Q3 2021 Verb Technology Company Inc Earnings Call
Good afternoon, and welcome to the third quarter 2021 financial results Conference call for Bird Technology Company, Inc. At this time all participants are in a listen only mode. Please be advised the call is being recorded at the company's request.
On our call today are worried J, cutaia, CEO and Jeff Clayborne CFO before we begin I'd like to remind everyone that statements made during this conference call will include forward looking statements under the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, which involve risks and uncertainties.
That can cause actual results to differ materially.
Looking statements speak only as of the date they are made except as required by law as the underlying facts and circumstances may change verb technology company disclaims any obligations to update these forward looking statements as well as those contained in the company's current and subsequent filings with the SEC I would now like to turn the call over to Boyd.
Jay Cutaia CEO Laurie.
Okay.
Thank you and thanks to everyone for joining us today for our third quarter 2021 financial results and business update conference call.
Let me begin by welcoming so many new shareholders individuals institutions.
The offices that have recently become for our shareholders.
Of course, a special welcome to our long term shareholders. So many of whom have been with us for years and with whom we've shared this amazing journey from a scrappy pre revenue start up with a big Dream and vision for the future of sales technology to where we are today.
Well respected NASDAQ listed socially conscious company at the forefront of the technology driving the biggest shift in consumer buying behavior since Amazon began selling more than books.
And yeah, we're still scrappy.
You know.
We fondly referred to all of you as the logs.
And for all of you long I'm about to share some information with you that's going to make your day, but for those of you who've taken a short sighted approach to verb investing well [laughter].
I wanted to know now as your day is about to take a turn for the worse. So let me start with the headlines.
We've had a record breaking quarter and our digital revenue is up 30% this quarter over last in fact, it's been an amazing quarter for us across several metrics, which Jeff will cover later in the call and with the upcoming launch of marketplace Berg T V. Among other things, which I'll talk about today.
We believe 2022 and beyond will drive revenue to levels beyond that which even the most optimistic among new project, representing a value creation opportunity that would be hard to beat.
Anyone who has followed me or our company over the past several years knows that we have been predicting the technological convergence of entertainment and shopping that would begin manifests itself through a coming shift in consumer buying behavior towards interactive video based ecommerce you all.
Also now that we have been actively developing patenting and refining the technology that would drive that shift last year I said that the recognition by sales professionals that video went from a nice to have beecher for sales and marketing two essential table Stakes was evidenced.
The convergence of entertainment and shopping we predicted was no longer a mere possibility, but rather a certainty.
Particularly as the data coming out of China around livestream shopping began to emerge such as $425 million in product sales generated through a single live stream more than $75 billion of livestream sales generated in a single day.
And the fact that more than half a billion people purchase products through livestream shopping events in China last year, one third of them reportedly attended the livestream shopping event as a preferred form of entertainment.
Talk about right place right time, its just beginning here in the U S.
As even though it was just the past three months were seeing more and more consumer brands looking for live stream and interactive video based shopping solutions and major major social media platforms testing their own versions of shop chop about video.
No I think.
Many consumers may still look to them as the best destination for a funny cat videos.
Now imagine that rather than attending a single live stream or shopper. Both video event. There was a centralized online destination, where shoppers could explore scores of shopper bowl livestream events and overtime thousands across numerous.
Product and service categories being hosted by people from all over the World always on 24, seven where shoppers could communicate with the host asking questions about products in real time through an onscreen chat visible to all shoppers that even allow shoppers who have invited their friends and family the <unk>.
Joining them there to share the experience to communicate directly with each other in real time.
And then as and when that impulse buy propensity, we all have kicks in simply click on a non intrusive totally in video overlay and place items in your on screen shopping cart for purchase or without interrupting the video and then as easily as flipping through videos.
On any of the popular social media sites spend the next several hours visiting any number of other shopper bull events to meet up and chat with friends old and new and together watch shop and chat with the host discover new products and services and quite simply become part of an immersive entered.
Painting shopping experience and all the while Youre shopping cart bottlers, you seamlessly from event to event Shopper Bull video to shop in both video host to host product to product.
So.
What I've just described his certainly extraordinary and for all of our current shareholders. Congratulations it's real and now just weeks away from completion and final testing and you own it.
Introducing marketplace verbs, new social shopping platform look.
Look as the pioneer in original innovator of interactive shopper. Both video we have now re imagined the online E Commerce shopping experience our research, including extensive new industry data confirms that consumers have grown bored with looking at static images and.
Reading reviews, when making purchase decisions.
