RooLife delivers another record quarter, predicts even stronger FY22

RooLife has had a busy quarter, posting record results, receiving a strategic investment, and driving down its costs.

China-focused digital marketing and e-commerce company, RooLife Group (ASX: RLG) has had a strong Q4, delivering record revenue and cash receipts for investors.

This was the third consecutive quarter of record revenue that RLG has posted.

The $3.9 million Q4 revenue is a 15 per cent increase on its Q3 record results, and 280% higher from the previous corresponding quarter.

RLG also collected a record $5.5 million of cash receipts in Q4, resulting in a net positive cash flow of $1.35 million for the quarter.

With a strong balance sheet that includes a cash position of $3.8 million and $1.7 million from recent capital raising, RLG says that it’s expecting another record sales quarter in Q1 FY22.

Strong sales revenue growth

During the quarter, RLG continued to drive significant product sales in China.

The company offers a cross-border platform that matches Chinese consumer demand with international brands and products.

It represents a growing number of quality products and international brands from Australia, New Zealand, US, Europe, UK and South America wanting to sell in China.

To drive sales, RLG identifies trends in Chinese consumer demand, and secures distribution rights for international products that fit consumers’ needs.

It also offers a fully integrated offering which includes market research and data analysis, logistics and warehousing, as well as payment acceptance and remittance.

RLG’s revenue mix is increasingly progressing from marketing services fees to scalable product sales, validating its vision of being a platform between global suppliers and Chinese consumers.

Initial investment in sales channels is already paying dividends, and has resulted in rapid revenue growth and increased sales efficiency, as seen in the chart below:

Contract wins during the quarter

During the quarter, RLG secured two new and exclusive brand distribution rights for Remedy Drinks and Amie Skincare for the Chinese market.

Remedy is currently Australia’s number one kombucha brand, with the drink already being sold in Australia, New Zealand, UK, USA, Canada and parts of Asia.

The three-year contract  with Remedy is subject to sales and performance milestones, which requires a minimum scaled-up revenue target of $5 million to be achieved over the contract period.

Amie Skincare meanwhile, is a skincare brand of RLG partner SLG Brands, a UK beauty and wellness company.

The exclusive deal was struck with Amie after strong performances by RLG in marketing and selling SLG Brands’ COLAB Dry Shampoo previously.

Cost reductions and strong balance sheet

The company’s balance sheet has been strengthened by the continuing positive cash flows generated from operations, as well as a $1.7 million investment made by a strategic partner, Daniel Love.

The private placement was made directly to an entity controlled by Love called Mega Holdings in early July,  at 2.3c a share.

Love has prior significant business dealings in China, where he was involved in the food demand and supply in the country from his farming and agriculture portfolio.

It’s expected that his  extensive experience in China will further support RGL’s ambitions in the country.

On the cost front, the company continues to reduce its administrative, staff, and marketing expenses in the quarter by leveraging its expertise and technology.

Payments for staff costs in the quarter totalled $726k, down 10% from the prior quarter, which followed the 20% reduction in Q3.

Admin and corporate costs were $220k in Q4, down 4% from the prior quarter, while marketing expenditure was $352k for the quarter, down 2%.

RLG says it’s set for a strong next quarter ahead.

With a team of expert online marketers sitting in the city of Guangzhou, the company has been driving sales for international brands through some of China’s biggest online marketplaces like TMall, Taobao, and JD.com.

This article was developed in collaboration with RooLife, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.