Locafy Reports Fiscal First Half 2024 Results
April 02 2024 - 4:10PM
Locafy Limited (Nasdaq: LCFY, LCFYW)
(“Locafy” or the “Company”), a globally recognized
software-as-a-service technology company specializing in local
search engine marketing, today reported financial results for the
2024 fiscal first half ended December 31, 2023. All financial
results are reported in Australian Dollars (AUD).
Recent Operational Highlights
- Announced a partnership agreement with diDNA,
a leading ad tech provider for the publisher ecosystem. With this
partnership, diDNA will implement Locafy’s Article Accelerator
alongside diDNA’s existing advertising software to allow diDNA’s
publishers to increase the prominence of advertorials within online
search results for competitive keywords. The agreement will begin
with a paid trial for 10-15 publishers in diDNA’s network and, if
successful, will be expanded to their broader set of
publishers.
- Signed a series of commercial agreements with
Localista, the largest lifestyle and travel directory in Australia
and New Zealand. Through these agreements, Locafy acquired Scoop’s
digital assets, agreed to provide SEO consulting services to
Localista’s retained asset, and added Localista’s sales team as a
reseller of Locafy’s Article Accelerator.
- Launched Hotfrog Proximity Page, an
application built in partnership with Yext. Hotfrog Proximity Page
is a unique application that combines Yext’s extensive business
listing database network with Locafy’s SEO technology to empower
local businesses to effortlessly create for themselves one or more
dynamic landing pages that are optimized for SEO performance.
Hotfrog Proximity Page is expected to allow users to enhance their
online presences and drive traffic to their main websites.
Management Commentary“Our 2024 fiscal first
half presented several promising opportunities for our business
that inform our optimism for the rest of the fiscal year,” said
Locafy CEO Gavin Burnett. “Recent search engine algorithm updates
created persistent headwinds for both the existing online search
ecosystem and our traditional business. Content-based sites drive
revenue from advertising and affiliate commissions, and dramatic
website traffic losses caused by these algorithm updates, sometimes
in excess of 90% in the past 18 months, materially impacted our
partners’ advertising income and budgets. These challenges reached
our top resellers, dampening the expected upside from recent
reseller partnerships.”
“Our Article Accelerator technology has proven very successful
for media brands hoping to rapidly combat the effects of these
algorithmic changes,” continued Burnett. “As we move into the
second half of the year, we’ve effectively reduced our expenses and
managed our lean cost structure to give us the flexibility to shift
our strategy. By deploying our proprietary SEO technology and
expertise, we are confident that we can reverse the fortunes of
struggling content-based websites under our control. We have
already started diversifying our go-to-market strategy to acquire
additional digital properties and expand our publishing reach, as
highlighted by our partnerships with diDNA and Localista. We
believe we are on a path to becoming a global publisher and media
organization that specializes in content-rich websites in
high-value advertising categories. We look forward to providing
updates in the coming quarters.”
2024 Fiscal First Half Financial ResultsResults
compare the 2024 fiscal first half end (December 31, 2023) to the
2023 fiscal first half end (December 31, 2022) unless otherwise
indicated. All financial results are reported in Australian Dollars
(AUD).
- Total operating revenue decreased 28.3% to
$2.0 million from $2.8 million in the comparable year-ago period.
- Subscription revenue decreased 34.4% to $1.4
million from $2.1 million in the comparable year-ago period.
Compared to the 2024 fiscal first quarter, subscription revenue
decreased 19.0%. The decrease in subscription revenue was
attributable to the Company continuing to extend billing relief to
customers whose campaigns on our Proximity product were affected by
the transition onto Locafy’s upgraded technology platform (the
“Platform”), together with a higher rate of customer churn compared
to previous periods.
- Advertising revenue remained steady at
$167,000 in both the current and comparable year-ago period.
Compared to the 2024 fiscal first quarter, advertising revenue
decreased 28.0%.
- Data revenue decreased 4.6% to $430,000 from
$451,000 in the comparable year-ago period. Compared to the 2024
fiscal first quarter, data revenue increased 1.4%.
- Services revenue decreased 74.3% to $12,000
from $49,000 in the comparable year-ago period. Compared to the
2024 fiscal first quarter, services revenue decreased 56.9%. These
decreases are due to comparatively lower custom website builds in
each respective period.
- Other income decreased 96.0% to $7,000 from
$165,000 in the comparable year-ago period. The variance is
attributed to the Company’s assessment (as at the respective
reporting period) of the extent and likelihood of its ability to
claim a Research & Development tax incentive.
- Cost of sales decreased 64.1% to $318,000 from
$888,000 in the comparable year-ago period.
- Gross margin for the 2024 fiscal second
quarter increased to 81.4% from 68.7% for the comparable year-ago
period.
