LGIQ: Logiq Returns to Revenue Growth in Q3 2021

By Lisa Thompson

OTC:LGIQ

READ THE FULL LGIQ RESEARCH REPORT

Logiq LGIQ reported revenues inline with its preannounced numbers and returned to revenue growth after a long year since it pivoted its AppLogiq sales model to a higher margin business. AppLogiq has not yet returned to revenue growth due to shut down in Indonesia and other delays, but we expect that to change in Q4 2021.

DataLogiq continues to grow and has shown great success primarily in marketing Medicare policies. This quarter it is taking that experience and applying it to other health insurance as well as auto and life insurance.

In order to unlock value for shareholders the company plans to split these unrelated businesses into two separate public companies where they should be able to find appropriate shareholders and present a simplified story for investors. This is expected to happen by year-end.

Versus other companies in its space, Logiq appears undervalued. It currently trades at a fully diluted enterprise value of $65.7 million or 2.0 times estimated 2021 sales of $33.0 million. Its peers trade at blended 8.3 times. We believe its valuation will improve as it resumes year over year revenue growth next quarter and continues to move to profitability.

Q2 2021 Results

For Q3 2021, Logiq reported $7.8 million in revenues versus $7.0 million a year ago, up 11%. AppLogiq revenues were $2.8 compared to $3.2 million in Q3 2020, and flat sequentially. AppLogiq margins were 31.7% versus 12.1% a year ago, the same as in Q2 2021. DataLogiq generated $5.0 million in the quarter compared to $3.8 million last year, up 30.1%. Sequentially total revenues declined 5.8% as DataLogiq is in a seasonally weak period. AppLogiq was flat with Q2, while DataLogiq was down sequentially. It seasonality has been driven by ACA and Medicare General enrollment, which takes place each year between January 1 and March 31. Medicare Open Enrollment started October 15^th and extends to December 7^th and should also be a strong for the company.

Gross margin increased in Q3 2021 to $2.3 million from $1.1 million, or 108%. The margin percentage improved to 29.5% from 15.8% last year from the revamp of the CreateApp sales model. Margin was flat with Q2 2021.

Operating expenses increased to $8.1 million from $4.0 million in Q3 2020. G&A was impacted an increase of $568,505 in stock compensation costs plus other G&A cash expenses including: a legal & professional costs increase of $429,576, an increase to consultants $291,555 due to uplisting and IR/PR-related costs of $237,970. R&D and Sales and Marketing increased $361,000. Depreciation and amortization increased by $576,000 with acquisitions.

Pretax income, net income and income to common shareholders were all a loss of $5.8 million in Q3 2021 versus a loss of $2.9 million in Q3 2020. This resulted in a GAAP loss per share of $0.25 versus a loss per share of $0.23. Primary shares outstanding for the year increased 83% to 23.4 million.

On a non-GAAP basis, taking out stock-based compensation the loss was $5.2 million compared to $3.0 million a year ago and loss per share of $0.22 versus $0.23.

Balance Sheet

As of September 30, 2021, Logiq had $5.3 million in cash and no debt. During the quarter it eliminated $2.9 million of debt by converting a convertible promissory note to stock. Its current ratio is 4.4 times and it had $12.8 million in working capital. The company had negative operating cash flow for the quarter of $4.2 million (not including changes in working capital) and a negative free cash flow of $4.5 million. The company plans to spin off AppLogiq to shareholders into a separate public company by year-end.

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