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Linkage Global Inc Announces Fiscal Year 2024 Financial Results

1. Total revenues decreased by 19.19% to USD 10.29 million. 2. Gross profit increased by 123.91% to USD 4.17 million. 3. Cross-border sales dropped 38.82%, mostly in Japan due to yen depreciation. 4. Digital marketing revenue fell significantly after Google policy changes. 5. New e-commerce services generated USD 3.28 million, boosting overall revenue.

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Why Bearish?

Revenue decline and cross-border losses highlight ongoing challenges, reminiscent of previous market downturns.

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Financial results demonstrate significant volatility which can unsettle investors.

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Immediate revenue declines suggest potential weaknesses before recovery can stabilize market perception.

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TOKYO, Jan. 24, 2025 (GLOBE NEWSWIRE) -- Linkage Global Inc (“Linkage Cayman”, or the “Company”), a cross-border e-commerce integrated services provider headquartered in Japan, today announced its financial results for the fiscal year ended September 30, 2024. Fiscal Year 2024 Financial Highlights Total revenues decreased by approximately 19.19% from USD12.73 million for the fiscal year ended September 30, 2023 to USD10.29 million for the fiscal year ended September 30, 2024.Our new fully managed e-commerce operation services that was launched in April 2024, generated USD3.28 million in revenue.Gross profit increased by approximately USD2.31 million, or 123.91%, from USD1.86 million for the fiscal year ended September 30, 2023 to USD4.17 million for the fiscal year ended September 30, 2024.Net loss decreased by USD0.21 million, or 32.69%, from USD0.65 million for the fiscal year ended September 30, 2023 to USD0.44 million for the fiscal year ended September 30, 2024. Mr. Zhihua Wu, Chairman and CEO of the Company, commented: “For the fiscal year ended September 30, 2024, total revenues decreased by about 19.19% from USD12.73 million in 2023 to USD10.29 million, primarily attributable to the decrease of cross-border sales. Specifically, cross-border revenues fell by USD4.11 million, with our Japanese subsidiary experiencing a 53.12% decline. This was largely driven by yen depreciation, which raised prices in Japan and resulted in a decline in consumers’ purchasing power. It was also exacerbated by the depreciation of the Japanese yen against U.S. dollars.” “Our integrated e-commerce services saw a rise of USD1.67 million, thanks to our new fully managed e-commerce operation services, which generated USD3.28 million in revenue. However, digital marketing revenues plummeted from USD1.53 million to USD0.31 million because Google updated agreements with more stringent criteria for incentives. In order to cope with the change of policies from Google, we actively engaged in direct and indirect cooperations with other social platforms, such as TikTok and Facebook.” “Our gross profit increased by USD2.31 million or 123.91% to USD 4.17 million, largely due to the new business fully managed e-commerce operation services with gross profit of USD2.94 million and gross profit margin of 89.62%.” “Looking ahead, while we faced challenges in fiscal year of 2024, our expansion in integrated e-commerce positions us for future growth. We remain committed to enhancing partnerships, optimizing operations, and exploring new market opportunities. These strategies will help us navigate market fluctuations and achieve sustainable growth in the coming years.” Fiscal Year 2024 Financial Results Revenues Total revenues decreased by approximately USD2.44million, or 19.19%, from approximately USD12.73 million for the year ended September 30, 2023 to approximately USD10.29 million for the year ended September 30, 2024, primarily attributable to the decrease of cross-border sales. Our breakdown of revenues by revenue streams for the years ended September 30, 2024 and 2023 is summarized below:   For the Years Ended September 30,   2024  2023   USD  USD Cross border Sales  6,476,939   10,587,053 Integrated E-commerce services  3,812,742   2,146,286 Fully managed e-commerce operation services  3,280,002   — Digital marketing services  312,180   1,527,247 Others  220,560   