Reklaim Ltd. (MYID.V) Earnings Call Transcript & Summary

Greetings, and welcome to the Killi; webinar. It is now my pleasure to introduce your host, Mr. Sweeney. Thank you. You may begin.

Hi, everybody. Let's just dive right into it. I'm sure all of you have been listening to a number of different presentations over the last 2 days. So I'd like to introduce you to Killi, K-I-L-L-I. Ticker symbol in Vancouver is MYID and it's MYIDF in the U.S. So before we get started, let's kind of talk specifically about kind of the overall investment thesis. I think before we're all investors, we're consumers first. And I think if you think about the 3 most dominant stories that have been in the headlines over the last 2 or 3 weeks, first and foremost, clearly, COVID. And specifically, this concept of COVID tracing has been top of mind for everybody. Last week, we saw the four horseman from Amazon, Google, Facebook and Apple in front of Congress, answering questions around antitrust and data. And then lastly, this week, dominating has been the storage, specifically around Microsoft and Tik Tok. But while these stories have been dominant over the last 2 weeks, what people are failing to kind of realize is that, this has nothing to do with antitrust and it has nothing to do with the actual pandemic. Really what the bigger issue here is this concept of what all these stories have in common is the idea of data and more specifically, around privacy. And when you're thinking about data and privacy, it's really about consumer privacy and consumer control of privacy. So these 3 trends, whether it's data privacy, consumer control or antitrust or big tech, at the end of the day, it still comes down to who is collecting this data on these individual consumers. So for us, what we believe is that data and privacy will be the largest macro trend of 2020 and 2021. And this is similar to what we've seen in years past, whether it was around blockchain or even around cannabis. And I think the stories that I kind of have highlighted is evidence of this ever kind of growing trend. And so with this in mind, who are the public companies that are really operating in this space. And I think you're going to be hard-pressed to find another company like Killi, who is really leading the chart specifically around this. So a little bit more about this market. I think when you ask individual consumers specifically about whether or not they know if data is being collected, although most say, yes, but most have really no understanding as to how much data is actually being collected or what the value is. As an investor, you're likely -- you're unlikely aware that you are actually worth $500 per month per user in North America, and you're growing at an average rate of about 30% per year. How does that happen? When you log in using your Google browser or you log into Facebook or you use Spotify, this is a perpetual data collection. And your consumer data is going over the fence to these individual firms. It's the oxygen of these individual platforms, and this has been going on and building for years and years and years. So whereas these companies continue to actually amalgamate and collect increasingly more data, they're actually turning that data around and actually monetizing. Hence, the reason for the increase in the actual rate. Now the important piece about this is that what's driving the increase in the rate is fidelity of data. The higher the fidelity or the more private the data, the more valuable it is. This, as a byproduct, though, has actually caught the attention of the global privacy regulators, specifically around the world. So some of you might be familiar with privacy laws that came into effect in Europe called the General Data Rights Protection Act. It came into effect about 1.5 years ago. Most recently, this came to the United States in the form of the California Consumer Privacy Act, which sort of hit the shores of the West Coast on January 1, 2020. In short, what this means is that in order to use people's data going forward, you must have explicit consent from the consumer. The problem with this is that up until now, the 30-plus years of data architecture that have been created have been done so without actually collecting consumer consent. And so these government regulators are putting more and more pressure on these larger companies to ensure that they're actually getting consumer consent, and it's leaving an individual gap in the market. So with that in mind, though, there is really no company -- there are really no companies operating in the world today that are actually allowing you, as a consumer, to actually gather control of your data from all of these various different platforms, have visibility specifically on what data these companies have and actually have visibility on what actual value of this data is. And most importantly, whether or not you, as a consumer, should be compensated, we think that this is sort of the larger trend that's actually happening. So with Killi, at its core, these are the tools that we're actually building. We are building consumer controls for data. So we are creating a platform to allow you to take your Facebook data, your Google data, your credit card data and pull it all together in one central source, controlled and owned by you. As