The Marygold Companies, Inc. (MGLD) Bundle
Understanding The Marygold Companies, Inc. (MGLD) Revenue Streams
Understanding Marygold Companies, Inc.’s Revenue Streams
The revenue for the quarter ended September 30, 2024, was $7,910,000, a decrease of 4% compared to $8,235,000 for the same quarter in 2023. This decline was attributed primarily to a reduction in average Assets Under Management (AUM) in the fund management sector.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue | Q3 2023 Revenue | Percentage Change |
|---|---|---|---|
| Fund Management - Related Party | $4,591,000 | $5,049,000 | -9% |
| Food Products | $1,822,000 | $1,730,000 | 5% |
| Beauty Products | $597,000 | $775,000 | -23% |
| Security Systems | $690,000 | $554,000 | 25% |
| Financial Services | $210,000 | $127,000 | 65% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a decline of 4% in total revenue for the quarter ended September 30, 2024, compared to the previous year. The fund management segment, which accounts for a significant portion of total revenue, saw a decrease of $458,000 or 9% due to lower AUM, which averaged $3.1 billion in Q3 2024 compared to $3.5 billion in Q3 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to the overall revenue for the quarter ended September 30, 2024, is detailed as follows:
| Segment | Revenue Contribution |
|---|---|
| Fund Management | 58% |
| Food Products | 23% |
| Beauty Products | 8% |
| Security Systems | 9% |
| Financial Services | 3% |
Analysis of Significant Changes in Revenue Streams
In the analysis of significant changes, the beauty products segment experienced a notable decline of 23% due to strategic adjustments aimed at controlling pricing and reducing online sales channels. Conversely, the financial services segment saw a remarkable increase of 65%, primarily driven by the acquisition of Step-By-Step Financial Planners, which contributed an additional $0.1 million in revenue.
Overall, the food products segment increased by 5%, while security systems revenue rose by 25%, highlighting a shift towards more lucrative commercial installations
.A Deep Dive into The Marygold Companies, Inc. (MGLD) Profitability
A Deep Dive into Marygold Companies, Inc.'s Profitability
Gross Profit Margin: For the quarter ended September 30, 2024, the gross profit was $5,782,000, down from $6,198,000 in the same quarter of 2023, reflecting a decrease of 7%.
Operating Profit Margin: The company reported an operating loss of $(2,170,000) for the quarter ended September 30, 2024, compared to an operating loss of $(1,036,000) in the prior year, marking a 109% increase in losses.
Net Profit Margin: The net loss for the quarter was $(1,586,000), a significant increase of 217% from $(500,000) in the previous year.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $5,782,000 | $6,198,000 | -7% |
| Operating Loss | $(2,170,000) | $(1,036,000) | +109% |
| Net Loss | $(1,586,000) | $(500,000) | +217% |
Revenue Trends: Total revenue for the quarter ended September 30, 2024, was $7,910,000, down 4% from $8,235,000 in the same period of 2023.
Cost of Revenue: The cost of revenue increased to $2,128,000 from $2,037,000, a rise of 4%.
Operating Expenses: Operating expenses rose to $7,952,000, compared to $7,234,000 in the previous year, reflecting a 10% increase.
Comparison of Profitability Ratios with Industry Averages
For context, the average gross profit margin in the industry is typically around 30%, while the company's gross profit margin currently stands at approximately 73%. The operating loss margin is notably higher than the industry average operating profit, which is generally positive, indicating operational challenges within the company.
Analysis of Operational Efficiency
Cost Management: The increase in operating expenses, primarily driven by a 22% rise in salaries and compensation, has negatively impacted profitability. General and administrative expenses also rose by 14%.
Gross Margin Trends: The gross margin percentage decreased from approximately 75% in Q3 2023 to 73% in Q3 2024, indicating a slight decline in operational efficiency.
| Expense Type | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Salaries and Compensation | $3,147,000 | $2,590,000 | +22% |
| General and Administrative | $2,565,000 | $2,248,000 | +14% |
| Fund Operations | $1,412,000 | $1,270,000 | +11% |
Debt vs. Equity: How The Marygold Companies, Inc. (MGLD) Finances Its Growth
Debt vs. Equity: How The Marygold Companies, Inc. Finances Its Growth
As of September 30, 2024, the total liabilities for the company stood at $10.344 million, comprising both current and long-term obligations. The current liabilities were reported at $7.874 million, while long-term liabilities totaled $2.470 million .
The company's debt structure includes a significant portion of notes payable. Specifically, the current portion of notes payable was $2.800 million, with an additional $910,000 classified as long-term debt . The effective interest rate on the note payable is notably high at 41.3% .
In terms of equity, the total stockholders' equity reported was $25.531 million, reflecting a decrease from $26.614 million in the previous quarter . The company had 40.326 million shares of common stock outstanding at the end of the quarter .
