product perspective, we have been focusing on going direct and closing the loop.
We have launched the first iteration of our platform targeted at the SMB market.
Livered leads directly to the businesses engaging with our consumers.
This allows new clients to first independently onboard review and acquire consumer data through a do it yourself web application.
Set filters and thresholds around the right cost and various aspects of each lead delivered.
Third engaging with both our internal machine learning learning algorithms and third party, scoring metrics to evaluate this prospect data in aggregate.
These efforts and going direct allow logic to close the loop on attribution.
Having both traffic generators and buyers all transparency into the consumer journey.
<unk> midstream through the consumers request for services and products.
Transparency will enable logic to step forward as a market leader in regards to the pricing quality and traceability of our results.
Lastly in from our incubation lab.
We have been quietly working in web three using blockchain technology, the non fungible utility tokens and our marketplace format.
Using our zero party data communities as a guide.
Within wet three frameworks, we see an opportunity to address the growing concerns around data privacy. We are actively exploring concepts around loyalty tokens and consumer participation in conjunction with identity wallets to deliver transparency control and even compensation, providing fresh zero party data to our clients.
This is just one example of the many opportunities which logic is actively exploring to deliver sustainable growth for logic shareholders within an evolving technological and regulatory landscape.
We are excited for the year ahead and continue the growth we have achieved.
Right.
Thanks, Jay and with that Keith let's open it up for questions. Please.
Thank you, ladies and gentlemen, if you like to ask a question. Please signal by pressing star one on your telephone keypad using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again. Please press star one to ask a question, we'll pause for just a moment to give everyone an opportunity to signal for questions.
Yes.
Yeah.
We'll take our first question from Tony <unk> private Investor. Please go ahead.
Thank you.
This is an excellent conference call Brent and individuals that logic. Thank you very much and I agree it's been a great year for logic, except for one thing the <unk>.
Their price.
My name is Toni 40, before I retire that was in charge of the chain analysis Division at the American stock exchange.
My tenure, there Ryan its significant interaction with the SEC.
I'm pretty sure that all shareholders on this call.
Extremely concerned about the share price of logic.
Despite a super report today, the stock traded down to 85.
All time low.
Down another seven.
An active change of about a 115000 shares.
I want to emphasize that in my opinion.
Absolutely nothing wrong with logic.
One of the most undervalued stocks in the marketplace.
However.
The share price is faced with continuous substantial manipulation on a daily basis.
The manipulation began in October 2021, and.
And we felt that some of the logic offering in June of 2021.
The firms who are engaging in this manipulation.
Purchase a substantial number of the units that were sold in the offering.
Following the offering the firm's solve all of their common shares and.
And subsequently exercised approximately 50% of their warrants and sold those shares.
They had an exercise of warrants, which were held as a hedge against the possible tender offer for logic.
During every trading session.
The manipulating firms enter substantial office to sell logic within a few minutes after the opening I'm sure most shareholders, who look at the trade.
See that.
Orders are all computer generated utilizing a developed algorithm.
The order is that designed to push logic Lola.
So that shareholders will panic and sell their positions.
As logic declines.
Additional cell orders are placed at or slightly above the last sale.
The computer that generates violence.
Below the last sale.
If it to cover the short positions and make a profit.
This strategy can occur multiple times during each trading session.
It is extremely important for shareholders.
To realize that the manipulative strategy will only work if shareholders panic sell their positions.
Without shareholders selling the manipulating firms will have no choice but to.
Move onto another victim, which is what we hope.
When the stock.
Rallies.
So the $3 range.
That would mean that the share price.
The Canadian share price would be approximately $4.
The shareholders the manipulating farmers will exercise their warrants.
Sell the shares and probably move on to another ratio.
They've made substantial amounts of money on this.
And the money started in October of 2021.
Because by holding these unexercised shares as a hedge.
They were able to manipulate the stock daily and they do it every single day, they're not interested in driving the stock down 2030 sensitive session.
They are interested in doing is dropping the stack three or four cents have.
