Location Sciences: recovery and growth play for 2021
Location Sciences (LON:LSAI), a world leader in location verification for mobile advertising, recently released a trading update for the current year (year-end Dec). The update covers the three product lines — Verify, GeoProtect, and Insights. We provide an overview of these on p2.
The update outlines the impact of the additional UK lock-down measures that have derailed the previously expected recovery in revenues for the Verify product. At the time of the interim results in September, Location Sciences reported a substantial impact from the second-quarter (Q2) lockdown measures, particularly concerning mobile advertising revenues from the restaurant and retail sectors, which essentially came to a halt. The same factors will now have an impact in the fourth quarter.
The weakness in Verify revenues has been partially offset by additional revenues for the Insights product, including a contract with the NHS (UK health department) to support pandemic modelling based on individual location data.
The news release also includes a new contract win for the company’s newest product, GeoProtect (previously Verify Audience), which has been selected by The Spoken Thought (trading as Mira), a leading audience segment supplier in the USA. Mira’s services allow advertising agencies to target mobile advertising campaigns at a specific demographic, including targeting individuals who have visited or who regularly visit a specific geographic location. GeoProtect will enable Mira to verify the location data. This is the second customer for GeoProtect, which was launched in the first half of 2020. We believe that the Mira contract on its own represents a significant revenue opportunity for 2021, as well as further validation of the GeoProtect product.
Cash resources sufficient through to 2022:
Importantly, the company also reports that its net cash position, roughly £1.2mln at November 30 is now expected to provide sufficient resources through to 2022. This forecast reflects a reduced cash utilisation rate due to further cost reductions and efficiency measures. We believe that this cash runway provides the company with the opportunity to begin realising a recovery in Verify revenues during 2021, and ramp-up in GeoProtect revenues, before needing to seek additional capital.
Quick facts: Location Sciences Group PLC
Price: 0.415 GBX
Market Cap: £2.44 m
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