a byproduct of that, you have transparency on all of the data that's out there. And should you decide to share that and be willing to monetize and will -- be willing to share it with brands, agencies, companies and platforms. Rather than Facebook, Google and others being compensated for the use of your data, we are redistributing this wealth back to the individual consumer. So we think that giving consumers back control of what's rightfully theirs, while also paying them in an environment where we have 15% unemployment and the economic situation is not that great, is sort of -- is a trend that we think is going to help move, not only the visibility of our company, but actually the stock as well. So how the mechanism works is you can either download this product as an application from the Apple or Google stores. You can also access this from your browser by logging in, putting in a password. Once inside of the platform, you can pick and choose and decide which individual accounts you would like to actually add. Would you like to link a credit card, would you like to link a social account? These are all up to you. What's really important about this is that inside of the individual platform, you can actually turn on and off at any time that you like, whichever piece of data you would no longer wish to share. Also important to note is that when somebody purchases this data, i.e. a Procter & Gamble, you have a full transparent record of actually whose purchase is paid at. Similar to a banking record where you would log into your Wells Fargo account, and you would see that you spent $5 at Starbucks, you can log into your Killi account and see that Procter & Gamble has bought your location data and you now have $1 sitting in your account. This is important, too, because we pay you in cash. We are not paying you in crypto, we are not paying you in coupons. We are not paying you in offers, and we're not paying you in points. We're paying you in cash because that is actually how data transacts in the real world. And as I mentioned before, this notion of actually redistributing the wealth or the cash back to the consumers away from the opaque market is really kind of where our kind of core intention is. What we've also done is we've begun to institute passive revenue opportunities for individual consumers. So we've trademarked such statements as the date dividend or the concept of Fair-Trade Data. These are situations where, should you decide to share location data, you don't have to interact with the application. It's similar to a hydrometer, you would basically pay as you go. So once somebody uses your data, you would get a notification and money would be passively deposited directly into your account. So let's take a quick look at a few highlights that we've actually focused on over the last 3 months. Then we'll focus on specifically what we're planning on getting to over the remainder of this quarter and then a few additional catalysts specifically for what we -- for the stock. So in Q2, the focus has really been on the addition of new revenue models for the individual consumers. So we've integrated 3 international research companies into the product. This is important because no matter where the product is launched and the product is currently available in half a dozen countries today: U.S., Canada, Australia, Singapore, and New Zealand, with further global expansion planned, is that no matter where you are in the product, there's always an unlimited opportunity for you to actually earn money for answering questions specifically from research firms. We call this active revenue because you actually have to actively participate in a question that someone is working with you, is asking you. We've also introduced this concept of passive revenue. Passive revenue is where you decide to share a specific piece of data and you're compensated passively when that data is actually used. So we've integrated over 20,000 financial firms into the product today. That allows you to link any card from, say, a Wells Fargo, a TD Bank, a Bank of America. And should a hedge fund that in New York decided that they would like to actually purchase this shopping behavior to see which retail stores are actually having trouble during COVID, you would be passively compensated for that. It will be deposited directly into your account and then you could cash out. In addition to this, Killi was actually integrated in another company of mine. So on the serial launch of [indiscernible], we sold Freckle at the beginning of this year, which put $4 million of cash into the business as well. That's on a draw, it's not $4 million upfront. And then lastly, we've introduced this concept of Fair-Trade Data, which allows consumers to be compensated when advertisers use that data to specifically buy and sell media. So I'm going to focus specifically here on the credit card module and then a little bit on the audience Fair-Trade Data because I think those are the 2 real levers from Q2 that are really important. As I mentioned, Visa, American Express, Mastercard, any of these various different types of card from any of the 20,000 financial institutions can be linked to our card. Some of you might be familiar with other publicly traded companies like Cardlytics, et cetera. Cardlytics really would