A substantial amount of office around the last sale, which will panic sales into selling they will buy the shares makes it three or four cents and then continued that practice all the time they are not concerned about the.
Bob.
What the company is doing.
I don't believe these times even have an analyst.
That looks at what the companies are doing they have a certain computer strategy. They use the computer generated off quarters.
Push to stop that.
And they've been successful up to this point.
I know.
Brent is trying to do everything possible to eliminate the manipulation.
Enhance shareholder value.
And I'm sure he will be successful.
But in the meantime, if shareholders panic.
Because they see the price going down it just allows them to continue their manipulation.
I personally have written letters to some of the firm's strong letters that I was told.
And I told them they were manipulating the stat that I explained how they were doing it but there was no avail that continuing to do it I also wrote letters to some of the market make us accepting new orders.
The demo.
Customer rules of the SEC and FINRA.
Some of the market make us stop taking the orders.
It's relatively easy for these times to find a new market.
Calling or writing to the SEC FINRA is probably a waste of time.
I do not have the manpower.
To do check all the manipulation that cars on the OTC market.
So I don't believe they do much at all on the OTC market.
And if for some reason they were going to do it it would take them a year or two to actually.
Complete any kind of a study.
The problem is is that piece.
People that go to the SEC for a job.
They go to the FCC to get it on their resume.
In a year or so after they leave the SEC and they get a job on the streets of tier four times the money.
So I appreciate this appetite talking to you.
I believe this is one of the most undervalued stocks on the OTC on the marketplace in general and I think eventually with brands help.
The stock will move up to the level it should be treated.
Thank you very much.
Okay.
Tony.
Appreciate that.
We'll take our next question from <unk> <unk> with research capital. Please go ahead.
Thanks for taking my questions, Congrats Brian John or an egg.
Excellent quarter.
Firstly I wanted to ask about Europe .
Guidance for next year, you mentioned the guidance seems to be very good 50 to 75 millions of revenue, but how should we think about the.
Guidance for the just the logic segment.
Yeah.
Thanks.
What we are the way I described it.
Okay.
Acquisition.
<unk>.
For the data logic segment, so organic.
Growth, which is my second comment without those acquisitions.
As you know.
More or less in line with discussions that we.
We have had but that the inorganic growth is what we would be adding through the M&A pipeline.
So thats.
That may not answer your question directly, but it's I don't want to give too much more specifics in terms of the absolute numbers, but.
In terms of talking about EBITDA breakeven and things like that I think we've given you some indication as to what we think the organic capacity is versus the <unk>.
Capacity with M&A.
Okay excellent.
And.
I was looking at the <unk>.
Economics.
This company seems to be a really good company because they have like annual revenue or one 4 million and are able to generate positive.
Positive EBITDA.
When we look at.
And then just a standard on a standalone business.
Data logics.
Margins are these.
These are their biologic is currently at an annualized revenue of around one 3 million, but the margin in the struggling to make positive EBITDA. So what might be the difference between a battery of returned or data logic because.
The dividends coming from operating expenses.
The difference in gross margin profile of both companies how should we think about this.
Yeah.
Battle Bridge as gross margins are.
Better than our corporate averages there, they're probably not as high as what we would see from.
L J M.
I would say also that as a private company it.
It doesn't have the corporate overhead associated with public market.
Public market functions that we need so that's one reason that you see it but we can.
Hopefully tuck it in as it is and just.
Getting the benefit of the EBITDA performance that you've that you called out.
Just to be clear the.
The $3 million to $4 million.
Target that was discussed as a as a forward look though they have certainly done such revenue than in the past in the recent past as well so it's.
You're basically on track there.
But we expect it would be beneficial to gross margins and beneficial to the top line as well beyond what.
We have discussed this organic growth for data logic.
Okay. So the impact of a battle bridge.
It will be felt in the last three quarters of 222 right.
That is correct.
Okay. Thanks, Thanks, a lot John on the thanks, a lot guys and all the best for the next quarter. Thank you.
Thanks, Dan Thank you Ben.
We'll take our next question from Lisa Thompson with Zacks investment Research. Please go ahead.
