eResearch is pleased to publish an Update Report on EQ Inc. (TSXV:EQ). The report covers the Company’s Q4/2021 and 2021 Financial Results and recent news, including an update on the acquisition of Paymi.
We are maintaining our Buy rating but decreased our one-year price target to $2.00 from $2.65.
You can download the full 13-page report by clicking here: eR-EQ-UR-Q4-2021_2022-05-09_FINAL
EQ 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.
Financial Highlights:
Quarterly Revenue Up 36% Q/Q and 16% Y/Y
- EQ recorded its highest quarterly revenue since 2010, with $4.2 million booked in Q4/2021, up 36% Q/Q and 16% Y/Y, but below our estimate of $5.0 million due to the negative effects caused by the COVID-19 pandemic, which impacted the retail operations of various businesses.
- Data Business Continues to Grow
- Overall revenue increased 16% Y/Y to $12.1 million in 2021, compared to $10.4 million in the prior year.
- The revenue increase was powered by the continued traction in the data business, which improved 11% Q/Q and 18% Y/Y in Q4/2021. For 2021, data business revenue jumped 29% Y/Y.
- Sales & Partnership Announcements Support Sales Growth
- In February, EQ announced $6.0 million of new client engagements for data-driven marketing projects that surpassed the data-driven marketing projects in 2020 by 50%.
- In addition to the recent client wins, EQ also launched LOCUS Commute to help insurance providers, retailers, and digital out-of-home networks (e.g., digital billboards) to better understand the movement behaviour of customers
- Paymi’s Acquisition Adds a New Revenue Stream
- Paymi is a consumer-facing application (a downloadable app for iOS and Android) that uses card linking technology that was acquired in July 2021.
- Paymi only generated $0.2 million in revenue in 2021 but added expenses to launch the new division and in developing the product.
- However, Paymi’s propriety technology platform accumulates first-party data (100% consent-based) and should enhance the EQ’s LOCUS (analytics and AI framework) platform with proprietary zero-party data.
- Strong Cash Position
- As of December 31, 2021, EQ had $8.8 million in cash compared to $3.2 million as of December 31, 2020, due to the successful $11.5 million financing that closed in Q1/2021.
Financial Analysis & Valuation:
- Due to a slower recovery from the impact of COVID-19, we are reducing our 2022 revenue estimate to $16.5 million from $22.2 million, decreasing our 2023 revenue estimate to $21.5 million from $33.3 million, and also decreasing our 2024 revenue estimate to $30.0 million from $41.6 million.
- We estimate an equal-weighted price target of $2.00 based on a DCF valuation ($2.44/share) and Revenue Multiple valuation ($1.62/share).
We are maintaining our Buy rating and reducing our one-year price target to $2.00 from $2.65.
You can download the full 13-page report by clicking here: eR-EQ-UR-Q4-2021_2022-05-09_FINAL
FIGURE 1: EQ 1-Year Stock Chart
Notes: All numbers in CAD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.
