Double digit quarter over quarter revenue
growth from measurement and data products supplemented with
improving traction from Killi identity product
TORONTO, March 9, 2020 /CNW/ - Freckle Ltd.
(TSXV: FRKL) (the "Company"), a leader in privacy-compliant
data and offline media measurement, announces its financial results
for the year ended December 31, 2019
("2019").
Financial Highlights
- Q4 2019 revenue was $1.0 million,
up 17% versus $862,000 in the
year-ago quarter and up 17% versus $863,000 in Q3 2019;
- Full year 2019 revenue of $3.5
million increased 11% versus $3.1
million in 2018;
- Recurring revenue, year to date, increased to 64% of total
revenue versus 30% in 2018;
- Q4 2019 gross margin was 58% versus 67% in Q4 2018 and 73% in
Q3 2019;
- Full year 2019 gross margin of 66% compared to 68% in fiscal
2018;
- Cash balance of $2.4 million and
zero corporate debt.
Killi Product Highlights for Q4 2019
- Average Revenue Per User (ARPU) per month improved by 250% from
Q3 2019 to Q4 2019 and 827% from 2018 to 2019;
- Cost Per Acquisition for new users (CPA) decreased 9% from Q3
2019 to Q4 2019, and 22% from 2018 to 2019;
- Integrated a second leading international third-party survey
provider, creating additional high-margin, recurring international
revenue;
- Integrated an incentivized mobile video provider, providing
Killi users with compensation for every video they view;
- Launched the Killi application in the Asia Pacific region (APAC) with distribution
in Singapore, Australia and New
Zealand bringing total global markets to five, and total
addressable audience to approx 400m;
- Combination of reduced CPA plus increased ARPU is accelerating
core unit economics towards cash neutral user acquisition model
where revenue equals acquisition cost.
Freckle Product Highlights for Q4 2019
- A successful focus on the USA
market lead to 87% of 2019 revenue being generated in the US,
compared to 69% in 2018;
- Announced partnership with iCrossing, a US-based advertising
agency owned by Hearst Communications, for offline
measurement.
"During Q4, we continued to focus on our core unit economics of
Killi, our direct-to-consumer (DTC) data privacy product, while
also launching into three new Asia-Pacific markets; Singapore, Australia and New
Zealand, extending our addressable market to approximately
400 million people," said CEO Neil
Sweeney. "We're pleased that user revenue (ARPU) and
retention continued to rise during the quarter while the cost of
acquisition (CPA) continued to fall. In the past quarter we
have added an additional survey company to the product as well as
an incentivized video provider to allow for new ways for our users
to monetize their data. Not only do our survey conversion
metrics continue to improve (the percentage of people that complete
revenue generating surveys) but we have also introduced a data
dividend for the passive sharing of Killi location data, which we
believe will increase the lifetime value (LTV) of each of our users
while also assisting in generating higher ARPU. We have several new
modules planned over the coming quarters that will assist our key
metrics, and help us get us to a cash flow positive model that will
allow us to increase our customer acquisition spend. Overall, we're
pleased with our Q4 results as Freckle delivered 17% revenue growth
over the same period last year. Freckle is well positioned to
continue to grow throughout 2020 as customers continue to look to
validate the efficacy of their digital market campaigns. Although
Killi is our focus, we are seeing significant interest from large
media groups that are looking to utilize our measurement and data
products to improve the outcomes of their campaigns."
BUSINESS OUTLOOK
Our team remains focused on being recognized as the global
leader in consumer privacy, a market that continues to expand in
size with persistent changes to data privacy regulation around the
world and Google's recent announcement of the depreciation of
third party tracking. We believe we are the leader in this
space and are sitting in between the two largest macro trends in
the data and technology ecosystems, each worth billions of dollars
per annum. Our goal is clear - to improve unit economics to a
cash flow neutral position. This is the only goal. Not scale. Scale
is a vanity metric that without core unit economics is a very fast
way to burn capital. That is not our priority. We track
the same metrics and business models as other global DTC brands,
such as Uber, Airbnb and Warby
Parker, where the focus is on a lower funnel conversation
metric; the difference between the cost to acquire a new Killi user
and the value they generate over their lifetime using Killi. When
lifetime value ("LTV") is lower than user acquisition cost, all new
users COST money. By focusing on closing the disparity between CPA
and LTV, scaling becomes neutral and then profitable. When we
hit this inflection point, scale will become the number one
priority. We refer to this model as The Triangle. To help
achieve our goals, our focus for Q1 2020 includes the
following:
- Expand the Killi application outside of the mobile ecosystem to
make available online,
- Expand the Killi product to an additional one to three new
countries,
- Passive Revenue vs Active Revenue. Introduce a dividend income
module for consumers to allow them to be compensated for their data
'passively' vs having to engage 'actively' in surveys and videos
exclusively in order to be compensated,
- Introduce a comprehensive user referral program to customers to
allow them to socially share the product while reducing internal
CPA,
- Increase the ARPU of Killi customers at a double-digit rate,
further reducing the disparity between CPA and LTV
- Increase survey conversion rates for users inside of Killi,
leading to improved retention and ARPU.
