Company Overview
The Marygold Companies, Inc. (MGLD) is a diversified global holding company with a primary focus on the fund management and financial services industries in the United States and the United Kingdom, including the emerging Fintech space. The company's business operations are managed through its wholly-owned subsidiaries, each providing unique products and services to a diverse customer base.
Founded in the early 2000s, The Marygold Companies has evolved over the past two decades into a multifaceted conglomerate with a presence across various sectors, including fund management, food products, beauty products, security systems, and financial services. The company's strategic shift toward financial services and Fintech in recent years has been a key driver of its growth and diversification efforts.
Business Segments
Fund Management
The Marygold Companies' fund management segment, operated through its USCF Investments subsidiary, has been a key part of the company since its early days. USCF Investments is a leader in the exchange-traded product (ETP) and exchange-traded fund (ETF) space, managing a diverse portfolio of commodity, equity, and fixed-income funds. The subsidiary generates revenue from management and advisory fees based on the assets under management in the funds it oversees. As of December 31, 2024, USCF Investments had $3.1 billion in assets under management (AUM), a decrease of 11% compared to the prior year period, due to commodity price fluctuations and the high-interest rate environment, along with geopolitical and economic uncertainty.
For the three months ended December 31, 2024, this segment generated $4.68 million in revenue, accounting for 58.5% of the company's total revenue. However, operating income from this segment decreased by 33% to $832,000 compared to the prior year quarter, driven by the decrease in average AUM.
Food Products
The company's food products division, Gourmet Foods, operates in New Zealand, producing a range of food products. Gourmet Foods' revenue decreased by 4% to $3.5 million for the six months ended December 31, 2024, compared to the same period in the prior year, primarily due to a temporary cancellation of certain product categories sold to national grocery chains pending price increase acceptance.
This segment includes two main business units: a commercial-scale bakery producing Kiwi pies and sausage rolls, and a digital printing business called Printstock Products Limited that prints specialty food wrappers. For the three months ended December 31, 2024, this segment generated $1.69 million in revenue, a 12% decrease compared to the prior year quarter. Operating income for the food products segment decreased by 72% to $58,000, driven by decreases in both the printing and bakery businesses.
Beauty Products
The beauty products segment, represented by the Original Sprout brand, markets proprietary hair and skin care products to domestic and international distributors, grocery stores, hair salons, and direct-to-consumer channels. Original Sprout's revenue declined by 12% to $1.4 million for the six months ended December 31, 2024, as the company sought to control the discounted price of products sold online by authorized resellers.
For the three months ended December 31, 2024, revenue for this segment was flat at $832,000 compared to the prior year quarter. However, the operating loss decreased by 48% to $61,000 due to the elimination of intangible asset amortization expenses.
Security Systems
Brigadier Security Systems, the company's security systems division based in Canada, generates revenue from recurring alarm monitoring fees charged to residential customers and hardware sales and installations for commercial customers. Brigadier's revenue increased by 13% to $1.3 million for the six months ended December 31, 2024, driven by increased sales to commercial customers.
For the three months ended December 31, 2024, revenue for this segment increased by 3% to $585,000, while operating income decreased by 19% to $58,000.
Financial Services
The Marygold Companies' financial services segment is composed of its Marygold US and Marygold UK subsidiaries. Marygold US has developed and launched a mobile banking Fintech app, which is expected to generate revenue in the form of management fees based on a percentage of the amount of account holder funds invested in various curated ETF portfolios, as well as transaction fees from the use of its debit card. Marygold UK operates through its wholly-owned subsidiaries, Marygold Co. Limited and Step-By-Step Financial Planners, providing investment advisory services and financial products to customers in the United Kingdom.
The financial services segment recorded an operating loss of $3.3 million for the six months ended December 31, 2024, as the company continued to invest in the development and marketing of its Fintech app. For the three months ended December 31, 2024, Marygold Co. in the U.S. incurred an operating loss of $1.5 million, while the UK operations generated $214,000 in revenue and an operating loss of $200,000.
Financials
The Marygold Companies' financial performance for the six months ended December 31, 2024, was marked by a 5% decrease in revenue to $15.9 million, compared to the same period in the prior year. The company sustained a net loss of $3.3 million, or $0.08 per share, during this period, driven by decreased profits in the fund management business due to lower average AUM, increased losses in the financial services segment as the company invested in its Fintech app, and higher stock-based compensation charges.
For the most recent fiscal year (2024), the company reported annual revenue of $32.84 million, with a net loss of $4.07 million. Annual operating cash flow was negative $1.91 million, and annual free cash flow was negative $1.97 million.
In the most recent quarter (Q2 2025), revenue was $8.00 million, representing a 5% decrease year-over-year due to lower AUM in the fund management segment. The net loss for the quarter increased by 48% year-over-year to $1.75 million, driven by decreased profits in the fund management business and increased losses in the financial services segment as the company continues to develop its Fintech app.
The company operates primarily in the US and UK markets, with its fund management, food products, beauty products, and US financial services segments located in the US, and its UK financial services segment located in the UK.
Liquidity
Despite the challenging market conditions and ongoing investments in the Fintech space, The Marygold Companies maintained a strong balance sheet, with $5.68 million in cash and cash equivalents and $61,000 in restricted cash as of December 31, 2024. The company's liquidity position was further bolstered by a $4.38 million debt financing in September 2024, which provided additional resources to support the development and rollout of its Fintech app. This note purchase agreement with Streeterville Capital, LLC also includes the potential to borrow an additional $2.18 million. The note has a 24-month maturity and an interest rate of 9%.
Key financial ratios as of December 31, 2024: - Debt/Equity ratio: 0.22 - Current ratio: 2.77 - Quick ratio: 2.50
These ratios indicate a relatively strong liquidity position and conservative capital structure for the company.
Future Outlook and Risks
Looking ahead, The Marygold Companies is poised to navigate the evolving financial services landscape, leveraging its diversified business model and strategic focus on Fintech to drive long-term growth and value creation for its shareholders. The successful integration of recent acquisitions, such as the UK-based Step-By-Step Financial Planners, and the continued development and rollout of its mobile banking app are expected to be key priorities for the company in the coming years.
The company continues to invest significantly in the development of its Fintech mobile app through its Marygold & Co. subsidiary, having spent $18 million on the app since its inception. While the app has generated minimal revenue to date, the company believes it represents an important strategic initiative and expects to require additional financing to fund its ongoing Fintech operations over the next 12 months.
However, the company faces several risks, including the potential inability to generate sufficient cash flows to repay its recent debt financing, the highly competitive Fintech industry, and the potential for double taxation on certain income earned by its non-U.S. subsidiaries. Investors should carefully consider these risks, as well as the company's long-term growth prospects, when evaluating an investment in The Marygold Companies.
Conclusion
Overall, The Marygold Companies' diversified business model, strategic focus on the financial services and Fintech sectors, and strong financial position provide a solid foundation for the company to navigate the evolving market landscape and deliver long-term value to its shareholders. While the company faces challenges in its fund management and financial services segments, its continued investment in Fintech and its strong liquidity position suggest potential for future growth and innovation in the rapidly evolving financial services industry.