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Introduction & Market Context
EMERGE Commerce Ltd (TSXV:ECOM) presented its April 2025 corporate update, highlighting the company’s strategic shift to a focused portfolio across Grocery and Golf verticals in the Canadian market. The presentation comes after EMERGE reported annual revenue of $20.4 million for 2024, a 4% increase year-over-year, with a significantly reduced net loss of $500,000 compared to $21 million in the previous year.
The company is positioning itself to capitalize on favorable market trends, including the growing "Buy Canadian" movement, which BMO estimates will add $10 billion annually in consumer spending locally. Additionally, EMERGE is targeting the meat subscription market, which is anticipated to grow at a 15.2% CAGR to reach US$6.4 billion by 2033, up from an estimated US$1.7 billion in 2024.
As shown in the following portfolio overview, EMERGE has streamlined its operations to focus on its most promising verticals:
Strategic Shift and Portfolio Focus
EMERGE has transitioned from what it calls "ECOM 1.0" – a diversified, decentralized portfolio with minimal synergies – to "ECOM 2.0" – a streamlined, centralized operation with high synergy potential and reduced debt. This strategic pivot has allowed the company to focus resources on its most promising brands while improving operational efficiency.
The company’s portfolio now consists of four brands across two verticals: Grocery (truLOCAL) and Golf (UnderPar, JustGolfStuff, and the newly acquired Tee 2 Green). truLOCAL, a meat and seafood subscription service, is EMERGE’s largest brand by revenue and is experiencing accelerating organic growth.
The truLOCAL business demonstrates strong unit economics with an average order value of $225, customer lifetime value of $1,772, and customer acquisition cost of $146. With approximately 90% returning customers and an average of only two boxes needed to break even on customer acquisition, the subscription model is showing promising results.
As illustrated in the following slide detailing the truLOCAL business:
The "Buy Canadian" movement has been particularly beneficial for truLOCAL, which reported a 193% increase in net new subscriptions in February 2025, along with a nearly 20% year-over-year reduction in cost per acquisition. This aligns with consumer sentiment data showing 84% of Canadians considered buying more Canadian-made products in February.
Financial Performance and Debt Reduction
EMERGE’s 2024 preliminary report card highlights significant financial improvements across multiple metrics. The company achieved positive revenue growth for three consecutive quarters, with accelerated double-digit growth trends in Q4. This aligns with the earnings report showing Q4 revenue of $5.6 million, representing a 9% increase year-over-year.
A key achievement has been the substantial reduction in debt, from approximately $32 million at its peak to around $5 million by the end of 2024. This debt reduction, combined with interest rate cuts, has significantly improved EMERGE’s cash flow position. The company’s cash position exceeded $3 million at year-end 2024, up from $2.5 million at the end of 2023, without raising additional equity.
The following slide summarizes EMERGE’s key 2024 achievements:
EMERGE has also secured an amended credit facility, reducing its senior debt from $25 million originally to $5.85 million – a 77% reduction. The new facility provides visibility into April 2027 with an 11.5% variable interest rate.
Tee 2 Green Acquisition and Golf Vertical
A significant development in EMERGE’s strategy was the acquisition of Tee 2 Green (T2G), a profitable golf apparel and equipment business with a 38-year track record. According to the presentation, T2G generated revenue of $6.4 million, Adjusted EBITDA of $1 million, and net income of $700,000 in 2024 (unaudited).
The acquisition terms appear favorable, with a purchase price of $2.2 million including $1.1 million cash on closing, $900,000 deferred consideration over a five-year payment plan, and $200,000 in EMERGE shares. The company also acquired $2.4 million in inventory under an eight-year payment plan, providing cash flow advantages in 2025.
EMERGE’s golf vertical now includes three complementary businesses:
- Tee 2 Green: Golf apparel and equipment with retail stores, roadshows, and online presence
- JustGolfStuff: Discount golf apparel and equipment marketplace
- UnderPar: Leading discounted golf experiences marketplace
The following slide details EMERGE’s golf vertical offerings:
The company has identified several synergies between T2G and its existing golf assets, including cross-selling opportunities to its database of 400,000 golfers, leveraging EMERGE’s digital marketing expertise to scale T2G’s online presence, and cost savings through combined shipping volumes and shared resources.
JustGolfStuff serves as a case study for EMERGE’s ability to scale acquired businesses, having grown approximately 10x in five years from $500,000 GMS in 2019 to $5 million in 2024.
Growth Opportunities and Future Outlook
Looking ahead to 2025, EMERGE has outlined three key priorities: accelerating positive organic revenue growth, re-activating its accretive M&A program with a focus on cash flow positive acquisitions, and exploring opportunities to enhance cash flow and reduce interest expenses.
The company has identified several growth avenues, including new revenue initiatives, geographical expansion, tuck-in acquisitions, and strategic partnerships:
EMERGE is also implementing various initiatives to extract synergies and accelerate growth, including cost savings across payment processing, email services, logistics, customer service, and marketing. These initiatives are expected to generate approximately $925,000 in savings, with $750,000 coming from HQ team optimizations alone.
With its streamlined portfolio, reduced debt, and strategic acquisitions, EMERGE appears positioned to capitalize on favorable market trends in both the grocery subscription and golf equipment sectors. The company’s focus on operational efficiency and strategic growth initiatives suggests a continued trajectory toward improved financial performance in 2025.
Current trading data shows EMERGE Commerce shares at $0.05, giving the company a market capitalization of approximately $6.4 million and an enterprise value of $11.7 million – figures that appear modest relative to the company’s reported pro forma revenue of $25 million.
Full presentation:
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