Good morning, guys.
So let's go back to Lisa.
Hi, there.
Let's go back to Battle Bridge, just a little clarity on that are they bringing you new vertical.
Or new customer like what is there what's the attraction.
Well, there most definitely bringing new customers.
And some of the verticals overlap, but they are by and large new verticals I think one of the interesting aspects of it is that they do a significant amount of creative work that is providing a.
More engaging content, so where we do overlap we expect to improve.
That that part.
Of the engagement with new vertical sorry.
Yes. Please.
Please.
I would.
Is there I believe we just lost connection.
[laughter] to whom.
Verifying one moment.
I believe it was Brent.
Okay.
One moment I will attempt to reconnect.
Okay.
Yes.
But if.
If you're on you might want to speak to this but at least say, yes, we're gaining we're definitely gaining customers, it's accretive both top and bottom line margins.
There is some overlap, but it's helpful overlap in the verticals that we are.
We share because we want to come to more engaging content in their exports are creating that.
Okay that sounds good so when do they get their shares.
Or did they get them already.
Well they they will have been delivered them as a result of the close of the acquisition, but they would be restricted shares.
So.
Subject to a lockup and leak out.
So I'm just curious.
Yeah.
Hi, Brett.
Oh, Hey, sorry, Brent.
You were about to speak when I guess, you've got dropped so if you want Oh yeah.
I hope you're right.
Sure.
No no problem I Hope you had an already covered it I was going to also.
Illustrate an example of where we see the.
The.
Additive impact of Battle bridge so.
Yeah.
John This is correct on them, bringing us new vertical.
Participation and also.
Additional customers.
To give an example battle bridge is currently.
Doing digital marketing services or for all of their clients, but that is limited to Facebook and Google.
Specific ads that does not include whats called programmatic advertising.
Which they believe is is significantly higher than the revenue that you generated from Google and Facebook that they are covering.
The acquisition, we made last year of rebel AI brings the ability to offer programmatic advertising to the Battle bridge clients you combine that with what we're doing.
At logic consumer marketing.
Hum.
And being able to offer additional services.
That we have in house.
In that Battle Bridge is not currently doing is also.
<unk> is also an attractive upside.
So there are things that are beyond just the numbers I believe that what we will see with Battle bridge is very similar to what we saw with with the acquisition of push interactive now data logic again.
That went from $9 million in 2019 to nearly $24 million last year, we had a huge margin improvement during that time.
And I think that that adding in Battle bridge, and then cross selling and up selling together becomes a significantly important part of our business. So.
I hope that helps I hope.
[laughter].
Say the same thing John Murphy I cannot resolve.
That's good okay. So just to clarify so now.
Well take the ending.
Share count on December 31st and Ed like about $3 million for this acquisition and another $3 million or the ionic financing correct that correct correct yes.
Yes, because that's where we are now.
Okay.
Because it I wasn't sure when that was going to happen and it didn't happen because it happened that day.
Okay Alright.
Okay. So you got to help me with the quarters here, because I'm still not.
Sure how seasonality works.
So let's start with like Appalachia, right, you did $6 2 million in the fourth quarter, which was.
Double what you did in the third quarter is that seasonal or does that go up sequentially from here.
That is the.
That is mostly due mostly due to.
Enhanced commissions that salespeople.
<unk> had.
In off and offering a package sale.
With other add ons, so I'd say that that was actually quite successful significantly more successful than we had expected.
Whether or not we continue that into Q1 and two.
Yeah.
We'll see.
We're also offering additional functionality on that platform.
That rolls in in Q2, so we may be.
Back it out a bit and then and then and then gear. It up again in Q2, but that's that is actually.
In the hands of our of our respective team over at Appalachia.
So so so yeah revenues sorry go ahead go ahead.
No go ahead John .
No I was just going to say that you know just to be clear that this is only going to be consolidated into <unk> until the distribution of the shares and Rover is complete so with that happening by the June quarter, well expect it to be happening towards the end of the June quarter.
We're into July there may be another quarter of consolidation I believe.
Then you know youll be talking only about data logic.
