Q3 2024 Brand Engagement Network Inc Earnings Call
Speaker Change: Welcome to the Brand Engagement Network, 3rd Quarter, 2024 Results Conference Call and Webcast.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be an analyst question and answer session. Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to Brand Engagement Network Investor Relations Susan Xu. Please go ahead.
Thank you, Operator, and good afternoon, everyone.
Speaker Change: Welcome and thank you for joining Ben's Q3 2024 Earnings Conference Call. Joining me on the call today are CEO Paul Chang, CFO Bill Williams, and Tina, our AI-powered assistant.
Speaker Change: The company's Q3 financial results were disseminated this afternoon and are available on our Investor Relations website at www.investors.beninc.ai.
Speaker Change: During this call, we'll make four looking statements, including statements about our business outlook, strategies and long term goals. These comments are based on management plans, predictions, and expectations as of today, which may change over time.
Speaker Change: The company's actual results could differ materially due to a number of risks and uncertainties.
Speaker Change: For more information about the risks and uncertainties involving forward-looking statements and factors that could cause actual results to differ materially from those projected or implied by forward-looking statements.
Speaker Change: Please see the risk factors set forth in Venn's most recent annual report on Form 10-K as supplemented by the risk factors in its most recent quarterly report on Form 10-Q.
Speaker Change: Forward-looking statements represent management's current estimates and the company assumes no obligation to update any forward-looking statements in the future.
Speaker Change: As a reminder, this call is being webcast from the Investor Relations website. An audio replay will be available on the website in a few hours. With that, I'll now turn it over to Paul to share our Q3 update. Over to you, Paul.
Paul Chang: Thank you, Susan, and thank you for joining us today. Before diving into our results and key developments, I'd like to take a moment to share some exciting changes within our organization.
Paul Chang: In August, I had the honor of stepping into the role of CEO of BEND, a global leader in secure and reliable conversational AI solutions.
Paul Chang: Having been deeply involved in Ben's journey from the start, I am truly energized and ready to lead the company into its next stage of growth.
Paul Chang: Our vision for the future is clear and I'm excited to guide Ben as we continue to strengthen our market presence and expand our innovative AI solutions transforming customer engagement.
Paul Chang: My focus remains on driving market validation for our AI solutions and scaling our deployments to deliver even greater value to our customers and shareholders.
Speaker Change: with over 20 years of experience, including 15 years as a technology investment banker.
Waleed: Waleed brings a wealth of expertise in capital raising, mergers and acquisitions, and strategic planning for leading tech companies.
Speaker Change: Waleed's deep understanding of technology sector coupled with his expansive network makes him the ideal leader to drive Ben's next phase of growth.
Speaker Change: I believe his strategic vision and experience will not only strengthen our financial position and expand our global presence, but also play a pivotal role in helping to integrate new acquisitions as we pursue future expansion opportunities.
Speaker Change: At the same time, I'd like to take a moment to express my appreciation to Bill Williams, our outgoing CFO and someone I am privileged to call a friend.
Speaker Change: Bill has been a cornerstone of Ben's success and has played a critical role in shaping our financial strategy from the very beginning.
His leadership, dedication, and insights have been invaluable.
Speaker Change: Although Bill's contribution will be missed, we are energized to build on the foundation he established as we lead the company into its next chapter of growth.
Speaker Change: While this will be Bill's last earnings call at CFO, we extend our deepest gratitude for his outstanding impact and wish him the very best in his future endeavors.
Speaker Change: Looking ahead, I want to highlight Ben's position in the evolving AI landscape.
with a focus on secure closed AI systems.
Speaker Change: Earlier this month, Sam Altman, the CEO of OpenAI, spoke on the shift towards closed AI models, emphasizing the need for greater safety, security, ethical standards, and user privacy.
Speaker Change: At BEN, we are already at the forefront of this movement, leveraging a secure, closed AI platform.
that gives businesses control and visibility over their data.
Speaker Change: Unknown Speaker Our AI solutions, whether SaaS, private cloud, or on-premises,
are designed with privacy and trust at their core.
Speaker Change: Our AI is a reliable, scalable way to engage customers while maintaining strict data sovereignty.
Ben: This differentiates Ben in an industry increasingly prioritizing ethical responsible AI deployment and underscores our vision of AI that moves markets while ensuring user trust.
Ben: In Q3, we saw strong progress across our core verticals of healthcare, automotive, and financial services.
Ben: Our integration with Cox Automotive's dealer.com platform was a significant milestone in the quarter for the automotive vertical.
Ben: This partnership allows dealerships to leverage Ben's human-like digital assistance across multiple touch points including apps, web browsers, and life-size kiosks, creating a seamless customer experience.
Ben: The integration enhances dealership operations by automating tasks and enabling more interactive, intelligent conversation with customers.
Ben: Additionally, our collaboration with Vibroo and Pharmacia Roma offers AI-powered audio engagement enhancing grand consumer interaction.
Ben: By combining Ben's AI assistance with Vibroo's audio platforms, we aim to provide personalized suggestions to consumers through accessible mediums like radio and streaming services.
