This article is excerpted from a letter by MOI Global instructor Jim Roumell, partner and portfolio manager of Roumell Asset Management, based in Chevy Chase, Maryland.
Liquidity Services began its first quarter fiscal year 2019 (ended December 31, 2018) call with Bill Angrick, Chairman and CEO, reiterating the four key pillars of its RISE growth strategy. 1) recovery maximization, 2) increasing volume, 3) service expansion, and 4) expense leverage. The objective of RISE is to deliver a diversified asset-light business with a solid foundation for long-term growth.
Excluding the completed DoD Surplus contract, Consolidated Gross Merchandize Value (GMV) grew 12% and revenue grew 20% over the prior year period. Adjusted EBITDA increased 42% over the prior period. This was the third consecutive quarter of double-digit top line growth, excluding the DoD Surplus contract. GMV grew: 16% over the prior year period in the Capital Assets Group (CAG) segment, excluding the D0D Surplus contract 23% over the prior year period in the Retail Supply Chains Group (RSCG) segment 7% over the prior year period in the GovDeals segment Machinio, acquired in 2018, recorded over $1 million of quarterly subscription revenues with a 90% gross margin in the first quarter.
Additionally, LQDT’s new Returns Process Management or RPM SaaS solution is already being used by Fortune 500 and mid-sized retailers to reduce cost, improve customer service and maximize financial recovery on both e-commerce and in-store returned goods. As previously reported, Home Depot selected LQDT to implement a customized software returns solution. We believe the continued growth in online retail purchasing provides strong secular tailwinds to the company’s retail division.
For Q2 FY19, LQDT expects GMV to be $150 to $170 million, GAAP net losses from $(8.3) to $(5.5) million, and Non-GAAP Adjusted EBITDA from $(3) to $(1) million. The company stated that it would be investing in sales and marketing and the tech stack in order to continue to capture market share. It also announced that it was deferring the launch of its Go-Dove marketplace to the new LiquidityOne platform from early calendar year 2019 until later this spring.
Members, log in below to access the restricted content.
Not a member?
Thank you for your interest. Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:
The specific securities identified and described do not represent all of the securities purchased, sold, or recommended and the reader should not assume that investments in the securities identified and discussed were or will be profitable.
About The Author: Jim Roumell
Jim Roumell entered the securities industry in 1986. Before founding the firm in 1998, he was a Registered Principal at Raymond James Financial Services, Inc. Mr. Roumell is a frequent contributor to Manual of Ideas Global and has been featured in such publications as Barron’s, Kiplinger’s, Value Investor Insight, Financial Planning Magazine, and The Washington Post. He is listed and quoted in “The Art of Value Investing: How the World’s Best Investors Beat the Market.” Mr. Roumell was selected to participate in, and won, two consecutive Wall Street Journal stock picking contests in 2001 and 2002. He is a Board Member and Chairman of the Investment Committee of Wayne State University Foundation. He is also a Board Member and serves on the Investment Committee of Amalgamated Casualty Insurance Company. Mr. Roumell is a graduate of Wayne State University in Detroit, Michigan.
More posts by Jim Roumell