Q2 2021 Remark Holdings Inc Earnings Call
Please standby were about to begin.
Welcome to remark Holdings', Inc. Second quarter 2021 financial results Conference call. My name is Cody and I'll be the operator today and will handle the Q&A.
As a reminder, this conference is being recorded I would now like to turn the call over to Brian Harvey Director of capital markets and Investor Relations. Please go ahead.
Thank you Cody and good afternoon, everybody and welcome to remark Holdings' fiscal second quarter 2021 financial results Conference call I'm, Brian Harvey Senior Vice President of capital markets and Investor Relations for remarks on the call with me. This afternoon is causing Tau remarks, chairman and Chief Executive Officer.
And just a moment Mr. Zhao will provide an update on our business and I will recap our second quarter financial results. Following these remarks, we will open the call to questions, but before I turn the call over to Mr. Tao I would like to take this opportunity to remind you that some of the statements made today may be forward looking statements. These statements involve risks.
Uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by these forward looking statements.
Any forward looking statements reflect remark holdings' current views and remark holdings expressly disclaims any obligation to update or revise any forward looking statements. After the date hereof. This disclaimer is only a summary of remark holdings' statutory forward looking statements disclaimer, which is included in full.
And in its filings with the SEC I will now turn the call over to remarks, Chairman and Chief Executive Officer. Mr. Tao. So he can provide additional color on remarks business and recent developments Shang.
Good afternoon, and thank you for joining the remark Holdings' second quarter 'twenty, One financial results conference call before I turn the call back to Brian to review the financials I want to provide an update on the progress we've made in certain business segments since our last call and provide information on where we see additional opportunities.
<unk>.
I'd also like to first take this moment to acknowledge our research and development team for their continued success as our latest software achieved a top five ranking in the recent computer vision testing known as the face recognition vendor tests or S. R. V. T conducted by the U S National Institute.
The standards in technology, otherwise known as NIST NIST.
Physically hunt.
198 systems were tested in the F. R V T code the ability to verify that the person is wearing of face masks and we finished in the top five.
Well known public companies several billion dollars private AI unicorns, and well known AI research labs.
Our consistent and continued leadership in AI innovation and practical execution has given us a strong advantage to beating our much larger and capitalized competitors in this space.
2021 is turning out to be a transformational year for us we have already nearly surpassed our 2020 revenue numbers and only expect our third quarter and fourth quarter to be stronger setting us up in a perfect position to continue to win new businesses continue to capitalize on infill opportunities in <unk>.
And into new verticals.
Our current pipeline and future potential wins remained very strong and we will continue to commercialize our industry, leading AI technology around the world.
Are some of the highlights in Asia. After <unk>. After our first after Q1 successful implementation of Smart bank retail stores and good results from our DNP solutions.
The second quarter, we won the second phase with bank of China in the DMT business, where we run their offline traffic and convert them, both offline and online across the entire Sichuan province.
At the same time through our banking industry partners. We have won more than 100 Smart bank retail store deals with bank of China as well.
School businesses.
In the second quarter, we developed several school product distributors started to help us get into schools in Switzerland, and some chain province, where we have deployed our smart school solutions and 35 out of the 200 schools combining with other provinces schools, we've now deployed.
And more than 250 schools in 2021.
China mobile.
Although China Mobile's retail store innovation and smart community projects have been experiencing a slower than expected rollout due to COVID-19 situations. We still managed to complete phase one and continued to execute phase two and phase III smart retail store contracts.
While the smart community project Phase one is still being executed for China mobile smart communities and is expected to be completed by Q3, we are confident in our ability to win the second phase of China Mobile Smart community project.
We will provide our AI solution to enforce COVID-19 protection rules for communities by enforcing health codes.
Real time temperature checks, ensuring mask wearing allowing access only to residence or authorized persons controlling vehicle axis and helping to protect the elderly and children. All in addition to what we delivered in phase one.
And factory businesses.
After several successful POC projects in Q4 2020 in Q1 2021.
With many cement factory clients and for the second quarter. We have won the first five cement factories out of the 35 expected deployment for 2021 what we've provided a complete safety solution that covers.
AI worker management.
