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Buddy Technologies (ASX:BUD) - Co founder & CEO, David McLauchlan (right) Co founder, Jeffrey MacDuff (left) - The Market Herald
Co founder & CEO, David McLauchlan (right) Co founder, Jeffrey MacDuff (left)
Source: Geek Wire
  • Smart tech company Buddy Technologies (BUD) is set to raise $2 million from a share placement to provide bridging finance through the pandemic downturn
  • The money raised will provide liquidity and working capital until the execution of its previously announced $12.5 million growth equity overdraft facility with CST Investments
  • Buddy has been forced to be agile in its strategy and has made significant changes to its business model through the virus crisis so far
  • The strategy has paid off too, with the company posting its second-best ever monthly earnings figures in April due to a combination of cost-cutting and a shift to higher-margin online sales
  • With the capital raise now giving the company further breathing room, Buddy should be well placed to continue pursuing its goals
  • Buddy Technologies is down 8.3 per cent today, with shares trading for 1.1 cents each

Smart tech company Buddy Technologies (BUD) is set to raise $2 million from a share placement to provide bridging finance through the pandemic downturn.

The money raised will provide liquidity and working capital until the execution of its previously announced $12.5 million growth equity overdraft facility with CST Investments.

The company successfully completed the placement to institutional and sophisticated shareholders and investors within its 10 per cent placement capacity, issuing the shares at 1 cent each, a 16.7 per cent discount to the last closing price of 1.2 cents on May 26.

One notable new investor is Buddy VP of Global Sales, Don Hicks. The company says it's affirming to see Don's "sufficiently enthused by [its] products, [its] roadmap and [its] people to make such an investment decision."

COVID-19 cuts

Buddy has been forced to be agile in its strategy and has made significant changes to its business model through the virus crisis so far.

Surprisingly, the company posted its second-strongest ever monthly earnings before interest, tax, depreciation and amortisation (EBITDA) in April, posting a loss of just $246,000.

The company attributes this to a combination of cost-cutting measures and a shift in marketing focus to online sales creating higher margins.

Given the company's biggest distributor, U.S. retailer Best Buy, was shut down over the period and didn't place an order, it shows Buddy's nimble strategy adjustment did well to defend the company's bottom line.

Buddy CEO David McLauchlan says while the company's not yet where it needs to be, its resilience and performance so far bodes well for the future.

"Make no mistake, there’ll be no popping champagne corks until we have demonstrably recorded consistent net profits, but on the path to achieving that milestone, April’s numbers are a standout result that primes the pump for further strong results," David said.

Lighting the future

Buddy has some big goals for the future.

While the company's "Eight Goals for 2020" strategy was conceived before the pandemic downturn, Buddy has decided to broadly stick to the aims regardless.

The company plans to focus on its basic LIFX white smart light to drive market expansion throughout Europe, the Middle East and Africa.

Buddy is hoping the targeted campaign in Europe, in collaboration with Google and Tink.de, will spearhead that ongoing expansion of LIFX's commercial footprint.

In concert with a suite of new products and the potential to bundle smart home lighting solutions, the commercial expansion and refocused online strategy have set Buddy up to continue growth despite the global downturn.

With the $2 million capital raise now giving the company further breathing room, Buddy should be well placed to continue pursuing its goals.

Buddy Technologies is down 8.3 per cent today, with shares trading for 1.1 cents each as at 3:39 pm AEST.


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