But.
So what you're focused on and it's going to be actually a conversation about logo.
Once the distribution of those shares takes place.
Okay and.
And their revenues are they.
Like Grand majority create up because you have all of those other businesses and I'm not quite sure how significant they are.
They are there the majority of dominantly creates great creative and then we also launched a data analytics product I'm, sorry platform called radical <unk>.
But the team built.
So theres a little bit from that we would expect to try to scale that up but I think that that's that's better discussed by the team there or when they when they start to do their calls.
So they're they're completing the year end.
And they'll start to report.
Soon.
So that would be a separate.
A separate.
Call.
Okay. So.
Data logic, and then I know Medicare is a big deal does that.
So those core is the quarters this year still going to be seasonal with other business, making up for it how do we look at the quarter.
But I would think that we're going to see seasonality last year was unusual because they extended the enrollment period and so we had sequential strength which was.
Pretty atypical as a result of the follow through on that.
So I would say that we wouldn't see that and if you.
And I've looked at the data we can share with you.
But 2021 was very front end loaded because you had a lot of sign ups early in 2021, and the backend we did well.
But just from a total opportunity it was in the fourth quarter you know.
So so so my guess is that we're going to see it there will be some upticks that we see but it seasonally speaking, it's not expected to be a stronger growth in Q4.
Okay. So that's down sequentially just based on Medicare.
Yeah.
That's correct.
My expectation.
Okay and then.
Or does it stay flat or does it grow sequentially each quarter from there.
It is it popped back up again.
<unk>.
Yeah, Yeah, Yeah, no. It does I mean, one of the reasons that we've talked about acquisitions and Battle bridges. One example, and I think we discussed this a bit is that there's we talk about seasonality and it isn't always on the calendar so that extended enrollment period last year.
Messed up the seasonality if you will by making.
Extend from Q4 to Q1, well now we're going back to more normal seasonality. So, yes, youre going to see things pick up again, probably in the second quarter, even but seeing it more normally trend into Q4 again being strong and not just sort of normal cycle of things, but that's why we've been wanting to layer in all of those.
So what you're sort of counter cyclical to what is sort of normal E. Commerce strong Q4 weaker Q1, which is I think sort of the.
Generic view of.
You know digital spend so that's why we're looking at all the other verticals, which have different seasonality than say Medicare for example.
So is the next biggest vertical home improvement and is that also seasonal with a strong spring or something.
Well I mean, I don't know if you'd like to talk to the seasonality of it I mean, there is seasonality, but the.
You know that.
Seasons may not be quite as you expect in other words, you may get a lot of indoor home improvement done and the darker.
Darker days of winter than you will in the summer, but it's you know I don't know is there any color you'd like to provide around sort of what you're expecting or what.
The seasonality around home might be.
That's an excellent question.
Yeah, we see home improvement at least historically really start to ramp up in the spring that includes roofing windows, even interior remodels and exterior landscaping.
Also with improved insurance offerings, such as our auto insurance health insurance et cetera.
Those also helped.
Seasonality.
Slash Medicare is truly.
A bit of a debt as our seasonal constraint.
Per se, but I also believe that.
We're highly diversified into over 10 vertical markets.
And by going deeper.
And offering the insights, which we talked about we believe we'll be able to smooth out the seasonality.
Yeah.
Yeah, and I think I think that's a good point.
<unk> brought up with regards to the auto insurance vertical so we're going.
Along in financial services, and adding layers, they're both going deeper, but adding other things that we can offer much as you would at home improvements, adding doors Rus hubs all sorts of things that you can add so there's a good opportunity organically I would say, but also part of it is the acquisition strategy too.
Smooth things out.
Alright, and John do you have a number for what you think your operating expenses might be for this year.
Well, we can take that offline theres, some theres a reasonable amount of it is what I would characterize as success based.
Meaning that the more successful we are with some of the new verticals the more.
Hiring there would be around them to support it.
So I kind of like to take that offline and discuss that with you Ed in your model if that's okay.
Alright, I was just trying to sure. That's okay. We can talk about Atlanta [laughter].
