PERTH, Australia - Locafy Limited (NASDAQ:LCFY, LCFYW), a global software-as-a-service company in local search engine marketing, has reported a notable reduction in operating expenses and strategic partnerships in its 2024 fiscal first half financial results.
The company saw a year-over-year decrease of $3.6 million in operating expenses, which contributed to a lower net loss compared to the same period last year.
The financial results, which ended December 31, 2023, showed total operating revenue declined by 28.3% to $2.0 million from the previous year's $2.8 million. Subscription revenue fell by 34.4%, primarily due to extended billing relief and higher customer churn.
Despite a steady advertising revenue of $167,000, services revenue saw a significant drop of 74.3%. Still, the company's gross margin improved to 81.4% from 68.7%.
Locafy's cost-saving measures included a 51.6% reduction in operating expenses, with technology expenses down by 56.5% and employee benefits expense reduced by 63.6%. These reductions are part of the company's ongoing efforts to streamline operations and manage a lean cost structure.
The company also highlighted new partnerships with diDNA, a leading ad tech provider, and Localista, Australia and New Zealand's largest lifestyle and travel directory. These collaborations are seen as steps towards Locafy's goal of becoming a global publisher and media organization.
Moreover, the launch of the Hotfrog Proximity Page application, developed with Yext (NYSE:YEXT), is expected to enhance SEO performance for local businesses.
Despite these strategic moves, Locafy reported a net loss of $1.4 million, or $1.12 per diluted share, an improvement from the previous year's net loss of $4.0 million, or $3.93 per diluted share. Key Performance Indicators (KPIs) reflected decreases in monthly recurring revenue, active reseller count, and end user count.
CEO Gavin Burnett expressed optimism for the future, citing the company's ability to adapt and the success of its Article Accelerator technology in combating search engine algorithm changes. Burnett stated that by deploying proprietary SEO technology and expertise, Locafy aims to reverse the fortunes of struggling content-based websites.
This financial overview is based on a press release statement from Locafy Limited.
InvestingPro Insights
Locafy Limited's latest financial results show a company in transition, making significant strides in reducing operating expenses and forming strategic partnerships. According to InvestingPro data, the company's market capitalization stands at a modest $6.25 million, reflecting the challenges faced in the competitive tech landscape.
The revenue for the last twelve months as of Q1 2024 is reported at $3.23 million, with a growth rate of 5.59%, indicating a potential turnaround despite a quarterly decline of 24.3%.
The company's gross profit margin presents a concern, reported at -17.86% for the same period. This aligns with an InvestingPro Tip that Locafy suffers from weak gross profit margins, which could impact its ability to sustain operations without further cost-cutting measures or additional revenue streams.
Moreover, the stock performance has been underwhelming, with a 24.62% decline over the last month, and it's currently trading near its 52-week low, which is 29.18% of the 52-week high.
InvestingPro Tips suggest that Locafy is quickly burning through cash and has not been profitable over the last twelve months. These insights are crucial for investors considering the company's future prospects. For those looking to delve deeper into Locafy's financial health and stock performance, there are additional InvestingPro Tips available, which can be accessed with the promo code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
Despite the challenges, the fair value estimate from InvestingPro stands at $5.8, above the previous close price of $4.9. This discrepancy suggests that the market may not fully recognize the company's intrinsic value, possibly due to the recent negative price performance. Investors interested in this potential discrepancy might consider this an opportune moment to research further, especially with the next earnings date on the horizon, May 24, 2024.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.