A key device management.
<unk> conveyor belt safety management and for protective gear checkup in.
And the wave of technological improvements for traditional factories, a proprietary AD technology is now being tested in many different heavy industries, including cement factories mines power plants ports railways and et cetera.
For Q3, our speed of deployment has increased quite significantly and our target for 'twenty, one and 'twenty two is to deploy across the 300 factories.
Winter Olympics in Beijing in 2022, we are in the process of deploying our smart <unk> solution and energy saving solution for one of the largest ski resorts outside of Beijing, where the Beijing Winter Olympics will be held where some of those those sports competitions.
We'll be expected to be completed for the snow season starts are at the point.
As mentioned on the previous earnings calls these solutions will range from helping to lower the labor costs monitoring employee and guest safety and in areas of power management, where they can help to significantly lower the cost for transferring water too smart to snow.
Our pipeline is very strong as I mentioned and here are some of them.
After a successful POC project with one of China's largest airlines we are in the process of securing an AI as a service project, where AI algorithms can be the foundation of many aviation applications.
We believe this is the first of its kind complete platform for the avian Asian industry presents a tremendous future opportunity for remark AI around the world.
Potential AI algorithms for aviation applications include facial recognition PPE recognition metal surface defect detection lidar signal based object recognition and personal R. E D.
This project is expected to be completed by the end of 2021.
We've also entered the bidding process for a large easy.
Bus charging station, where we will provide real time fire and smoke detection monitoring for over 500 EV buses every night.
It is critical to be able to detect fire and smoke fast and accurately enough and trigger fired distinguishing equipment before the charge station gets on fire.
There are over 2000, EV bus charging stations throughout China, and given all the issues with battery safety for all EV vehicles as the recent headlines have spotlighted. We believe this is not just the China opportunity, but a global.
Moving to the U S.
During the second quarter, we continued to build our data intelligence business using our AI data intelligence platform.
Based on initial success, we are looking forward to the start of the fall sports season, and two additional growth opportunities with other online sports gaming and gaming businesses.
Our AI is used to find insights with their own proprietary datasets, particularly with respect to understanding our customers' needs and buying patterns.
This helps with analyzing first party protected data and benefits from the shift away from cookies and third party data sources.
These initiatives, which began in Q1 2021 led to a doubling of U S revenue in Q2, 'twenty, one as compared to the comparable quarter a year ago in 2020.
Our technology includes Geo framing targeted audiences, where we contract with physical and virtual visits qualified them as interested potential customer.
Historically companies used Facebook because they had the best identity graph. Therefore, you know your customer you can ask Facebook to find similar customers.
With all the new privacy rules against Facebook at March the it makes the identity graph much less useful.
Taking advantage of this opportunity we've created our own proprietary identity graph.
Our ability to exactly geo target based on longitude and latitude and Geo framing our competitors have allowed us to really understand who is going to the website and allowed us to refine our targeting.
For example, if youre an M. B a lakers fan you are likely to be interested in participating in anything Lakers related or.
Our geo targeting allows us to identify anyone that's been in the Staples center or any other restaurants or retail stores around it.
We can figure out exactly what email that Lakers dotcom has sent out to there.
To that centered out outbound screak their fan clubs and Facebook groups.
Now that we know who the profiled this person is we can match it with our own datasets, usually you have the name and email, but you know nothing about the customer or vice versa. You know the profile of your customer, but not how to contact them.
We become that bridge for our customers and once we were able to identify we can go through their social behavior and see who their friends are or people they associate with similar behavior.
We then cut school then we create a customized off before them and through our AI data intelligence, we're able to do automated rapid AB testing our platform is running 24 hours seven days 365 days.
A year, while I'm, not taking breaks and dealing with human constraints.
And the daily Fantasy sports industry, we were able to track the largest competitors as well as the fan engagement on Facebook groups, knowing that customer is actively receiving chemo from a team site and participating and fan chatting with their friends were able to confirm the interest in following the seasonal games as well as their favorite athletes who can.
Positively marketed two regarding who's who and how to participate in their clients' daily fantasy contests.
