Emerge Commerce Revenue Rises 223% In Q1; Shares Up 6%

Shares of Emerge Commerce Ltd (ECOM) gained 6% in early trading Thursday after the company reported a record first quarter.

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Emerge Commerce is a diversified acquirer and operator of e-commerce brands across North America. Its portfolio includes UnderPar.com, trulocal.ca, and JustGolfStuff.ca, among other brands.

Emerge’s Founder and CEO Ghassan Halazon said, “Q1 was another record quarter for EMERGE, and the first quarter that includes the impact of truLOCAL, our most recent acquisition which closed December 31, 2020. truLOCAL exhibited strong organic growth and profitability in Q1, exceeding management’s expectations. Overall, revenue more than tripled, and we achieved another quarter of positive Adjusted EBITDA.”

Revenue came in at C$7.1 million in the quarter ended March 31, up 223% from C$2.2 million in Q1 2020, thanks to the acquisition of truLOCAL, Canada’s leader in premium meat subscriptions.

Meanwhile, Emerge reported positive Adjusted EBITDA of C$0.27 million in Q1 2021, up from C$0.23 million in the prior-year quarter.

Gross Merchandise Sales (GMS) increased to C$11.4 million, increasing 81% from C$6.3 million a year ago.

Emerge ended the first quarter with C$21.4 million in cash. During the quarter, the company raised C$12.1 million in equity financing. (See Emerge Commerce stock analysis on TipRanks)

Halazon said, “We continue to ramp up our team, making key hires to support both existing and future potential acquisitions. We are carefully exploring and advancing various opportunities in our growing acquisition pipeline. Consolidating profitable D2C e-commerce brands is a tremendous opportunity, and our strong balance sheet puts us in a prime position to capitalize on it.”

In April, Raymond James analyst Steven Li reiterated a Buy rating on ECOM and a price target of C$2.75, for 137% upside potential.

Li stated the COVID-19 pandemic accelerated the trend towards e-commerce, which bodes well for Emerge Commerce.

The analyst wrote, “This e-commerce surge obviously translates well for Emerge’s portfolio of companies, which have seen similar strength in organic growth. truLOCAL revenues have grown at a CAGR of +136 percent year-over-year for the past three years. With the average order value per month per customer staying fairly constant, member growth has been increasing at a similar clip. Management also indicates that margins have increased steadily over this time from 30 to 35 percent.”

Overall, ECOM scores a Moderate Buy consensus rating among analysts based on 2 Buys. The average analyst price target of C$2.18 implies 88% upside potential from current levels.