Undeniably driven in large part by the pandemic.
Consumers have now developed a preference for online shopping over traditional retail.
And what bid drawn to those outlets that provide a social interactive fun entertaining experience our marketplace business model is a simple but next level b to B play we provide a multi vendor platform with a single follow me style unified shopping cart and.
<unk> e-commerce capabilities with the tools for consumer brands Big box brick and mortar stores boutiques, influencers and celebrities to connect with their clients customers their fans followers and prospects, while providing a unique interactive social shopping experience that will keep them.
Coming back and engaged for hours, notably.
And a big differentiator. It also provides an online meeting place for friends and family to meet Chiang Shang and enjoy a fun immersive shopping experience and real time together from anywhere and everywhere in the world.
Marketplace will provide vendors with extensive business building analytics capabilities not available on and not shared by operators of other social media sites, who regard that information is valuable proprietary property or.
All vendors our marketplace will retain this valuable intelligence for their own unlimited use.
Marketplace allows vendors and opportunity to reach not only the shoppers that they invite to the site from their own client contact lists.
But also those shoppers who come to the site independently who will discover these vendors as they jump in and out of many other shopper bull events hosted simultaneously on marketplace twenty-four seven from around the world.
Our vendor friendly revenue model, which will consist of SaaS recurring revenue as well as a share of revenue generated through sales on the platform.
Marketplace will also incorporate a modified version of our verb live attribution technology, allowing vendors, who so choose to leverage extremely powerful built and affiliate marketing capabilities.
Non vendor visitors to the site can search for those vendors that have activated the attribution feature for their events and actually get paid when people they referred to that vendor purchase products and services during that vendor shopping event. We expect that this feature unique to marketplace will drive.
Many more shoppers, who will be referred from all over the world producing a cross pollination effect enhancing their revenue opportunities for all marketplace vendors, while also creating an attractive income generating opportunity for anybody with a contact list.
Marketplace is an entirely new platform built wholly independently and separate from our verb lives sales platform, representing what we believe is the state of the art of shopper both video technology.
Utilizes an ultra low latency private global CDN network that we control, allowing us to deliver the highest quality experience and platform performance capabilities. We also believe that marketplace will expose vendors to our entire suite of sales enablement products such as verb mail.
Among others driving do cross selling revenue opportunities as.
As we near completion of testing a new platform on time next month.
We've been actively working on vendor partnership sponsorship Influencer and celebrity and other relationships marketplace that we expect will grow exponentially over time. We've also been working on several pre launch initiatives that we referred to as Mega events to help kick start.
And boost awareness of marketplace. We expect that these events will be hosted by well known influencers and celebrities and sponsored by retailers and consumer brands do.
Due to the limitations caused by the ongoing supply chain issues. Many U S retailers are experiencing.
We have recently shifted the focus of these mega events to digital products such as in a Ts among other things.
Okay. So.
We talk about something else a natural extension of marketplace and built alongside it is something new that we call verb T. B verb PV launch in 2022 is where youll find shopper Bull entertainment, whereas marketplace is a social shopping experience verb T V.
<unk> as a destination for those seeking commercial free TV content, such as concert Gameshows sports, including esports sitcoms podcast special events news, including live events and other forms of video entertainment that is all interactive.
Shopper Bull.
Verb T V represents an entirely new distribution channel for all forms of content by a new generation of content creators looking for greater freedom to explore the creative possibilities that are native interactive video platform can provide for their audience, we believe content creators.
We will also enjoy far greater revenue opportunities through the native e-commerce capabilities. The platform provides to sponsors and advertisers who will enjoy real time monetization data collection and analytics to.
Through verb T V sponsors and advertisers will finally be able to accurately measure the ROI from their marketing spend instead of relying on decades old imprecise viewership information those of you who are fans of the popular business pet Joe two minute drill on Amazon Prime.
Bloomberg TV will be excited to know that a shop Abou version of the 12 episodes of the upcoming season three will be featured on verb T V. Each.
Each episode is a fast paced reality show or five to six entrepreneurs competing for $50000 in cash and prizes at two minutes to impress the judges with the best Investor pitch and yet I'm I'm one of the judges on the show.
Expect it to air in early 2022 verb television viewers will be able to click on screen and purchase the products and services of the contestants featured on the show among other contemplated interact features Dave Meltzer the creator of the show and cofounder of sports one marketing and the former CEO of the re now.
Lease Steinberg Sports and Entertainment agency has signed on with Burke to produce other interactive and shop, a BOE entertainment for Barb television.
