Professional Diversity Network, Inc. (NASDAQ:IPDN) (“PDN” or
“the Company”), a global developer and operator of online and
in-person networks that provide access to networking, training,
educational and employment opportunities for diverse individuals,
today issued the following letter to shareholders.
Dear Fellow Shareholder,
Yesterday, we released our second quarter financial results as
filed in our Form 10Q with the Securities and Exchange Commission.
While we believe it illustrates tangible progress towards executing
our stated business plan, I felt it important to personally take
the time to not only expand on recent results, but also provide you
with a sense of current initiatives and how we intend to achieve
our collective goals.
I say collective goals because much like you, I too have a very
vested interest in the shares of our Company, and therefore value
creation. Our goals could simply not be any more aligned. The
current price of our stock can only be considered an indication
that there is more we should be doing towards building shareholder
value. In fact, this communication is indicative of our previously
announced intent to try and be more transparent and better stewards
of our corporate messaging with the financial community.
That said I believe actions are always stronger than words.
Affirmation of my own belief in the long-term prospects of our
business can be no better illustrated than by my own recent insider
purchases as noted in a Form 4 filing made on 6/19/2017. Those
purchases were made at nearly twice the price as we sit today. Upon
the window opening whereby insiders can again make purchases, you
may expect to see me again put my own money where my mouth
is.
In addition, in late 2016 and early 2017 I was part of the group
of investors at Cosmic Forward Limited (“CFL”) which invested over
$20 million in the company, at a price of $9.60 per share. This
investment was made based solely on an expectation that we believed
we could not only improve upon U.S. operations, but we could
leverage this expertise and existing talent as we expand into the
China market. Having now spent approximately seven months as
your Chief Executive Officer, I believe more strongly than ever
that the Company is well positioned for long-term success. I
further believe and expect my personal investment in our company,
along with CFL’s, will ultimately generate measurable return on
investment.
Our core value proposition as we develop a global company is to
provide international cultural services and education that supports
families so they can grow and prosper. With the integration
of our U.S. and China businesses, this perfectly captures our
company’s mission and culture.
I’d like to now give you an overview and update of our different
business segments.
U.S. Operations
Our U.S. operations currently consist of our NAPW business. NAPW
is a paid network for women only which provides networking and
business development opportunities to its members through online
and offline connections. Our PDN careers business provides career
opportunities to diverse job seekers and access to diverse job
seekers to the employers seeking them and our Noble Voice business,
is a lead-generation business which monetizes transactions by
driving inexpensive online traffic to our offline call center where
we add value and sell leads to our strategic partners who provide
continuing education and job opportunities to American workers.
Our NAPW business operates as a subscription-model with an
annuity element because of its renewals. Members originally
purchase one-year memberships in order to fully participate in
NAPW’s online and offline communities and offerings. We work hard
to maximize our members’ value so that they renew their memberships
each year creating a recurring revenue stream. Thus, we have
distinct revenue streams from both the sale of membership
subscriptions (and related products) as well as from the annual
subscription renewals. During 2017 we have, by design,
decelerated the former and reduced subscription revenues to
implement new technology, rebuild our sales processes and either
replace or re-train much of our sales team.
From our 10-Q filing you may have noticed NAPW’s decline in
subscription revenue. What you would not have noticed, and I
am very pleased to share with you today is that our efforts have
resulted in reduced per-member acquisition costs, improved brand
reputation and increased rates of renewal. The importance of
this progress cannot be overstated. While we have a plan to
accelerate top-line revenue growth from initial subscription sales
in 2018, much of the lifetime revenue value in this business comes
from the high-margin renewal revenue. We are already seeing
significant returns on our 2017 investments in the form of
increased renewal rates. If these returns continue, as we
expect they will, 2017 will mark an inflection point resulting in a
more efficient business which has a larger baseline.
Beginning in the first quarter of 2017, we consolidated the
day-to-day management of our PDN and Noble Voice businesses.