- Operating expenses decreased 51.6% to $3.3
million from $7.0 million in the comparable year-ago period. This
included a 56.5% decrease in technology expenses to $450,000 from
$1.0 million in the comparable year ago period as a result of the
Company’s ongoing efforts to upgrade its Platform, including
changes to its technology stack and the reduction of third-party
product subscriptions. Employee benefits expense decreased 63.6% to
$1.6 million from $4.3 million in the comparable year ago period.
The Company has in the intervening period significantly reduced
headcount, particularly in underperforming sales regions and across
all business units. New hires have predominantly been made in more
“cost efficient” regions. Depreciation and amortization expense
increased 45.4% to $719,000 from $494,000 in the comparable year
ago period. This increase is mainly due to the higher starting cost
base of capitalized development cost for fiscal 2024 compared to
fiscal 2023.
- Net loss was $1.4 million, or $1.12 per
diluted share, compared to a net loss of $4.0 million, or $3.93 per
diluted share, in the comparable year-ago period.
Key Performance Indicators (KPIs)Unless
otherwise specified, KPI data has been recorded as of the 2024
fiscal second quarter end (December 31, 2023).
- Monthly recurring revenue (MRR) for the 2024
fiscal second quarter was $314,000, a 32.2% decrease compared to
$464,000 for the comparable year-ago period, and a 12.5% decrease
compared to $360,000 for the 2024 fiscal first quarter.
- Total active reseller count for the 2024
fiscal second quarter was 87 resellers, a 35.1% decrease compared
to 134 resellers for the comparable year-ago period, and a 12.1%
decrease compared to 99 resellers as of September 30, 2023.
- Total end user count for the 2024 fiscal
second quarter was 947 end users, a 25.3% decrease compared to
1,268 end users for the comparable year-ago period, and a 9.6%
decrease compared to 1,048 end users as of September 30, 2023.
For more information, please see Locafy’s investor relations
website at investors.locafy.com.
About LocafyFounded in 2009, Locafy's (Nasdaq:
LCFY, LCFYW) mission is to revolutionize the US$700 billion SEO
sector. We help businesses and brands increase search engine
relevance and prominence in a specific proximity using a fast,
easy, and automated approach. For more information, please visit
www.locafy.com.
About Key Performance IndicatorsLocafy defines
MRR as the value of all recurring subscription contracts with
active entitlements as at the end of each month. MRR across a
period is the average of each month’s MRR within that period.
Locafy’s recent Platform upgrade caused a significant change to
the calculation of average page metrics, and Locafy management no
longer views these metrics as relevant indicators of the
performance of Locafy technology. The Company may introduce
additional KPIs in future quarters if deemed relevant long-term
indicators of performance.
Forward-Looking StatementsThis press release
contains “forward-looking statements” that are subject to
substantial risks and uncertainties. All statements, other than
statements of historical fact, contained in this press release are
forward-looking statements. Forward-looking statements contained in
this press release may be identified by the use of words such as
“subject to”, “believe,” “anticipate,” “plan,” “expect,” “intend,”
“estimate,” “project,” “may,” “will,” “should,” “would,” “could,”
“can,” the negatives thereof, variations thereon and similar
expressions, or by discussions of strategy, although not all
forward-looking statements contain these words. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, they do involve
assumptions, risks, and uncertainties, and these expectations may
prove to be incorrect. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. The Company’s actual results could differ materially
from those anticipated in these forward-looking statements as a
result of a variety of factors and risk factors, including those
discussed in the Company’s filings with the Securities and Exchange
Commission (the “SEC”), including the Company’s Annual Report on
Form 20-F filed with the SEC on October 11, 2023, and available on
its website (http://www.sec.gov). All forward-looking statements
attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these factors. Other than
as required under the securities laws, the Company does not assume
a duty to update these forward-looking statements.
