Scaling a competitive e-commerce business can be complex and costly. It doesn’t have to be.
New York-based
Logiq Inc. (
NEO.LGIQ,
OTCMKTS: LGIQ,
Forum) is an E-commerce company that’s quickly transforming how companies operate and compete for growth. Logiq is also creating significant headwinds for brands and agencies trying to find a winning edge by helping businesses grow and accelerate revenue…not expenses.
The team at Logiq are a collection of industry experts committed to the challenges of helping companies grow through their e-commerce initiatives.
Stockhouse Media’s Dave Jackson was joined by Tom Furukawa, Chief Executive Officer of Logiq Inc., to introduce our investor audience to this unique and innovative e-commerce company.
(Click image to play video)
TRANSCRIPT BELOW:
SH: To start off with, can you tell us a little bit about yourself and the history of the company?
TF: Yeah, sounds good. So a quick history of myself, I've been in the tech industry, really building and designing software for over 26 years now and the span of jobs, I was a software engineer, computer scientist that at heart if you will be turned product manager turned C level executive. I've had the pleasure and really the honor of working for some pretty major brands, some of which is IBM, Yahoo, Kelly Blue Book, and Motor Trend group. So I spent some time as the automotive publisher and also the Rubicon project, which some of you may know turned into Magnite. So a lot of good experiences in tech, a good 15-16 years is in advertising technology. That's where I spent a lot of my formidable years, if you will.
So I'll transition a little into the history of Logiq. So the company has been around for about six years. It started in Asia with this roots in Southeast Asia with a product called CreateApp, which I'll go into a little bit more detail as we go through the interview. Some of the key milestones, In 2018 we launched a mobile payments product called AtozPay, a digital wallet product and then 2019 we launched a hyper-local delivery service, AtozGo primarily in the Indonesian area and there's an interesting dynamic there in that market which I can go into. Then 2019 as well we really came into the North American market and acquired a company that had a direct to consumer e-commerce marketing platform and today, we call that Logiq consumer marketplace.
In 2020 we acquired an AI driven engagement scoring technology, basically can identify when someone has a potential probability of buying a product or a service that you're selling. So that's called Fixel AI. It's based out of Tel Aviv. It's one of the TechStars award winners and then earlier this year, we acquired a company called Rebel AI which we rebranded and relaunched as Logiq digital marketing and that's a software as a service. So it's a do it yourself an e-commerce marketing platform for small to medium sized businesses and brands. So that's kind of the big milestones and then the addition to that we just completed a Canadian IPO on the Neo exchange which has as you know, the tier one global stock market.
SH: Can you update our investor audience and your Logiq Inc. shareholders on any new company developments, especially in the wake of COVID-19?
TF: Yeah, sure. So I'll start with Southeast Asia cause COVID did affect the markets very differently, especially in kinds of businesses that you're in. So as I mentioned we have a product called AtozGo. So places like Indonesia that is very highly congested, trying to get a delivery service via car is very difficult. It can take hours to drive them a mile or a couple of kilometers or so. So these hyper centers with lots of buildings, lots of skyscrapers, we have a pedestrian delivery service called AtoxGo, which is doing wonderful pre pandemic. Now COVID has hit Indonesia really hard. So a lot of those centers don't have people working with them. So that's had taken a decline but the other part that's grew is really the FinTech side, the AtozPay.
Some of the things that we did was we launched a micro lending service in Indonesia that people can borrow against a social security. So there's roughly 276 million people in Indonesia. It's a very massive market, 11th biggest e-commerce in the world and the other partnership that we announced is with a company called Mentalku and we're integrating AtozPay into a mobile app and payment terminal. So when people who are paying for specific tests that's required to get a driver's license. We're part of that payment, the digital wallet solution for those folks and there's about 14 million driver licenses issued per year. So it’s nice, we were able to really transition and focus more on supporting e-commerce through the mobile wallet product while our delivery service is now on the recovery or on the mends, if you will now let me transition to data logic in North America.
Now in the United States we've seen actually e-commerce sales increased due to COVID. I've seen reports that shows a 44% increase from 2019 to 2020. So that went from about 560 billion to 860 billion in e-commerce sales in the US so people being home in front of their computers like this, that's the only way to buy stuff and that which also allowed us to really increase our revenues and our margins as well. To give a little bit of background on our consumer market marketplace division. So we sell data, first party data to businesses that require consumer profiles to have expressed an interest in their product or service and that's a big part of our business. To be more specific, we've seen growth really in the last you know, six months or so within Medicare and also people staying at home and using a lot of electricity.