With the upcoming NFL and college football season expected to be the busiest period for players participating and daily fantasy sports, we expect to fully leverage the 32 million Historic Daily Fantasy sports players, we have identified in our graph and identity graph <unk>.
Including the active 1.8 million active participants, who currently bet or the competitor daily fantasy sites to introduce and attracted to our clients' offerings.
This is our first venture in the U S applying our AI data analytics platform.
As you remember we've had success in doing this before in other parts of the world.
We are excited by our initial results and look forward to continuing to work with Super draft and their peers.
Brands that use our AI are using it for a richer and more effective connection with their customers.
In addition, we are also enthused by the additional opportunities in other verticals that are looking for similar situations in solving the issue of how do I acquired more customers with a higher conversion rate, while lowering our overall acquisition cost.
For example in the mortgage loan industry, we're able to geo frame customers, who participate in real estate open analysis, which suggests that they would likely be interested in pursuing a mortgage.
For their eventual purpose.
The mortgage loan origination processes is waiting to be disrupted Ed is slow and costly we will soon be entering this industry with a couple of named partners along our site.
Other updates in our U S businesses, our biosafety business saw a slowdown in the second quarter commensurate with the vaccine push in the overall relaxing regulations with some customers delaying orders, while they await the final regulations.
However, with variants such as the Delta virus emerging we've begun to see business development activity pick up again.
It is our continued belief that creating a safe environment for both customers employees will be crucial in a differentiator in the marketplace and we believe our solutions ideally suited to meet these needs.
We are working with share care as their partner to help their share care safe certification process, leveraging our thermal safety products.
We are also currently testing our AI safety and security solutions at the West Palm Beach location of one of the largest private and publicly funded high speed railway in the U S. Currently connecting Miami to West Palm Beach, and in the future with Orlando to come.
We are looking to hit our goal of a full rollout when the station becomes fully operational in Q1 'twenty 'twenty two.
In Q3, we expect full deployment of our AI security surveillance platform with the shrine group the largest vertically integrated cannabis company in California.
We'll try and group, becoming our anchor partner in this fast growing industry.
We are enthused by the number of different solutions, we can provide for the industry in general which extends beyond helping manage the retail dispensary operations.
This includes opportunities to use the remark AI platform for cultivation and manufacturing as well.
We continue to also be working with a large hospitality customer as they begin the planning for their new hotel ventures in the U S with the intention to leverage layers latest AI technologies to save costs and improve operations and finally as mentioned before with our ESG efforts in China already.
Underway, we look forward to the massive infrastructure build in the U S. Allocating combined 15 billion to EV infrastructure, including $7.5 billion to electric buses alone our technology is well tested and needed in the U S. So we like our chances and entering this market.
Subsequent to June 32021 share care completed its merger with Falcon acquisition, providing us with an initial liquidity of $2.3 million plus approximately $9.5 million shares of share care.
We anticipate that monetizing our position will fund our balance sheet, while simultaneously supporting working capital needs to meet our growth goals and new initiatives.
Spike the recent turmoil respect related deals we remain very bullish on Shirkers leadership business plan and execution.
Unlike most companies in the digital healthcare space sure care is a category of one digital health business that is growing revenues at 25% plus while generating positive EBITDA.
There are not many companies in this hyper growth digital health space that can say that and in addition, the recent anthem Blue Cross Blue Shield strategic partnership brings 44 million prospective members to the cross marketed sure care platform.
Looking forward into Q3, and Q4 remark holdings will now be taking our first steps into building and bringing the meta versus the life inspired by division of the global leading companies like epic games, who created a fortnight face.
Facebook roadblocks in Nvidia.
Our pivot to leverage our bikini dotcom brand equity and IP assets to create a beach lifestyle better versus where we can integrate the digital and physical worlds together.
With the Bikini dot com that metal versus we're creating a full fledged economy and offering an unprecedented quote this unprecedented interoperable interoperability.
Users have the ability to take their advertising goods for one place in the med averse to another to another no matter who runs it with Bikini Dot com, we will capitalize on a named being recognized around the world as it means the same in every language. In addition, we are now leveraging remark entertainment platform to create proprietary.