Yep.
Alright, Thanks Lisa.
I think that's all my questions. Thank you.
We'll take our next question from Rich Marshall private Investor. Please go ahead.
Hi.
I think we're all trying to get at the same answer here. So let's assume there's no further M&A in the disclosure today, you said logic did about $23 million in revenues for the year. If we add in Battle bridge. Another 4 million. So that's about 27 million.
So are we looking at about $27 million for 2022 out of logic without App logic, and some growth on top of that without any further M&A.
Or is the underlying business not going to achieve that with bridge.
No it would it.
It is expected to be.
Higher than that than what you penciled out there.
We expect that the organic growth of data logic two continue to reflect.
I wont say it was the same growth as we experienced last year, but similar.
Okay. So we do expect without further acquisition data logic.
Battle bridge to grow.
Absolutely yes.
Another question here.
There was a lot of shares issued.
Last summer last fall.
Marketing awareness for investors.
Emerging market report I think we're now paying fees to research capital on a monthly basis.
We are again engaged as a new IR.
And what kind of <unk>.
What kind of awareness activities should we expect because you know quite frankly, if we look at the beginning of April in 2021 were down 87% today, there's more overhead and I know everyone could talk about algorithms and north face, but some things not there's a disconnect here and how do we offset that.
At this point.
That's that's that's quite complex and I did I did get your email the other day, we should follow up separately, but what I would say out loud is.
Without diving too deep to what what Tony 40 was describing earlier.
I think it's clear that since the IPO on the neo last year, which personally.
And again this is my personal opinion I believe was was was poorly handled.
Very poorly handled.
Most of the shares were placed in the hands of several funds.
As Tony pointed out and I also know by looking at our at our DTC list.
Sold shares.
And use the warrants is what's called a box to short against.
And the two market awareness.
Initiatives that we undertook one in August and then one in November rich.
Were met with such resistance on the sell side.
That it crushed both both attempts.
I'm, probably not supposed to describe that but really I don't care.
I'm extremely angry about it.
What what I would say to also address your point.
Yes, so there those market awareness campaigns.
And in other ancillary activities did involve <unk>.
Shares you won't see a replication.
Of that this year as we as we figure out other.
Larger strategic initiatives that would eliminate the pressure on the stock.
Those might include something in the order of of doing a registered direct IPO of data logic out of the OTC.
Listing on to the New York stock exchange, or NASDAQ, which incidentally, we do we do and we have qualified on on.
On a quantitative basis for NASDAQ on everything except share price. So unfortunately, the only thing that is that has hindered us has been share price. So unfortunately. These guys are currently winning but we will find a way to.
To mitigate that.
I hope I answered your question, but I'm happy to talk with you about it offline.
You answered the best you can and I appreciate it.
Thank you.
Yeah.
We will take our next question from Bill <unk> with Blue Flame capital. Please go ahead.
Hi, Thank you.
I have three questions. My first one is a little bit of.
Regurgitation.
What Tony started with.
I'll be short on that I thought Tony does an excellent job and Brian Your answer shows that you understand what's going on.
I differ slightly with Tony is I think the short sellers.
And supposed the.
Suppliers of capital to you there just giving you your own money as soon as you go to them. They go to their institutional so called investors and those guys start shorting your company when their offerings done. They just gave you your own mark money back and then since Theyre not really buyers they have no long.
Term interest in the company, they keep selling you're like a fabric path that they can slaughter.
And where I think.
And by the way, it's not just hey, it's other short sellers.
Think it misses the Mark is it does it does hurt you when you're using your stock as currency to buy other companies and by other revenues.
You do it at much much lower prices and this matter re research or whatever the company's called that took us public on Neal I personally when I ran a company I hope in the future would never use them.
They did you at $3 and now they have a research report that comes out value.
Who are the loyal to their loyal to the capital that keeps buying their deals. So they can keep making money and I think you should ask to ask for your investment banking fees back. So my three questions. One are you talking to any true buyers because you need true buyers not these fake.
Manipulators and.