We had a boom in solar installation sales and also home improvement, bathroom remodeling and full window replacements. So these are companies that are, think of them as agencies that sell and leads to these actual brands that sell windows or so on and so forth and we have the consumer data that we provide. So that's the consumer marketplace product and then lastly the digital marketplace division, that's the software as a service e-commerce platform. So we launched that in April. So we actually acquire Rebel AI, completed the close of the acquisition in March and launched the product in April and we have over a dozen agencies signed up using the platform and these agencies have 10 to 20 to a hundred customers on their side. In addition, we've added a lot of new features, which we can talk about and also expanded our reach into Asia Pacific audiences as well. So these are US-based agencies that want to sell into Asia Pacific consumers.
SH: The emerging E-commerce company, yours, boasts multi-faceted revenue sources. Can you expand on this for our investor audience?
TF: Sure thing. So we know we're a global company, but we operate primarily two different regions Southeast Asia and North America. Now Southeast Asia being predominantly mobile driven. The problem we're solving for them is just getting these stores online. So CreateApp allows a small or micro business with zero technical skills to be able to use CreateApp, to be able to build an app which then we help launch in the Google play store or the apple store and then in addition to that once you have your app then you can use the pay Logiq for mobile wallets and be able to do digital transactions with your customers and if you're a restaurant, a grocery store or anything that requires delivery, the AtozGo provides that as well. So that's really the key thing in Southeast Asia is enabling e-commerce for these offline micro businesses.
That's one part our revenue and the other big piece is really North America where with all these platforms today, Shopify being one of the biggest, most stores are online but now you're competing in the US alone, there's probably close to a million of these online stores of which everyone is fighting to get consumers. I want to come to their website to buy their products. So we offer the software as a service digital marketing platform and so those are different business models, right? Different kinds of revenue, different regions and if you want to run a successful company right, you can’t put all your revenue eggs in one basket and so that allows us to really have a bigger pie and be able to kind of see how those revenues really shaped that pie.
SH: Tom, the company says its “developing superior E-technology for small to medium sized businesses to succeed against competitors of any size.” Can you unpack the benefits of this?
TF: Yeah, so it's really interesting. So we've seen, e-commerce grows into a multi-trillion dollar economy. If you take a microscope to the US market, the e-commerce marketplace landscape is actually really unhealthy. It's really unfair and here's an interesting statistic. The top 10 brands, so I call them mega brands, right and you know who they are, it's the Amazons of the world and Walmarts and so forth. So the top mega brands control 63% of the US e-commerce market. That is insane. What that means is that there's a half a million e-commerce businesses that are struggling to compete and it doesn't matter where you go, whether you're advertising on Facebook or Instagram or Tik Tok or Snapchat or wherever the mega brands are there to eating up all that great consumers because they're spending hundreds of millions of dollars of ad budgets in these enterprise platforms that small businesses means as business they cannot access.
So I'm talking about platforms like the best platform Google provides is called DB 360. It's got artificial intelligence built in to be able to find your engaged consumers. It's got audio advertising, it's got video, it's got display, app, mobile, wherever they are. It's got the most sophisticated algorithms that provide really the best performance for you. Unless you're spending hundreds of million dollars a month. You can't even sniff those platforms. Right. So now then what are you left with? With these social platforms where you're still competing with big budgets and so we look at this landscape and say, look, we've been in this business for a long time. We know what it takes to build AI driven the best of the best media platforms and so we're going to build and launch it but we're going to focus on small to medium sized businesses.
What this means is that we have AI, we have all the channels. We recently added audio as a great advertising channel. So if you're on Spotify or if you're on SoundCloud and you see those audio ads in between songs, we can provide that inventory to our agencies and we also have through the acquisition, we have that AI based engagement scoring engine. So you can find out who your most engaged audiences are and be able to very carefully target people who have the highest probability to come and buy our products but at the end of the day, it's all the channels, all the best premium inventory at the lowest cost possible for customer acquisition and return on ad spent right, at the end of the day that's what it's all about. You put a dollar in for advertising, hopefully you get a $1.10 out of sales, right? That's the key thing that we provide that no other company is providing for the marketplace.
SH: In a recent press release you mentioned Sway Group, Decible, and Digible. Also, during your IPO, Quinn Street was referenced. Can you tell us a bit about the partnerships you’ve built with them?
TF: Yeah, sure thing. As background, these are companies that are clients of Logiq and they're so happy with working with us in our products and technology that allow us to use their name publicly, which is not an easy thing to do especially as a company that's relatively new to the digital marketing space. So I'm proud of our product teams, our marketing teams to be able to get that even through the door. Now Quinn Street, let me back up a little bit. So we have within data logic, there's two separate businesses that drive the revenue that fall into data logic overall revenue. So there's the Logiq consumer marketplace that I mentioned in Logiq digital marketing, right? So one is more of a service and the other is a software as a service platform.
