Treasure Global Inc. (NASDAQ:TGL) Q3 2024 Earnings Call Transcript

Treasure Global Inc. (NASDAQ:TGL) Q3 2024 Earnings Call Transcript May 15, 2024

Operator: Good day, everyone and welcome to Treasure Global Inc.’s Third Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions]. 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 Su Chuah, Chief Marketing Officer of Treasure Global, Inc. for introduction and the reading of the safe harbor statement. Please go ahead.

Su Chuah: Thank you, operator. Good morning, everyone and welcome to Treasure Global’s Third Quarter Fiscal Year 2024 Results Conference Call. With us today, we have our Chief Executive Officer, Sam Teo. 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 is 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, you may now begin.

Sam Teo: Thanks, Su. And good morning and thank you, everyone, for joining us today on our Third Quarter of Fiscal 2024 Earnings Conference Call covering the period ended March 31, 2024. I will start with the highlights of our third quarter business performance, followed by our financial results. At Treasure Global, we maintained a positive outlook and grow steadily in this ever-changing macro environment. We are proud to say that we have developed a strategy that work in all condition, allowing us to grow regardless of the situation. Our focus remains on delivering value to our customers and consumers, which ultimately enable us to drive sustainable growth for all our shareholders. Before I begin, I’m happy to announce the achievement of the new ZCITY Premium Store, which we’ve discussed last quarter.

This addition has not only broadened our product portfolio but had also significantly boosted our gross profit margin. This growth perfectly aligns with our strategy vision and path forward. In this quarter, we have successfully filed and actually initiated an ATM offering, securing an aggregate offering price of up to $2.99 million. This strategic financing effort has provided us with the necessary capital while maintaining flexibility and alignment with our growth strategy. The fund will be put towards driving forward our business initiatives, fostering innovation and ultimately creating more value for our shareholders. We will dig deeper into our AI initiative, market expansion efforts and key achievements shortly. Additionally, we are pleased to further solidify our competitive advantage in the blockchain market and opening up new avenues for revenue expansion and portfolio growth.

Q&A Session

Our recent partnership as the exclusive provider of an AI forcing wallet on Telegram places us at the forefront of innovation in the blockchain sector. This strategic decision not only expands our portfolio but also reinforce our competitive edge by securing the first right of refusal. Furthermore, this unlock promising new business opportunity within the blockchain market. Let’s now proceed to explore the highlights of our third quarter. In the third quarter of 2024, Treasure Global remained laser-focused on innovation, utilizing artificial intelligence to enhance product and foster better customer connection. Our AI initiatives empower us to anticipate customer needs, strengthen market share and identify lucrative opportunity in high-profit sector.

Expanding on this AI enhancement success, we ventured into Meta platform for our live shopping event, utilizing AI power robot, equipped with advanced language capability, we hosted event in multiple language breaking down language barrier and engaging thousands of viewers. The Malaysian e-commerce market projected to reach $20.93 billion by 2029 and Meta platform boosting millions of active users. Our presence on Meta represents a significant opportunity. The move to Meta Live opens up West market with unparalleled user engagement potential. With this extensive user base and a robust infrastructure, Meta platform provides an ideal platform to showcase our products and engage with a global audience. By leveraging Meta Live, we aim to not only drive sales but also enhance brand visibility and customer engagement on the scale previously unseen.

Treasure Global and AIO Synergy have joined force to revolutionize the AI landscape, capitalizing on the booming digital economy of Southeast Asia, with the Southeast Asia AI market expected to grow significantly at an anticipated annual rate of 17.83% by 2030. Our collaboration is strategically positioned for success. Our strategy [indiscernible] highlight our commitment to delivering innovative AI solutions and establish a state-of-the-art data center dedicated to AI application, catering to the evolving needs of businesses across various industries. By leveraging our collective expertise and resources, we aim to drive transformative changes in the Southeast Asian AI landscape, positioning our self as a key player in this dynamic market. We have taken a significant step forward by announcing a strategic partnership to become the exclusive partner for an AI blockchain model on Telegram.

This move forward further strengthen our competitiveness in the blockchain industry, securing Treasure Global position as the leader in innovation with the global crypto wallet market projected to grow significantly. This collaboration positions us for significant expansion. Treasure Global strong focus on innovation and partnership puts us ahead in the world of the new technology. We are dedicated to exploring and creating more advanced AI to grow our business. Another exciting development is our recent milestone, in which we have secured a $2 million marketing contract with Satria Dunia Sdn Bhd. The objective is to showcase premium Korean beauty products using ZCITY advanced AI marketing engine. This strategic partnership marked a significant achievement for us as we expand ZCITY influence and capability in the beauty sector.

By utilizing the ZCITY’s state-of-the-art AI technology, we are well positioned to increase brand exposure and boost sales, thereby creating a new revenue stream for the company. Moving on, we have got more exciting news about ZCITY. We are talking with the Shanghai Guangxi Chamber of Commerce about running the Malaysia Pavilion. This is a big deal because this is a chance to sell great Malaysian products on huge platforms like Taobao and [indiscernible]. With China online shopping market growing fast and over 1.4 billion potential customer, this is an opportunity for us. This move fits perfectly with our goal to make digital shopping better and grow in new markets. As I mentioned earlier, the launch of ZCITY Premium Store has surpassed the expectations since inception, leveraging advanced AI tools, the premium store not only exceeded sales expectation but also significantly enhanced our user engagement.

