TON Strategy Company (TONX) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to our First Annual Access to Giving Conference, the first of its kind virtual investor conference, where 100% of monies raised through donations will be given to causes that are focused on financial literacy and financial education. Now I'd like to introduce Rory Cutaia, President and CEO of Verb Technology Company to present their company story. Sir, please proceed.

Thank you, thank you. Happy to be here today. I'm Rory Cutaia, Founder and CEO of Verb. And I truly appreciate the opportunity to tell you all about Verb and really the incredible year that we're having and anticipating through 2021 and beyond. So I want to give you all a brief overview of who we are, what we do. And then I want to jump to what we believe will be the greatest value creator for ourselves and our shareholders for years to come. And what I'm talking about is live stream e-commerce, shoppable video. I'm going to talk about what it is, why it's going to take this country by storm and how Verb is incredibly well positioned to lead the disruption that we expect will impact online e-commerce as we know it. I'm going to attempt to advance some slides here. Okay. So let's start with who we are and what we do. So we're a software company, SaaS-based recurring revenue business model with what our customers say are the most effective sales tools on the market today. You may have seen a press release that went out this morning with one of our customers, SHOP.COM and Market America and the global launch of our verbLIVE with Attribution feature. And I would encourage you to take a look at what the CEO of that company is saying about our products. Our suite of tools is -- that comprises our sakes-enabling platform, are based on our proprietary interactive video technology. Now this is technology that, again, our clients say is producing 600% to 1,200% increases in sales conversion rates. 3,300% increases in sales rep retention rates because now people are obviously productive making quota selling using our tools. We've had now well over 2 million downloads of our products, well over 25,000 4.9-star ratings on the app stores, and we're in 60 countries, 48 languages. I say just this past week, we had a giant launch throughout Asia and Europe and North America. We recently reported in our 2021 first Q earnings, and I can tell you that our SaaS recurring revenue is up 38% over the same period last year, 12% over last quarter, and we're continuing to grow at a pretty nice clip, especially now with the release of these products. Another product that we just announced this week is something that we call verbMAIL. I'm going to talk about that a bit. That's the result of a product that we worked on with Microsoft. It's an integration of our interactive video technology natively inside Outlook, really cool, and I'm going to talk about that a bit. Frankly, when -- I think when we look back at this quarter, we're going to recall that this is when the pivot of our business began. This is when all of the work and the time and development, the ups and downs of trials and tribulations, all of it was validated because we believe that these new products that we've now begun to deploy into the market and the follow-on products and enhancements that we'll continue to deploy throughout this year will demonstrate the true value creation opportunity that Verb represents. So let me show you what I'm referring to. I'm going to start with verbLIVE. It's truly an innovative live stream e-commerce platform. So for those of you who don't know what live stream e-commerce is, it's the ability of consumers to click in a video during a live broadcast to purchase products, not just click on the text and static images on popular websites, but true click and purchase capability for the masses right in the live broadcast itself. And we're bringing that technology to everyone. Allowing literally anyone to host their own live QVC or Home Shopping Network style sales channel with clickable in-video purchase capabilities, eliminating friction from the sales process. So your viewers don't have to call a phone number or go to a website to purchase the products that we're watching, obviously that's introducing friction into the sales process. And we're delivering this capability on both mobile and desktop, and it's fun, it's quick, it's intuitive. It's really easy to do. So how do I know this is going to be big here in the U.S.? Well, here's how I know. Let's talk about China. This technology actually began in China. Now I'm not saying our technology, our technology is proprietary. It's our own. I think it's better than anything that they've done in China. But they were 2 years ahead of us, building their version of it. And it's just, just beginning here now. So here are some data points to illustrate how really meaningful this technology is and what it means for the market. So on November 11, 2019, November 11 is something they call Singles' Day. It's sort of analogous to our Black Friday here in the U.S., right? One company, one person using live stream e-commerce technology sold $145 million of merchandise in one live stream, okay? Now that's going back 2 years ago. Now 12 months later, Singles' Day 2020, again, November 11, 1 person reached 37 million live viewers on their live stream sold $425 million of merchandise. Combined sales through live streams just that day alone were $75 billion. In 2020, 0.5 billion people in China purchased products through a live stream, more than $136 billion of products sold in 2020 alone in -- through a live stream. So as I said, it's really, really just beginning here in the U.S. And we believe it's going to be even bigger in the U.S. And here's why: because unlike China, U.S. consumers have already been conditioned for decades for live stream buying through watching QVC TV shopping, right? And today, people have adopted webinars and other video streaming platforms to promote their products and services. I'd probably get, I don't know, 25 invites to a webinar every single day. And what is it? It's actually just people trying to sell you something, right? So you may have heard the term social selling. Well, we've taken that to really an entirely new level. So let me tell you what we've done with live stream selling. Let me tell you about our Attribution feature, which we literally just released. So think about this, not everyone wants to be in front of the camera, right? Not everyone feels comfortable hosting a live event. Not everyone feels confident pitching a product, a service or pitching themselves. Not everyone feels confident articulating whatever the value proposition might be for that product. But we all know people who do, right? There's millions of influencers, people that are really, really comfortable being in front of the camera do a great job. And obviously, that would be our target market for people that want to use live stream selling. But this is where our new Attribution feature just becomes absolutely the killer app. So with verbLIVE Attribution, you can go into the application, you could take a look and see which verbLIVE events are coming up. You could see people who are hosting them. And you might say, hey, you know what, this guy is great, this gal is great. I really like the products that they're going to be selling. And then you could generate in the app an invitation unique to you. And then you could share that invitation with your clients, your prospects, your fan base, whatever it might be, because you might not feel good being in front of the camera, right? You don't think that you're going to come off really well. But you can now monetize your contacts by sending them that live stream invitation. When your prospects, people that got your invitation, when they show up and watch that other person's live stream event and purchase products, you get paid, right? You participate in that revenue stream. The verbLIVE platform with Attribution is able to attribute each sale to the correct person that invited that purchaser. Now we just increase the total addressable market from -- literally exponentially, right? Because now it's not just the people who feel really good and be in front of the camera. Now it's everyone, everyone that has a Rolodex or a contact list or a customer base or a customer list, everyone. So that's how we all win. Attribution is our proprietary technology. We conceived it. We developed it. Now we've launched it. We've got several different pricing models around it, including subscription-based pricing as well as participation to a percentage of the sales done through our platform, and of course, combinations of both. So let me show you how it works. I'm going to try and play this video now with help from our tech team here at the conference, hopefully. That's Slide 8 for you guys trying to play that for me. [Presentation]

