Cluey Ltd's Strategic Capital Raise for Future Growth and Profitability
CLUEY LTD (CLU) Share Update July 2024 Tuesday 23rd
Cluey Ltd Announces Capital Raise to Fund Path to Profitability
Cluey Ltd (ASX: CLU) has announced a significant capital raise to support its strategic shift towards profitability and growth. The company aims to secure $4.5 million through a fully underwritten entitlement offer.
Instant Summary:
- Cluey Ltd announces a $4.5 million capital raise.
- The capital raise is fully underwritten.
- Funds will support the company's path to profitability and growth initiatives.
- Significant reduction in operating costs and cash burn achieved in recent years.
Capital Raise Details
Cluey Ltd has announced a fully underwritten 3 for 4 non-renounceable entitlement offer to raise $4.5 million. This capital raise aims to provide the necessary funds to support Cluey's path to profitability and execute targeted growth initiatives.
The offer price for the new shares is set at $0.03 per share, representing a 15.25% discount on the 30-day volume-weighted average price of Cluey shares up to and including 23 July 2024. Approximately 151,210,176 new fully paid ordinary shares will be issued under this entitlement offer.
Operational Improvements
Over the past 18 months, Cluey Ltd has made significant strides in restructuring its business to pivot from hyper-growth to profitability. Key operational improvements include:
- Reduction in full-time equivalent (FTE) employees from a peak of 236 in July 2022 to 111 in June 2024.
- Reduction in marketing spend from $10.3 million in CY23 to a $3.9 million run rate for CY24.
- Decrease in total expenses from $24.6 million in CY23 to a $17.9 million run rate in CY24, a 27% improvement.
- Significant improvements in cash burn and underlying EBITDA losses.
Financial Performance
Cluey Ltd has reported substantial improvements in its financial performance. The company's cash burn decreased from $18.9 million in CY22 to $14.9 million in CY23, a 21% improvement. Similarly, the underlying EBITDA loss reduced from $17.2 million in CY22 to $11.1 million in CY23, marking a 35% improvement.
In Q4 FY24, Cluey achieved its lowest ever quarterly cash burn of $1.3 million, a 68% improvement from the previous corresponding period (PCP) of $4.1 million. The underlying EBITDA loss for the same quarter was $0.9 million, a 65% improvement from the PCP of $2.5 million.
The capital raise is expected to have a positive impact on Cluey Ltd's stock as it demonstrates the company's commitment to achieving profitability and supporting growth initiatives. The significant reduction in operating costs and cash burn indicates effective management and operational efficiency, which should bolster investor confidence.
Investor Reaction:
Analysts have expressed optimism about Cluey's strategic shift towards profitability. The reduction in cash burn and operating expenses is seen as a positive indicator of the company's financial health. Investors are likely to respond favorably to the capital raise, viewing it as a necessary step to support future growth.
Conclusion:
Investors should closely monitor Cluey Ltd's progress towards profitability and assess the potential long-term benefits of the capital raise. The company's strategic initiatives and operational improvements position it well for sustainable growth. Participation in the entitlement offer could be a valuable opportunity for investors looking to support Cluey's path to profitability.