Content from leading Influencers entertainers and artist building, a non fungible token otherwise known as the N F T business in the U S and Asia with a targeted Q4 launch anchored by a very well known global celebrity with substantial valuable intellectual property and assets.
For those unfamiliar with one N S. T is a non fungible token is a unit of data stored on a digital ledger called a blockchain that certifies a digital asset to be unique and therefore are not interchangeable.
And if these can be used to represent items such as photos videos audio and other types of digital files the market for NFC exploded earlier this year with $2.5 billion in platform sales in the first six months of 2021 up from just $13.7 million in the first half of 2012.
And the investment we made to capitalize on this that business is poised to capture that growth.
Our core strengths and artificial intelligence give us the market intelligence to make early investments to develop and support the N F T and meta versus vision and we believe we are well positioned to prosper in this fast growing industry.
The recent pandemic has changed both lifestyle and work habits advancing technology trip technology trends that would take decades to adopt instead of taking place in years.
Human beings continued to crave, social interaction, while keeping a form of unique identity.
Virtual World has mirrored the physical world with owners.
Turning to own unique branded status symbols to show off the same way customers of Chanel and their mez, probably where their brands to reflect social status.
In summary.
I'll remark holdings continues to grow and transform our business that it's either or.
Either reoccurring a repetitive in nature.
Our AI based platform with proprietary services attached to it.
Business and earnings model that leads to increased margins and significant cross channel selling opportunities I'd now like to turn the call back to Brian for a review of the second quarter 'twenty one financial results.
Thank you, saying the second quarter was highlighted by a six 5% year over year increase in revenue, which included a near doubling of revenue from the United States. Our U S business saw the recognition of over $2 million in revenue from a data intelligence product project, leading to $2.6 million in total U S revenue.
Compared to $1 three in the comparable quarter of 2020.
Revenue from China was up 40% to $1.4 million compared with $1 billion in last year's second quarter. This growth was achieved despite periodic regional lockdowns associated with COVID-19, and long celebration of the 100th anniversary of the founding of the CCP.
Our gross profit improved to $1.8 million from $1.1 million commensurate with the increased revenue.
Overall gross profit margin was 43, 9% in the second quarter.
We incurred an operating loss of $2.5 million in the second quarter of 2021 compared to an operating loss of $2.8 million in the second quarter of 2020.
A increased by approximately 600000, but it was offset by 300000 of other operating expense decreases and the improved gross profit.
The company reported a net loss of $1.6 million or <unk> <unk> per diluted share in the second quarter of 2021, which compared favorably to a loss of $9.8 million or 11 cents per diluted share in the second quarter of 2020.
A decrease in the company's stock price between December 31, 2020, and June 32021 led to a $1.3 billion noncash gain in the change in fair value of our warrant liability, which compared favorably to a $6.3 million noncash charge, but the same category last year.
At June 32021, our cash balance totaled <unk> 1 million compared to a cash balance of <unk> 9 million at December 31, 2020.
Proceeds of $4.8 million from a debt issuance and 800000 from stock stock option exercises were offset by $6.3 million of cash used in operations and as Jim noted subsequent to years quarters and sure. If they're completed its merger with Falcon acquisition, which provided us with initial liquidity of $2 three.
And approximately $9.5 million shares of the new share care.
With that I'll turn the call back to the operator, and we will now open the conference call to questions. We encourage callers with questions to queue up with the operator as soon as possible. So that there will be minimal lag time between each caller.
Operator could you please instruct the callers how to queue up with their questions.
Absolutely. Thank you.
Like to ask a question please signal by pressing star one on your telephone keypad.
If you're using a speaker phone. Please make sure that your mute function is turned off to lay your signal to reach our equipment, What's gonna star one if you'd like to ask a question or a pause for just a moment to allow everyone an opportunity to signal.
And we'll take our first question from Darren <unk> from Roth Capital Partners. Please go ahead.
Hey, this is Dylan on for Darren Thanks for taking my questions first.
With China.
How confident are you that you can redeem some of that momentum that you saw.
Sort of in the second half of last year into Q1 this year.
To get that back to sequential growth just just given the opportunities that you have there in the pipeline.