Turning to our existing revenue streams, including those that comprise the remarkable results. We achieved in the third quarter I'm pleased to report that we continued to expand the target demographic and business verticals for our sales enablement platform for teams has been the choice of many notable companies for.
Medical equipment and other sales in the life Sciences sector for our clients in that vertical includes such notable names as Philips Olympus and Boston scientific among many others since last quarter, we've seen verb teams expand beyond life Sciences into professional sports you may have seen there.
Recent press release announcing the adoption of our interactive video platform by the Pittsburgh Penguins sports franchise as a tool to enhance ticket sales. The response to that announcement from the sports industry was extraordinary and we expect to announce several other sports franchises both in the U S and beyond.
Who we expect will use our platform for ticket and merchandise sales as well as enhanced interactive fan engagement experiences verbs.
Barb CRM, which has historically been our bread and butter product has now been enhanced to incorporate and works seamlessly with bird live our livestream sales application, coupled with team attribution and pulse, our new AI B I feature as well as bird learn this product feature set has allowed us to.
Track many of the biggest names in the direct sales space and command a bigger share of direct sales market, putting more and more distance between us and every other would be competitive in the space.
As verb is already the platform of choice in that industry in 2022, we're bringing an even greater focus on delivering the best customer service and support in that industry, including our recently launched professional services division to provide the level of customization some of the largest.
Global enterprises in the world require for their sales enablement infrastructure, our professional services division represents a new and lucrative revenue stream for our direct sales software vertical.
And as we await the imminent release of Birkdale Pro the enterprise version of the integration of our interactive video feature set into Microsoft outlook as well as the forthcoming release, a verb mail for Google's Gmail, we're already seen interest for large scale adoption by universities well.
Known nonprofit organizations and believe it or not as well as the armed services.
We talked at length over this past year about our ongoing growth through acquisition strategies, which are ongoing and we will certainly continue into 2022 and beyond however in the coming weeks I expect to announce the details of an acquisition that we believe is not only highly accretive but comprises several key.
Strategic elements of our marketplace and verb TV growth initiatives.
You know many of you reach out to me after seeing one of my almost weekly appearances on Ah Ah business television show Investor Conference of podcasts to say, how excited I seem about the future of the business and the company well now you know why.
Over the years as we move from startup based in commercialization phase, we face down the challenges inherent in all software development.
But we've also had our successes and conquest all of which provided the valuable lessons that still lie ahead undiscovered by any new would be competitors.
Yes, nothing we've done to date more accurately represents the true culmination of everything we've learned over the years as a team and as a company that marketplace in north PV, which individually and together represent enormous value creation opportunities for our shareholders value that we believe.
Has the potential to be exponentially greater than it is today and in my opinion represents a greater growth and value creation opportunity than that honestly almost any other opportunity I've seen in a long while and I buy.
And I had to keep a tight lid on it unable to share it for a variety of reasons, except demand by highly motivated and exceptionally bright and talented team and more recently among the partners. We've engaged who are as excited as we are to be part of the next truly big thing.
Okay.
So let me give you some high level third quarter numbers, and then Jeff will provide more of the details from our Form 10-Q filing for the three month period ended September 30th and contrast them with prior periods. Okay. So here are some Q3 data points in Q3, we added 16, new client contracts with a combined minimum contract value.
<unk>, a $1 $1 million, which constitutes a new record for our company, our new contracts executed in a single quarter our.
Our combined digital revenue in Q3 was $2 $4 million, an increase of 30% over Q2 and up 28% year over year digital revenue. The main focus of our building business initiatives now represents more than 81% of our total combined revenue that's up from <unk>.
64% for the same period last year and up from 76, we reported in Q2 2021 are SaaS recurring digital revenue in Q3, which is a component of combined digital revenue was approximately $1 9 million million, an increase of 15% over Q2 and up two.
<unk>, 5% year over year.
Non SaaS digital revenue the other component of combined digital revenue was over $500000, an increase of 42% year over year and up 144% over Q2.
Total combined revenue in Q3 was $2 9 million up from the $2 4 million. We reported in Q2 and includes the $1 9 million of recurring SaaS digital revenue that is up 25% and non SaaS digital revenue that is up 42% year over year.
Total user download stand at 3 billion as of September 30th and that's up from the $2 2 million as of June 30, we reported in Q2 and more than 88% of the $1 6 million.
In the same period last year.