take data from Bank of America user and amalgamate it and then provide it to the market. We think that we're the antithesis of that. We're actually -- if you're not buying it from Bank of America, you're actually buying it from the individual consumer. So we believe that this is even more compliant. But the ability to actually link these cards gives up to 2 years' worth of actual shopping data, which again, brands, agencies, hedge funds, et cetera, are very much interested in. From a revenue model perspective, what's important is that there's a 50-50 rev share between ourselves and the individual clients. So if $1 was being paid to a user, we would get $1. If it was $0.50 being paid to a user, we would get $0.50. So the more data that is actually purchased, the more data we actually make. Which kind of brings us quickly to this idea of Fair-Trade Data. So this was covered in Forbes Magazine. I would encourage you to read the article on this. And I think this is probably one of the big differentiators that we have in the market. One of the misconceptions that people have is that people buy advertising. Nobody buys advertising. You buy data and then the data manifests into the shape of an advertisement. What that means is that if you were Procter & Gamble and you were looking for a 25- to 54-year old female grocery shopper, you buy that data and then you put a Tide ad on top of it. So all of this data sits inside of these large data management platforms. The big ones are Oracle, LiveRamp, Adobe, Salesforce, et cetera. A lot of this data is unconsented or is referred to as third party. For us, in our past experience, we have integrations with all of these individual platforms to put our Killi data, which is an amalgamation of all of the Killi data into these platforms. So now when you're actually buying a 24-year-old team of grocery shopper, rather than that money going back to the third-party who put the data into Oracle, what we do is we provide a fractional dividend back to every single consumer that actually participated in this. So what's important about this is that really every major brand and agency uses these data management firms as their watering hole. This is where they go to buy all the data to power all of their media. We are the only company in the world that is offering audience-targeting segments inside of these platforms that actually reward the consumer. Hence the reason we call it Fair-Trade because you, as the consumer can see who's buying the data and you as the buyer of the data can all -- see all the way through to the other side to see who's actually consented to the data. So the last thing I'll say on this before I move on is that in order to sell data, it's not trivial. We don't just get out of bed and get integrations into platforms like Oracle or Google, et cetera. You have to know your way around it. I mean I've been selling data for the last 20 years. And for me, the key is, is that if you want to sell data, you have to have scale of users, and I'll talk to that in the next slide. You have to have ubiquitous distribution, meaning you need to be in all those places where everybody buys data and then you ultimately have to have demand. At Killi, we have all these 3. So we're integrated into all the major platforms. We have buy-in relationships with all the major agencies and brands. And then we also have all the distribution as well. So that brings us to Q3 and what we've been working on specifically in Q3. So we'll work back to front here. A global agreement of a top 4 agency holdco. We're hoping to announce that this quarter, where they are using our data to power all of their media. This is a deal that we've already been working on. And we're already -- this company is actually already buying the data. We just have not announced it. Additionally, constantly focusing on security. The more modules that we put into the product, security is an always-on, never-ending task for us and making sure that when people are adding credit card data or adding driver's license scans that we are making sure that we are at top from a security perspective. I talked about the audience dividend. We believe that this is going to start to manifest in real revenue this quarter. But the 2 pieces that we are actually introducing this quarter is the browser extension to sit on top of the Google Chrome browser as well as the Killi Elite subscription. So let me talk to the browser extension, first and foremost. So for context, most of you are familiar with the Google Chrome extension. That's the icon, that's on the left-hand side here. Chrome and its sisters, Edge, Opera and Brave. Those are the browsers to the right of it. They own about 80-plus percent of the browser market. So some of you might think because you have an iPhone that you have Safari, that, that is a powerful browser. The reality is that has basically 3% of the total market. So if you want to do something in the browser space, you have to do something with Chrome. Ultimately for us, we believe the browser is one of the biggest pools of data that is actually leaking personal data directly, specifically actually into Google. So what we know specifically about Google is that they are perpetually collecting all this information. And in fact, there's actually a $5 billion class action