Sign in

You're signed outSign in or to get full access.

SI

SRAX, Inc. (SRAX)·Q1 2021 Earnings Summary

Executive Summary

  • Q1 2021 consolidated revenue was $5.442M, up 1,450% year-over-year and 21% quarter-over-quarter; SRAX beat its Q1 revenue guidance of $5.0M and raised full-year guidance to $25–$27M while reiterating Q2 revenue guidance of $7.0M .
  • Excluding BIGtoken, SRAX delivered positive operating income ($52K) and EBITDA ($500K); consolidated gross margin was ~70%, and consolidated EBITDA remained negative (press release cites -$0.6M; segment table shows -$0.862M) .
  • Sequire momentum continued: $10M bookings in Q1, $7.2M booked to date in Q2, and 200 subscribed public companies (up 17 since Q4); 2021 revenue to be recognized from existing contracts increased to $19.8M .
  • Balance sheet improved: debt fell to $3.1M as of March 31; cash was $13.5M and marketable securities $18M (press release also notes ~$23M marketable securities “currently”)—management highlighted warrants that could add ~$54M cash if exercised, implying potential dilution and funding flexibility .

What Went Well and What Went Wrong

What Went Well

  • Sequire-led revenue acceleration: consolidated revenue grew to $5.442M (+1,450% YoY), with Sequire revenue of $4.553M (+2,803% YoY) and ~70% margin; management emphasized exceeded Q1 guidance and robust feature pipeline (“best of what we are building has not even hit the market yet”) .
  • Guidance raised and bookings strong: FY revenue guidance lifted to $25–$27M; Q1 bookings were $10M and Q2 bookings reached $7.2M to date, underpinning visibility (“Sequire revenue to be recognized in 2021: $19.8M”) .
  • Operating progress ex-BIGtoken: ex-BIGtoken, SRAX achieved positive operating income ($52K) and EBITDA ($500K); debt reduced sharply to $3.1M by quarter-end, improving financial flexibility .

What Went Wrong

  • Consolidated profitability still negative: despite margin strength, consolidated EBITDA remained below zero (press release: -$0.6M; segment table: -$0.862M) and operating loss was -$1.485M, reflecting BIGtoken drag and elevated growth investments .
  • Operating expenses elevated: consolidated OpEx was $5.277M vs $4.113M in prior year (press bullets referenced ~$5.0M, later clarified higher in segment detail and call), driven by Sequire sales/operations scaling .
  • Potential dilution from warrants: ~10M warrants (majority at $7.50 strike) and ~1.2M options; full warrant exercise could add ~$54M cash but dilute to ~34M shares fully diluted, raising capital structure considerations .

Financial Results

MetricQ3 2020Q4 2020Q1 2021
Revenue ($USD)$2,600,000 $4,524,000 $5,442,000
Revenue YoY %161% 316% 1,450%
Revenue QoQ %124% 74% 21%
Gross Margin %66% 73% 69.68%
Operating Expenses ($USD)$4,200,000 $5,318,000 $5,277,000
Operating Income ($USD)-$2,500,000 -$1,997,000 -$1,485,000
EBITDA ($USD)N/A-$672,000 -$600,000 (press) ; -$862,000 (segment)
EPS ($USD)N/AN/AN/A

Segment breakdown (Q1 2021 vs Q1 2020):

MetricQ1 2020Q1 2021
Sequire Revenue ($USD)$107,000 $4,553,000
BIGtoken Revenue ($USD)$193,000 $855,000
Corporate & Other Revenue ($USD)$52,000 $364,000
Eliminations ($USD)$0 -$330,000
Consolidated Revenue ($USD)$351,000 $5,442,000
Consolidated EBITDA ($USD)-$3,211,000 -$862,000
Consolidated Operating Income ($USD)-$3,874,000 -$1,485,000
Consolidated Gross Margin ($USD)$239,000 $3,792,000
Consolidated Margin %68% 69.68%

KPIs and balance-sheet indicators:

KPIQ3 2020Q4 2020Q1 2021
Sequire companies (#)125 183 200
Sequire bookings ($USD)$6.7M $4.8M $10.0M
2021 rev to be recognized from existing contracts ($USD)N/A$16.5M $19.8M
Marketable securities holdings ($USD)~$10M ~$23.8M ~$23M (current)
Cash ($USD)~$2.5M at 9/30 ~$9M at 12/31 (CFO commentary) $13.5M (3/31)
Marketable securities ($USD, point-in-time)$4.8M at 9/30 +$10M acquired in Q1 (subsequent) $18.0M (3/31)
Debt outstanding ($USD)~$9.2M conv. debentures (post Q3 activities) ~$3.8M debt (CEO) $3.1M (3/31)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
RevenueFY 2021$23M–$25M $25M–$27M Raised
RevenueQ2 2021$7M $7M (reiterated) Maintained
RevenueQ1 2021$5.0M (restated) $5.442M actual Beat
Sequire rev to be recognized in 2021FY 2021$16.5M $19.8M Raised

