TON Strategy Company (TONX) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining the H.C. Wainwright 23rd Annual Global Investment Conference. My name is Louis Susser, and I'm on the Corporate Access team at H.C. Wainwright. While we are virtual this year, we're confident we're going to be able to provide value to you with over 900 companies presenting at this conference as well as via your interactions through one-on-one meetings. H.C. Wainwright is a full-service investment bank dedicated to providing corporate finance, strategic advisory and related services to public and private companies across multiple sectors and regions. We have a total of 19 publishing senior analysts and over 560 companies covered across all sectors. Please visit hcwco.com for more information. From a logistics standpoint, please make sure to reference your virtual online portal that provides your individual links to your meetings and all presentations. Please join us for corporate presentation and panels that will be available live and streaming on September 13 to 15. With that said, have a productive and enjoyable day, and I'd like to introduce our first presenter. I'd like to welcome Rory Cutaia, who's President, CEO and Chairman of Verb Technology Company.

Okay. Thank you. I appreciate that, Louis. Thank you all for joining me today. I appreciate the opportunity to tell you all about Verb and the incredible year that we're anticipating here in 2021 and beyond. So I want to give you all a brief overview of who we are and what we do. And then I want to jump to what we believe will be truly the greatest value creative for ourselves and our shareholders for years to come. What I'm talking about is live stream e-commerce, shoppable video. And 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 all know it. So let me jump forward here in our slides, and let me talk about who we are and what we do. So we're a software company, a SaaS-based recurring revenue business model with what our customers say are the most effective sales tools on the market today. We had $1 billion plus sales company -- revenue sales company, global and scale. One of our clients put on a press release really just a couple of weeks ago, SHOP.COM. I would encourage you guys to take a look at it if you get a chance. They launched our verbLIVE product and the CEO quoted in that press release, completely unsolicited, this is them, saying that this is the most effective sales tool that they used in the history of the company. So that -- when you hear that from your customers, that really -- that speaks by and I would suggest you guys take a look at that. And where is it coming from? Well, it's because our suite of sales tools, which comprise our sales enablement platform, are based on our proprietary interactive video technology. So this is technology that produces 600% to 1,200% increases in sales conversion rates. 3,300% increases in sales rep retention rates. So as you know, every sales organization has massive turnover and turn within their sales teams, right? Because what most sales people don't know how to sell, they don't have the experience, the training or they just don't have the chops. Either way, there's always tremendous turnover. But when they're using our platform, and they use it in our sales tools, they're actually able to perform. And I'm going to show you why, what these sales tools actually doing? Now, easy, they're able to use them. And because they're getting results, you don't have that gigantic churn. And as I said, our clients are reporting 3,300% increases in the retention rates because the salespeople were actually selling. And obviously, everybody wins when that's happening, lower recruitment costs, lower training costs, all of that. So we've had now -- I think by now, by today, we've probably crossed over the 3 million downloads of our products. Last I looked, that was up like more than 40%, 45%, 50% just over the past several months. So it's -- there's massive adoption rate going on as we speak because of these new products that we introduced, and I'm going to obviously get to it. We've got well over 25,000 4.9 star ratings on the app stores. We're in 60 countries, 48 languages, and we reported our 2021 second quarter earnings last month. And I could tell you that our SaaS recurring revenue was up 26% over the same period last year, up 10% over the prior quarter. And I'm willing to let you guys know as we're approaching the end of third quarter now, third quarter is going to be nicely up, impressively up. So we don't traditionally give guidance, but because we're so far into the third quarter now, I feel pretty confident putting that out there. So let me move on to the next slide here. Our verbMAIL application, it's an integration with Microsoft Outlook. I want to make sure that we talk about that. But I want to start with what we believe the growth that we're going to experience and how it's going to accelerate, do these catalysts, specifically the new sort of hyper-growth products that we've developed, and we've recently launched with large enterprise clients on a global scale. Those products and the follow-on products and enhancements that we'll continue to deploy throughout this year into next will demonstrate the true -- really the true value creation opportunity that we believe Verb represents. So let me show you what I'm referring to. This is -- I want to talk about verbLIVE. It's truly innovative, live stream e-commerce, shoppable video. We think this is really going to blow up. It's really just starting here. And so for those of you who don't know what that is and what shoppable video is, it's the ability for consumers to click in a video during a live broadcast to purchase products. Not just click on the text or on static images on popular websites. You can see some of the social media platforms are now beginning to adopt this. But we're just so far ahead of everyone else and self-proprietary protected technology. I'm talking about true click and purchase capability for the masses right in the live broadcast itself. And we're bringing that technology to everyone, allowing anyone, literally anyone to host their own live QVC or Home Shopping Network style sales channel or show with clickable in-video purchase capabilities, eliminating friction from the sales process because after all, isn't that what this is all about, right? That's what selling is. Those people that are successful in sales have figured out how to eliminate friction from the sales process. I mean look, what Bezos did with Amazon's 1-Click. That's the perfect example of it. So look, viewers, they don't have to call a phone number or go to a website like they do when they're watching any other