- Announce an additional six figure upfront additional agency
deal for Freckle,
- Announce large data partnership with a financial institution
for retail traffic monitoring for Freckle
- Demonstrate quarter over quarter revenue growth similar to the
levels of late 2019 for the Freckle product,
- Improve the Freckle data product by expanding the distribution
and breadth and revenue of this data taxonomy
CONFERENCE CALL TO DISCUSS 2019 FINANCIAL RESULTS
President and CEO Neil
Sweeney and CFO Andrew
Elinesky will host a conference call to discuss the results
and the 2020 outlook at 4:30pm EST
the same day. All interested parties are invited to
participate in this conference call and should dial the numbers
below 10 minutes before the starting time.
Date: Monday, March 9, 2020
Time: 4:30pm EST
Dial-in number: (877) 876-9176, (785) 424-1670
Conference ID: FRECKLE
Replay: Available at freckleiot.com
About Freckle Ltd.
Freckle's consumer identity mobile application "Killi"
(killi.io) allows consumers to take back control of their digital
identity from those who have been using it without their consent.
With Killi, consumers can opt-in and select specific pieces of
personal information that they would like to share with companies,
as well as answer specific surveys, and be compensated directly for
these answers. Download it here.
Freckle, via its data and offline measurement products, also
allows leading brands and platforms to measure the effectiveness of
their advertising by independently matching media spend to in-store
visitation while remaining media agnostic. Freckle's technology is
used by Fortune 500 brands like McDonald's, Lexus, Walmart, Verizon
and AT&T, and is a core component of the top demand-side
platforms (DSPs) and data management platforms (DMPs) used around
the world.
For more information, please visit freckleiot.com
/ killi.io
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Non-IFRS Measures
This press release includes certain measures which have not been
prepared in accordance with International Financial Reporting
Standards ("IFRS") such as CPA, ARPU and revenue growth. The
non-IFRS measures presented are unlikely to be comparable to
similar measures presented by other issuers. None of the foregoing
non-IFRS measures is an earnings measure recognized by IFRS and do
not have a standardized meaning prescribed by IFRS. The Company
believes that these measures may offer useful supplemental
information but are subject to inherent uncertainties and
limitations and rely on various assumptions by the Company and
should, therefore, not be relied upon for the purpose of making an
investment decision. Readers are cautioned that CPA and ARPU should
not be construed as alternatives to net income (as determined under
IFRS), as indicators of financial performance or to cash flow from
operating activities (as determined under IFRS) or as measures of
liquidity and cash flow.
For further information, please refer to the audited condensed
Consolidated Financial Statements and Management's Discussion and
Analysis ("MD&A") for the year ending December 31, 2019 filed on SEDAR at www.sedar.com
for more information.
DISCLAIMER FOR FORWARD-LOOKING INFORMATION
Certain statements in this press release are forward-looking and
may constitute forward-looking information and forward-looking
statements under applicable securities laws. All statements, other
than those of historical fact, which address activities, events,
outcomes, results, developments, performance or achievements that
Company anticipates or expects may or will occur in the future (in
whole or in part) should be considered forward-looking information
and forward-looking statements. Such information or statements may
include, but is not limited to: comments with respect to
strategies; expectations; planned operations; future actions,
growth and financial well-being of the Company; that the Company
will continue to be a leader in privacy-compliant data and offline
media measurement; expansion of the Killi application outside of
North America; introduction of an
additional third-party research engine in the Killi application;
increasing ARPU for Killi; addition of incentivized video modules
to the Killi application; improvement of the Killi UI; improvement
of the engagement and user retention; securing an international
data distribution deal; expansion of Freckle's global presence;
securing additional partnerships in 2020; quarter over quarter
revenue growth in 2020; sustaining current recurring revenue;
building Killi into a legal global DTC application for Data
Privacy; making Killi available online; the Company introducing a
dividend income module and a referral program for its users; and,
improving key data metrics.. Forward-looking statements are not
based on historical facts, but rather on current expectations and
projections about future events, and are therefore subject to risks
and uncertainties which could cause actual results to differ
materially from the future results expressed or implied by the
forward-looking statements, including, but not limited to: whether
the Company will continue to be recognized as a leader in
privacy-compliant data and offline media measurement; whether the
Company's expansion into APAC will expand its reach to 400 million
people; whether the Company will be able to achieve cash neutral
user acquisition; whether the market will require consumer opt-in
for data use; whether the Company's improvements to Killi will
result in increased revenue and customer retention and growth;
whether the Company's focus on closing the disparity between CPA
and LTV will increase its profits; whether the Company is able to
enter into an international data distribution deal and expand the
Company's global presence; whether the Company is able to enter
into new partnership agreements; whether the Company's team will
continue to grow; and whether the Company's technology will
continue to be used by Fortune 500 Brands.. These statements
generally can be identified by the use of forward-looking words
such as "may", "should", "will", "could", "intend", "estimate",
"plan", "anticipate", "expect", "believe'' or "continue", or the
negative thereof or similar variations. Although management of the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking statements or forward-looking information, there
may be other factors that cause results not to be as anticipated,
estimated or intended. There can be no assurance that such
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements and forward-looking information. The
Company assumes no obligation to update any forward-looking
statements or forward-looking information that are incorporated by
reference herein, except as required by applicable securities
laws.
The securities of the Corporation have not been and will not be
registered under the United States Securities Act of 1933, as
amended and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirement. This press
release shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful.
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SOURCE Freckle Ltd.