Yeah, a couple of other interesting data points cash totaled $3 $7 million as of September 32021, compared with $1 8 million on December 31, 2020, our ongoing operating cash requirements through the third quarter to support our growth initiatives.
We met very easily through modest periodic draws on the ATM, which were conducted in a very responsible manner to ensure investors interest were protected.
This represented our lowest cost of capital.
But since the business has continued to demonstrate impressive quarter over quarter sustainable growth.
We've become more attractive to providers of alternative financing structures, including credit facilities on what appear to be very attractive terms, which we intend to explore as we move forward through the fourth quarter.
And now I'd like to turn the call over to Jeff Claiborne, Our Chief Financial Officer for a more detailed review of our financial results Jeff.
Thank you Rory and good afternoon, everyone I'd like to review our financial performance as reported in our Form 10-Q filed today November 15, the quarterly period ending September 32021.
Let me reiterate and we'll provide more color around some of the data points, we shared with you.
The following represents the Companys results of operations for Q3 2021 as contrasted with Q3 2020 in Q2 2021, respectively.
Total digital revenue of approximately $2 4 million was up 28% over the same period last year and up over 30% we reported in Q2 2021.
Total SaaS recurring revenue a component of total digital revenue was $1 8 million.
25% over the same period last year and up 15% over Q2 2021.
Total other digital revenue a component of total digital revenue was 510000 up 42% over the same period last year and up 144% over Q2 2021.
That's recurring revenue as a percentage of total digital revenue was 78%.
Paired with 80% for the same period last year and down over the 88% reported in Q2 2021, a decrease in our SaaS digital mix. This quarter is actually an extremely welcome development as it is attributed to our record breaking sales quarter in which we executed 16, new quiet contracts, representing an aggregate of one.
$1 million in minimum contract value a new record for our company.
New SaaS contracts typically also produce an increase in non SaaS digital revenue such as digital design that we are committed to record.
The work is complete a quickly after the execution of new client contracts during the quarter as such the digital design work associated with all new Q3 contracts generated increased our non SaaS digital revenue, which produced an increase in net revenue as a percentage of total digital revenue.
As I just mentioned, we added 16, new quiet contract with a guaranteed base valuable one night, what I'd like to highlight is that those contracts are expected to generate annual recurring revenue of approximately 500000. However, those numbers do not include the expanded revenue, we historically generate unexpected.
From existing clients, who have recently launched and those that are about to watch verbalized with attribution as well as calls and learn which we believe could add as much or more than an additional $1 million in annual recurring revenue.
And obviously none of this includes our revenue we expect to add during 2022 from marketplace <unk> T V and bird map among other as of yet unannounced initiatives.
Total combined revenue of approximately $2 9 million was slightly up versus the same period last year, which consists of the $1 8 million in recurring SaaS revenue that is up 25%.
Non SaaS other digital that is up 42%.
Research and development expenses were $3 5 million compared with a $2 4 million for the same period last year with the increase attributed to the development of Berg law firms.
Burbs, new attribution feature product enhancements to verbs CRM verb pulse, the Microsoft outlook integration and our forthcoming new marketplace.
Among other as of yet unannounced features and products.
We continue to pursue cost reductions within development, we discussed in prior earnings calls that had been planned for the year and as we move from R&D mode maintenance mode for many of our products, while we may likely see some of that savings offset by increases in marketing expenses associated with the up and coming watches a marketplace and a R. T D.
If the company is successful in the execution of certain planned marketplace negative that's where he referenced earlier those expenses might easily be offset by the potential new and additional revenue those events may generate.
Additional information around product development expense is that we've made tremendous progress towards the completion of the marketplace and as such we capitalized $2 $3 million in development expenses that will be depreciated over three years.
Administrative expenses were $6 1 million compared with $6 7 million for the same period last year with the decrease in spending attributed to lower stock compensation expense of $1 3 million.
Now, let me share the financial highlights for nine months ended September 30.
Total digital revenue of approximately 6 million was up 20% year over year total SaaS recurring revenue a component of total digital revenue was $4 9 million up 29% year over year.
That's recurring revenue as a percentage of total digital revenue, which remains our focus was 82%.
Paired with 77% the same period last year.
Research and development expenses were $9 6 million compared with $5 3 million for the same period last year with the increase is attributed to the development of Herbalife clubs, New attributions feature product enhancements the verb CRM for pulse the Microsoft outlook integration in the forthcoming new marketplace platform among other as of yet unannounced.
Features of rocks.
General and administrative expenses were $20 million compared with a $14 2 million for the same period last year with increases attributed to labor related costs to support our growth professional services marketing expenses as well as expenses related somewhat by our operations following the acquisition.
