Logiq (OTC:LGIQ) beat our revenue estimates for the quarter with its pick up in revenues at AppLogiq. We had expected the quarter to be down sequentially due to the exceptionally strong quarter at DataLogiq in Q1, but total revenues were up from Q1 2021. In Q3 we can look forward to regaining year over year revenue growth after four down quarters due to the model shift at AppLogiq. Revenue growth should accelerate from there. Gross and operating margins have and are expected to continue to improve and investors should see valuation improvement in this show-me stock.
DataLogiq now has a compelling set of tools to improve the ad spending of SMBs. It added audio marketing this quarter and expanding its target of verticals to 14. It has had great success in Medicare and finance and is expanding further into insurance.
AppLogiq just release version 4.0 of CreateApp incorporating new capabilities that customers demanded. In Indonesia, progress continues still stymied by pandemic measures. One new service Logiq’s WIP business is adding is the ability to pay for testing at motor vehicle with an app or by kiosk when applying for or renewing licenses. The company will not only get a small fee with each payment, it plans to garner data for marketing purposes from usage. Indonesia issues 14 million new licenses or renewals a year. Users will also gain access to Logiq’s AtozGo digital wallet that they can use for other types of payments and access additional financial services. Also in the works is a new micro loan program in Indonesia for 5 million contract and delivery drivers of Garda Digital Indonesia, the membership organization overseen by BPJSTK who serves as the Social Security Agency in Indonesia. This is eventually expected to be available to BPJS’ 53 million members.
Versus other companies in its space, Logiq appears undervalued. It currently trades at $65.7 million fully diluted enterprise value or 1.6 times estimated 2021 sales of $40.7 million. Its peers trade at blended 9.4 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 Q2 2021, Logiq reported $8.3 million in revenues versus $9.3 million a year ago, down 11%. AppLogiq revenues were $2.8 compared to $5.7 million in Q2 2020. AppLogiq margins reached a record high of 32.2% versus 11.6% a year ago. DataLogiq generated $5.3 million in the quarter compared to $3.7 million last year, up 50.3%. Sequentially total revenues grew 2.8%. While AppLogiq is rebounding nicely from its low point in Q4 2020, DataLogiq was down slightly sequentially. This is only because of its extremely strong first quarter driven by ACA and Medicare enrollment, which takes place each year between January 1 and March 31.
Gross margin increased in Q2 2021 to $2.4 million from $1.2 million, or 101%. The margin percentage improved to 29.5% from 13.1% last year from the revamp of the CreateApp sales model. We expect margins to continue to improve.
Operating expenses increased to $7.8 million from $4.0 million in Q2 2020. G&A was impacted by an increase in stock-based compensation of $1.7 million year over year as well as one-time costs associated with the IPO of $1.2 million. Going forward we expected a more normalized stock-based compensation number. R&D and Sales and Marketing increased $248,000. Depreciation and amortization increased by $581,000 with acquisitions.
Other expense was $421,189 of which $494,353 was forgiveness of a government PPP loan and one-time. Pretax income, net income and income to common shareholders were all a loss of $5.0 million in Q2 2021 versus a loss of $2.9 million in Q2 2020. This resulted in a GAAP loss per share of $0.27 versus a loss per share of $0.14. Primary shares outstanding for the year increased 52% to 16.3 million.
On a non-GAAP basis, taking out the one time income and expenses as well as stock based compensation the loss was $2.8 million compared to $1.9 million a year ago and loss per share of $0.15 versus $0.16.
As of June 30, 2021, Logiq had $5.8 million in cash and debt of $5.0 million. $2.9 million of that debt is from a convertible promissory note that was converted to stock after the quarter ended and $509,000. Its current ratio is 1.9 times and it had $7.8 million in working capital. The company had negative operating cash flow for the quarter of $2.5 million (not including changes in working capital) and a negative free cash flow of $2.4 million. The company stated it might do another raise at the end of the year.
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