lawsuit that Killi was referenced in that -- as a positive example of a company that's actually the antithesis of Google and is providing consumers with actual control of their data. So as I mentioned, 75% to 80% of the global market is in the Chrome market. What we're doing with the browser extension is we're allowing consumers to put all of their browsing data underneath their control for actual sale. What we're also doing is that we will put -- we will give the consumers the opportunity to put an ad blocker on the front end of that browser extension. Why that's important is that this is also a growing trend, 1-in-4, 1-in-5 individual users on the Internet are currently using an ad blocker, but there's not one company in the world that's actually paying people to block ads. We plan on doing that as part of our overall subscription model, which brings us next to Killi Elite, which is the subscription piece of the equation. So what we found with Killi Elite, and this is kind of runs in parallel with what former Presidential candidate, Andrew Yang, was talking about when he mentioned universal basic income is that, when you sign up to Killi, to simplify the process is that if you would like to make $1, $2 or $5, you can sign up for a subscription. The subscription is pretty simple. It depends on how much data you're willing to share. The more data you're willing to share, the more money you can actually make. So there's not a company in the world currently that is actually providing a subscription model for consumers to be compensated for the data usage. So we think that the combination of a browser extension, ad blocker that actually pays user, plus an overarching subscription model, specifically for consumers, are 2 very, very differentiated products that you're going to see literally in the next 6 to 8 weeks. And these, we believe, are actually going to be very beneficial for us in creating stickiness amongst the individual clients. We think that just the subscription model itself is going to increase the lifetime value of our users by 3x. So I think whenever we talk about Killi, there's always sort of 2 skeptical questions. The first is great, great idea. Ultimately, we believe in this idea that you should get compensated for your data, you'll find very few people who actually disagree with that sort of thesis. The question always becomes, how are you going to scale it, Neil? Or more specifically, how much money can I make? So the question around how much money you can make, it ranges depending upon how much money -- how many pieces of data you're willing to share, but it ranges anywhere from a $1 at the base level to upwards to over $5. And as we add increasingly more modules, that dollar figure will continue to grow, which will increasingly keep people inside of the product. But on the scale side, there's really 3 buckets of scale. There is the paid concept, which is that you go to Google or Twitter and you actually buy a user. That's called a cost per acquisition and it's quite dominant amongst most direct-to-consumer kind of companies. There's the organic pillar where you create content, post it on places like Tik Tok, Instagram, that is also quite common. And then there's the partnership component. And so what's important is that we've been doing paid and we've been doing organic, but now we've done the partnership piece. And as a byproduct of us having built the consent framework that allows consumers to opt in and opt out of various pieces of data, what has happened is that companies that have an enormous amount of data that actually are headless, meaning that they have no consumer interaction or they don't have any direct communication with the consumer, have come to us to basically be that consent-as-a-service product, where we are now actually communicating with the consumer on their behalf, allowing them to opt in and opt out. The end result of that is that over the next 2 months, we'll be onboarding over 100 million accounts, specifically in the United States. So the question is always like, how do you get 100 million accounts? As mentioned, we are actually providing the consent framework specifically for companies that actually don't have it. So that's the IP of our business is being able to do that. And just to manage, again, your expectations, you also don't get out of bed, flick the switch and just have 100 million accounts. The goal is to add 50 million of these accounts in August and then 50 million of these accounts in September. We feel confident that we'll be able to add similar types of numbers going into Q4. But this is giving us an enormous amount of scale, which is sort of solidifying the idea that we are the market leader specifically in the space. So with that in mind, from a cost per acquisition point of view, meaning, how are you actually getting people into your base. The cost per acquisition for us is actually crashing. Whereas in the past, we would have had to actually pay for a user to come in at that $2. Now companies are coming to us and actually paying us to actually work with them specifically on this. And so the cost per acquisition from a model perspective is actually shrinking, whereas the average revenue per user is actually growing. And the average revenue per user, as sort of presented here on the