kind of shopping content or QVC or home shopping network. And if you've ever done that, you know how -- what kind of miserable experience that is, you're on hold and they're trying to upsell you something. It's friction, friction, friction. This is a technology that allows to click and buy as their interest level peaks. It's fun, it's quick, it's intuitive, it's easy to do. It allows anyone to generate an income again through their own QVC style show. So when we think about how big can this be, right? Everyone's asking the same question. This seems amazing. How big can this be? Well, look, we -- when we conceived this several years ago, and this was all pre-pandemic -- obviously, the pandemic accelerated all this, but when we conceived it, we thought that -- we thought we were geniuses, nobody is doing anything like this. And then as we began putting the product out, we realized that there are companies in China that has something similar, not nearly as cool as ours, but it's something very similar, shoppable video, live stream shoppable -- live stream e-commerce capabilities. And they've been running that now for a good couple of years. So I want to take a look at some of the data points that have come out of China on this to give you a sense of how big could this actually be here in the U.S. and in the rest of the western world. So here's what we know. So in China, on November 11, is what they call Singles' Day, and that's sort of analogous to our Black Friday, a big shopping day. So Singles' Day in China is where people that are not married buy each other presents. So it's a massive shopping day. So one company, one person using a live stream shopping technology sold $145 million worth of merchandise in 1 live stream, okay? This is November 11, 2019, okay? So just 2 years ago. Now fast forward, how has that grown? So 12 months later, November 11, Singles' Day in 2020, 1 person in a single live stream reached 37 million live viewers and sold $425 million worth of merchandise. Combined -- I mean that's crazy, right? It's almost impossible to believe, but true. Combined sales through live streams on just that day alone, $75 billion worth of products sold just that day alone. In 2020, 500 million, 0.5 billion people in China, purchased products through a live stream. And an interesting fact on that is a little more than 30% of the people that went to go see these live streams didn't go because they intended to buy product. They went for pure entertainment. And that's a really important point because people who heard me speak before and talk on this particular topic, I've been saying for a long time now, we are going to see a true convergence of pure entertainment and shopability. People are going to want that all content, all video content, live and recorded is shoppable. That's coming. And I'll tell you who else is going to want it. Your sponsors and advertisers are going to want it because they're getting to the point now where they don't want to wait for the Nielsen ratings to come out a couple of weeks later, and it's going to tell you what -- how many homes were tuned into a specific channel. They're going to want to know what their ROI is. And they're going to want to know in real time because that capability now exists. It exists right now in verbLIVE. You'll know who was on, how long they were on, they were were actually watching, what did they click on, what did they buy? And you'll have that data in real time. So if you're an advertiser or a sponsor of content, you're going to insist that companies are using this technology because that's the only way you're going to know definitively what your ROI is. And we think that's where it's all going. We are at the forefront of it. Again, as I said, we're just really so far ahead of everyone else. So let me show you something. In fact, you know what I want to do here. I want to see if we could just jump right to what does this actually look like. Take a look at this. [Presentation]

Okay. So let me talk about what you've just seen. So that's verbLIVE. And so any sales rep, that's a subscriber to our platform, has the ability to basically host their own QVC style show, right, where you could say purchase my AirPods Pros and go ahead and click right here, and I'm having to sell on them right now and you could buy them, right? Okay, so there's something else that was featured in that video that I wanted to talk about. Well, when I say we're so far ahead of everybody else trying to do live streaming stuff, you heard the term Attribution, that feature was mentioned. And I want to emphasize what that is because it's really quite extraordinary. So here is some context. Everyone's using some kind of live stream today or some video to promote themselves or their products or their services. And you get invites to webinars. I get a whole bunch of them everyday. Webinar is really just an opportunity for someone to try to get your attention and sell you something in a webinar environment. But then how do they make the sale? You've got to go dial a phone number or they put a URL in the chat and they kind of hope that people go click on it. But your conversion rates there are exceedingly low because if people are actually even interested, if they have to leave the video to contact you, you're going to lose 80% of the interested people. That's just the data. With our technology, as you can see, you can click right in the live stream and purchase the products while the live stream is still going. Okay. So who's the target demo for this? What's the total addressable market for live stream? Well, it's obviously everyone who feels it's comfortable, be in front of the camera, pitching whatever the value proposition might be, feeling confident in their ability to articulate the value proposition. And obviously, that's a zillion people, just look at how many people are putting videos out on YouTube and social media, right? But what we've done with Attribution is take that to a new level and increase the total addressable market exponentially and here's why. Let's suppose I don't really feel confident being in front of the camera and pitching anything like the way I look and like the way I sound. I don't really get the handle on the value proposition I'm not good at, right? So I could go into the application, and I can look at the calendar of events and see who's going to be on, who's hosting events, what products or services they're promoting. And I might see some people on there that I think, hey, I've seen them before, they're really great. Well, maybe it's an influencer, right, that has -- that's going to generate a massive audience who is someone that is really, really good at pitching any product to service. I