So Quinn Street is a client of Logiq consumer marketplace. This is where we sell consumer profiles and Quinn Street is a great partner, their customers are the people who are actually selling window replacements and roofing and bathroom remodels and Medicare to their customers. So they look to us in larger consumer marketplace to be able to buy from us engaged consumer profiles that they can actually market to. So it's the most basic sentence, a lead gen kind of program and lead gen is really the heart and soul of digital marketing. Now that's going so well that with Quinn Street, we're going to look to add additional verticals to our platform so we can continue to increase our revenue and our margin profiles look really great in that business. So that's one piece. Now Sway group, Decible and Digible, they are z full service digital marketing agency. So they use Logiq digital marketing the software as a service. So they're logging into that platform and running digital marketing programs on behalf of their customers. So these are the guys that come in and say, okay, you know, you are a brand XYZ, we'll do the creatives. We'll start to put together a marketing plan for you and then we'll execute. Look at the numbers and refine and improve, the execution of the marketing plan is all done through our product.
SH: Pivoting to financials, you’ve recently announced Q2 2021 results – revenue is up 3% sequentially to $8.3 million with a gross margin at a record 29.5%. This may be news to many investors. What can you tell about these numbers?
TF: Sure. So at the end of the day, running a successful business where the stock to go up into the right. There are really two factors that I think the most basic numbers of people look at is one is the revenues of the company going up into the right and is profitability increasing, right? Profitability is measured by margins, right? So as we earn a dollar, how much of that dollar did we get to keep, obviously if it's upside down you can't make, you can't make a profit and your stock will continue to suffer. So last year coming into the business, our margin profile actually wasn't that great. If we do like a quarter to quarter look in terms of our Q2 2021, as you said, we did 29.5% margin compared to Q2 of 2020, it was 13.1%.
If we position ourselves as a technology company that's not good at all and so we made a concerted effort to say, all right, let's take a deep look at our business and what revenues are we willing to forgo? That's low, low margins. What do we need to acquire? Or what do we need to change to be able to increase our margins? Those are hard things to execute on. We all came in and put a plan together but at the same time we all said, okay, can we do this? Like yes, we can execute on this but at the end of the day it's the numbers that count. So we transitioned this out of Q3 last year. So from Q4 to Q1 to Q2, we've had consecutive increases in our revenue and consecutive increases in our margins and so the profile here is that we'll continue this trend and we're really looking forward to the next quarters ahead.
SH: The Company looks set for strong growth in 2021. How are you placed to expand operations to meet this demand?
TF: Sure. So, you know what's interesting is pre IPO, right? As a OTCQX company, we really had to watch our budgets and so we had to ensure that not only are we growing our revenue and investing in the right places and looking at our margins, we have to manage our costs. When you're in the OTC you see these companies getting massive, massive amounts of money coming in now through the larger exchanges, we didn't have that kind of capability. So I guess if you look in the past, we've achieved these results with really a limited budget. Now with the IPO behind us we can invest in growth, especially in sales, marketing, and engineering. Those are the key areas that's going to really bring that revenue continue to go up and to the right.
Also as I mentioned, we're adding more verticals. We've had such good successes in the verticals that we're in now, that us going into another vertical, like insurance and insurance is a huge vertical itself. There are so many other specific things within that we can go into. Also on the marketing side like I said, we launched Logiq digital marketing platform in April, we signed over 12 agencies. They are happy we were providing lots of new functionality and so we'll have a really a great set of news coming out in the second half of this year on the continued increase of those customers and that part of the business is very exciting because software as a service, the margins are absolutely insane. So if you look at our comparables in the margins they're doing, that's the goal for this company to be able to really hit that the huge double digits on the margin side.
SH: I have to mention your stock has had a very nice bump since going public on the NEO in June…up nearly 50-percent in value since then. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good value buy right now?
TF: Yeah, it's a very timely question because we just had our earnings report, and we had a analysts. It's interesting, as we start to do these quarterly investor conferences, the attendees grow, it almost doubles every single time we do, especially post Neo. We had new report come out from, from Zack's research, which I'll go into a little bit because I think if I can reference that I can talk about that as public without me speculating on where the stock's going to be, but I think it's a little bit better. Also keep in mind that during the IPO, we had an extended quiet period and that really hurt our stock and we had all these news that we couldn't publish. We really couldn't do these kinds of interviews.
We were very locked down and when you have no news coming out of a company in a quiet period for an IPO you get that conversations and like, Hey, what's going on and people will start selling their stocks that we did have that kind of the bottom, if you will, during the quiet period. So now with the IPO, we're actually getting a lot more visibility in the company and if you look at the stock, we see the volume of trades increasing on a daily basis and that's really key. We're getting known, a lot more people are hearing about Logiq and, and having that visibility of a tier one exchange has really helped us reach a larger universe of retail investors which is obviously a good thing. Our volume shows it.
