Weyland Tech Reports 2019 Preliminary Results: Revenue up 53% to Record $34.6 Million, Driving First Quarter of Positive Adj. EBITDA
NEW YORK, Jan. 27, 2020 (GLOBE NEWSWIRE) — Weyland Tech, Inc. (OTCQX: WEYL), a leading global provider of mCommerce platform-as-a-service (PaaS), eCommerce managed services and mobile fintech solutions, reported preliminary unaudited results for the fourth quarter and full year ended December 31, 2019.
The company’s results for 2019 do not include its acquisition of the eCommerce technology company, Push Interactive, which was closed on January 8, 2020. However, pro forma results for the combined companies were provided.
For the fourth quarter of 2019, the company expects to report record revenue of approximately $10 million, representing an increase of 85% from the same year-ago quarter and up 11% sequentially. The company also expects to report its first positive quarterly adjusted EBITDA after previously reporting it had turned adjusted EBITDA positive in the final month of Q3 (see below for definition and further discussion of this non-GAAP metric).
For the full year 2019, Weyland expects to report record revenue of approximately $34.6 million, increasing 53% over 2018. The company ended the year at an estimated $48.6 million annualized run-rate.
The increase in revenue for the fourth quarter and year was primarily driven by the growth in monthly and annual subscriptions to the company’s CreateApp platform-as-a-service, which provides an easy-to-deploy mobile presence for small-and-medium sized businesses (SMBs). The CreateApp user base, which has been comprised primarily of businesses in Southeast Asia, grew more than 47% during the year to more than 360,000 total users by year end.
Also contributing to the increase in recurring revenue was the adoption by existing customers of new features and modules added to the platform, which helped drive increased average CreateApp subscription fees per customer.
Earlier this month, the company completed its acquisition of the eCommerce technology company, Push Interactive, a direct-to-consumer eCommerce platform that provides an end-to-end solution for SMBs and major U.S. brands, like HomeAdvisor, QuinStreet and Sunrun.
Push Interactive sustained a significant return to growth in the second half of 2019, and anticipates reporting revenue of $1.9 million for the fourth quarter of 2019 and $7.7 million for the full year, primarily derived from managed services. Given new business transacted in the later part of the fourth quarter, Push estimates its annualized run-rate at year-end totaled more than $12 million, with an outlook for continued strong growth in 2020.
On a combined pro forma basis, the companies anticipate reporting $11.9 million in revenue for the fourth quarter of 2019, with total revenue of $42.3 million for the year. The combined annualized run rate on a pro forma basis totaled more than $60.6 million at year-end.
Weyland also reported that the new AtozGo™ local food delivery service launched last summer in Jakarta, Indonesia, by its mobile payments subsidiary, AtozPay™, has reached a registered customer base of 74,000 mobile users. About 22% of the userbase has been generating more than 15,400 deliveries per day. AtozGo has also nearly reached breakeven, which compares to global competitors which report 2%-3% average customer usage and expect continued losses for the next few years. AtozGo plans to continue to reinvest in user growth and regional expansion with its unique pedestrian-powered approach to urban food delivery. AtozPay’s total gross mobile transaction volume totaled $16 million in 2019.
“Our record results for 2019 reflect the strategic investments we made over the last few years to grow customer demand, leverage our distribution partnerships, and continually enhance our CreateApp PaaS based on customer feedback,” noted Weyland Tech CEO, Brent Suen. “This has resulted in a rapidly expanding customer base with low attrition, along with an increasing average revenue per customer. We have also benefited from markets with exceptionally strong growth in smartphone-driven m-Commerce, making CreateApp increasingly relevant and essential to businesses looking for a competitive edge in an increasingly mobile world.”
According to the e-Conomy SEA 2019 Report issued by Google, Bain & Company, and Temasek investment fund, Southeast Asia (SEA) has become one of the world’s fastest-growing regions for online commerce. The region’s internet economy hit $100 billion last year and is expected to triple in size by 2025. Of the 360 million Internet users in SEA (which accounts for about two-thirds of the population), 90 percent access the Internet via their mobile phone. The adoption of digital payments has also reached an inflection point, says the report, and is expected to cross $1 trillion by 2025 and represent about half of all financial transactions.
“Having established a robust user platform and achieving strong user growth in our initial target markets in Southeast Asia, we are now ready for greater global expansion,” continued Suen. “Our recent acquisition of the Minneapolis-based Push Interactive and its highly-complementary e-Commerce platform has set the stage for our launch of CreateApp across the U.S. before the end of the current quarter. Based on our growth models, we continue to see our CreateApp U.S. subscription revenues reaching $5 million by year end.”
Push co-founder, CEO and president, Haig Newton, commented: “We have identified a huge opportunity for Weyland to cross sell CreateApp into our established U.S. marketplace, as well as introducing our managed e-Commerce services to Weyland’s customer base in Southeast Asia. Meanwhile, our existing U.S. market continues to heat up, with demand growing for our services from major brands, along with new industry verticals opening up where we can leverage our highly effective e-marketing and conversion technologies.”