In just 4 months, the premium store has sold over 6,000 Bill Saver Bonanza Packs. This notable sales achievement highlight the platform effectiveness in driving transactions and enhancing gross profit stream. ZCITY has gained valuable insight into user spending habits and preferences, enabling the premium store to offer highly personalized package tailored to individual user needs and preferences. As a result, the premium store has significantly contributed to our gross profit growth, reflecting its strategic importance in driving business expansion and profitability for Treasure Global. In addition to the success of the ZCITY Premium Store. We also made strides in the gaming sector by launching 10 exciting mini games integrated with our AI Game Creator in ZCITYs 3D World.

These mini games not only enhance the gaming experience for users but also position us to access the rapidly growing global gaming market, which is projected to reach a revenue of $212 billion by 2026. Through in-game purchases, virtual goods and AI-driven marketing strategy, ZCITY 3D World is poised to become a dynamic digital marketplace, capturing a significant share of the booming global gaming industry. And we are proud to share our significant achievement in this quarter, a notable win at the MARKETING-INTERACTIVE Asia eCommerce Awards 2023, where ZCITY has been honored to have won the silver trophy for best e-commerce solution. This recognition highlights our excellence in the fast-changing landscape of online shopping. This achievement demonstrates our firm commitment to innovation and delivering topnotch solution that caters to the ever-changing mix of our online customer.

This quarter, we showcased our dedication to staying ahead of the curve, expanding our reach and putting our customers first. Moving forward, we are dedicated to driving growth, seizing opportunity and delivering value to our shareholders. Next, I will now share our financial results for the third quarter of fiscal year 2024. For the third quarter, our gross profit reached [$217,000], marking a substantial increase of 47% compared to the same period last year. This notable improvement is primarily attributable to our ongoing initiatives and optimizing spending and capitalizing on higher profit margin stream. While our total revenue for the quarter were $1.6 million compared to $6.7 million for the second quarter of fiscal year 2024, reflecting a decrease of approximately 76%.

It is important to view this figure in the context of our strategy shift towards higher-margin business channel and long-term value creation. We are pleased to announce a substantial decrease in our net losses, approximately $1.7 million compared to approximately $2.9 million in the third quarter of fiscal year 2023. This strategic positive shift was primarily driven by our focus on optimizing cost management, including reduction in selling and administrative expenses. Our disciplined approach to cost management and operational efficiency has enabled us to achieve significant improvement in our bottom line compared to the previous year despite the challenging market condition. As of March 31, 2024, our cash balance was approximately $0.3 million compared to a cash balance of approximately $4.1 million as of March 31, 2023.

This position is expected to strengthen following future sales of ATM share. ZCITY had over 2.69 million registered users and over 2,027 registered merchants as of March 31, 2024. Quarterly active users for the quarter ending March 31, 2024, were 41,455, a total of 0.19 million transactions were transfected by our registered users in the quarter ended March 31, 2024. Despite the decline in quarterly active users and paid users compared to our previous quarter, we remain confident in the long-term growth potential of ZCITY, especially as we continue to enhance its features and offering to meet the evolving mix of our users and merchants. In summary, our financial results for the third quarter demonstrate significant improvement in gross profit, reduction in net losses and strengthened financial position despite the decrease in overall revenue.

We remain committed to executing our strategic initiatives and delivering value to our shareholders in the quarter ahead. We are also happy to say that we are expecting good standing with NASDAQ. This achievement reflects our commitment to upholding the highest standards of corporate governance and transparency. By meeting NASDAQ’s mandatory requirement for listing, we demonstrate our dedication to operating it according with regulatory standard. This positions us to manage and grow our business more productively and will also encourage investor interest, improving the marketability of our common stock to an even broader base of investors. Looking forward, I have a positive outlook on the development showcased in our quarter 3 fiscal year 2024 highlights.

Our unwavering focus on innovation and market expansion has led to significant products. In recent months, we have strategically taken intentional step to reallocate resources away from lower margin offering like our e-voucher product despite the anticipated short-term impact on results. We recognize this move as essential for long-term gain. This strategic move is aimed to enhance our working capital and rearranging our strategy branding towards reducing dependency on such offering. By doing so, we can channel our resources into the development of high-margin solution, empowering us to capture higher margins and drive sustained growth. As we navigate through fiscal 2024, our focus remains squarely on innovation and the development of products and services that promise more profitable growth, with an unwavering dedication to excellence and a keen eye on emerging trends, we are well positioned to capitalize on the diverse opportunities that lie ahead.

Thank you again everyone for joining us on today’s call and for your continued support. This concludes our prepared remarks. I will now ask the operator to close the line. Thank you and have a great day.

Operator: Thank you for joining today. I will now close the lines.

End of Q&A: