Linkage Global Inc reported decreased revenues and improved gross profit for fiscal year 2024, highlighting market challenges and new service growth.
Quiver AI Summary
Linkage Global Inc, a Japan-based cross-border e-commerce services provider, reported its financial results for the fiscal year ending September 30, 2024, revealing a 19.19% decline in total revenues, from USD 12.73 million to USD 10.29 million, largely due to decreased cross-border sales. Despite this revenue drop, gross profit surged by 123.91% to USD 4.17 million, driven by a new managed e-commerce operation that generated USD 3.28 million in revenue. The company also reduced its net loss from USD 0.65 million to USD 0.44 million, reflecting efforts to adapt to shifting market conditions and Google's enhanced policies affecting digital marketing revenues. CEO Zhihua Wu emphasized the focus on strategic partnerships and expanding e-commerce services to position the company for future growth amidst ongoing challenges.
Potential Positives
- New fully managed e-commerce operation services generated USD3.28 million in revenue, indicating successful new service implementation.
- Gross profit increased by approximately USD2.31 million, or 123.91%, reflecting improved profitability and efficiency in operations.
- Net loss decreased by USD0.21 million, or 32.69%, demonstrating better financial performance compared to the previous year.
Potential Negatives
- Total revenues decreased significantly by approximately 19.19%, indicating a decline in overall business performance.
- Cross-border sales revenues fell by 38.82%, with a particularly severe 53.12% decline from the Japanese subsidiary, which could reflect broader market challenges.
- Digital marketing revenues plummeted from USD1.53 million to USD0.31 million due to stricter Google policies, showing vulnerability in adapting to industry changes.
FAQ
What were Linkage Global's total revenues for fiscal year 2024?
Total revenues for Linkage Global in fiscal year 2024 were approximately USD10.29 million, a decrease of 19.19% from 2023.
How much revenue did the new services generate in fiscal year 2024?
The new fully managed e-commerce operation services generated USD3.28 million in revenue during fiscal year 2024.
What contributed to the decrease in cross-border sales?
Cross-border sales decreased primarily due to yen depreciation, which raised prices and reduced consumer purchasing power.
How did Linkage Global's gross profit change in 2024?
Linkage Global's gross profit increased by USD2.31 million, or 123.91%, to USD4.17 million in fiscal year 2024.
What are Linkage Global's future growth strategies?
Linkage Global plans to enhance partnerships, optimize operations, and explore new market opportunities for sustainable growth.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
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Full Release
TOKYO, Jan. 24, 2025 (GLOBE NEWSWIRE) -- Linkage Global Inc (“Linkage Cayman”, or the “Company”), a cross-border e-commerce integrated services provider headquartered in Japan, today announced its financial results for the fiscal year ended September 30, 2024.
Fiscal Year 2024 Financial Highlights
Total revenues decreased by approximately 19.19% from USD12.73 million for the fiscal year ended September 30, 2023 to USD10.29 million for the fiscal year ended September 30, 2024.
Our new fully managed e-commerce operation services that was launched in April 2024, generated USD3.28 million in revenue.
Gross profit increased by approximately USD2.31 million, or 123.91%, from USD1.86 million for the fiscal year ended September 30, 2023 to USD4.17 million for the fiscal year ended September 30, 2024.
Net loss decreased by USD0.21 million, or 32.69%, from USD0.65 million for the fiscal year ended September 30, 2023 to USD0.44 million for the fiscal year ended September 30, 2024.
Mr. Zhihua Wu, Chairman and CEO of the Company, commented: “For the fiscal year ended September 30, 2024, total revenues decreased by about 19.19% from USD12.73 million in 2023 to USD10.29 million, primarily attributable to the decrease of cross-border sales. Specifically, cross-border revenues fell by USD4.11 million, with our Japanese subsidiary experiencing a 53.12% decline. This was largely driven by yen depreciation, which raised prices in Japan and resulted in a decline in consumers’ purchasing power. It was also exacerbated by the depreciation of the Japanese yen against U.S. dollars.”
“Our integrated e-commerce services saw a rise of USD1.67 million, thanks to our new fully managed e-commerce operation services, which generated USD3.28 million in revenue. However, digital marketing revenues plummeted from USD1.53 million to USD0.31 million because Google updated agreements with more stringent criteria for incentives. In order to cope with the change of policies from Google, we actively engaged in direct and indirect cooperations with other social platforms, such as TikTok and Facebook.”
“Our gross profit increased by USD2.31 million or 123.91% to USD 4.17 million, largely due to the new business fully managed e-commerce operation services with gross profit of USD2.94 million and gross profit margin of 89.62%.”
“Looking ahead, while we faced challenges in fiscal year of 2024, our expansion in integrated e-commerce positions us for future growth. We remain committed to enhancing partnerships, optimizing operations, and exploring new market opportunities. These strategies will help us navigate market fluctuations and achieve sustainable growth in the coming years.”
Fiscal Year 2024 Financial Results
Revenues
Total revenues decreased by approximately USD2.44million, or 19.19%, from approximately USD12.73 million for the year ended September 30, 2023 to approximately USD10.29 million for the year ended September 30, 2024, primarily attributable to the decrease of cross-border sales.
Our breakdown of revenues by revenue streams for the years ended September 30, 2024 and 2023 is summarized below:
For the Years Ended September 30, | ||||||||
2024 | 2023 | |||||||
USD | USD | |||||||
Cross border Sales | 6,476,939 | 10,587,053 | ||||||
Integrated E-commerce services | 3,812,742 | 2,146,286 | ||||||
Fully managed e-commerce operation services | 3,280,002 | — | ||||||
Digital marketing services | 312,180 | 1,527,247 | ||||||
Others | 220,560 | 619,039 | ||||||
Total revenues | 10,289,681 | 12,733,339 | ||||||
Our breakdown of revenues by geographic areas for the years ended September 30, 2024, and 2023 is summarized below:
For the Years Ended September 30, | ||||||||
2024 | 2023 | |||||||
USD | USD | |||||||
Japan | 4,101,865 | 8,749,200 | ||||||
Hong Kong | 3,612,126 | 1,987,182 | ||||||
China | 2,575,690 | 1,996,957 | ||||||
Total revenues | 10,289,681 | 12,733,339 | ||||||
Revenues from cross-border sales
fell by USD 4.11 million, or 38.82%, from USD10.59 million in 2023 to USD6.48 million in 2024. Our Japanese subsidiary, EXTEND, accounted for USD 4.10 million or 39.86% of total revenues, but saw a 53.12% decline. This drop was primarily due to the yen's depreciation, which increased prices and reduced consumer purchasing power for non-essential 3C electronic products. The decrease was also exacerbated by the depreciation of the Japanese yen against U.S. dollars. The average exchange rate also worsened, dropping from $1=¥138.93 in 2023 to $1=¥150.33 in 2024, respectively, resulting in a decrease of 8.20%.
Revenues from integrated e-commerce services
rose by USD1.67 million or 77.64%, from USD2.15 million to USD3.81 million, driven by a new fully managed e-commerce operation generating USD3.28 million.
Revenues from digital marketing services
dropped to USD0.31 million due to stricter Google incentive policies and a 40.76% decline in merchant numbers. To adapt, we are partnering with platforms like TikTok and Facebook while expanding our e-commerce services.
Revenues from training, consulting, and TikTok agent services
decreased by USD0.40 million or 64.37%, from USD 0.62 million to USD 0.22 million.
Cost of Revenues
Cost of revenues decreased by 43.68% from approximately USD10.87 million for the year ended September 30, 2023 to approximately USD6.12 million for the year ended September 30, 2024.
Gross Profit
Gross profit increased by approximately USD2.31 million, or 123.91%, from USD1.86 million for the year ended September 30, 2023 to USD4.17 million for the year ended September 30, 2024. The increase was primarily attributable by the new business fully managed e-commerce operation services with gross profit of USD2.94 million and gross profit margin of 89.62%. The high gross profit margin is mainly due to the low cost, which was mainly composed of the salaries of the operation personnel.
Gross profit margin of cross-border sales increased from 7.82% for the year ended September 30, 2023 to 13.99% for the year ended September 30, 2024. The decrease was mainly due to that the depreciation of the Japanese yen has led to a rise in prices of goods in Japan.
Gross profit margin of integrated e-commerce related services increased from 48.10% for the year ended September 30, 2023 to 85.52% for the year ended September 30, 2024. The increase was primarily attributable by the new business fully managed e-commerce operation services with gross profit of USD2.94 million and gross profit margin of 89.62%.
Operating Expenses
Operating expenses increased from USD2.43 million for the year ended September 30, 2023 to USD4.24 million for the year ended September 30, 2024, representing a year-on-year increase of 74.49%. This increase was primarily attributable to the increases in our general and administrative expenses, offsetting the decreases in selling and marketing expenses and research and development expenses.
Other income/(expenses), net
Other non-operating income increased from USD0.01 million for the year ended September 30, 2023 to USD0.02 million for the year ended September 30, 2024. Investment income increased by 2003.35% from USD2,119 for the year ended September 30, 2023 to approximately USD44,570 for the year ended September 30, 2024.
Income taxes
Income tax (expenses) /benefits decreased by USD0.65 million, from USD0.06 million of tax benefit for the year ended September 30, 2023 to USD0.59 million of tax expenses for the year ended September 30, 2024. This decrease was primarily attributable to net profit for the year ended September 30, 2024, and the valuation allowance for deferred tax assets.
Net (loss)
As a result of the foregoing, net loss decreased by USD0.21 million, or 32.69%, from USD0.65 million for the year ended September 30, 2023 to USD0.44 million for the year ended September 30, 2024.
About Linkage Global Inc
Linkage Global Inc is a holding company incorporated in the Cayman Islands with no operations of its own. Linkage Cayman conducts its operations through its operating subsidiaries in Japan, Hong Kong, and mainland China. As a cross-border e-commerce integrated services provider headquartered in Japan, through its operating subsidiaries, the Company has developed a comprehensive service system comprised of two lines of business complementary to each other, including (i) cross-border sales and (ii) integrated e-commerce services. For more information, please visit www.linkagecc.com.
Safe Harbor Statement
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “approximates,” “assesses,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s annual reports on Form 20-F and other filings with the U.S. Securities and Exchange Commission.
For more information, please contact:
Investor Relations
WFS Investor Relations Inc.
Connie Kang, Partner
Email: ckang@wealthfsllc.com
Linkage Global Inc CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2024 AND 2023 (In U.S. dollars, except for share and per share data, or otherwise noted) | |||||||||
As of September 30, | |||||||||
2024 | 2023 | ||||||||
USD | |||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | 2,000,732 | 1,107,480 | |||||||
Accounts receivable, net | 6,302,696 | 2,011,047 | |||||||
Inventories, net | 66,331 | 679,732 | |||||||
Deferred offering costs | — | 1,076,253 | |||||||
De pos its paid to media platforms | 482,650 | 3,717,773 | |||||||
Prepaid expenses and other current assets, net | 2,689,581 | 1,053,687 | |||||||
Short-term loan to third party | 410,000 | — | |||||||
Total current assets | 11,951,990 | 9,645,972 | |||||||
Non-current assets | |||||||||
Property and equipment, net | 85,807 | 158,642 | |||||||
Deferred tax assets | — | 149,129 | |||||||
Right-of-use assets, net | 653,730 | 624,945 | |||||||
Other non-current assets | — | 54,825 | |||||||
Total non-current assets | 739,537 | 987,541 | |||||||
TOTAL ASSETS | 12,691,527 | 10,633,513 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable | 624,723 | 1,142,667 | |||||||
Accrued expenses and other current liabilities | 236,813 | 309,986 | |||||||
Short-term debts | 32,810 | — | |||||||
Current portion of long-term debts | 428,702 | 535,226 | |||||||
Contract liabilities | 533,625 | 530,488 | |||||||
Amounts due to related parties | 314,544 | 1,413,604 | |||||||
Lease liabilities - current | 231,978 | 187,214 | |||||||
Convertible bonds | 964,865 | — | |||||||
Income tax payable | 1,017,619 | 581,235 | |||||||
Total current liabilities | 4,385,679 | 4,700,420 | |||||||
Non-current liabilities | |||||||||
Long-term debts | 839,560 | 1,996,326 | |||||||
Lease liabilities - noncurrent | 441,504 | 439,854 | |||||||
Total non-current liabilities | 1,281,064 | 2,436,180 | |||||||
Total liabilities | 5,666,743 | 7,136,600 | |||||||
Commitments and contingencies (Note 22) | |||||||||
Shareholders’ equity | |||||||||
Ordinary shares (par value of US$0.00025 per share; 200,000,000 ordinary shares authorized, 21,500,000 and 20,000,000 ordinary shares issued and outstanding as of September 30, 2024 and 2023, respectively) * | 5,375 | 5,000 | |||||||
Additional paid in capital | 5,591,596 | 1,549,913 | |||||||
Statutory reserve | 11,348 | 11,348 | |||||||
Retained earnings | 1,613,217 | 2,052,553 | |||||||
Accumulated other comprehensive loss | (196,752 | ) | (121,901 | ) | |||||
Total shareholders’ equity | 7,024,784 | 3,496,913 | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 12,691,527 | 10,633,513 | |||||||
Linkage Global Inc CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS) FOR THE YEARS ENDED SEPTEMBER 30, 2024, 2023 AND 2022 (In U.S. dollars, except for share and per share data, or otherwise noted) | ||||||||||||
For the years ended September 30, | ||||||||||||
2024 | 2023 | 2022 | ||||||||||
USD | ||||||||||||
Revenues | 10,289,681 | 12,733,339 | 22,028,303 | |||||||||
Cost of revenues | (6,123,025 | ) | (10,872,484 | ) | (18,323,802 | ) | ||||||
Gross profit | 4,166,656 | 1,860,855 | 3,704,501 | |||||||||
Operating expenses | ||||||||||||
General and administrative expenses | (3,506,075 | ) | (1,373,695 | ) | (1,047,552 | ) | ||||||
Selling and marketing expenses | (434,856 | ) | (595,804 | ) | (812,062 | ) | ||||||
Research and development expenses | (302,280 | ) | (588,108 | ) | (628,350 | ) | ||||||
Gain from disposal of property and equipment | — | 125,804 | 193,191 | |||||||||
Total operating expenses | (4,243,211 | ) | (2,431,803 | ) | (2,294,773 | ) | ||||||
Operating (loss)/profit | (76,555 | ) | (570,948 | ) | 1,409,728 | |||||||
Other income/(expenses) | ||||||||||||
Investment income | 44,570 | 2,119 | 8,402 | |||||||||
Impairment loss from equity investment | — | (60,046 | ) | — | ||||||||
Interest income/(expenses), net | 160,685 | (102,360 | ) | (79,455 | ) | |||||||
Other non-operating income | 21,644 | 14,557 | 113,658 | |||||||||
Total other income/(expenses), net | 226,899 | (145,730 | ) | 42,605 | ||||||||
Income/(loss) before income taxes | 150,344 | (716,678 | ) | 1,452,333 | ||||||||
Income tax (provision)/ benefit | (589,680 | ) | 63,950 | (385,958 | ) | |||||||
Net (loss)/income | (439,336 | ) | (652,728 | ) | 1,066,375 | |||||||
Net (loss)/income | (439,336 | ) | (652,728 | ) | 1,066,375 | |||||||
Other comprehensive income | ||||||||||||
Foreign currency translation adjustment | (74,851 | ) | (15,524 | ) | (57,722 | ) | ||||||
Total comprehensive (loss) /income attributable to the Company’s ordinary shareholders | (514,187 | ) | (668,252 | ) | 1,008,653 | |||||||
Earnings per ordinary share attributable to ordinary shareholders | ||||||||||||
Basic and Diluted* | (0.02 | ) | (0.03 | ) | 0.05 | |||||||
Weighted average number of ordinary shares outstanding | ||||||||||||
Basic and Diluted* | 21,175,342 | 20,000,000 | 20,000,000 | |||||||||
Linkage Global Inc CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2024, 2023 AND 2022 (In U.S. dollars, except for share and per share data, or otherwise noted) | ||||||||||||
For the years ended September 30, | ||||||||||||
2024 | 2023 | 2022 | ||||||||||
USD | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net (loss)/income | (439,336 | ) | (652,728 | ) | 1,066,375 | |||||||
Adjustments to reconcile net (loss)/income to net cash (used in) /provided by operating activities: | ||||||||||||