Unknown Speaker
Ben: Subsequent to quarter end, we also announced a partnership with Kangaroo Health to enhance remote patient monitoring with our generative AI platform.
Ben: This collaboration combines Kangaroo Health's monitoring devices with Ben's AI assistance, offering round-the-clock support for patients and health care providers, especially those with chronic conditions.
Ben: Building on this momentum, we are excited to announce another pivotal development after the quarter, our recent agreement to acquire Catenail, a leading media technology company based in Munich, Germany.
Ben: The $19.5 million transaction consisting of $9 million in cash and 4.2 million common shares valued at $2.50 per share.
Ben: will expand our reach in the $45 billion global media technology market.
Ben: Kataniel's MIDAS platform, which supports over 5,000 users and handles over 5 billion euros in annual media spending, enhances our ability to deliver intelligent, scalable, conversational AI solutions to over 1,000 global media brands.
Ben: This acquisition is expected to enhance our ability to deliver intelligent, scalable, conversational AI solutions across multiple continents, and further position Ben as a leader in the next generation of interactive advertising technology.
Ben: We expect the transaction to close in Q4 2024 upon receiving shareholder and regulatory approvals and upon obtaining financing to fund the acquisition that is accessible to the parties.
Ben: With all these exciting developments, it's only fitting that we showcase one of our key drivers behind their success.
Tina, our AI assistant.
Ben: Let's take a closer look how T&I is helping shape the future of customer engagement using our proprietary large language model and retrieval augmented generation.
Speaker Change: With that, I'd like to introduce Tina, who can help answer some questions regarding our recent partnership with Cox Automotive and recent acquisition announcement of Catenail.
Speaker Change: Hello, my name is Tina, an AI assistant created by Brand Engagement Network.
Speaker Change: Hey Tina, can you tell me a little bit about Brand Engagement Network and what makes Ben's technology different? Sure.
Speaker Change: Brand Engagement Network, or BEN, is a global leader in providing secure and reliable conversational AI solutions.
Speaker Change: What sets Benapart is its commitment to data sovereignty ensuring that consumer and business data remain private and protected.
Speaker Change: Our technology is not only secure, but also highly customizable and scalable, making it perfect for enhancing customer experiences and boosting productivity. Thanks, Tina. Can you tell me about Cox Automotive and its collaboration with Ben? Certainly.
Speaker Change: Cox Automotive is a leading provider in the automotive services and technology sector.
Speaker Change: They recently collaborated with Ben to integrate our RAI assistance into their dealer.com platform.
Speaker Change: This integration allows Cox Automotive to offer a more personalized and interactive experience for customers through Ben's AI web assistance available on apps, web browsers and life-size kiosks. What data does dealer.com aggregate and provide to dealers to share with consumers?
Speaker Change: dealer.com aggregates a variety of data including consumer behavior insights performance metrics from websites and advertising data
Speaker Change: This data helps dealers understand their customers better and tailor their marketing efforts to provide more personalized experiences.
Speaker Change: With Ben's integration, this data is now cleaner, more comprehensive and accurate, allowing for more effective two-way conversations between dealers and consumers.
Dina, can you tell me about catenail acquisition announcement? Certainly.
Dina: Ben has agreed to acquire 100% of Catenaio, a media technology company based in Munich, Germany.
Dina: The total purchase price is $19.5 million, consisting of $9 million in cash and 4.2 million shares of Ben Common stock at $2.5 per share.
Dina: Kataneo's Midas platform manages over five billion euros in annual media spending and supports over 5,000 users across four continents.
Speaker Change: This acquisition aims to expand Venn's global media reach and strengthen its offerings in the media technology market. Michael Zacharski, Unknown Attendee Can you tell me about Catanail's customers and their differentiation? Unknown Attendee Certainly. Michael Zacharski, Unknown Attendee
Speaker Change: Cataneo's customers include major media corporations like BBC Global, NBC Universal and Discovery Europe.
Speaker Change: They operate over 200 media channels across linear online and nonlinear formats.
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Speaker Change: Kataneo differentiates itself with a modular and highly customizable platform that supports both media buying and selling offering a flexible and scalable cloud-based solution.
Speaker Change: How would this merger benefit both companies and their customers? This merger will benefit both companies and their customers by enhancing efficiencies and expanding market reach.
Speaker Change: Wednesday, I will optimize catenaio services, reducing manual processes and improving productivity.
Speaker Change: Kataneo will gain access to the U.S. and Latin American markets offering flexible cloud-based solutions.
Speaker Change: Technologically, Catenao's tools will help then create new dynamic advertising formats, leading to more interactive and meaningful consumer experiences.
Thanks so much, Tina. I really appreciate your help.
You're welcome. I'm glad I could help.
Speaker Change: If you have any more questions about Ben or our AI assistants, feel free to ask. I'm here to help.
Unknown Speaker Thank you.
Speaker Change: Thank you, Tina, for that valuable insight. We are excited about the prospects of the catenail acquisition.
Unknown Speaker
Speaker Change: As a reminder, the acquisition is expected to close in Q4 2024 and is subject to closing conditions including receipt of shareholder and regulatory approvals and obtaining financing to fund the acquisition that is acceptable to the parties.