purple side of this circle, is all of those additional modules that we put in. In short, nothing bad happens when you give more money to consumers. The more money you give to a consumer, the less likely they are to leave the product. The more money you give to a consumer, the longer they'll stay in the product. So if you're thinking about the bottom component of this, which is lifetime value, if you want to increase the lifetime value of the consumer, the fastest way to do that is actually pay people more money. So we are laser-focused really on how are we actually redistributing more and more wealth to these individual consumers by actually bringing on more and more different modules. So that ties back to the browser extension, subscription, et cetera. These are all things which are going to increase average revenue per user, which will increase lifetime value. That, in combination with kind of a reduced cost per acquisition, creates the unit economics of this model, which actually put us in a situation where we believe that, by the end of this quarter, we're going to be in a cash flow-positive position. And as you can see from this slide, sort of that very faint pink slide -- that pink images, that is the crashing of our cost per acquisition, which is really in green, kind of our unit economics. The bar graph that is represented here is the dollar value that you can actually get from each of the individual modules. And so when you put 100 million people on top of this pre-existing module -- this pre-existing business model with more and more modules, you'll generate more and more revenue. So the best way to think about this is that the more people you get, the more data you get. The more data you get, the more brands you get. The more brands you get, the more money you get and around and around you go. So we are looking to push towards this revenue flywheel. What we feel that we have is that we feel that we've got the hardest part done, and that is getting the actual individual scale. So what this looks like from an average revenue per user kind of goals by the data dividend point of view, this sort of outlines for you what some of these things look like. So you can answer surveys, you can do -- you can opt in to location, you can watch videos, you can participate in the audience dividend that I may reference to, you can link a credit card. All of these things are different ways in which you can actually make more money. For us, as an individual company, we participate in every single one of these modules. So when you, as a consumer, link a credit card and that credit card gets sold, you get paid, we get paid. So again, we are incented to have more users sharing increasingly more and more data. So just to kind of quickly sort of summarize here is that as mentioned, we believe that this concept of data privacy and consumer control of data is a larger trend that is clearly not going away anytime soon. We think that it's looking at kind of the market leaders around the world. We feel that we're at that table. I think you're going to be hard-pressed to find public companies that are operating at this scale with this kind of focus specifically on this market. The Data Privacy regulatory market is global. This is not just U.S., this is in Europe, this is in Canada, this is in United States. Every country in the world is implementing new data privacy policy, which is creating an opportunity for us, as a company, to continue to expand our scale. Talking specifically about the scale, as I mentioned, adding 100 million accounts in Q3, with similar growth in Q4, we think, kind of allows us to kind of run away with the market. This is a global trend. While we're in half a dozen countries now, we plan on continuing to expand further and further. That revenue flywheel that I made reference to is quite simple in nature, is that, if you're looking at those 3 unit economics: average revenue per user, cost per acquisition and lifetime value, and you're squeezing those to get to a neutral module -- neutral level, as soon as you can get to cash flow positive, then the revenue compounds quite quickly. And then lastly, the momentum is that we believe that we're the market leader in the space. So with that in mind, I'll kind of quickly answer a few Q&A questions if anybody has them.

There's a question here specifically around what makes your company unique from your competition, in particular, BIGtoken. So I would say that big token is schizophrenic. One, they're an investor relations firm. They are sometimes identity firm. They're sometimes a crypto firm. They're sometimes a social firm. We're none of those things. We're focused entirely on identity. So I think that's probably the biggest difference between us. I think that there's also some other things trying to get money out of BIGtoken. They have minimum $20 redemptions for consumers, which we think is unfair. It's also -- we don't think it's transparent. Whereas for us, you can redeem at $5. BIGtoken also doesn't do anything from an audience perspective. It also doesn't do anything from a passive perspective. So we actually don't think the BIGtoken as competition. Any other questions? Okay, great. Thanks so much.

Thank you. This concludes today's webinar. You may disconnect at this time, and have a great day.