As of September 32021, total assets were $35 9 million total liabilities were $21 5 million and total stockholders' equity was $14 4 million.
The company successfully converted all Romania preferred shares into shares of the company's common stock as a result, there are no shares of preferred stock and associated rights outstanding and our cap table reflects a clean capital structure comprised of one class of common shares.
As of today, there are $70 million 470415 shares of our common stock issued and outstanding on the total number of common shares issued and outstanding approximately $6 1 million shares or approximately eight 7% are owned or controlled by management and the board members.
I'd now like to turn the call over to the operator for Q&A operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two our first question is from Bryan Keane flanker of Alliance Global Partners. Please go ahead.
Hi, guys. Thanks for taking my questions I've got a handful.
Hi.
Hey, Barry.
Great. Thanks for the details around the marketplace, maybe you can share with us.
Really from a high level range of royalty rates from partner sales, maybe how many brands.
Our signed up and.
I will customers or consumers become aware of the site.
As I mentioned in the.
And my my prepared comments, a few moments ago some of the things we've got planned revolve around these.
What I called Mega events and Mega there's are some events that were trying to get as many done before the end of the year as possible. We've had the shifts sort of at the last minute because.
These ridiculous supply chain issues, where we have retailers who were were in and then they were they were afraid they couldn't.
Keep up with the with the sales they thought that would be generated through these kinds of events and because they just didn't have enough inventory to accommodate it and as especially now as were going into holiday season. So we have now shifted to as I said sort of digital products.
NFC is a big focus among some other things.
And we'll announce that as we as we get closer to actually doing it and making sure that they have sufficient inventory of whatever it is to accommodate.
Those mega events could generate.
Fairly meaningful revenue for us in fact.
Even from a couple of those we could we could be.
Based on our modeling we could be looking at more revenue from those events that we did the entire quarter.
So.
We're pretty excited about that and as a result of what that means for for marketplaces. We move forward I can give you some of the some of the information that we're looking at and based upon feedback that we're seeing from.
From some of the vendors that were that were working with.
As it relates to the the SaaS component.
Certain vendors will pay a recurring fee to have premium placement too.
Oh in a particular time slot in a particular location and does that kind of thing.
And then as it relates to the revenue we would derive from a revenue share basis. It depends on the products and the margins associated with them.
And we took a look at at what.
What other sites are charging for these kinds of things and what we're seeing is somewhere.
On the product a range that is.
On the low end, 4% to 5% and as high as 15%. So of gross sales. So you know based on the on the volume that we're projecting from some of these kinds of events.
That's a lot of dough now how are we going to attract people of course.
We're going to see these influencers and celebrities were talking to people that have tens of millions of followers there'll be inviting their their fans or followers to these events.
The retailers themselves plus our own promotion that we're doing in our marketing that we're wrapping up right. Now. So we are taking a very very thoughtful comprehensive approach to how we launch it and marketing because we believe this and you've heard me say it again.
Say it again.
We believe this really represents an extraordinary value creation opportunity much grander than anything that we've that we've we've worked on previously and in fact, much rather than a medicine anything else in the market. So we want to make sure that we do this right.
So I'm not sure that absolutely, yes, because you only have six six or so weeks left in the quarter it sounds like youre going to.
Slide 11, a few Mega event. This year will you partially so so all of the shareholders and we can become consumers on that and get to watch it live.
Oh, Yeah, Oh, absolutely are you cutting this is the whole purpose of doing that we want as many people to see this because I think when they do.
I think I think people are going to be blown away I mean extremely smart knowledgeable people in the industry that we've shown it to.
It was it was jawdropping for them, which makes us feel good huge validation and don't forget this is not something that we just kept up we've been working on this for years and we had a a sort of a beta version of it that was running for now going on nine months 10 months, where we had somewhere north of 40 retailers actively on it we kept that down.
Quiet because it was a was a feedback loop learning loop for developers and the team's on it product people. So yeah. We're really we're really really excited about and I don't want to leave out verb T V, which is its own thing that also has enormous opportunity for us and value creation, so anyway, I hope that estrogen.
And of course, if I just I mean, you mentioned.
The contribution next year it could.
Contributing beyond.
Even the most bullish estimates so maybe as we look to 2022.
Is that a certain should I should we think about this being the top revenue contributor of all your product maybe just put some of that into context, because that's a pretty wide open statement yeah.
I know it is and.
I can tell you this.