Suen added: “We are also planning CreateApp pilot launches with potential distribution partners to expand our CreateApp market reach to the Middle East and additional countries in Southeast Asia. These partnerships would be similar to our existing relationship with Indosat, Indonesia’s second largest telecom provider, who markets and distributes CreateApp on our behalf in Indonesia. These global markets are very attractive, given their high smartphone penetration and the tens of millions of micro and small businesses well suited to the benefits and advantages of CreateApp.
“Looking ahead in 2020, we are on track for another year of double-digit organic growth, and triple digit acquisitive growth with the addition of Push. As we continue to work to elevate our profile in the financial community, we believe the market valuation for a company like ours with a $34.6 million subscription-based revenue stream should garner a several times multiple in its price-to-revenue ratio rather than a fraction it does today. Adding the revenue and synergistic operations of Push in 2020 should make our valuation even stronger.”
Publicly traded SaaS and PaaS companies typically garner valuations of around 10x revenue on average, or even higher for those in Weyland’s industry sector and SEA market. This is largely due to their ‘stickier,’ higher-margin customer engagements that provide greater performance predictability and transparency into revenue and profitability. Nearest public peers to Weyland Tech include SEA Limited at 12.4x trailing 12-month revenues, Shopify at 38.4x, and Wix at 10.2x. These valuations are supported by significant investments by institutional investors and awareness of their growing market opportunities.
“Given these comparative valuations, our current market capitalization of around $40 million does not appear to reflect our financial performance, the quality of our revenue, and prospects for our growth to accelerate over the coming quarters,” said Suen. “For a valuation more in line with our peers, a 10x multiple applied to our 2019 revenues would mean a valuation of about $350 million—or more than $600 million if you factor in our annualized run rate combined with Push. As we continue to execute on our global expansion plans and raise awareness in the investment community, such as with our planned uplist to Nasdaq, we expect a more favorable valuation to eventually follow suit.”
About Weyland Tech
Weyland Tech is a developer and global provider of mobile business software applications. The company operates its CreateApp™ platform-as-a-service (PaaS) across three continents and 10 countries, including some of the fastest-growing emerging markets in Southeast Asia. The platform provides a mobile presence for small-and-medium sized businesses (SMBs) that is supported locally by distributor partnerships.
Offered in 14 languages with more than 70 integrated modules, CreateApp enables SMBs to create and deploy native mobile applications for Apple iOS and Google Android without technical knowledge or background. The technology empowers SMBs to increase sales, reach more customers, manage logistics, and promote their products and services in an easy, affordable and highly efficient way. For more information, visit weyland-tech.com.
About Push Interactive
The e-Commerce platform of Weyland’s Push Interactive subsidiary features comprehensive customer acquisition capabilities, highly productive media and channel strategies, well-tuned product promotion and messaging, and sales funnel development and optimization. The direct-to-consumer platform provides an end-to-end solution for SMBs and major brands, allowing these organizations to dramatically increase online revenue while lowering the cost of customer acquisition and order fulfillment. Post-sale, Push supports fulfillment, customer relationship management, and further monetization through re-engagement and remarketing toolsets that enhance customer lifetime value (LTV). For more information about Push Interactive, visit www.pushint.com.
About AtozPay™ and AtozGo™
Through Weyland Tech’s minority-owned subsidiary, Weyland Indonesia Perkasa (WIP), the company operates AtozPay™ and AtozGo™. The AtozPay mobile payments platform serves the burgeoning mCommerce and e-Payment markets in Indonesia, the world’s fourth most populous country. AtozGo is a fast-growing short-distance food delivery service operated in Jakarta, Indonesia. For more information, visit atozpayindonesia.com.
About the Use of Non-GAAP Financial Measures
Weyland management believes the use of adjusted EBITDA is helpful to assessing the company’s financial performance. The company defines adjusted EBITDA as income before interest and financing expense, provision for income taxes, depreciation and amortization, stock-based compensation and acquisition expense.
Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States or GAAP. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash operating expenses, management believes that providing a non-GAAP financial measure that excludes non-cash and non-recurring expenses allows for meaningful comparisons between the company’s core business operating results and those of other companies, as well as providing an important tool for financial and operational decision making and for evaluating the company’s own core business operating results over different periods of time.
The company’s adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, or unusual items. The company’s adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. The company does not consider adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results.
The company expects to include adjusted EBITDA in its future financial reporting, which will include a reconciliation to the nearest GAAP measure. For the fourth quarter 2019, the company expects to report positive adjusted EBITDA, but it is not providing a reconciliation to nearest GAAP measure in this press release since the actual amount or range has not yet been determined, and it would require unreasonable efforts to report a reconciliation of this information to the nearest GAAP measure.
Important Cautions Regarding Forward Looking Statements
This release contains certain “forward-looking statements” relating to the business of the Company. All statements, other than statements of historical fact included herein are “forward-looking statements” including statements regarding: the ability of the Company to successfully integrate Push, the continued growth of the eCommerce segment and the ability of the Company to continue its expansion into that segment; the ability of the Company to attract customers and partners and generate revenues; the ability of the Company to successfully execute its business plan; the business strategy, plans, and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume any duty to update these forward-looking statements.
Brent Suen, CEO
Weyland Tech Inc.
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