Q3 2024 LogicMark Inc Earnings Call
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Mark Archer, Marla Marin, Logicmark.
Speaker Change: Good afternoon, and thank you for participating in today's third quarter 2024 conference call. Shailene Simmons, Chief Executive Officer, and Mark Archer, Chief Financial Officer, are joining me from LogicMark today.
Speaker Change: During this call, management will be making forward-looking statements, including statements that address logic marks, expectations for future performance or operational results, and anticipated product launches.
Speaker Change: Forward-looking statements involve risk and other factors that may cause actual results to differ materially from those statements.
For more information about this risk,
Speaker Change: Please refer to the risk factors described in LogicMark's most recently filed annual report on Form 10-K and subsequent periodic reports filed with the SEC and LogicMark's press release that accompanies this call, particularly the cautionary statements in it.
Speaker Change: Statements made on this call may include reference to non-GUP financial measures as defined in Regulation G of the Securities Exchange Act of 1934 including adjusted EBITDA which is reconciled to the most directly comparable GUP financial measures.
Speaker Change: Management believes that non-GOP adjusted EBITDA provides investors with insight into the company's overall operating performance.
Speaker Change: The content of this call contains time-sensitive information that is accurate only as of today, November 12, 2024.
Speaker Change: Expect, as required by law, Logic Mark disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.
Speaker Change: It is now my pleasure to turn the call over to Shailene Siemens, please go ahead.
Shailene Siemens: Thank You Kathleen and welcome everyone. I'm pleased to share that we delivered improved third quarter financial results with double-digit gains in key metrics.
Shailene Siemens: Our $2.7 million of revenue reflects a 14% increase compared to the same period last year.
Shailene Siemens: Gross profit improved by 13%, to 1.8 million, and the gross margin was 67%, a critical KPI we have maintained for the last six consecutive quarters.
Shailene Siemens: I want to congratulate our employees on their contribution to this progress. While we have much we can still accomplish, these numbers reflect our commitment to grow unit sales and operate efficiently.
Shailene Siemens: I believe our third quarter results also validate our go-to-market strategy.
Shailene Siemens: LogicMark is now a software and hardware solutions provider, growing our footprint in personal safety and emergency response systems.
Shailene Siemens: We're making progress because of all the great work that our team has done through research and development, the creation of a tremendous intellectual property portfolio, new products, and expanded sales and marketing efforts.
Our Freedom Alert Mini has been well
These include patented superior fog
Shailene Siemens: Integrated geofencing to notify caregivers when the device exits the map boundary previously set, as well as two-way communications with a 24-7 U.S.-based customer care service that dispatches emergency services for support and care.
Shailene Siemens: It doesn't end there. The SA-Mini has an extended battery life of six days in the always-on mode and 30 days in a standby mode for fall detection.
Shailene Siemens: Also included is GPS location services which provide accurate location tracking for enhanced safety.
Shailene Siemens: and a caretaker companion app which offers emergency notifications, enables location monitoring, and facilitates service on both iOS and Android. That's a terrific set of features for the price.
Speaker Change: Yesterday was Veterans Day, a time to honor the brave men and women who have faithfully served our country.
Speaker Change: We are privileged to continue working with the Veterans Administration to provide solutions that enhance many veterans' quality of life.
Speaker Change: Our recent partnership with Black Knight, a service-disabled veteran-owned small business retailer, further strengthens our commitment to the veteran community by expanding our sales and marketing channels to reach even more customers.
Speaker Change: Service-disabled veteran-owned small businesses, also called SDVOSBs, and other resellers like Black Knight, play a vital role in the healthcare ecosystem.
Speaker Change: especially in making essential products like PURS and other assistive devices more accessible to a broader audience.
Speaker Change: This new collaboration aligns seamlessly with our mission to deliver innovative solutions in the care economy, supporting those who have given so much to our country.
Speaker Change: Our long-standing relationship with the VA is only part of the market opportunity we can capture. The caregiving gap is a widening problem that can only be solved with technology.
Speaker Change: Baby boomers are turning 65 at a rate of over 10,000 per day. By 2040, one in four Americans will be over the age of 65.
Speaker Change: So for independent living and aging, the market opportunity is projected to reach $17.26 billion by 2028.
Speaker Change: In addition to PERS devices, we have also established a footprint in the personal safety market.
Speaker Change: Smart personal safety market opportunity is projected to reach 33.5 billion by 2030.
Why? Personal safety fears are at a three-decade high.
Speaker Change: 66% of adults avoid social outdoor activities due to the fear of personal crime. 53% of women are afraid to walk alone at night.
Speaker Change: When we began transforming this company three years ago, we reinvented our approach to the CURS and safety markets. Since then, we've strengthened our staff and board of directors, expanded our product portfolio, and found many important new patents.
Speaker Change: Our IP portfolio now includes 23 total patents allowed and issued, 16 patents filed since May of 2021, 2024, with many that are focused on AI and ML.
Speaker Change: Given our progress, I'm pleased to say that we are attracting the attention of many who are interested in our story.
