Treasure Global Inc. (NASDAQ:TGL) Q2 2024 Earnings Call Transcript

Treasure Global Inc. (NASDAQ:TGL) Q2 2024 Earnings Call Transcript February 15, 2024

Treasure Global Inc.  isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, everyone, and welcome to Treasure Global Inc.’s Second Quarter of Fiscal Year 2024 Conference Call. At this time, all participants are in a listen-only mode. This conference call is being recorded. A replay of today’s call will be available on the Investor Relations section of TGL’s website and will remain posted there for the next 30 days. I will now hand the call over to Erika Kay, Vice President, Investor Relations at KCSA for instructions and the reading of the safe harbor statement. Please go ahead.

Erika Kay: Thank you, operator. Good morning, everyone, and welcome to Treasure Global’s second quarter fiscal 2024 results conference call. With us on today’s call are Sam Teo, Chief Executive Officer; Michael Chan, Chief Financial Officer; and Jeremy Roberts, Independent Director. Before we begin, I would like to remind you that today’s call contains certain forward-looking statements from Treasure Global’s management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended, concerning future events. Words such as may, should, project, expect, intend, plan, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements.

These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company’s Form 10-K for the year ended June 30, 2023, and subsequent filings filed with the SEC. Copies of this document are available on the SEC’s website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now it is my pleasure to introduce Sam Teo, CEO of TGL. Sam, please go ahead.

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Sam Teo: Thanks, Erika, and thank you, everyone, for joining us today on our second quarter of fiscal 2024 earnings conference call for the period ended December 31, 2023. I’m pleased to be with you today to update you on the progress that we are making toward Treasure Global business strategy and to provide you with our results for the quarter. Before I review sort of the exciting innovation that we announced during the quarter, I want to update you on some steps that we took that we believe will help Treasure Global to achieve our growth and enhance shareholder value. This action which has centered on our ability to leverage new cutting edge artificial intelligence capability, further our strategy to be a leading innovator in our region, create new opportunity for profitable growth.

We believe this action has made us a stronger company and will lead to a new state of growth for Treasure Global. Supporting our operation growth in the second quarter, we announced a public offering, raising $4 million, less fees and expenses. We used a portion of the fund to retire the remaining $2.1 million of convertible notes. This action help us to fortify our financial position and to optimize our capital structure, freeing up funds so that we can continue to develop new innovative products and services for customers. And shift our focus to higher margin businesses. Much of Treasure Global success is built on our ability to innovate. Throughout the quarter, we announced several initiatives that utilize artificial intelligence or AI to enhance our product offering and to engage more meaningful with our customer.

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Q&A Session

Through our use of AI, we have been able to anticipate shifts in consumer demand, which has led to increases in market share for our businesses. This effort has allowed us to identify new business opportunity and allow us to focus our growth on our higher-margin product. On our last call, we announced that we have developed an AI robot through the acquisition of AI technology of Tencent and that we believe this will transform the e-commerce landscape on TikTok by offering dynamic interactive shopping experience for customers across the region. This innovative approach to product marketing has been successful as it captured the attention of the TikTok community and create a unique shopping experience for viewer by providing a platform that can answer customer query, provide product details and offer personalized recommendation.

This new way of shopping was expected to not only drive increased revenue for ZCITY’, our e-commerce subsidiary, but has set new standard in the Live Commerce industry. Later in the quarter, we made history by hosting a first event as ZCITY’ became the first business in Malaysia to conduct a Live Commerce section on TikTok. This well-attended event that was co-hosted by human and an AI robot surpass Internet expectation with over 6,400 viewers participating in the section because of the potential of this innovative technology in reshaping the way consumers interact with brand. We demonstrated our ability to enhance consumer shopping experience, leading to more consumer engagement and approximately 1,100 purchasers. The event was significantly forward for digital shopping experience.