Now let me touch on Zack's research. Now you can find this on their website, and I think it's definitely in a lot of the wire services but here's what they said about Logiq. So they said that the blending comparable valuation of our peers, right they put out a 9.4 X enterprise value to sales, right. In other words, and then ours is around like 2.6 X, right? So in other words, we're a very undervalued right now. There are other comps that I'd seen or companies similar to us are in the like 20 X enterprise value to sales. So there's upside. In all that they basically put our stock price target as $17.10 and we're trading at $2.30, I think today USD.
Yeah. I think we're at $4 at some point. I can reference this report and know this has been following us for quite a while now and so the upside right is there.
SH: What’s the long-term strategy for the company moving into 2021 and beyond, and what should retail and institutional investors be looking out for?
TF: Yeah. You know one thing that I think it's you never want to overlook around companies like us is data, right? Having consumer profiles, understanding what people are looking for and shopping for online, that is really a core part of our company. So one of the key pieces we're investing in is a much bigger core data infrastructure that our clients and our agencies can leverage so that's completely potentially a new revenue line that is literally a hundred percent margin that we're looking at and we're looking to build and launch. So that's going to be a longer term strategy but that's going to be key you know, entering into additional verticals as I discussed and then growing our client base and we really, I think hit this mark on the small to medium-sized agencies and we have some insane announcements coming out or we're going to be the first to market especially around video and connected TV offerings.
That part of the digital advertising business is going to continue to grow. You see companies like Trade Desk who continue to get high evaluations because they're in that space, but they focus on enterprises. They focus on the top 20 agencies in the world. So for us, we're in the mid market but again, we are providing that similar kind of technology and then a couple of things that's going to be interesting as well is we're always looking for bigger accretive acquisitions. I think one thing that we've proved through the acquisition of Logiq consumer marketplace of Fixel, of Rebel AI, that we know how to acquire the right companies and integrate them quickly and bring them to market and we've seen a lot of companies that really fail in these areas, but I think we have a good team that knows how to do this, right. The last piece is APAC. Now there's been news around the spec for app Logiq and one of the things that we are really looking at and developing is a possible spinoff of app Logiq, which could bring immediate value back to our shareholders.
SH: Can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to this exploding and exciting E-commerce space?
TF: Yeah, sure. I've added a few new folks to the management team and really is to bring that kind of core experience. I'm not a true believer of a fake it until you make it. I'm more of a believer that if you've done it and made the mistakes in the past and learn things, you can apply it and be more successful, right. You know learning from your mistakes and having to do these type of big initiatives, experience is everything. So my management team is really from amazing places like Yahoo, IBM, Magnite, Verizon Sony and Blizzard. Now these are key leaders that really grew up in software technology business and I'm going to have the people who have a lot of different kinds of experiences but also understand the vision and mission of the company.
I feel like we've executed a very well at quarter after quarter and then the board of directors I tell you I feel so blessed to have this insane amount of experience on the board of directors team and these are folks from Bear Stearns, right? Imagine a former managing director at Lehman Brothers. One of the board members is a former president Omnicom and that's one of the largest digital agencies, Omnicom Media. I also have a former Vice President of product from Adobe who led the strategy of the creative cloud. I think maybe some of your viewers may or may not know this, but Adobe used to sell boxes of software in stores and made a huge business out of it, all the Photoshop Suite. So this person on our board actually led the movement of the cloud when people were still wondering if that's going to be a good business strategy or not.
Can you imagine being the person that says, Hey, guess what your business model is going to change, and we have to change or die and just to have that fortitude, that strategy and thought to move a billion dollar business like that. So now we have her on the board of directors of icing me and my team. We have a contributing editor to the MIT technology review and so again the credentials of the board here are amazing and of course I take every advantage of that.
SH: And finally, Tom, if there’s anything I’ve overlooked please feel free to elaborate. The floor is all yours!
TF: Yeah. Dave, great list of questions Thank you for those and I think if there's one thing that investors out there could take with them is the timing, it's all about timing. We are literally on the beginnings of that ramp for Logiq and everything that we started to plan and execute on is bearing fruit and our execution of the management team, support from the board and most importantly the reaction from our customer base And these are folks that some of them are new with Logiq digital marketing and the level we're providing and they're increasing their spend in un the platform, others like Quinn Street they're there over two years that they've been a client of ours on the customer marketplace side and taking all that together, our stock, our multiples is very low and so I think it's a huge opportunity right now and I don't think its going to last that long.
For regular updates, visit
logiq.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.