It is absolutely our intention that it is substantially greater than everything else that we've done.
Up to the state now as you'll see we've had we've had nice growth in our existing business really nice growth and we anticipate that we're going to continue to grow our other verticals and but I think this places us in a completely different realm and I think realm is really the only way to describe it. This is this is a big.
Big play and we know that and we take it as Super seriously and I think we've got the right people involved who is excited about it as we are to make it happen.
Great moving to verbalize can you quantify because there's a lot of numbers I'm not sure I heard it how many enterprises as well as monthly active paying users you have with Windows <unk>.
Compared to June and then in addition.
What are those numbers in terms of enterprises signed up yet not part of.
Installation of part of what we saw in the third quarter revenue for Bud light.
So we've got.
A ton of Av.
Enterprises that.
Have signed on looking for to get verbal I've launched.
And I'll tell you we've got.
Several hundred thousand users.
And that's on a global basis to verbalize and what we did which is something that we didn't do as well in the past, but as it relates to verbalize and certainly on the things that we're doing going forward. We have created really an amazing very comprehensive detailed.
User feedback loop to really understand exactly what people are doing with the application what they're not doing what they want.
And what's come out of that is a couple of features that I call. The new baseline features that people want as an example.
They want the ability to record their live sessions car platform doesn't accommodate that.
So that's in motion will and hopefully will be delivered soon.
They also wanted the ability to have not just one host not just one presenter. They wanted the ability to have dual presenters. So that was also not something that we that we built into the original version and some of them and there's a handful of others. In many of these are are really unique.
To the direct sales space, which right now still represents our largest revenue stream and we want to make sure that we're paying very close attention to those people because there's so many users out there that provides us with extraordinary data and information that allows us to improve the product. So we're moving as rapid.
Please we can't obviously on parallel tracks with a number of different initiatives to get those things done because a lot of them are waiting for those features to go live before the launch so that's all coming.
Okay.
Terms of when you win an enterprise.
Or are you bidding on applies to move forward and.
Not necessarily every user is required or paid for.
The adoption rate by employees, our sales folks and enterprise, where they have to opt in.
More recently.
Recently.
What we see is corporate.
Really really now embracing this this livestream shopping model.
And obviously the pandemic has had a lot to do with that.
No.
Many of them and I'm going to even say, perhaps most of them are now, making it a requirement where all of them all of the sales field gets Berg live so it's a little different than how it wasn't wood visuals and obviously fantastic development for us.
Great Lastly, touching on Microsoft and <unk>.
The male option.
How many freemium users have signed up whats going on with the Microsoft sell program and then lastly, how do you plan to market. The premium version of this email tool, especially if you don't get into the Microsoft sell program.
Okay. So let me start with with the the latter part of your question.
As it relates to the premium version at which for outlook and we'll also see a similar version coming out for Google's Gmail.
So fingers crossed this happens before the end of <unk> I feel pretty confident about it.
The enterprise version the premium version of what we've done is we've built already and internal sales group dedicated to the enterprise sale, so and believe it or not that is not all that difficult to sell because the market offer.
Already exists and when I say the market already exist what I'm talking about is this a massively high percentage of large enterprise that our subscribers to.
Microsoft products and in particular office 365 so.
The marketing strategy for this new group and these are these are real pros.
Simple theyre going out to companies that they know already have a microsoft subscription and offering for an additional monthly fee the ability to introduce.
Really killer sales tool and communication tool.
To their to their monthly package. So we think that's a pretty pretty solid and easy shale based upon some preliminary marketing initiatives around that so and of course that that product has the kind of features that we believe.
People will be willing to pay for so we've developed not just in.
And internal sales group around it but we've brought on a number of our.
Outside and affiliates that will be we'll be moving on that and develop its own pretty substantial marketing budget to accommodate that so we're really we feel really good about what kind of adoption. We will see also is as I sort of touched on briefly in my comments I think that as we're bringing a lot of vendors on.
On marketplace.
We think that Theres, a great cross selling opportunity there because anyone that is already already embraces video as a means of communication and selling they're going to be all over being able to add that feature to their outlook or their gmail. So that's a big part of our strategy as well that we feel pretty confident about again based upon.
The feedback and the research that we've been doing.
Now talking about the existing free version I'll tell you we have we've put zero zero marketing dollars behind that because look the offering Liam version. Unlike other kinds of products premium versions Theres no advertising revenue that we're going to expect to generate from it. So we really put that out there.
<unk> to create a great feedback loop again, I'm big on feedback loops.