What are you seeing so far in <unk>, that's sort of pointing towards positive momentum.
Just given some of the yes, I guess COVID-19 related headwinds that could.
<unk>.
Where we're doing very well this quarter.
Q4 will be even stronger for us I think the first two quarters. You know generally Q1 is slower anyway, because of the Chinese new year difficulties, but certainly with Covid and for Q2. This year, we had the the 100th anniversary of the <unk>.
C P M. So certainly.
There was a bit of a delay and how we were able to deploy things, but also keep in mind is that when we recognize revenue when we collect the cash.
So what we report on the revenue doesn't reflect.
What our growth pipeline is.
Yeah.
Got it and then on a similar now.
How much of the <unk>.
Revenue that you're expecting in the second half.
Continued deployments versus some of the new stuff like that.
With the cement mixing on me.
On the industrial side, and also sort of the electric vehicles and buses that you were talking about.
Yeah, I think no it's hard to tell I think it's a I wanted to kind of go down the line or down the middle with a 50.50.
It's a I think it would be.
Impossible to always get the exact timing down, but a lot of these projects where you.
You know, we've either won or are close to winning a.
And we're working out the details on how we deploy keep in mind as well is that again as I've always said. This is the first for both sides right not just for us but for the.
For the customer as well so there's always a lot of changes that are done.
Until we get to the finished product because a lot of the situations are haven't been forecasted before so but I would say down the line in terms of 50% new business or are you know in cell opportunities and then 50% would be why it sounds like 50% would be new business at 50%.
<unk> is old business, but in addition to new phases that we've been able to to win.
But certainly like the cement and factory business that I just mentioned.
The aviation those are all new business and that will continue to evolve, but we're very excited because we're in at the on the ground floor, we were able to breakthrough and once you do become the underlying technology or AI technology platform for that company, it's very easy to add on.
Afterwards, and this was something that we were able to beat a multi multibillion dollar AI business two to win simply because they werent able to.
Produce.
You know what they said they were able to do and.
And we proved it over the last let's say three to five months that we were able to accomplish it.
Got it thank you.
And then on.
The data intelligence side in the U S with both the fantasy sports and gaming and then mortgage.
I know in the past.
You talked about sort of leveraging partnerships to help get better sales is that still a thing that youre looking at.
Yeah, absolutely you know for you know what we we are never a an expert in any particular industry. We we.
<unk>, a very strong technology platform that can be adapted to different industries. So clearly to will move faster.
You know we would want to that you know that's our that's our desired way to enter it into something is so certainly on the the mortgage industry as I mentioned, we would you know we're in the process of.
Working with several groups there.
Moving into the live streaming business, we'd be doing the same and.
And we were basically replicate what we've done.
This fantasy sports.
Online sports business.
Where you know no one in the industry has done it before we were the first to bring it to the market now that we've been able to now both sides have been able to learn from the mistakes and now we have a much better product and you know just in time for the start of the football season. So we're really excited about.
Things to come not just with our current customers, but with.
The other groups.
That are in that space as well that are in the <unk> space or in the online sports gaming.
Got it and last one for me.
The 2.3 million liquidity from shared here can you talk a little bit about where you're sort of planning on giving up some of that some of that cash in order to invest in the business.
In terms of when you say, giving up the cash how are how are we allocating it.
I mean, I guess in terms of like how investment in.
Yes, developing net new technology versus using it to basically fill up the backlog of deployments.
Oh I mean, it's you know where our technology is always we're always developing new technology that will not change no. We need to obviously continue to do that too.
Maintain our lead.
But a big focus of certainly our resources that are our pipeline right now is so strong.
Lot of the engineers and development team that we that we build is really more focused on how helping us meet that demand.
And just one of these clients just say for example, we mentioned the cement factory, which you know as.
As one of the world's largest cement groups now they've got 1500 cement factories, and we certainly need people to help continue to help them develop these solutions to that so.
So it's certainly we're always building new technology as we as we need to do that and we need to continue to leave but the bulk of the new capital or any capital that comes out of the the share care monetization will be to meet our current monetization plans.
Thank you appreciate it.
On the call over.
Okay. Thanks Dillon.
