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EMERGE Commerce has a 143 per cent upside, says Raymond James

Raymond James analyst Steven Li likes the trajectory of e-commerce acquisition story EMERGE Commerce (EMERGE Commerce Stock Quote, Chart, News, Analysts, Financials TSXV:ECOM), which just reported its first quarter results. In an update to clients on Thursday, Li called the company’s Q1 numbers solid despite COVID restrictions negatively impacting EMERGE’s golf assets.

Toronto-based EMERGE, which joined the TSX Venture this past December, acquires direct-to-consumer (D2C) e-commerce brands, with names like,,, and The company delivered on May 27 its first quarter 2021 earnings which featured record quarterly revenue of $7.1 million, up 223 per cent year-over-year, and positive adjusted EBITDA of $270,000 compared to $230,000 a year earlier.

It was the first quarter of contribution from meat subscription service truLocal, which now has facilities in four provinces in Canada and in Illinois in the US. Overall, EMERGE hit $11.4 million in gross merchandise sales over the Q1, up 81 per cent from a year earlier, with the company having ended the quarter with $21.4 million in cash while raising gross proceeds of $12.1 million in equity financing in March.

“We saw robust organic growth in premium meat subscriptions, driven by truLOCAL, and enormous early promise in our fast-growing golf products business,, a Shopify-powered site, which saw explosive growth throughout the quarter,” said Ghassan Halazon, founder and CEO, in a press release.

“Despite the challenging climate that persisted for our experience-based offerings during the pandemic, our diversified e-commerce portfolio demonstrated its strength and agility,” he added.

On the M&A front, EMERGE said potential targets in its pipeline combine for about $68 million in EBITDA, including signed Letters of Intent.

“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,” said Halazon.

EMERGE’s share price has bounced around since its debut on December 14, currently trading down about five per cent year-to-date.

But Li is bullish on the stock, saying with the reopening of golf facilities, typical seasonality and truLOCAL’s recent expansion into Quebec, ECOM’s outlook for the second half of 2021 looks strong. The Q1 revenue of $7.1 million was slightly above consensus, Li noted, while adjusted EBITDA of $0.3 million was in line with the Street’s call and represented the company’s fifth consecutive quarter of positive EBITDA.

“With golf courses re-opening in Ontario, UnderPar should start to see significant improvement in selling golf experiences in Canada,” Li wrote. “As well, we also expect other travel and experience offerings to improve as the economy re-opens in 2H.”

“TruLOCAL remains the largest anchor asset for ECOM and recently expanded into Quebec (the second-largest market in Canada) in April 2021. While they are still ramping up their product offerings in Quebec (and therefore may not have a material impact in 2Q), we expect some meaningful contribution to truLOCAL organic growth in 2H,” he argued.

The analyst said the fourth quarter is the biggest for ECOM, with holiday events like Black Friday and Cyber Monday benefitting WagJag, golfing products and holiday packages.

“As consumers shift their spending online at an accelerated rate, we expect ECOM stands to benefit from the current e-commerce surge and the resulting strong organic growth profile of the businesses they acquire,” Li wrote.

Li said ECOM’s over $21.8-million in cash versus debt of $9.5 million leave the company with plenty of firepower to advance its acquisition pipeline this year.

The analyst has updated his model and is now calling for ECOM to deliver 2021 revenue and EBITDA of $33 million and $2 million, respectively, and 2022 revenue and EBITDA of $38 million and $2 million, respectively.

With the update, Li has maintained his “Outperform 2” rating and $2.75 target price, which is based on a 3.0x multiple (unchanged) of his next 12 months revenue estimate and, at press time, represented a projected one-year return of 143 per cent.

EMERGE last month announced the launch of across the United States, saying the golf equipment and apparel brand represented the company’s fastest growing brand across its portfolio of companies. EMERGE reported a 357 per cent year-over-year spike in gross merchandise sales (GMS) for JustGolfStuff over the month of March, with the company re-launching a JustGolfStuff website late in the first quarter where it added hundreds of new products. EMERGE said the website received over 1,000 five-star reviews in its first 30 days.

Golf is EMERGE’s largest vertical by GMS and second largest by revenue, with the company saying expansion into golf equipment and apparel is its largest growth opportunity.

Disclosure: EMERGE Commerce is an annual sponsor of Cantech Letter

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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