Speaker Change: Our focus on operational excellence and sales growth will continue. We're committed to developing and implementing technology solutions that enhance everyone's quality of life by utilizing leading edge AI and machine learning tools.
Speaker Change: Our dedication to building a care village with the iHERA technology continues to drive us forward and towards creating innovative solutions for the care economy.
Speaker Change: I'll turn over the call to Mark to further comment on the financial results.
Mark Archer: Yeah, thank you Shailen. The entire team shares your enthusiasm for our third quarter results.
Mark Archer: Third quarter revenue of $2.7 million reflects a 14% increase compared to the same quarter last year.
Mark Archer: Higher sales of both our legacy Guardian Alert 9-11 Plus product and the recently released Freedom Alert Mini monitored PERS device drove the improved results.
Mark Archer: In fact, sales of the FAA Mini improved from 191 units in the second quarter to over 1,100 units in the third quarter.
Mark Archer: Gross profit in the third quarter was 13, rose 13% to $1.8 million, compared with $1.6 million.
Mark Archer: in the same quarter last year, and gross margin was 67%, remaining constant for the last six quarters.
Mark Archer: The shift to higher margin products this quarter offset cost pressures.
Mark Archer: Total operating expenses in the third quarter of 2024 were $3.4 million, which was virtually flat with the same period last year and 6% lower than the second quarter of 2024.
Lower spending in general and administrative expense.
offset higher depreciation expense.
Mark Archer: Adjusted EBITDA for the third quarter was a loss of $785,000, an improvement over the $1.1 million loss
in the third quarter of 2023.
Adjusted EBITDA includes the add-back of non-cash stock-based compensation charges.
Mark Archer: Net loss attributable to common shareholders for the third quarter was 1.6 million compared with a net loss of 1.5 million in the same quarter last year.
and on a fully diluted basis.
Mark Archer: The net loss per share was $.20 compared with a net loss of $1.10 per share in the same period last year.
As of September 30th, our cash balance was $5.6 million.
Mark Archer: And this balance reflects the completion of a registered secondary offering in August.
that resulted in approximately $4.5 million in gross proceeds.
Speaker Change: At this time, I'd like to open the call up for questions.
Kathleen.
Kathleen: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Kathleen: And if you would like to withdraw your question, simply press star 1 again.
Kathleen: If you are called upon to ask a question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
again please press star 1 to join the queue
Speaker Change: And your first question comes from the line of M. Marine. Your line is now open.
Speaker Change: Thank you. Hi. So I have a couple of questions. So the Freedom Alert Mini, based on the numbers you just cited, it appears to be gaining traction in the third quarter.
Speaker Change: So can you give us a little bit more color on what you're seeing there, what you're thinking, and specifically did you conduct some, you know, increased promotional activities for the new product?
Speaker Change: Hello, Marla. How are you today? Thank you for the question.
for example, the business government space. And so...
Speaker Change: We have been very, very active in going out and sharing the enhanced services of those products and I think that's what you're seeing as a result of that.
Speaker Change: So we launched a product around sort of mid, you know, second quarter of this past year. And so we're actually beginning a second quarter. And so I think the improvement that you're seeing is really that, you know, a lot of groundwork that we're doing.
Speaker Change: and getting out there and sharing the message of the product and its enhanced services. When you say sharing the message with some of your partners, just in terms of when you're...
Speaker Change: When you're meeting with some, you know, reps, I mean, how are you positioning that so that you continue to see that traction accelerate? Sure.
Sure, absolutely.
Speaker Change: speaking with all of the, for example, government businesses, the VISNs.
Speaker Change: of the Veterans Administration, and so we've actually beefed up all of our marketing collaterals and the products that we send them.
Speaker Change: as well as basically touting the features of the product, right? It's really a really brand new product in the system, and it's one that is unique and differentiated from those that our competitors are putting out in the market, and so we're spending a lot of time basically communicating via email, in person, on calls, actually really sharing with them sort of how the product's differentiated and the pricing structure that is, I think, very competitive.
Speaker Change: Also, we spent some time, you know, as a small business selling to the Veterans Administration and things like small business days.
Speaker Change: and also the different sort of conventions that basically speak to the veterans directly as well.
Speaker Change: It really, I think, helps us when we do those conferences in the summer that we've attended to have the veterans walk in and say, look, we've heard about this amazing Logic Mark product and that's the unit that we want to have.
Speaker Change: And so that's really helped us boost those businesses as well.
Initial Faction as well.
Speaker Change: Okay so, you just mentioned, I have a follow-up on something you just said about the Amazon store, and I know that direct-to-consumer and, you know, online sales, you know, that's been a sort of push for the company recently.
Speaker Change: Can you give us any color there in terms of, you know, what you're seeing, if you're satisfied with, you know, the way things are growing or, you know, it's still too early to really say.
Well, I'm never going to be satisfied, ever.
Lovely to bring here.