Investor Relations ContactTom Colton or Chris
Adusei-PokuGateway Investor Relations(949)
574-3860LCFY@gateway-grp.com
-Financial Tables to Follow-
Locafy Limited
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
|
|
6 months to31 Dec 2023AUD
$ |
|
|
6 months to31 Dec 2022AUD
$ |
|
Revenue |
|
2,035,683 |
|
|
2,839,089 |
|
Other income |
|
6,600 |
|
|
164,817 |
|
Technology expense |
|
(450,614 |
) |
|
(1,036,224 |
) |
Employee benefits expense |
|
(1,600,837 |
) |
|
(4,396,441 |
) |
Occupancy expense |
|
(47,096 |
) |
|
(60,586 |
) |
Advertising expense |
|
(132,864 |
) |
|
(158,891 |
) |
Consultancy expense |
|
(464,789 |
) |
|
(530,086 |
) |
Depreciation and amortization
expense |
|
(719,278 |
) |
|
(494,786 |
) |
Other expenses |
|
(42,334 |
) |
|
(65,792 |
) |
Reversal/(Impairment) of
financial assets |
|
67,146 |
|
|
(259,888 |
) |
Operating
loss |
|
(1,348,383 |
) |
|
(3,998,788 |
) |
Financial cost |
|
(78,288 |
) |
|
(45,900 |
) |
Loss before income
tax |
|
(1,426,671 |
) |
|
(4,044,688 |
) |
Income tax expense |
|
- |
|
|
- |
|
Loss for the period
after tax |
|
(1,426,671 |
) |
|
(4,044,688 |
) |
|
|
|
|
|
|
|
Other comprehensive
income |
|
|
|
|
|
|
Items that will be
reclassified subsequently to profit and loss |
|
|
|
|
|
|
Exchange differences on
translating foreign operations |
|
17,644 |
|
|
(7,438 |
) |
Total comprehensive
profit/(loss) for the period |
|
(1,409,027 |
) |
|
(4,052,126 |
) |
|
|
|
|
|
|
|
Earnings per
share |
|
|
|
|
|
|
Basic loss per share |
|
(1.12 |
) |
|
(3.93 |
) |
Diluted loss per share |
|
(1.12 |
) |
|
(3.93 |
) |
|
|
|
|
|
|
|
Locafy Limited
Consolidated Statement of Financial Position
|
6 months to31 Dec 2023AUD
$ |
|
|
Year to30 Jun 2023AUD
$ |
|
Assets |
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and cash equivalents |
724,581 |
|
|
3,174,700 |
|
Trade and other
receivables |
868,492 |
|
|
1,288,513 |
|
Other assets |
453,763 |
|
|
356,782 |
|
Total current
assets |
2,046,836 |
|
|
4,819,995 |
|
Non-current
assets |
|
|
|
|
|
Property, plant and
equipment |
317,618 |
|
|
380,018 |
|
Right of use assets |
268,558 |
|
|
314,596 |
|
Intangible assets |
4,022,887 |
|
|
3,720,272 |
|
Total non-current
assets |
4,609,063 |
|
|
4,414,886 |
|
Total
assets |
6,655,899 |
|
|
9,234,881 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and other payables |
1,289,251 |
|
|
2,507,573 |
|
Borrowings |
271,600 |
|
|
301,600 |
|
Provisions |
226,547 |
|
|
214,465 |
|
Accrued expenses |
357,776 |
|
|
512,611 |
|
Lease liabilities |
120,287 |
|
|
85,165 |
|
Contract and other
liabilities |
139,120 |
|
|
152,211 |
|
Total current
liabilities |
2,404,581 |
|
|
3,773,625 |
|
Non-current
liabilities |
|
|
|
|
|
Lease liabilities |
269,500 |
|
|
332,578 |
|
Provisions |
33,559 |
|
|
48,271 |
|
Accrued expenses |
90,450 |
|
|
90,450 |
|
Total non-current
liabilities |
393,509 |
|
|
471,299 |
|
Total
liabilities |
2,798,090 |
|
|
4,244,924 |
|
Net
assets |
3,857,809 |
|
|
4,989,957 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Issued capital |
47,805,798 |
|
|
47,930,486 |
|
Reserves |
2,696,635 |
|
|
2,404,933 |
|
Accumulated losses |
(46,644,624 |
) |
|
(45,345,462 |
) |
Total
equity |
3,857,809 |
|
|
4,989,957 |
|
|
|
|
|
|
|
Locafy Limited
Consolidated Statement of Cash Flows
|
6 months to31 Dec 2023AUD
$ |
|
|
6 months to31 Dec 2022AUD
$ |
|
Cash flows from
operating activities |
|
|
|
|
|
Receipts from customers
(inclusive of GST) |
1,837,481 |
|
|
2,743,777 |
|
Payments to suppliers and
employees (inclusive of GST) |
(3,312,368 |
) |
|
(4,753,048 |
) |
R&D Tax Incentive and
government grants |
561,501 |
|
|
164,817 |
|
Financial cost |
(78,288 |
) |
|
(45,900 |
) |
Net cash used by
operating activities |
(991,674 |
) |
|
(1,890,354 |
) |
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
Purchase of intellectual
property |
(1,190,222 |
) |
|
(1,161,145 |
) |
Purchase of property, plant
and equipment |
- |
|
|
(2,171 |
) |
Maturity of term deposit |
40,000 |
|
|
- |
|
Net cash used by
investing activities |
(1,150,222 |
) |
|
(1,163,316 |
) |
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Payment for share issue
costs |
(245,586 |
) |
|
- |
|
Repayment of borrowings |
(30,000 |
) |
|
(6,500 |
) |
Leasing liabilities |
(27,956 |
) |
|
(10,936 |
) |
Net cash from
financing activities |
(303,542 |
) |
|
(17,436 |
) |
|
|
|
|
|
|
Net decrease in cash and cash
equivalents |
(2,445,438 |
) |
|
(3,071,106 |
) |
Net foreign exchange
difference |
(4,681 |
) |
|
(7,438 |
) |
Cash and cash equivalents at
the beginning of the period |
3,174,700 |
|
|
4,083,735 |
|
Cash and cash
equivalents at the end of the period |
724,581 |
|
|
1,005,191 |
|
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