Thank you we'll take our next question from me, it's Grossman with Maestro group.
Gentlemen, thank you for your reports a couple of quick questions number one.
That you received 9.5 million shares of shared care and I'm guessing that the market is now your stock is now sort of attached and tethered permanently to the performance of share care do you have any specific plans to monetize new share of care shares.
That's question one.
Hi, Thanks for your question.
Yeah, absolutely, obviously, where we're subject to our insider lockups like every other investor.
Investor are indeed in the private rounds of share care are subject to but you know as our lock up ends.
And we're certainly in discussions with.
Several large financial groups.
That we were that we can achieve some form of financing before that happens and that will allow us with the early monetization.
To support our activities as I just mentioned on the previous question as well as to buy back shares as well.
Yeah. Okay. Thank you for that answer and my next question was what again back to shirk here what percentage of the share of care distribution of shares does nine 5 million shares represent is it 3% 4% 2%.
Yes.
But rough approximately 3%.
Thank you and I have a final question again with regard to the.
Proceeds are you mentioned that you had $2.3 million from the sale of some shares or was that in addition to the shares you got did you have to sell a need to get to $2.3 million shares.
Yes that upon the close of the <unk> of the Destocking that was our pro rata share of the <unk> of the share care stocks that we were that we had to sell alongside with all the other investors.
And how long is the lock up periods for the remainder of revenue shares.
It is.
It is it's it's a year.
But there's a bunch of like you know if there's a bunch of different points like say for example, if the stock rises above 12. After a certain amount of trading days, then were able to sell a certain amount.
But there there's the actual formula.
<unk> formula to that.
But in general just plan for planned for a year if the stock stays at this price, but if the stock continues to trade a get back to an excess of $12 than our options become options to monetize become in terms of just selling directly into the market.
<unk> become much more.
Okay, and do you have enough cash right now in hand.
To fill.
Q3 orders and anticipated growth for Q4, and then going back into Q1 until the time that you can monetize such shares.
Q3, we are good we are looking to as I just mentioned before we are in talks with several financial groups to help us have an early monetization of our share care stake.
And and now that will certainly provide us with ample liquidity for Q4 and beyond.
Okay I have one final final question.
Notice, saying that.
Yeah, I know I keep saying one final question if I do a one final question.
I noticed that in the last six months or so that you become tended to share a cure people have sort of walked away from the core business.
We mark is trying to accomplish and in reality you have some very interesting businesses, specifically in the AI and it's I see the board's not getting out.
To the street as to what the real potential is a remark on its own on tethered to share care and I'm wondering what can be done with regard to investor relation to let the street know and let shareholders know that there really is a business here besides collecting cash from the sale of sugar cure.
Yeah, I think that's a great point and certainly been very frustrating from from our side are you know when you see.
Private companies AI companies that are doing comparable in terms of revenue with us with.
With not as strong technology and Luke.
Losing you know probably $5 for every dollar of revenue that they generally it's very frustrating to see them being valued at billions of dollars of valuation right.
And when we've seen that pretty much every month there is a a large announcements so.
You know what we plan on doing really is I think number one it comes down to our execution of our business plan, which is what we're doing we're continuing to win contracts, we're continuing to deploy it.
And certainly as we finalize on our deal with our financial partners are a portion of that will be used to buyback our stock and will continue to do that because to your point. We certainly believe our core business is really the gen here and it's trading.
At a fraction of what private companies are trading at so you know, we'll look to aggressively buy back stock when we're able to and and then coupled that with our continued performance no announcements of partnerships our numbers to prove that we're continuing to execute well.
Do think that the valuation will begin to get to where.
A lot of our private competitors are trading at.
Thank you very much.
Thank you.
Thank you, we'll hear next from Steve Allen private Investor.
Hi Shang.
Your last question pretty much was what I was going to ask you we see on <unk>.
Weekly basis, it seems like private companies, reaching multibillion dollar valuations and I was just going to get your thoughts on that based on it seems like the leadership position in the contract opportunities that you have and I think you just went over that but if you had anything more to say about it that would be great.
Yeah.
Yeah, I mean, you know like like I said it is it is frustrating because we certainly are very confident.
