Company Description: EQ Inc. (“EQ” or “the Company”) enables businesses to understand, predict, and influence customer behaviour. Using unique and third-party data sets, advanced analytics, artificial intelligence and machine learning, EQ creates actionable intelligence for businesses to attract, retain, and grow customers. The Company’s proprietary SaaS platform mines insights from location and geospatial data, enabling businesses to close the loop between digital and real-world consumer actions. EQ is one of the largest providers of location-based data in Canada with over 1 petabyte of data.
Quarterly Highlights: (1) Quarterly Revenue Increases 71% Q/Q and 74% Y/Y. (i) Revenue for the three months ended June 30, 2021, was $3.0 million, an increase of 74% compared to $1.7 million in Q2/2020, and slightly higher than our estimate of $2.98 million. (ii) EQ’s Data Solutions revenue, its fastest-growing segment, increased 85% from Q2/2020 to $0.8 million in Q2/2021, and accounted for 27% of the overall quarterly revenue.
(2) Paymi Acquisition Opens New Consumer Line of Business and Proprietary Data Set. Paymi is a cloud-based rewards and marketing platform that processes consumer transactions in real-time to create aggregated, anonymized customer spending profiles. Paymi adds a new consumer line of business that should generate incremental revenue & also provides a new proprietary data set to the LOCUS platform.
(3) Recent Sales Wins Support Stronger H2/2021. In June, EQ reported that it entered into a data services contract with one of Canada’s largest media companies to utilize the LOCUS platform and it also signed a $1.8 million agreement with an unnamed media agency to use the LOCUS data platform to provide data solutions and insights to leverage online and offline audiences.
Financial Analysis & Valuation: We slightly reduced our 2021 and 2022 revenue estimates due to the continued impact of COVID-19 on advertising spending. (i) 2021E: Revenue $13.1 million; EBITDA loss of $0.9 million; (ii) 2022E: Revenue $22.2 million; EBITDA $2.9 million. We estimate an equal-weighted price target of $2.65 based on a DCF valuation ($2.49/share) and Revenue Multiple valuation ($2.86/share). We are maintaining our Buy rating and one-year price target of $2.65.
23 Sep 2021
Quarterly Results Improve as Revenue Increases 71% Q/Q and 74% Y/Y
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Quarterly Results Improve as Revenue Increases 71% Q/Q and 74% Y/Y
Company Description: EQ Inc. (“EQ” or “the Company”) enables businesses to understand, predict, and influence customer behaviour. Using unique and third-party data sets, advanced analytics, artificial intelligence and machine learning, EQ creates actionable intelligence for businesses to attract, retain, and grow customers. The Company’s proprietary SaaS platform mines insights from location and geospatial data, enabling businesses to close the loop between digital and real-world consumer actions. EQ is one of the largest providers of location-based data in Canada with over 1 petabyte of data.
Quarterly Highlights: (1) Quarterly Revenue Increases 71% Q/Q and 74% Y/Y. (i) Revenue for the three months ended June 30, 2021, was $3.0 million, an increase of 74% compared to $1.7 million in Q2/2020, and slightly higher than our estimate of $2.98 million. (ii) EQ’s Data Solutions revenue, its fastest-growing segment, increased 85% from Q2/2020 to $0.8 million in Q2/2021, and accounted for 27% of the overall quarterly revenue.
(2) Paymi Acquisition Opens New Consumer Line of Business and Proprietary Data Set. Paymi is a cloud-based rewards and marketing platform that processes consumer transactions in real-time to create aggregated, anonymized customer spending profiles. Paymi adds a new consumer line of business that should generate incremental revenue & also provides a new proprietary data set to the LOCUS platform.
(3) Recent Sales Wins Support Stronger H2/2021. In June, EQ reported that it entered into a data services contract with one of Canada’s largest media companies to utilize the LOCUS platform and it also signed a $1.8 million agreement with an unnamed media agency to use the LOCUS data platform to provide data solutions and insights to leverage online and offline audiences.
Financial Analysis & Valuation: We slightly reduced our 2021 and 2022 revenue estimates due to the continued impact of COVID-19 on advertising spending. (i) 2021E: Revenue $13.1 million; EBITDA loss of $0.9 million; (ii) 2022E: Revenue $22.2 million; EBITDA $2.9 million. We estimate an equal-weighted price target of $2.65 based on a DCF valuation ($2.49/share) and Revenue Multiple valuation ($2.86/share). We are maintaining our Buy rating and one-year price target of $2.65.