- SRAX held its FY2019 and Q1 FY2020 results conference call on May 4, 2020
- The company reported year-over-year revenue growth of 3% for FY2019
- SRAX Q2 revenues staged recovery despite COVID-19 woes due to innovative Stock for Ads program
- The company also saw increased traffic on, demand for BIGtoken platform as well as rebranded Sequire investor relations tool, both of which have witnessed strong uptick in sales in recent weeks
SRAX Inc. (NASDAQ: SRAX), a digital marketing company focused on providing consumer data-management services, recently held its FY2019 and Q12020 results conference call (http://ibn.fm/YOcxB). Despite unprecedented business challenges presented worldwide by COVID-19, the company was able to report strong results due to its product suite being ideally positioned to capitalize on the global shift to a fully digital economy in early 2020.
SRAX’s fiscal 2019 revenues of $3.6 million showed a 3% year-to-year increase while Q1 2020 sales fell to $350 thousand relative to the $592 thousand recorded in 2019, the latter decline largely a result of customers opting to defer their media spend to the second quarter. While first quarter revenues tend to mark the seasonal low for the company, SRAX was able to launch new initiatives, namely its pioneering Stock for Ads program and BIGtoken Lighting Insights platform, both of which have contributed to a significant sales rebound in the second quarter.
“The first quarter of the year tends to be seasonally adjusted, the lowest time of the year for the company […] most of the revenue from that time frame comes in the March area” SRAX Chairman and CEO Christopher Miglino stated in a news release. “Many of the companies that paused media in March when the pandemic was in full swing are beginning to launch those programs back up in May.”
A key driver for the company’s recent surge in marketing revenues has been its innovative Stock for Ads program, which has enabled customers to launch new media campaigns while paying with stock, thereby permitting companies to conserve cash. SRAX has sought to expand the scope of its program by tabling agreements with 31 banks and brokers, including the likes of B. Riley Financial Inc., who in turn have sought to promote and cross-sell SRAX’s marketing capabilities and Stocks for Ads program to their underlying client bases. Thus far this year, publicly-listed US companies have raised capital by selling stock at over twice the pace at which they did in 2019 (http://ibn.fm/AWQqH), a clear illustration of the popularity and potential of equity-based financing options.
SRAX also reported a strong uptick in the use of its BIGtoken Lightning Insights platform (http://ibn.fm/u96jf). The platform allows SRAX’s customers to harness the collective insights of BIGtoken’s 16.7 million registered users, providing brands with a prompt and deeper understanding as to its consumer mindset-related queries. CEO Christopher Miglino revealed that SRAX “saw our first substantial revenue for our BIGtoken product in Q4 of 2019,” with the company recognizing approximately $450 thousand in sales at a 50% margin.
SRAX highlighted the unique capabilities of their proprietary BIGtoken platform by referencing a recent campaign which the company carried out for Kraft. Through the use of SRAX’s BIGtoken tool, Kraft was able to launch an extremely targeted marketing campaign, resulting in a 6.6% return on ad spend (http://ibn.fm/EODi7). SRAX’s management highlighted the potential of its proprietary marketing solution by contrasting the Kraft campaign to those recently carried out by Walmart and Evite, which delivered flat and negative returns, respectively. Moreover, the company also revealed that the positive returns from the marketing campaign had prompted the client to subsequently follow through with a substantial purchase.
Moreover, SRAX seized the opportunity to elaborate upon the rebranding of its investor intelligence platform, SRAX IR to Sequire. The investor relations platform, which enables companies to identify, manage and communicate with their investor base in a unique and seamless manner, announced that it had gained 59 corporate subscribes to date, a remarkable 62% increase relative to the quarter ending September 30, 2019. The company further announced its addition of functionalities to the platform, including the ability for companies to take advantage of marketing services, exploiting the synergies existent within its various product offerings in a bid to maximize potential revenues.
In addition to its ongoing business lines, SRAX management also touched upon its 2018 sale of SRAXmd, which has since been rebranded as TI Health. SRAX has retained a 31% stake in the business with CEO Christopher Miglino attributing a carrying value to the asset of approximately $12 million following several quarters of 8% annualized growth. Remarkably, the value of the stake would be equivalent to nearly 50% of SRAX’s current market cap.
Finally, the company also revealed that it had been extremely diligent in safeguarding its business in response to the onset of the global pandemic in the first quarter. As of March, SRAX had implemented cost savings measures resulting in the elimination of over $3 million in annualized expenses while simultaneously identifying a further $600 thousand in cost cuts to be implemented in the coming months. Separately, the company entered into a $5 million debt financing agreement with B. Riley Financial Inc. to further safeguard its balance sheet liquidity while also announcing the procurement of a $1.1 million PPP loan at the beginning of May.
For more information, visit the company’s website at www.SRAX.com
NOTE TO INVESTORS: The latest news and updates relating to SRAX are available in the company’s newsroom at http://ibn.fm/SRAX