Speaker Change: Now, let's turn it over to our CFO, Bill Williams, who will walk us through our financial results for the third quarter. Bill?
Bill Williams: Thank you, Paul. I appreciate the opportunity to provide a brief update on VIN's financial progress.
Bill Williams: on laying the foundation for future growth, product and solution development, the continued build-out and productionizing of our infrastructure, developing talent, and expanding partnerships and initial customer relationships.
Bill Williams: Quarter and year-to-date revenue improved versus Q2 as we saw expanded proof-of-concept pilot and partnership activity gaining momentum.
Bill Williams: with an expansion in POCs and channel partnerships since the first half of 2024 in both healthcare and automotive verticals.
We continue to exercise strong cost discipline.
Bill Williams: with a 24% reduction compared to our Q1 and Q2 run rate.
Bill Williams: This resulted in 1.5 million or 24% sequential operating profit improvement.
Bill Williams: Cash flow from operations for the corridor showed a 28% improvement sequentially compared with first half of performance.
Bill Williams: Q3 also saw the positive effects of our capital raise efforts, including our $50 million standby equity facility that will enable sustainable liquidity, cost efficient access to capital and financial flexibility to fund operations and growth in the future.
Bill Williams: And importantly, we announced in October the definitive agreement signing for the acquisition of CapnAo, which we expect to close by end of year. We believe this partnership will be earnings and value accretive for Finn shareholders.
Bill Williams: For the balance of 2024, we remain focused on building market momentum, scaling the platform, improving access to efficient capital and liquidity, and cost discipline.
While Q3 featured building momentum through operationalizing our platform,
and we successfully productionized and productized our AI assistance.
Speaker Change: Thank you. And now I'd like to turn it back over to the operator, Daniel, for our Q&A session.
Daniel: Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced.
To withdraw your question, please press star 11 again.
Please stand by while we compile the Q&A roster.
Daniel: Our first question comes from Jack Codera with Maxim Group. Your line is open.
Speaker Change: Hi, thank you. This is Jack Coderre calling in for Jack Van Der Arte. Thanks for taking my questions.
Speaker Change: First question, can you give a little more background on the recently announced pending acquisition? How long has this been in negotiation? How did you determine it was a good fit? Any other color there would be helpful.
Speaker Change: Sure, Jack. So we've known Catanel for quite some time, I would say almost a year.
Speaker Change: we're excited about the acquisition because it aligns with our. Strategic aim of expanding our global media reach while we get to leverage catnails expertise in digital marketing.
Speaker Change: We think, you know, our ability to change the landscape of, you know, creating interactive advertising.
Speaker Change: and transforming how brands can engage with consumers in real time.
Speaker Change: I think that is going to be potentially a game changer. You know, and Katsunel's Midas platform already supports over 5,000 users and 1,000 media brands across four continents.
Speaker Change: It will integrate with, you know, our scalable Gen AI platform to provide a more seamless and dynamic experience.
Okay, yeah, that makes sense.
Unknown Speaker And
Speaker Change: I think you guys touched on a little bit. I might have a follow-up question about the revenue bit, but can you give just a general update on, you know, I think the half-dozen pilot programs, such as MedAdvisor, any color on how those relationships are progressing?
Thank you.
Yes, so.
All of our POCs and pilots are progressing.
Speaker Change: Some have expanded into other potential customers participating in the pilots.
We are
Speaker Change: constantly updating our use cases to to fit the needs of our customers and our customers' customers.
Speaker Change: and our AI platform continues to perform well in a cost-effective manner, providing a valuable tool for the customers to continue to serve their customers.
Speaker Change: So with MetAdvisor, we're working on reaching out to a few
Speaker Change: large pharmacy network customers, as well as other pharma customers. And we are in constant development of new capabilities.
Speaker Change: Okay, that's awesome to hear. And then one last question, kind of a follow-up. I think it was mentioned in the prepared remarks. Can you give an additional color on that $50,000 in revenue? I know in the queue it says it's related to a proof of concept and rev sharing. And I think you also mentioned that it was related to the pilot. Can you just describe how that's
Speaker Change: Unknown Speaker How that's coming to fruition. Is it, you know, certain pilots like progressing to the they're now generating like a service revenue, any color on that, that would be helpful.
Yeah, just about the actual reported revenue. I think it's
Speaker Change: Unknown Speaker 50,000. I saw in the queue it was related to it says it's related through a proof concept and revenue sharing seems like just any additional color on how how that's coming to fruition would be helpful.
Yes, yes. So, so far, all of our revenue.
Speaker Change: is either SAS or subscription revenue to our AI platform. And that is paid to us by our customers who are actually deploying our pilot solutions.
Speaker Change: Okay, thank you. That yeah, that answers the question. Thanks again for answering my questions and congrats on the progress.
Thanks, Jack.
Speaker Change: Thank you. Again, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Again, that is star 11 to ask a question.
Speaker Change: I'm showing no further questions at this time. This concludes today's conference call.
Thank you for participating. You may now disconnect.
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