Fresh from its successful initial public offer (IPO) of shares, One Great Studio Company, which trades as 1GS, has returned impressive second quarter results.
In its first quarterly report as a public company, 1GS is reporting a 187 per cent increase in revenues and a whopping 498 per cent increase in net profit for the June quarter. The digital marketing company went public last month in a J$338.63 million IPO, which attracted over 3,600 new subscribers.
Revenue amounted to J$120.5, up 187 per cent increase year-over-year while net profit closed the quarter at J$27.1, a 498 per cent increase YoY. The net profit margin is up 22.52 per cent.
The management emphasized its commitment to innovation, strategic vision and exceptional client service has yielded strong year-over-year (YoY) results with the June quarter marking another period of impressive growth.
Revenue and profit performance
The J$120.5 million made in profit represents a 4.5 per cent increase over net profit for the previous first quarter. This 187 per cent YoY, and 4.5 per cent quarter-over-quarter increase was primarily driven by 1GS’ SEO business line, which contributed J$91.2 million for the period.
The Web & App Development segment represents the second largest revenue earner, which continues to grow and improve year-over-year. Over the last three quarters, 1GS saw an increase in revenue each quarter.
The most recent increase can be attributed to an improved client renewal rate along with a strong performance by the company’s sales team making June 2023 its best month to date. Operating profit climbed 375 per cent YoY to J$42.93 million when compared to the same period in 2022.
This has come about even though operating expenses went up to J$19.7 million. This translated into a higher operating profit margin of 35.62 per cent, primarily driven by cost management and operational synergies from the integration of the SEO business.
Net profit closed the quarter on J$27.1 million, representing an increase of 498 per cent when compared to same period in 2022 and an 18 per cent increase over first quarter of 2023. The management’s efforts to optimise resource allocation, streamline processes and boost productivity has resulted in the net profit margin for Q2 2023 improving YoY to 22.52 per cent.
Strong client retention
Eighty-four percent of the company’s revenue is attributable to retainer contracts in the second quarter, from a total of 82 clients with the average customer spend being J$1.47 million. Approximately 84 per cent of the revenue originated from retainers, which are recurring in nature, providing regular and predictable profitability and cash flows.
During the first and second quarter 1GS executed client acquisition and retention strategies which have already started to translate positively in its client metrics. There was strong revenue emanating outside of Jamaica, as the management continues to focus its efforts on generating income outside of Jamaica.
During this period over 80 per cent of 1GS’ revenue was originated from outside of Jamaica. For the second quarter as much as 60 per cent of the company’s income originated from North America, 22 per cent from Jamaica and the Caribbean, 10 per cent from Europe and the remaining seven per cent from Asia and Oceania regions.
As at June 30, 2023, 1GS’s top three clients accounted for approximately 19 per cent of revenue (down from 30 per cent at December 31, 2022) while no single client accounted for more than nine per cent of revenue (down from 16 per cent at December 31 2022) on a trailing twelve month basis.For the current financial year, the management has been focused on cash management, optimising revenue structure, and strategically integrating HVSEO into the group. This has continued to reap great benefits for our shareholders, evidenced in higher revenues, profits and cash flows.