Confident in what we've built here.
Private companies have raised.
You know billions of dollars.
To create a business that's still losing hundreds of millions of dollars and we essentially bootstrap a R. R to build our AI platform and now where we are winning the business not just the business, but from a technical standpoint, we're winning and then from the business that we're winning so we certainly see and are very confident about that.
Here and you know where we're not.
Where we're where we're going to keep on moving and getting to our goals. So you know I think it's a it's a great.
Congratulate those guys being able to raise those money, but we couldnt, we couldnt afford losing hundreds of thousands of dollars a year, which is what they're doing right. Now so we like where we are or our technology is very strong its not you cant really replicate what we're doing is we're offering a platform versus a point solution.
And we'll just continue to execute.
Okay. Thank you.
Thank you, Dan and Ken once again as a reminder.
Thank you and once again as a reminder, that is star one if you'd like to ask a question as we anticipate taking a few more questions. Once again that is star one.
We'll take our next question from Steve Wagner from integrity wealth Advisors. Please go ahead.
Hey, Shang Hey, Brian how are you guys.
Hi, Steve.
Thanks for the good work, obviously, there's a lot to unpack in his calls Shing I mean, it's all.
All very positive founding and the.
Obviously, we're excited about the future.
You know a lot of my questions have been asked and answered, particularly regarding the one about the private companies and their valuations and then some of the other things that were asked by a by a rough.
But you know just as a follow up I mean, just again I don't know who's listening and how many shareholders are on this call, but I did some quick math you know the sheer care valuation right now $70 million and change your whole market cap is $111 million. So I mean, it just represents I think as you said a fraction.
Of what your AI is worth so you know I I guess kind of piggybacking on one of the other questions I mean, what what more can you guys specifically do.
In your view to get this word out I mean, what what do you. For example, what do you think is preventing institutions from being involved in this thing.
Again, if you know if these smart boys and girls are buying up shares in private organizations, making private investments.
And yet you're worth a fraction, but what do you think is the the roadblock or the headwind.
Of them, taking advantage of clearly a.
Superior technology.
The company, that's worth a fraction of what it should be.
A big part is also the you know then the a lot of the funds that are investing in these private companies are having.
I have a much longer outlook investment outlook, and theyre, not looking and judgment of the company from quarter to quarter. There are judging it for them like what are the advancements they do year over year.
Generally those are made with a five year outlook. So you know I think a big part of that this is you know the the you know we have to kind of look at you know you can look at the cloud business took about 10 years.
Two when it really began to cheap.
Kind of the tipping point of becoming very profitable and obviously the major driver of success for you know the biggest companies in the world now right.
For the AI, we started early.
This is probably our I think this is our seventh year.
Since we first started in 2014 and.
We're we're we're close so you know we've been able to build a very strong technical Foundation and then now we will.
You know reap the benefits.
Now we are commercializing, but but I think a big part of that really is the the so far of the type of investors that invest in private companies versus versus public companies.
So you know I mean, what what can we do I think it really comes down to execution.
You know, there's certainly a bit of a a bitter taste right now considering what's happening.
With beaten out happening between U S and China relations.
So I think we've been kind of caught up in that as a I think a little bit of different rules and and you know the.
The announcements.
That have been made are you know they they would attribute that to that how it might affect US you know our goal is to help businesses run does that are you know aren't worried a b to b business or beta G. Burton is working trying to make things more efficient, we're not dealing with privacy issues with customer data and all that that's that's usually on the other side.
We feel we're fairly insulated from this the only area that you know these trade wars that affect us as just say you know if we're buying servers.
And Theres a trip shortly but that that's a that's an issue that every industry from the automobiles too.
We've seen that right and then.
Not a secret that Theres, a major chip shortage, but that's that's where that's where it's affecting us, but as far as where China.
It is growing it's a tremendous opportunity not in the future. It's right now and the market is huge.
And we've established ourselves to be one of the competitors are and we've been successful in winning projects. So we'll continue to do that we'll continue to educate our investor base, who exactly are customers are you know some a number of potential investors call us and ask us who China mobile as you know and we end up having to explain that.