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity (D/E) ratio can be calculated using the following formula:
D/E Ratio = Total Liabilities / Total Stockholders' Equity
Using the figures provided, the D/E ratio for the company is:
D/E Ratio = $10.344 million / $25.531 million = 0.405
This ratio indicates a moderate level of debt relative to equity, which is generally considered acceptable within the industry. Industry standards typically suggest that a D/E ratio below 1.0 is favorable.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In the recent quarter, the company executed a debt issuance, raising $3.690 million through a note payable . This activity is part of its strategy to finance operations and growth initiatives. The company also reported an outstanding principal balance of $0.3 million related to a bank loan that matured and was paid off in full in July 2024 .
Balancing Debt Financing and Equity Funding
The company has been actively balancing its debt and equity financing strategies. While debt financing has increased due to the recent note payable, equity remains a significant component of the capital structure. The stock-based compensation recognized during the quarter was $0.460 million, reflecting ongoing investment in workforce incentives .
| Financial Metric | Q4 2024 | Q3 2024 |
|---|---|---|
| Total Liabilities | $10.344 million | $6.285 million |
| Current Liabilities | $7.874 million | $5.233 million |
| Long-term Liabilities | $2.470 million | $1.052 million |
| Total Stockholders' Equity | $25.531 million | $26.614 million |
| Debt-to-Equity Ratio | 0.405 | 0.236 |
Assessing The Marygold Companies, Inc. (MGLD) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $25,001,000 | $7,874,000 | 3.17 |
The quick ratio, which excludes inventories from current assets, is as follows:
| Current Assets (excluding Inventories) | Current Liabilities | Quick Ratio |
|---|---|---|
| $22,826,000 | $7,874,000 | 2.90 |
Analysis of Working Capital Trends
As of September 30, 2024, the working capital stands at:
| Working Capital | Amount |
|---|---|
| Current Assets | $25,001,000 |
| Current Liabilities | $7,874,000 |
| Working Capital | $17,127,000 |
Cash Flow Statements Overview
For the quarter ended September 30, 2024, the cash flows from operating, investing, and financing activities are as follows:
| Cash Flow Type | Amount |
|---|---|
| Operating Activities | ($893,000) |
| Investing Activities | ($1,325,000) |
| Financing Activities | $3,375,000 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has:
- Cash and cash equivalents of $6,665,000.
- Restricted cash amounting to $64,000.
- Total cash, cash equivalents, and restricted cash of $6,729,000.
- A note payable balance of $3,700,000, with $2,800,000 due within 12 months.
Overall, the liquidity position appears strong with a current ratio of 3.17 and a quick ratio of 2.90, indicating a solid ability to cover short-term obligations.
Is The Marygold Companies, Inc. (MGLD) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net loss of $1,586,000 compared to a net loss of $500,000 in the same quarter of the previous year. The diluted net loss per share was $0.04, which makes the P/E ratio inapplicable as the company is currently not profitable.
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, is derived from total stockholders' equity of $25,531,000 divided by the total shares outstanding of 40,326,035, resulting in a book value of approximately $0.633 per share. The stock price as of the same date was $0.50, leading to a P/B ratio of approximately 0.79.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we first need the enterprise value. The enterprise value is calculated as market capitalization plus total debt minus cash. Total liabilities as of September 30, 2024, are $10,344,000, and cash and cash equivalents are $6,665,000. Assuming a market cap based on the share price of $0.50, the market capitalization is approximately $20,163,017. Thus, the enterprise value is calculated as follows:
| Measure | Value |
|---|---|
| Market Capitalization | $20,163,017 |
| Total Debt | $10,344,000 |
| Cash and Cash Equivalents | ($6,665,000) |
| Enterprise Value | $23,842,017 |
As of the latest report, EBITDA is not explicitly stated; however, the loss from operations for the quarter was $(2,170,000). This suggests that the company is not generating positive EBITDA. Therefore, the EV/EBITDA ratio cannot be accurately calculated at this time.
Stock Price Trends
The stock price has shown fluctuations over the past 12 months. The stock was trading at approximately $0.75 a year ago, indicating a decline of approximately 33.33% as it is currently around $0.50.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not pay dividends, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
Analyst consensus currently leans towards a hold rating due to the company's ongoing losses and lack of a clear profitability path. The consensus is based on the company's recent performance, market conditions, and future growth potential in the fintech sector.
The following table summarizes the valuation metrics discussed:
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.79 |
| EV/EBITDA Ratio | N/A |
| Current Stock Price | $0.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing The Marygold Companies, Inc. (MGLD)
Key Risks Facing Marygold Companies, Inc. (MGLD)
The financial health of Marygold Companies, Inc. is influenced by various internal and external risk factors that impact its operations and market performance.
Industry Competition
The competitive landscape in the fund management and financial services sectors poses significant risks. For the quarter ended September 30, 2024, the company reported a revenue decline of $0.3 million or 4% compared to the previous year, primarily due to a decrease in average Assets Under Management (AUM) from $3.5 billion to $3.1 billion. This decline can be attributed to increased competition and market saturation.