Secondly, Brian and I'm, a friend of the company, even though I'm getting a little worked out.
Do you are you aware of any other valuations over the last period of time that you've been working so hard and doing your yeoman's job.
Are there any other valuations that youre allowed to talk about with us and then finally.
My final question is what metric matters in this space in terms of if someone were to come to buy.
Logic.
Six months from now what is the metrics. They are focusing on is the cash flow per share is it revenue per share it certainly probably isn't profitability.
Thank you for my.
Listening to me.
No I appreciate that bill I'm going to do two things I'm going to answer your questions.
[laughter] very very directly.
And I'm sure I'm going to catch flak afterwards by counsel and IR, but at this point.
I will speak to them on a personal and professional basis.
[noise] valuate evaluations and I will attempt to answer all three.
Of your questions, but valuations are in our space are.
As low as one times revenue, but those are for companies like fluent F. L. M T, which only does whats called lead generation. We do have elements of our business that are in lead generation, but our margins are higher than what you see.
In that sector.
We have elements of our business through the acquisition of rebel and what we will be up selling through the new Battle Ridge acquisition.
That are comparable with the trade desk.
And companies.
Companies like magnets.
Where those valuations are still up at eight to 12 times revenues revenues not not earnings not EBITDA, but eight to 12 times revenues, which.
And incidentally.
The trade desk is 46 times revenues, so valuations are absolutely higher than where we are.
Our banker benchmark has evaluation analysis of us.
It's very recent and it pencils out to $108 million.
We had a evaluation analysis done by some friends of ours that came out to $133 million in the ways that these in these inputs are used bill you and I could do the same thing we can we can pull databases from public companies in our sector. We can apply.
On a blended ratio it'll still come out much higher.
If you look at M&A valuations same thing much higher and if you look at a discounted cash flow just based on where where we are and where we're going it will also come out higher so in terms of valuations are we extremely undervalued yes.
What can we do about it to to achieve those valuations well outside of traditional IR or market awareness. There are some things that can be done.
We have been in discussions with larger strategic buyers.
And we'll continue to do so.
Whether or not we can obtain evaluation that that that that would be comparable to our peers is going to be a combination of what they would be willing to pay what that what that would be in stock or cash and based on our market cap and share price as well so I hope that.
Answer your questions.
And.
That's a that's a combination of my personal opinion.
And we only because I think that's a terrific answer thank you, but what the one thing because I'm kind of a rookie in your space.
What is the metric to look at per share or a total that would that you base. Your valuations on is it revenue or is it <unk>.
Cash flow per share or is that anyway.
Anyway, I don't know what it is okay. So far.
Mostly nonprofit cause there anyway go on it's not it's not there are very few companies that operate with a net profitability.
What we what we've seen are.
So Lisa Thompson of Zacks utilizes comparables that are that are weighted more towards <unk>.
Tech and programmatic, which we absolutely have elements of <unk>.
So her target price is much higher.
I believe it's in the low teens.
Then over at research capital.
Used more comps from the lead Gen space, which are a combination of of.
Multiples of the growth of gross profit.
But I think the key to US is looking at how we evolve over this year and even if you take a blend of of lead Gen.
Programmatic advertising and data companies.
It still comes in at a multiple of revenue they'll so what's fair eight to 10.
Okay. Okay.
Thank you very much.
Youre welcome.
Thank you Amit.
I understand where back to your opening remarks.
Great. Thanks, Keith so.
I just wanted to reiterate that 2021 was a solid year of progress for us on all fronts on the business side.
Looking ahead, both logic and go logic have strong merger and acquisition pipelines that are actively in process and our operations are becoming much more efficient effective and scalable and we continue to believe our industry is extremely ripe for consolidation as we see valuation multiples if a.
Lois they've been at for years.
We intend to be a leader in that process, enabling us to leapfrog over the less imaginative in strategic competition and take our place as a scalable leader and a great and fast growing industry. So thank you all and Keith with that we can wind up the call.
Thank you ladies and gentlemen. This concludes today's conference. We appreciate your participation you may now disconnect.
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