Okay. So that's verbLIVE with our Attribution feature. We believe it's really unlike anything in the market today. So let me share with you now another major value creation catalyst for Verb. And this one was just released just this past week after being a beta for about 4 or 5 months. It's called verbMAIL. And it's the integration of our interactive video technology into Microsoft Outlook. So here's how it works. Outlook users who subscribe will have a new button on their toolbar that says verbMAIL. Clicking this allows users to create a quick video mail right in Outlook and then add interactive icons such as right now, among other interactive features and then send it out through Outlook. Look, video has really become the preferred means of communication. And now you no longer have to leave outlook to create and send your video and even better a Verb style interactive video right in and through Outlook. So Microsoft tells us that there's over 1 billion Outlook users worldwide. And look, we expect that many of them will likely be drawn to this feature set. We anticipate that enterprise users will be able to add it to their Office 365 subscription, making it available to their entire organization. So let me just show you how that works. So if the team could advance to the next slide, play Slide 10 for me. [Presentation]

So this is verbMAIL. It's out now. You can go check out verbMAIL in the Microsoft store. If you have Outlook, just go to that upgrade button and add it. This version is -- as you saw, it is free right now. We have a release that's coming, which will be the paid version that is -- add some features and functionality that is really, really cool. So what you'll see now and what I just showed you is the initial feature set, which is -- obviously represents a very compelling value proposition all by itself. But let me give you a glimpse of what's to come with our Microsoft Outlook app. So actually, you're going to see a whole series of updates and upgrades coming pretty quickly. So picture this, and this is specifically for professional salespeople, you'll be able to send your verbMAIL interactive video through Outlook, and then the moment when your customer or prospect watches the video, you'll get a pop-up message on your computer or your mobile device, notifying you. So just to think about that. Let me stop there for a second because we actually already have that feature built into our verbCRM product, which has been our bread and butter product over the past couple of years. But here's where we take that to the next level. So that pop-up message in outlook not only tells you that your video is being watched by your prospect, but it then gives you the option to click on it. And that pop-up message -- and decide if you want your prospect to know while he or she is watching the video that you're at that moment online and available to talk if they want to. So while they're watching, they'll get a pop-up message that'll let them know that you're online. And if they want to talk to you, if they have questions about the video that they're watching, that you're available. Now check this out. If you select that option, that message pops up on their end. If they click on the message and say, yes, I would like to talk to someone about it. It will immediately launch a 2-way interactive verbLIVE, like a Zoom 2-way like session, except it has Verb's proprietary interactive e-commerce capability right then and there, while their interest level is peak. So someone may have just watched the video and said, yes, I've got a question, does this come in blue, right? And then the salesperson will be right there. Yes, we have it in blue. Click right here to complete your purchase, right? So this is how salespeople will be able to eliminate friction from the sales process, do this all right through Microsoft Outlook. Gmail is coming, but Outlook is up and running now. So we expect to deliver this feature in the coming months. But the free version, available now. Please check it out, you'll really going to like it. So I'm going to run out of time, and I really want to make sure I get to some questions. Quickly, we've protected the IP behind the platform. We worked on it for years. We've got patents issued, patents pending. So let me jump to some Q&A.