Earnings Call Themes & Trends

TopicQ3 2020 (Prior-2)Q4 2020 (Prior-1)Q1 2021 (Current)Trend
Sequire platform growth7 consecutive quarters; clients 91→125; bookings $6.7M; rev $2.6M; operating system for public issuers 8 consecutive quarters; clients 125→183; rev $3.5M (Sequire); positive EBITDA (pro forma) 9 consecutive quarters; 200 clients; Sequire rev $4.553M; strong pipeline/features Accelerating adoption and revenue mix shift to Sequire
Guidance and bookingsAnticipated Q4 ~$4M; exceeded analysts’ expectations FY raised to $23–$25M; Q2 $7M; Q1 $5M restated FY raised to $25–$27M; Q2 $7M reiterated; Q1 beat Consistent upward revisions and visibility
LD Micro conferencesAcquisition and December virtual event setup Integration, studio build; Sequire synergies; invite shareholders June LD Micro planned; correlation with Sequire sign-ups Strategic integration benefiting customer acquisition
Balance sheet/securities~$10M marketable securities; $7M SRAXmd proceeds; debt actions ~$23.8M public securities; further warrant exercises; debt lowered Cash $13.5M, marketable securities $18M (3/31) and ~$23M currently; debt $3.1M Strengthening liquidity; ongoing securities monetization
BIGtoken carve-outMove to FPVD; cost center removal strategy Consolidation persists for now; plan to deconsolidate <50% Still consolidated; ex-BIGtoken SRAX EBITDA/OpInc positive Transition progressing; ex-BIGtoken metrics strong

Management Commentary

  • CEO: “We continue to see accelerated bookings into the second quarter, beat our Q1 guidance and increased our guidance for the year… The best of what we are building has not even hit the market yet.”
  • CFO: “Our profit margins continued to perform… 70%… Operating expenses were $5.3M… driven by increased sales and operational costs associated with rapid expansion of the Sequire platform… excluding the Big Token business operations, we had positive operating income of $52,000… and EBITDA of $500,000.”
  • CEO (on product roadmap): “We have a big pipeline of stuff that’s going to be released in this quarter… some of the best stuff that we’ve built into the platform.”
  • CFO (on balance sheet): “As of March 31, we had cash and marketable securities totaling $13.5M and $18M respectively… outstanding debt decreased from $9M to $3.1M.”

Q&A Highlights

  • Product/features and ancillary services: Management teased forthcoming Sequire features around financing and communication tools; ~30% of ~200 companies purchase ancillary media services, with repeat buyers emerging .
  • Customer mix: Roughly half OTC vs half listed among new Sequire companies, indicating broad market appeal .
  • Capital structure: ~23M shares outstanding at quarter-end; weighted average slightly over 19M for EPS; ~10M warrants (majority at $7.50 strike) and ~1.2M options; full warrant exercise would add ~$54M cash .
  • LD Micro linkage: June 8–11 conference; management sees a direct correlation between companies presenting and Sequire platform sign-ups .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2021 (EPS and revenue) was unavailable due to missing SPGI/CIQ mapping for SRAX; we attempted to fetch S&P Global consensus but could not retrieve values, so estimate comparisons are not provided here [SpgiEstimatesError: Missing CIQ mapping for ticker 'SRAX' in spgi_ciq_company_map].
  • Given the absence of S&P Global consensus, we compare actuals against company guidance: Q1 revenue beat ($5.442M vs $5.0M guidance), Q2 revenue guidance maintained at $7.0M, and FY guidance raised to $25–$27M .

Key Takeaways for Investors

  • Sequire is driving a structurally higher revenue base with ~70% consolidated gross margins and positive ex-BIGtoken profitability; the mix shift supports sustained margin resilience .
  • The company is executing ahead of plan: Q1 revenue beat, FY guidance raised, and bookings momentum provides visibility into 2021 revenues ($19.8M already contracted to be recognized) .
  • Balance sheet de-risking continues: debt cut to $3.1M; securities provide optionality for monetization; warrants could add substantial cash, albeit with dilution risk at higher share counts .
  • Watch the BIGtoken consolidation impact: consolidated EBITDA/OpInc are held back by BIGtoken, while ex-BIGtoken metrics indicate underlying profitability—deconsolidation would clarify earnings power .
  • Near-term catalysts: new Sequire feature launches, LD Micro conference engagement, and potential securitization/monetization of holdings can drive sentiment and bookings .
  • Medium-term thesis: continued platform adoption (200 companies and rising), recurring SaaS growth, and data-driven investor engagement tools position SRAX to compound bookings and margin while normalizing OpEx scaling .
  • Risk monitoring: estimate visibility is limited (no SPGI consensus), operating expenses are rising to support growth, and warrant/option overhang may cap upside if not accompanied by accelerating fundamentals .