Regulatory Changes
As a registered investment advisor, the company is subject to stringent regulatory scrutiny. The recent acquisition of Step-By-Step Financial Planners Limited for $1.2 million involves compliance with regulatory requirements, which adds operational complexity. Additionally, changes in tax regulations and compliance requirements may impact profitability and operational efficiency.
Market Conditions
Fluctuations in commodity prices and a high-interest rate environment have adversely affected the company’s performance. The net loss for the quarter ended September 30, 2024, was $1.586 million, a significant increase of 217% from the previous year. Such market instabilities can hinder the company's ability to attract new investments and maintain existing ones.
Operational Risks
Operational challenges, including rising costs associated with the development of the Fintech app, are noteworthy. Operating expenses rose by 10% to $7.952 million for the quarter. This increase in expenses, coupled with a 57% decrease in other income, further exacerbates the operational risk profile of the company.
Financial Risks
The company’s financial leverage is another risk factor. As of September 30, 2024, the note payable balance was $3.7 million, with an effective interest rate of 41.3%. This high-cost debt can strain cash flow and limit financial flexibility, especially if revenue continues to decline.
Strategic Risks
The strategic direction of the company, particularly its focus on expanding the Fintech segment, poses risks due to potential underperformance. The mobile banking app has generated minimal revenue since its soft launch in June 2023, leading to an operating loss of $1.4 million for the quarter ended September 30, 2024. Failure to achieve the expected growth in this area could impact overall business performance.
Mitigation Strategies
- Enhancing competitive positioning through innovation and improved service offerings.
- Strengthening compliance frameworks to adapt to regulatory changes effectively.
- Implementing cost control measures to manage rising operational expenses.
- Exploring additional financing options to improve liquidity and reduce financial risk.
Summary of Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $7,910,000 | $8,235,000 | -4% |
| Net Loss | $1,586,000 | $500,000 | 217% |
| Average AUM | $3.1 billion | $3.5 billion | -11.4% |
| Operating Expenses | $7,952,000 | $7,234,000 | 10% |
| Note Payable | $3,700,000 | N/A | N/A |
Future Growth Prospects for The Marygold Companies, Inc. (MGLD)
Future Growth Prospects for Marygold Companies, Inc.
Analysis of Key Growth Drivers
The company is pursuing several growth drivers aimed at enhancing its market position and revenue generation. Key initiatives include:
- Product Innovations: The recent launch of a mobile banking fintech app, which is expected to generate revenue through management fees and transaction fees, represents a significant innovation. The app was soft-launched in June 2023 and is in the early stages of revenue generation.
- Market Expansions: The company is focusing on expanding its financial services segment in the UK, particularly through the acquisition of Step-By-Step Financial Planners, which added $80.1 million in assets under management as of September 30, 2024.
- Acquisitions: The acquisition of Step-By-Step in April 2024 for $1.2 million enhances the company's asset management capabilities.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the quarter ended September 30, 2024, was reported at $7.91 million, a decrease of 4% compared to $8.24 million in the same quarter of 2023. Future projections suggest that with the scaling of the fintech app and the integration of acquired assets, the company could see a rebound in revenues. Analysts estimate a compound annual growth rate (CAGR) of approximately 10% over the next five years, driven primarily by the fintech services and enhanced fund management capabilities.
Strategic Initiatives or Partnerships That May Drive Future Growth
Marygold is actively pursuing strategic partnerships to enhance its service offerings. The development of its fintech app has involved collaboration with third-party vendors and banks, creating a robust ecosystem for financial services. Additionally, the company has indicated plans to enter further financing arrangements, potentially adding up to $10 million in capital to support ongoing and future projects.
Competitive Advantages That Position the Company for Growth
The company holds several competitive advantages that could facilitate growth:
- Diverse Revenue Streams: The revenue breakdown for the quarter shows varied contributions: Fund management at $4.59 million, Food products at $1.82 million, Security systems at $0.69 million, and Financial services at $0.21 million.
- Strong Cash Position: As of September 30, 2024, the company reported cash and cash equivalents of $6.73 million, an increase of 22% from the previous quarter, indicating a strong liquidity position.
- Investment in Technology: The ongoing investment of $16.5 million in developing the fintech app highlights the commitment to leveraging technology for competitive advantage.
Growth Opportunities Summary Table
| Growth Driver | Details | Expected Impact |
|---|---|---|
| Product Innovations | Launch of mobile banking fintech app | Revenue generation from fees |
| Market Expansions | Expansion of financial services in the UK | Increased assets under management |
| Acquisitions | Acquisition of Step-By-Step Financial Planners | $80.1 million in managed assets |
| Revenue Growth Projections | Estimated CAGR of 10% over 5 years | Rebound in overall revenues |
| Cash Position | $6.73 million in cash and equivalents | Strong liquidity for investments |
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Resources:
- The Marygold Companies, Inc. (MGLD) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of The Marygold Companies, Inc. (MGLD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Marygold Companies, Inc. (MGLD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.