To make sure that we're enhancing the product and delivering the features and functionality that people will be willing to pay for so so we don't really have I think we have I think we have less than 1000 people that have actually downloaded and are using the free version again, that's just solely from from me talking about it.
At conferences and on the earnings call, we've put zero dollars into marketing behind that.
Looking at our stuff knows there's no ads out there is nothing about about bird mail.
So we're saving that for the for the pro version, which obviously makes sense right. We want to get an ROI on our marketing spend is no ROI in the framework.
Actually if I can squeeze one last one in.
It goes back to the marketplace and royalties I know the margin profile of subscription in general, but what's the margin profile.
Royalty dollars is there any cost or is it all incremental how do we think about every dollar of royalty from sales on your marketplace that you'll get.
Yes.
Calling it royalty I don't know maybe royalties the right term, we're looking at that right right. Yes. It is a.
Sure, Brian and so what I've taken a percent of gross sales and as I said before it will range from 5% up to 15%, depending upon the product and the margin associated with it.
Alright, I'm asking what's the what's the margin if you recognize $1 of revenue or $100 of revenue whats your gross profit.
<unk>, so our gross Oh, okay, yes.
Well look that's.
Once the platform is built and launched it.
That's basically a sum cost margins are extremely high on that for US I would say there is higher higher than than our existing margins, which as you know 80% thereabouts, so that's going to be.
Yes, it could be a great a great business for us.
Great. Thanks for taking all my questions.
Oh always of course, thank you.
The next question is from Ed Woo of Ascendant capital. Please go ahead.
Yeah. Thank you for taking my questions and congratulations my question is on the marketplace. When you launch will be initially focused on a U S or is it focused globally as well.
We're contemplating that it will be global.
Great and then the other question I have is you mentioned because of the inventory shortages youre going to move to more digital products is that something that's a lot more difficult to do or is it really just plug and play doesn't matter what type of a product we sell whether it's physical or digital or do you still have to do a lot of.
Two the top form.
No no.
I think maybe I wasn't.
As clear as I would like to have been on that issue. So.
The vendors coming on to the to the platform. They are gearing up their own inventory needs are getting ready for launch and taking into consideration of course, whatever the then existing supply chain issues might be what I was referring to before is that in order to promote.
And create awareness and sort of kick off marketplace. We at verb we're going to use the platform to host what I referred to as Mega events and.
Im sure Theres now we were intending.
To launch a giant event with a giant influencer and a very big market.
Selling specific category of products on Black Friday, and really so excited about it and anticipated a fairly meaningful piece.
Piece of revenue to put out.
Our P&L for the fourth quarter.
And and just recently they the supplier.
The products have to pull out because they realize that they're not going to be able to to get the product to support it that they could they're still trying to make sure. They can meet the needs of the retail stores that they are signed into during the holiday season, so that caused us to step back and reevaluate the kind of events that we.
We want to do again for promoting the platform and we decided we would shift to digital products for these mega promotion events. So that we're not going to find ourselves in the same position, where a vendor or supplier can't meet the demand, which would be which would obviously be horrible savvy experienced you want to provide so that.
Where the the focus on Ftes came from and now the platform supports all of that very very easily already.
Great well. Thanks for answering my question is very excited about it and I look forward to the launch. Thank you. Thank you.
Appreciate it.
The next question is from Martin <unk> of AFM investments Inc. Please go ahead.
Hey, Rory great job on the quarter as usual you guys are knocking it out of the park great job.
Thank you. Thank you very much.
And I want I wanted to know if you could just reflect a little bit on why the U S markets were so slow compared to the Chinese in developing.
This interactive shopping experience why why were they so far ahead, what did they see that we didn't see it.
You know I'm not sure that.
That I can answer that with.
With any kind of certainty around that I have my own theories around it.
I think that the.
The Chinese market had begun just moving in that direction.
Before we did look we've been on the front lines of this movement towards.
Video first bin bin.
As I referred to it in my in my comments table Stakes in any in any way.
Sales and marketing initiative and then the add on the corollary to that was okay, well, let's make that video clickable and shopper ball.
And we did that and we were out there promoting that kind of technology.
Years ago, and having a hard time getting traction people just didn't get it they didn't understand it we were we were a bit early.
And I'll tell you.
I feel good about.
What we've done as a company because others might have just said, okay. The markets aren't ready for it let's go do something else and sell ice cream, but what we did is we stuck to it and tried our best to project out what would come next and what we saw was that yes. Eventually interactive video will be adopted.