619,039 Total revenues  10,289,681   12,733,339   Our breakdown of revenues by geographic areas for the years ended September 30, 2024, and 2023 is summarized below:   For the Years Ended September 30,   2024  2023   USD  USD Japan  4,101,865   8,749,200 Hong Kong  3,612,126   1,987,182 China  2,575,690   1,996,957 Total revenues  10,289,681   12,733,339   Revenues from cross-border sales fell by USD 4.11 million, or 38.82%, from USD10.59 million in 2023 to USD6.48 million in 2024. Our Japanese subsidiary, EXTEND, accounted for USD 4.10 million or 39.86% of total revenues, but saw a 53.12% decline. This drop was primarily due to the yen's depreciation, which increased prices and reduced consumer purchasing power for non-essential 3C electronic products. The decrease was also exacerbated by the depreciation of the Japanese yen against U.S. dollars. The average exchange rate also worsened, dropping from $1=¥138.93 in 2023 to $1=¥150.33 in 2024, respectively, resulting in a decrease of 8.20%. Revenues from integrated e-commerce services rose by USD1.67 million or 77.64%, from USD2.15 million to USD3.81 million, driven by a new fully managed e-commerce operation generating USD3.28 million. Revenues from digital marketing services dropped to USD0.31 million due to stricter Google incentive policies and a 40.76% decline in merchant numbers. To adapt, we are partnering with platforms like TikTok and Facebook while expanding our e-commerce services. Revenues from training, consulting, and TikTok agent services decreased by USD0.40 million or 64.37%, from USD 0.62 million to USD 0.22 million. Cost of Revenues Cost of revenues decreased by 43.68% from approximately USD10.87 million for the year ended September 30, 2023 to approximately USD6.12 million for the year ended September 30, 2024. Gross Profit Gross profit increased by approximately USD2.31 million, or 123.91%, from USD1.86 million for the year ended September 30, 2023 to USD4.17 million for the year ended September 30, 2024. The increase was primarily attributable by the new business fully managed e-commerce operation services with gross profit of USD2.94 million and gross profit margin of 89.62%. The high gross profit margin is mainly due to the low cost, which was mainly composed of the salaries of the operation personnel. Gross profit margin of cross-border sales increased from 7.82% for the year ended September 30, 2023 to 13.99% for the year ended September 30, 2024. The decrease was mainly due to that the depreciation of the Japanese yen has led to a rise in prices of goods in Japan. Gross profit margin of integrated e-commerce related services increased from 48.10% for the year ended September 30, 2023 to 85.52% for the year ended September 30, 2024. The increase was primarily attributable by the new business fully managed e-commerce operation services with gross profit of USD2.94 million and gross profit margin of 89.62%. Operating Expenses Operating expenses increased from USD2.43 million for the year ended September 30, 2023 to USD4.24 million for the year ended September 30, 2024, representing a year-on-year increase of 74.49%. This increase was primarily attributable to the increases in our general and administrative expenses, offsetting the decreases in selling and marketing expenses and research and development expenses. Other income/(expenses), net Other non-operating income increased from USD0.01 million for the year ended September 30, 2023 to USD0.02 million for the year ended September 30, 2024. Investment income increased by 2003.35% from USD2,119 for the year ended September 30, 2023 to approximately USD44,570 for the year ended September 30, 2024. Income taxes Income tax (expenses) /benefits decreased by USD0.65 million, from USD0.06 million of tax benefit for the year ended September 30, 2023 to USD0.59 million of tax expenses for the year ended September 30, 2024. This decrease was primarily attributable to net profit for the year ended September 30, 2024, and the valuation allowance for deferred tax assets. Net (loss) As a result of the foregoing, net loss decreased by USD0.21 million, or 32.69%, from USD0.65 million for the year ended September 30, 2023 to USD0.44 million for the year ended September 30, 2024. About Linkage Global Inc Linkage Global Inc is a holding company incorporated in the Cayman Islands with no operations of its own. Linkage