Speaker Change: more shareholder value via the e-commerce every channel that we go through. So that said, I think it's a little bit too early to tell for those folks who have actually had experience working as a seller on Amazon. It is not an easy sort of platform to go on. They are difficult in terms of placements. It's difficult to – we do shipping through and through and with them. And so there are always sort of pluses and minuses of doing that. They certainly take a bite out of your margins as well.
Speaker Change: And so, but, you know, it is one of the best sort of methodologies to reach and channels to reach the end consumer. And so, we're actively participating in all of the different sort of programs that's available to us on Amazon.
Speaker Change: Transparency Program is to make sure that people are buying brands directly from us and not sort of a used version of the product that may not have warranty on it. We are very focused on actually having and doing Amazon shipping and all of those things that help us basically get the product to the hand of the customer as quickly and as easily as possible through the Amazon channels and so we're very excited about the work that we're doing there. But as anyone who's ever worked on Amazon, it takes a toll and it's a lot of work and so we're slowly working through.
Speaker Change: for all of the different sort of layers and sort of challenges that is often to work with Amazon to get to our customer. And I think we're slowly succeeding there.
Speaker Change: Okay, and then switching gears a little bit, so you mentioned in the prepared remarks, you know, your patent position and it's
it's been growing. So given, you know, the IP
Portfolio that you have.
Speaker Change: How are you feeling about potentially, you know, down the road, obviously, you know the timeline would be subject to, you know, what's going on with other things you're working on, but how are you thinking right now about potentially down the road, possibly licensing some of the technology to
third party.
Yeah, I think that's a really great question.
Speaker Change: You know, we've been saying that since I joined the company that we're interested in being more than just a hardware company. I'm very proud that along with Mark and my executive team and everybody at LogicMark,
Speaker Change: the software margins that they're typically seeing out in the technology industry.
Speaker Change: very soon, you'll actually see the launch, one of the first launches of, you know, a very highly visible ecosystem product that we're working on. And so, you know, I think that
Speaker Change: With the portfolio that we have, we certainly see a lot of promise. We entered this company with a very strong focus.
Speaker Change: on actually building an IP portfolio strategy. Oftentimes when people are approached doing technology companies, you're trying to do, you know, building products and you happen to just basically file the patents.
Speaker Change: What we've done here is we've built this great sort of technology that we're implementing, but we've also basically put some very strategic structures around the IP portfolio so that we actually have the right sort of...
Speaker Change: products from IP perspective that would make it very is more likely for people to want to license from us because if they don't they'll stumble upon one of our IPs or CIPs and so forth and so we've been very thoughtful versus
Speaker Change: sort of randomly shooting about building that portfolio and most importantly you know I think there's a lot of talk about AI and Gen AI and all of those things which is very exciting and you know we're an apply AI company.
Speaker Change: And so we're very excited about the AI work and the machine learning work that we're doing here because
Speaker Change: you know ultimately the application of AI into the health and personal safety is where we all want to see applications right it's also it's always fun to see AI applied to photos and like text and all that kind of stuff that's really fun but wouldn't it be better if we all saw AI applied to you know the caring of our loved ones right and so we're very excited by the work that we're doing
Okay, great. Thank you. And last question from me.
Aster
Speaker Change: You know, it represents a new demographic target market for you, a different way of getting your technology out there. Are you getting any kind of meaningful feedback yet, or is it, you know, still too early since product launch, or since launching after?
Speaker Change: I tend to think that it's always a little bit too early. It really takes time to you know make sure that everything is well adjusted for product market fit. You know as much as I'm one of many sandwich generation people out there and I'm a woman who's probably afraid to walk at night, one of the 53% of women who may be a little bit afraid to walk at night by myself.
You know, I don't think that I'm my only...
Speaker Change: customer and so we've really spent a lot of time talking to focus groups and doing the initial testing of the product and we're making adjustments to the product as well as we're moving forward. This is the beauty in many ways of you know where the company is directionally today right we actually have a very
Speaker Change: interesting new product that is actually a sort of hardware and software package. And so it gives us the opportunity to provide and refresh and enhance as we hear back from customers in a way that if you were actually building a hardware-only company, that sort of feedback loop is just a bit of a longer sort of cycle to adapt to. And so you see us basically get feedback constantly from the marketplace and constantly enhancing the product. And so again, a little bit too early, but you'll see us actually also take on a lot of really cool new activities to market the product in Q4 as well.
Okay, thank you so much.
Thank you. Appreciate your questions.
Speaker Change: Again, if you would like to ask a question, please press star 1 to join the queue.
Speaker Change: There are no further questions at this time. I will turn the call back over to Shailene Siemens for the closing remarks.
Thank you Kathleen.
Shailene Siemens: And thank you everyone for attending this call. In closing, I'd like to thank everybody for joining the call, as well as for the continued support from all board, employee, and investors.
Shailene Siemens: We will continue to make significant strides in the personal safety and care technology landscape. As we approach the holidays, I'd also like to wish everyone a joyous season of Thanksgiving and celebration.
Shailene Siemens: And be sure to check our logicmark.com website for some holiday gift ideas for your loved ones. Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
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