Because of it’s popularity, Tiktok Live Commerce provides a significant opportunity for Treasure Global to diversify our revenue stream and showcase product on ZCITY in a more innovative and engaging manner. Tiktok stated as the world highest traffic. Live Commerce Platform met it’s ideal state for ZCITY to unveil our groundbreaking technology and to showcase ZCITY products and services. Throughout the quarter, we continue to look for a new way to reach consumers and to push the traditional boundary of e-commerce. Following the success of our First Live Commerce Event, we hosted another event on Meta Platform with an AI robot equipped with advanced language capability to engage with thousands of viewers in multiple language, breaking down language barrier and enhancing accessibility.

This successful event set into lucrative market that are reshaping the future of e-commerce, with Malaysia e-commerce market projected to reach USD 20.9 billion by 2029. Treasure Global is strategically positioned to play alone in this anticipated exponential growth. In the second quarter, we unveiled a new ZCITY premium store, offering an enriched user experience with diverse package, including top brand for our strategic partner, creating a robust and diversified offering for user, powered by our cutting-edge technology the ZCITY store offer innovative features such as personalized recommendation, AI-driven discount and real-time transaction tracking, providing users with an unparalleled and seamless shopping experience. The Premium Store enables drive transaction as well as increased gross profit for Treasure Global.

We also announced the launch of 10 mini games in ZCITY 3D World, powered by Treasure Global AI Game Creator. We incorporated an AI Power Game Creator within the ZCITY 3D world so that users can customize and play the 10 games, integrated mini games. This strategy move not only enhance the gaming experience for users, but also position ZCITY to assess the rapidly growing $212 billion global gaming market by offering in-game purchases and virtual goods. Our entrance into gaming aligned with our commitment to diversifying our revenue stream. I’m proud to say that our reputation for innovation has been recognized. During the quarter Treasure Global ZCITY received a silver trophy for best e-commerce solution and marketing interactive Asia e-commerce award 2023.

The award recognized our commitment to accelerate in the dynamic landscape of digital commerce. Finally, we recently announced that we have entered into strategic alliance with AIO synergy, a pioneering IT services developer company. Through this collaboration, we are focused on reshaping the landscape of AI by working towards the development of next-generation AI solution and developing an exclusive state of the art data center creator specifically for AI application, which will serve as a hub for cutting-edge AI data analytics and the creation of AI-generated human experience. The initial focus of this partnership is on the Malaysian market, where both Treasure Global and AIO synergy are committed to providing transformative AI solution to businesses across our various industries.

We expect to capitalize on the Southeast Asian AI market projected growth and leverage the region burgeoning interest and investment in AI. This collaboration not only a milestone for the 2 companies, but it is also a significant step towards fostering innovation and technology accelerate in the Southeast Asian region at an opportune plan. Throughout the first half of our fiscal year 2024, we have demonstrated our commitment to developing innovative products and advancing new market opportunity through strategic partnership. We continue to make progress on our key priority, growing our addressable market and developing innovative new revenue generation opportunity. We have clearly established ourselves as leader in AI e-commerce and continue to release innovative services offering, which are increasing user engagement.

I believe this opportunity has positioned Treasure Global to deliver continued growth and innovation and allowed us to pursue higher margin activity. In closing, I am pleased with the progress that we have met on our business strategy, and I am excited about the opportunity ahead for Treasure Global. We continue to prove ourselves as the leading innovator in the region, positioning us to continue add new customers and attract more partner and investor. I believe we are well positioned for the future, and we will continue to innovate and generate more profitable growth. I will now pass the call over to Michael to discuss our financial results in greater detail.

Michael Chan: Thank you, Sam, and good morning, everyone. Today, I will review our financial results for the second quarter of fiscal year 2024 ended December 31, 2023, compared to the same period in 2022. For the second quarter, total revenue was $6.7 million compared to $20.4 million for the same period last year. Revenue were down year-over-year as we continue to achieve our focus to growing our higher-margin business channel, including TAZTE as well as new higher-margin offerings for ZCITY’. As we discussed last quarter, TAZTE offering offered higher margin plus increased user engagement and stickiness by providing merchants with the product that they come to rely on for their business needs. As Sam mentioned, we are also focused on growing our ZCITY’s products through our utilization of AI lead to increased revenue at higher margins.