Effect of exchange rate changes | (226,846 | ) | — | — | ||||||||
Allowance for credit loss | 958,584 | 116,428 | — | |||||||||
Depreciation and amortization | 86,911 | 83,226 | 81,625 | |||||||||
Amortization of lease right-of-use assets | 224,451 | 180,464 | — | |||||||||
Share of profit from long-term investment | — | (2,119 | ) | (8,402 | ) | |||||||
Disposal gain from property and equipment | — | (125,804 | ) | (193,191 | ) | |||||||
Inventory write-downs | 11,858 | 19,981 | 21,282 | |||||||||
Deferred tax expenses/(benefits) | 148,239 | (160,402 | ) | 80,519 | ||||||||
Long-term investment impairment | — | 60,046 | — | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable, net | (5,023,387 | ) | 36,738 | (910,221 | ) | |||||||
Other non-current assets | — | — | (61,039 | ) | ||||||||
Prepaid expenses and other current asset, net | 1,870,567 | (3,871,930 | ) | (520,377 | ) | |||||||
Inventories, net | 601,543 | (359,859 | ) | (78,455 | ) | |||||||
Accounts payable | (517,944 | ) | 624,347 | (11,703 | ) | |||||||
Contract liabilities | 3,137 | 84,680 | 371,639 | |||||||||
Accrued expenses and other current liabilities | (37,987 | ) | (25,816 | ) | 152,448 | |||||||
Amounts due from related parties | — | 34,552 | (40,098 | ) | ||||||||
Amounts due to related parties | 446,469 | 139,772 | 946,379 | |||||||||
Tax payable | 436,384 | 113,597 | 272,148 | |||||||||
Operating lease liabilities | (178,037 | ) | (178,341 | ) | — | |||||||
Net cash (used in)/provided by operating activities | (1,635,394 | ) | (3,883,168 | ) | 1,168,928 | |||||||
Cash flow from investing activities | ||||||||||||
Purchase of property and equipment | — | (12,137 | ) | (481,391 | ) | |||||||
Proceeds from disposal of property and equipment | — | 1,745,094 | 1,265,217 | |||||||||
Proceed from withdrawal of long-term investment | 44,570 | 93,574 | — | |||||||||
Provide short-term loan to third party | (410,000 | ) | — | — | ||||||||
Purchase of long-term investments | — | — | (40,098 | ) | ||||||||
Net cash (used in)/provided by investing activities | (365,430 | ) | 1,826,531 | 743,728 | ||||||||
Cash flow from financing activities | ||||||||||||
Proceeds from issuance of Class A ordinary shares upon the completion of IPO | 5,356,417 | — | — | |||||||||
Proceeds from issuance of convertible bonds | 999,957 | — | — | |||||||||
Payment of service fees for convertible bonds | (351,000 | ) | — | — | ||||||||
Proceeds from short-term debts | 133,044 | — | 160,391 | |||||||||
Proceeds from long-term debts | — | 1,238,592 | 1,167,861 | |||||||||
Repayments of short-term debts | (101,778 | ) | (107,963 | ) | (280,692 | ) | ||||||
Repayments of long-term debts | (1,325,703 | ) | (1,918,181 | ) | (1,001,815 | ) | ||||||
Proceed of interest-free loan from related parties | 3,031,467 | — | — | |||||||||
Repayments of loans to a related party | (4,593,092 | ) | — | — | ||||||||
Capital contribution from shareholder | — | 1,430,612 | — | |||||||||
Payments for deferred offering costs | (273,287 | ) | (1,041,447 | ) | — | |||||||
Net cash provided by/(used in) financing activities | 2,876,025 | (398,387 | ) | 45,745 | ||||||||
Effect of exchange rate changes | 18,051 | (123,887 | ) | (51,067 | ) | |||||||
Net change in cash and cash equivalents | 893,252 | (2,578,911 | ) | 1,907,334 | ||||||||
Cash and cash equivalents, beginning of the year | 1,107,480 | 3,686,391 | 1,779,057 | |||||||||
Cash and cash equivalents, end of the year | 2,000,732 | 1,107,480 | 3,686,391 | |||||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Income tax paid | 2,050 | 150,124 | 33,291 | |||||||||
Interest expense paid | 48,607 | 65,901 | 57,776 | |||||||||
Supplemental disclosures of non-cash activities: | ||||||||||||
Obtaining right-of-use assets in exchange for operating lease liabilities | 209,652 | 805,409 | N/A | |||||||||
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