Cayman conducts its operations through its operating subsidiaries in Japan, Hong Kong, and mainland China. As a cross-border e-commerce integrated services provider headquartered in Japan, through its operating subsidiaries, the Company has developed a comprehensive service system comprised of two lines of business complementary to each other, including (i) cross-border sales and (ii) integrated e-commerce services. For more information, please visit www.linkagecc.com. Safe Harbor Statement Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “approximates,” “assesses,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s annual reports on Form 20-F and other filings with the U.S. Securities and Exchange Commission. For more information, please contact: Investor RelationsWFS Investor Relations Inc.Connie Kang, PartnerEmail: ckang@wealthfsllc.com Linkage Global IncCONSOLIDATED BALANCE SHEETSAS OF SEPTEMBER 30, 2024 AND 2023(In U.S. dollars, except for share and per share data, or otherwise noted)   As of September 30,   2024   2023   USD ASSETS      Current assets      Cash and cash equivalents  2,000,732    1,107,480 Accounts receivable, net  6,302,696    2,011,047 Inventories, net  66,331    679,732 Deferred offering costs  —    1,076,253 Deposits paid to media platforms  482,650    3,717,773 Prepaid expenses and other current assets, net  2,689,581    1,053,687 Short-term loan to third party  410,000    — Total current assets  11,951,990    9,645,972          Non-current assets        Property and equipment, net  85,807    158,642 Deferred tax assets  —    149,129 Right-of-use assets, net  653,730    624,945 Other non-current assets  —    54,825 Total non-current assets  739,537    987,541 TOTAL ASSETS  12,691,527    10,633,513          LIABILITIES AND SHAREHOLDERS’ EQUITY        Current liabilities        Accounts payable  624,723    1,142,667 Accrued expenses and other current liabilities  236,813    309,986 Short-term debts  32,810    — Current portion of long-term debts  428,702    535,226 Contract liabilities  533,625    530,488 Amounts due to related parties  314,544    1,413,604 Lease liabilities - current  231,978    187,214 Convertible bonds  964,865    — Income tax payable  1,017,619    581,235 Total current liabilities  4,385,679    4,700,420          Non-current liabilities        Long-term debts  839,560    1,996,326 Lease liabilities - noncurrent  441,504    439,854 Total non-current liabilities  1,281,064    2,436,180 Total liabilities  5,666,743    7,136,600          Commitments and contingencies (Note 22)                 Shareholders’ equity        Ordinary shares (par value of US$0.00025 per share; 200,000,000 ordinary shares authorized, 21,500,000 and 20,000,000 ordinary shares issued and outstanding as of September 30, 2024 and 2023, respectively) *  5,375    5,000 Additional paid in capital  5,591,596    1,549,913 Statutory reserve  11,348    11,348 Retained earnings  1,613,217    2,052,553 Accumulated other comprehensive loss  (196,752)   (121,901)Total shareholders’ equity  7,024,784    3,496,913 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  12,691,527    10,633,513   Linkage Global IncCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)FOR THE YEARS ENDED SEPTEMBER 30, 2024, 2023 AND 2022(In U.S. dollars, except for share and per share data, or otherwise noted)   For the years endedSeptember 30,   2024  2023  2022   USD Revenues  10,289,681   12,733,339   22,028,303 Cost of revenues  (6,123,025)  (10,872,484)  (18,323,802)Gross profit  4,166,656   1,860,855   3,704,501              Operating expenses            General and administrative expenses  (3,506,075)   (1,373,695)  (1,047,552)Selling and marketing expenses  (434,856)   (595,804)  (812,062)Research and development expenses  (302,280)   (588,108)  (628,350)Gain from disposal of property and equipment  —   125,804   193,191 Total operating expenses  (4,243,211)  (2,431,803)  (2,294,773)Operating (loss)/profit  (76,555)   (570,948)  1,409,728              Other income/(expenses)            Investment income  44,570   2,119   8,402 Impairment loss from equity investment  —   (60,046)  — Interest income/(expenses), net  160,685   (102,360)  (79,455)Other non-operating income  21,644   14,557   113,658 Total other income/(expenses), net  226,899   (145,730)  42,605              Income/(loss) before income taxes  150,344   (716,678)  1,452,333 Income tax (provision)/ benefit  (589,680)  63,950   (385,958)Net (loss)/income  (439,336)  (652,728)  1,066,375              Net (loss)/income  (439,336)  (652,728)  1,066,375 Other comprehensive income            Foreign currency translation adjustment  (74,851)  (15,524)  (57,722)Total comprehensive (loss) /income attributable to the Company’s ordinary shareholders  (514,187)  (668,252)  1,008,653              Earnings per ordinary share attributable to ordinary shareholders            Basic and Diluted*  (0.02)  (0.03)  0.05 Weighted average number of ordinary shares outstanding            Basic and Diluted*  21,175,342   20,000,000   20,000,000  Linkage Global IncCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED SEPTEMBER 30, 2024, 2023 AND 2022(In U.S. dollars, except for share and per share data, or otherwise noted)   For the years endedSeptember 30,   2024  2023  2022   USD CASH FLOWS FROM OPERATING ACTIVITIES:         Net (loss)/income  (439,336)  (652,728)  1,066,375              Adjustments to reconcile net (loss)/income to net cash (used in) /provided by operating activities:            Effect of exchange rate changes  (226,846)  —   — Allowance for credit loss  958,584   116,428   — Depreciation and amortization  86,911   83,226   81,625 Amortization of lease right-of-use assets  224,451   180,464   — Share of profit from long-term investment  —   (2,119)  (8,402)Disposal gain from property and equipment  —   (125,804)  (193,191)Inventory write-downs  11,858   19,981   21,282 Deferred tax expenses/(benefits)  148,239   (160,402)  80,519 Long-term investment impairment  —   60,046   — Changes in operating assets and liabilities:            Accounts receivable, net  (5,023,387)  36,738   (910,221)Other non-current assets  —   —   (61,039)Prepaid expenses and other current asset, net  1,870,567   (3,871,930)  (520,377)Inventories, net  601,543   (359,859)  (78,455)Accounts payable  (517,944)  624,347   (11,703)Contract liabilities  3,137   84,680   371,639 Accrued expenses and other current liabilities  (37,987)  (25,816)  152,448 Amounts due from related parties  —   34,552   (40,098)Amounts due to related parties  446,469   139,772   946,379 Tax payable  436,384   113,597   272,148 Operating lease liabilities  (178,037)  (178,341)  — Net cash (used in)/provided by operating activities  (1,635,394)  (3,883,168)  1,168,928              Cash flow from investing activities            Purchase of property and equipment  —   (12,137)  (481,391)Proceeds from disposal of property and equipment  —   1,745,094   1,265,217 Proceed from withdrawal of long-term investment  44,570   93,574   — Provide short-term loan to third party  (410,000)  —   — Purchase of long-term investments  —   —   (40,098)Net cash (used in)/provided by investing activities  (365,430)  1,826,531   743,728              Cash flow from financing activities            Proceeds from issuance of Class A ordinary shares upon the completion of IPO  5,356,417   —   — Proceeds from issuance of convertible bonds  999,957   —   — Payment of service fees for convertible bonds  (351,000)  —   — Proceeds from short-term debts  133,044   —   160,391 Proceeds from long-term debts  —   1,238,592   1,167,861 Repayments of short-term debts  (101,778)  (107,963)  (280,692)Repayments of long-term debts  (1,325,703)  (1,918,181)  (1,001,815)Proceed of interest-free loan from related parties  3,031,467   —   — Repayments of loans to a related party  (4,593,092)  —   — Capital contribution from shareholder  —   1,430,612   — Payments for deferred offering costs  (273,287)  (1,041,447)  — Net cash provided by/(used in) financing activities  2,876,025   (398,387)  45,745 Effect of exchange rate changes  18,051   (123,887)  (51,067)Net change in cash and cash equivalents  893,252   (2,578,911)  1,907,334 Cash and cash equivalents, beginning of the year  1,107,480   3,686,391   1,779,057 Cash and cash equivalents, end of the year  2,000,732   1,107,480   3,686,391              Supplemental disclosures of cash flow information:            Income tax paid  2,050   150,124   33,291 Interest expense paid  48,607   65,901   57,776              Supplemental disclosures of non-cash activities:            Obtaining right-of-use assets in exchange for operating lease liabilities  209,652   805,409   N/A 

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