can click on that event, and it will generate for me a unique invitation. So now I could take that invitation and I could send that to everybody on my contact list, everybody on my Rolodex. I could post it on social media. And then when that event comes up and anyone that I sent my invitation to, goes to that event and purchases product in that live stream video, in that verbLIVE event, I get paid. So just think about that. Now verbLIVE is not just for people who feel comfortable being in front of the camera. It is for anybody that has a contact list that wants to monetize that contact list. So that's Attribution. That's out. We released it about a month ago. Our clients -- our existing clients that jumped on early are having extraordinary results from it, and we believe that verbLIVE with Attribution is going to allow our company to grow in a meaningful way. I'm laughing because I think it's an understatement as to the growth that we will experience this year and certainly beyond as we continue to market that product. And look, it's not hard to see how more and more video content, even things that you're seeing on Netflix and Amazon and some other things are becoming interactive. That's the future. We're making that future happen now and using it as sales tools. And again, the conversion rates people are getting is unbelievably impressive. It's just so far ahead of everybody else out there. The next thing I want to show you is what we call verbMAIL because this is another catalyst for Verb growth this year and beyond. These are things that we just put out. Look, if you take a look at our financials, historically, we've invested a ton of dough in research and development and development and product costs over the past couple of years. In fact, we were even criticized for it because people are like you're spending way too much money on this, and I was like no. I know exactly where the market is going to be. I know where we want to be in it. And I want to be able to put out a suite of products, not just one, we're going to bet the farm on one product. We're going to put out a suite of products that we believe are game changers and going to really create value for ourselves because we're all shareholders and -- as well as our shareholders in the market. So anyway, verbMAIL is another one. We integrated our interactive video technology pursuant to a partnership agreement with Microsoft into Microsoft Outlook. So the Microsoft tells us there's 1 billion Outlook users out there, right, in the world globally. I mean even a small percentage of them that want to be able to communicate with video because now everybody does, nobody wants to really read anything anymore. People want to consume information by watching videos. People want to share information through videos. Now right in Outlook, which is where a lot of people live every day, you could click the verbMAIL icon, right in the Microsoft Outlook toolbar, something will slide out, will allow you to either choose an existing video or record a new one, add your interactive buttons like buy it now, click here to open my calendar right in the video, choosing available time slot to make an appointment with me, click here to download that contract that we were just talking about. The list goes on and on of what you can do. And then you could send that out through Outlook. So that's verbMAIL. It was just released about a month or so ago. It's in the Microsoft store. Right now, it's free. We have a pro version coming that has features that are just drop dead unbelievable. And if I had time, I really love to talk about what those features are. And they're coming in the next month now, hopefully sooner. But let me show you what it looks like because it's really... [Presentation]

So that's verbMAIL, that's out now. The -- as I said, it's free. That's the free version. What you saw is everything that you get in the free version. It's pretty incredible. But while I have just a couple of more minutes, I want to just tell you what the pro version is going to look like, which is the paid version. So in the paid version, I'm going to be able to get that same notification. When I send it out to you and you watch it, I am going to get notified right in my -- on my device, whatever it might be, if I'm on my phone or my desktop. And it's going to tell me that Louis just started watching the video. And that's going to tell me how long you watched it, how many times you watched it. And then it's going to give me, and this is where the pro version comes in, then it's going to give me the option to click on that pop-up message and let Louis know that I'm available right now, while he's watching the video, if he has any follow-up questions or any comments after seeing the video. If I click that, then a pop-up is going to appear on Louis' screen while he's watching the video, and it's going to say, "Hey, Louis, Rory is available right now. If you have any questions after watching the video, if you'd like to chat with him afterwards, click here." If he clicks, then it's going to launch a 2-way verbLIVE style video, where he and I are now communicating with each other. And it could be like, "Hey, Louis, so what do you think? You like the product? Is this something that you're interested?" And he could be like, "Yes, Rory, I really like it, does it come in blue?" "Absolutely, Louis, go ahead and click right here, and you can buy it right now in blue." Boom, done. That's the pro version, really quite amazing. It will be out shortly. That will be a paid version. So look, there's more, but unfortunately, I don't have more time, but we've got a number of catalysts that have recently been launched, more coming, some super exciting things coming. Last point, on October 7, where we're hosting what's called the verbLIT event, L-I-T, leading interactive technology symposium, where we're going to -- it will be like an Apple-like event where we're going to showcase products, people behind the products, who's using them. It will be really, really impressive. But unlike Apple's event, ours is interactive because it's going to be hosted on verbLIVE. Encourage everyone to take a look at it, check out the press releases and we'll put some information out. Okay. Sorry, we ran out of time.

All right. Thank you, Rory, and I want to thank all of our presenters for taking part in what has been a very productive and informative series of presentations. We appreciate the time and effort that went into preparing them. Hopefully, our next conference will be one we can hold in person rather than virtually. But in the meantime, we're very grateful for your flexibility and your presence online this year. Thank you again from the H.C. Wainwright team.