First video in sales and marketing would be adopted and.
And soon after that we saw all social media sites finally adopt video.
So that took some time you know it was only a couple of years ago, where you didn't have any in video on social media sites. If you think about it and then it was interactivity of course, we were at the forefront of it and then what we what we envisioned as we continue to try to look forward is what's next and that was taking that same interactive.
Video capability that clickable by capability and putting that developing that into live broadcast and hence all the work that we did on onboard live so that put US ahead of the curve, but we didn't stop there and we look forward to see again, what is going to come next because.
We believed that this live shopping capability would be much more rapidly adopted there will be many more competitors coming into the space much more rapidly, especially because of the pandemic and the isolation people were feeling they wanted that kind of live experiences and that we would see a lot of money come into that space.
So again, we looked forward where is it going to go next and that's where we came up with marketplace, which puts us I think so far ahead of everybody else because now it's just not a one off shopping experience now it's a social.
Social entertainment, it's a destination you can go there and meet up with your friends and your family and shop together chatting talking to the hosts talking to other people and that changes the entire dynamic that takes a sharper with video and livestream ecommerce to an entirely new.
Place. So we sometimes as we think forward find ourselves a little early in this case I think we nailed it in terms of right place and right time.
Alright. Thank you for that explanation I wanted to ask you do you feel that you have enough manpower when you launch market place to be able to handle.
The demands that'll be on your company.
Yes, yes, we do.
Yes, I feel very confident saying that I did allude to in my prepared comments earlier that I expect to be able to announce an acquisition.
In the coming weeks and while I. Unfortunately can't provide a lot of details around that now when they do announce that youll understand why I feel so confident in giving you that answer.
So you know more I think I understand.
Marketplace is a name just sounds <unk>.
Extremely generic.
Is there a move afoot.
To try to come up with a name that might be or might have more cachet are you doing branding, we're working with a branding group or are you just going to retain in a marketplace.
We've been working with us with branding groups.
And doing.
All of the things that you do when you're trying to.
I'll come up with the appropriate name for it and at some point.
When when we have some time to have some fun and sit back will kick around some of the names that have come up is because some of them are hysterical, but.
I mean crazy, but marketplace just seems to be right. So that doesn't mean, it's not going to change before we complete this thing because obviously, we've got to put the name on everything now as we come into these next last weeks.
But.
I think that it's something everyone can can relate to because it's a global marketplace with different products different languages different cultures to so many other things that are going to be part of this it will truly be.
A global community.
Tying people together from all over the World and it just seems right to me, but again we.
Super open minded and if something better comes up.
You'll hear about it.
So last question I have is pertaining to the.
Users like Microsoft and as you said Gmail is around the corner are there other providers of email services that are sniffing around in and looking at.
Having this ability to use you.
Your verb live and that in their services.
Well Martin as you know.
Really not at Liberty to share the sniffs.
I, just I can't do that and so I hope to reveal the sniffs and.
In coming weeks and months, but I can't I can't reveal themselves right now sorry.
It just strikes me just strikes me odd that you know if if Microsoft outlook finds it good enough to use them and now Google Gmail seems like Theyre on the costs. You would think you know the two of the bigger ones out there you'd have the other ones also wanting to get in the game.
So you know I'm, hoping for that but I don't want to just thank them for the Q and I'm really looking forward to the upcoming fourth quarter.
Completion, especially December because we're we're not that far away and it's very exciting times.
Thank you very much for your questions I appreciate it thanks for your interest and happy to have you as a shareholder thank you.
This concludes our question and answer session I would like to turn the conference back over to Rory Cutaia for closing remarks.
Well first thank you too.
All of our shareholders. Thank you to the longs. Thank you for your confidence and your trust in us.
We take that very very seriously and as I mentioned in my in my earlier remarks.
Whats happening now is truly truly the culmination of everything that we work so hard on everything that we've learned.
And and now seen her.
The market has changed and our vision for for a truly global marketplace.
That's video based.
<unk> seen all of that being validated.
<unk> is extremely extremely rewarding for us I do want to just take a moment and acknowledge my team because I couldnt, even get out of bed. If it wasn't for my team. They are just an extraordinary group of talented people.
And given the scope and scale of this this new opportunity in road forward. We're fortunate that we're attracting some amazing talent amazing talent that will make sure that we've got the horsepower to drive this this really big Big play.
We feel really really good and confident about so thank you all for today appreciate the questions and know that we are here on it and <unk>.
Not stopping till we make it happen I appreciate it.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.