All right. So we have a couple of questions here, and I'll start with the first one, which is, I believe, referring to verbMAIL. And it is, will this technology require new funding?

No, no, not at all. No, we're pretty -- we don't need any money. We raised about $15 million several months ago. We're doing pretty well. As revenue climbs, our costs are coming down pretty dramatically. No, we're in good shape. This is out now. So we obviously didn't need more money for it.

The second question, would you be able to give some guidance on the pricing that will accrue to the company and translate that into an estimate EPS or quarterly revenue?

Well, here's the best way, I think, for me to respond to that. So internally, we have our models, right? And we have a sense of how well we're going to do. But here's the crazy thing about giving projections. It's kind of a no-win situation for CEOs and public companies because if you come in too high, which I'm not really all that concerned about that in our case, if you come in too high, then people think that you don't have a handle on the business and you get penalized in the market. Unfortunately, the same thing happens if you come in too low. So you come out with estimates, you end up doing extremely better. You would think that the market responds well to that. They don't. They want to know that you really understand the business and you understand what to expect. Here, for us, let's just take the Microsoft Outlook opportunity. There's 1 billion Outlook users according to Microsoft. I don't really know what percentage of that total addressable market we're going to get because it's a brand-new product. There's nothing like it that's out there. And I would honestly just be guessing. I could be wildly off. Yes, we've got great expectations for it. But we are trying to get ourselves into the Microsoft co-sell program, as an example. That's a program that where Microsoft productizes it, they put it in their product catalog. They distribute it to their value-added resellers. They give their field, their resellers all kinds of spiffs for actually selling the product. It's great for Microsoft because it will drive the Azure data consumption business among large enterprise using this video application. But I don't know what certainty that we're going to get in. I believe we will. If we do, I mean I can't reasonably begin to estimate what that will produce for us. So I would look foolish coming up with any kind of number right now in terms of what we'll generate and how that would translate into earnings per share. So I'm sorry, but I have to decline right now. But I will tell you this, as soon as we really feel that we've got enough data upon which we can extrapolate projections, then we'll absolutely provide that because we -- look, we really believe in transparency, we consider our shareholders to be our co-owners. We want them to have as much information as we could possibly give them in accordance with the rules, and we'll do that. But I don't think anybody will want me to come out with something just for the sake of providing a number that may not make any sense.

Next question, is Verb having an ongoing conversations with Google about any Verb products?

I wouldn't be able to talk about that. That would be material nonpublic information.

And to go along with that, are there plans to integrate with Gmail as well?

Yes. I did mention that briefly in the presentation. Yes, we will be integrated into Gmail as well.

All right. We got one more question, and that is what can retail investors expect for the next 1 to 3 months in terms of catalysts?

Well, we just released verbLIVE with Attribution. We've got a very robust pipeline. You saw the press release this morning about what we just did with SHOP.COM. You'll see more of those kinds of giant launches on a global scale. verbMAIL, I already talked about. And we've got a couple of other, I'm going to say 3 or 4 other products that fall into the same category as the ones I've just described for you that I consider to be blockbuster, like really blockbuster. And those will be out this year. So if you're excited by verbLIVE with Attribution, and I can't even begin to tell you how excited we are. And obviously, the market seems to be responding pretty well to it. And if you're excited about verbMAIL, then you're really going to be excited about the things coming this year.

So we had a couple more questions come in. I think we can get through one more.

Yes, sure.

And it is, do you think that this technology can be used as a benefit for the government, military included as millions of Outlook users?

Gosh, that's another one of those that I would love, love to talk about, but it falls into the category of, again, material nonpublic information. I can't unfortunately share it.

All right. Well, that's all the time we have for Q&A.

Thank you all. Appreciate your attention and check us out.

This concludes today's presentation. Please visit accesstogiving.com to view the conference agenda and listen to more company presentations and distinguish patents. Thank you.