You know there are three times the size of AT&T and Verizon combined so I think a lot of this is about educating it's not just about investing by looking at the headlines, but its really digging deep in understanding what's really happening with our company and we're pretty excited about it.
Excellent. So that's what my last question one of the exciting things that I've seen in the past that we've seen on Twitter.
This what do they call merchandising merchandise control.
How are we doing there in that regard or we're getting more interest I know there was one one.
One potential customer you guys were working on at some point, but I mean are you guys attracting.
Other interest for that what seems to me to be.
Really an amazing technology and a great way for any company that has stuff on shelves.
Lots of vials.
To save money.
Yeah, No I mean, our we continue our talks but you know again, we're not magicians, it's not a it's not just a quick sales process right. So it's a it's a process where they set up a number of different P. O sees a different areas of where they have stores.
And were and where we have to be able to participate that it also includes as I mentioned I think probably in the first question is like where our resources.
Now with that with those potential customers will have to set up an office you know where they're based.
The team to help manage that right now where you know we haven't been able to do that but yet we're pretty far down the process. So you know that I don't expect that to happen or something much more substantial until fourth quarter, but we're certainly moving towards that and you're right. Our technology why people call us because.
Our technology works. So it's not we're not using them as a guinea pig not done in the lab environment, but are all the real life experiences.
And that we've had to say over the last five or six years dealing with the customers in China, where the stores are much bigger you're dealing with much more skus, you're dealing much more individual visitors that come our way.
We can apply that to the U S. A N and think we'll think we'll do it better than our customers just because of our experience.
Or do better than our competitors because of our experience.
Alright, well. Thank you very much Shing I appreciate you taking the time. Thank you Brian will talk to you guys later.
Thank you chip.
Thank you we'll take our final question from Lawrence Rosen from resin capital. Please go ahead.
Gentlemen, congratulations on the improved revenue and earnings.
And a lot of my was also.
Covered but I guess I think the savvy investors that I'm hearing on this phone are seeing we're trying to understand what I'm trying to understand here is that the entire value of the company excluding share fair at the moment is $40 million.
I think that's what we're all kind of concluding here based on everything that you have so I'm just doing quick math also with the current.
Valuation.
It looks like the targets on shortening average around 13, so quick math, where are way way off.
Off of the potential of the business.
So for me that's very exciting.
How do you from a large holder as we speak.
Did I missed the early part of the call and I'm not sure. If you touched on any of the what you're doing in the gambling arena and how your technology can play a role there.
Yeah absolutely.
You know I I talked I talked about that basically you know a big part of our U S. Revenue. This quarter. You know we showed a very strong growth from Q1 to Q2 in terms of our expand our presence in daily fantasy sports with with the Super Draft business.
And everything's done intent and anticipation for our you know the soccer that I'm not talking about.
Football that will happen very soon in the next few weeks and we're getting that business all set up for that I think I think just in general.
You know, we all we read them right now so some of the headlines is just how much money is being spent.
You know to acquire customers.
Whether that's for people that are that are I'm trying to go into the online sports gaming business or going into the I gaming business. So where we're actually just I think will be a beneficiary of that because the space is probably as competitive and it's just a race on who can acquire the most paying customers at the.
Lowest rate.
In the just say in the second quarter, we were able to prove that our technology works the ability to acquire the right datasets to find to our AI algorithms has led to that result, so.
So we'll continue to do that.
I mean are the market leader in the space. This is more than $200 million a quarter right. So you can imagine just how competitive this industry is so we're excited to be part of the spend.
And having the ability to not just partner with our current customer, but all the participants in that industry. So it's definitely an exciting area for us.
Excellent.
The rest of my questions were answered throughout the call. So I.
Again, I wish you guys, well and keep up the good work.
Great. Thank you Larry.
Thank you and at this time I'd like to turn the conference back over to Mr. Henry for any additional or closing remarks.
Thank you Cody and thank you everyone for participating in remark holdings second quarter 2021 financial results Conference call. A replay will be available in approximately four hours through the same link issued in our August 16th press release have a good evening.
Thank you and that does conclude today's conference. We do thank you all for your participation you may now disconnect.
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