Our belief was that doing so would allow for immediate cost savings
and allow natural synergies between the two operations to more
naturally be expressed, identified and captured. I am pleased
to report that we are seeing the results of these efforts.
Additionally, we have recently consolidated our physical offices
for both companies so that all employees will now be operating from
our main corporate office in downtown Chicago. This
consolidation is expected to reduce our operating expense by over
$100,000 per year, while at the same time bringing together the
employees who need to work side-by-side to help synergize the two
operations.
In our PDN careers business we previously disclosed and
described our new “Cost Per Applicant” service of selling completed
and qualified applications to employers. While this is a new
segment, we have seen very encouraging results and are currently
generating more than $25,000 per month. At the same time, we
have invested in and implemented significant new technology,
including artificial intelligence-based marketing tools, which we
believe will position us to scale the PDN business. In our
Noble Voice business, we are seeing increased demand for our
services, much of which results from the stability and reputation
of our brand in the marketplace as well as the marketplace’s
renewed confidence in the for-profit education sectors.
Our ability to assist jobseekers with the job search and provide
additional options for career development is fundamental to our
diversity recruitment business.
In short, our U.S.-based businesses are strong and I believe
that they are well-positioned to continue to grow. At the end
of the second quarter we had approximately 9.7 million registered
users in our PDN network, 945,000 members in our NAPW network, 6.4
million Noble Voice users with TCPA-compliant opt-ins, and over
1,000 companies using the products and services operated by our
PDN/Noble Voice operations. We believe these numbers support
our goal to operate at cash flow breakeven for 2017 in our PDN and
Noble Voice businesses and for our U.S. business to reach cash flow
breakeven on a consolidated basis in mid-2018. Given our
investments, the market’s adoption of our products and services,
and the team we have in place, I feel encouraged that we can meet
these goals.
China Operations
As previously disclosed in 2017, we entered the China market
with a three-pronged strategy: (1) provide education, training and
collaborative opportunities to Chinese business people through our
Shared Economy summit series; (2) provide networking and other
benefits to Chinese women through our International Association of
Women; and (3) provide education services for Chinese
students. All three reflect our core value proposition, which
is utilizing international cultural and educational resources to
support family members’ growth – men, women and children.
Through the first two quarters of the year we have made significant
progress on all three.
Our Shared Economy summit series has so far attracted over 7,800
paid attendees at seven paid events. We have used these
initial events to understand demand in diverse markets across China
so that we may tailor our offerings in the future. This
segment is continuing to mature, and we have plans to continue to
deliver exciting programming to the Chinese market through
well-known and respected global authorities.
Our International Association of Women (“IAW”) segment kicked
off near the end of the second quarter with an initial, marketing
event. We have since begun to transact IAW membership sales
which are priced in the range of 20,000 to 500,000 RMB for annual
membership subscriptions. We are encouraged by early
results. I believe that IAW can provide in China, which is a
virtually untapped market, the same dual-flow revenue stream as
NAPW does in the U.S. through initial subscription sales plus
annual renewals.
Finally, we have begun to gain traction in our education
business. We recently announced a partnership with Jiangxi
Ji’An College. This partnership will provide us with a supply
of students who wish to either study in or receive credit from
institutions in the U.S. We are currently cooperating with a
number of additional schools, both in the U.S. and abroad, to
identify appropriate partners and develop mutually-beneficial
programs.
In closing, while we are pleased with the measurable progress of
recent quarters, we are keenly aware that there is much hard work
still to be done. I believe our best days lay just ahead. Rest
assured we intend to continue driving towards our goal of achieving
both top line growth and bottom line profitability resulting in
building sustainable shareholder value. Thank you for your
continued support.
Sincerely,
Michael WangChief Executive Officer
About Professional Diversity Network (PDN)
Professional Diversity Network, Inc. (PDN) is a
global developer and operator of online and in-person networks that
provides access to networking, training, educational and employment
opportunities for diverse professionals. We operate subsidiaries in
the United States and China including National Association of
Professional Women (NAPW), which is one of the largest, most
recognized networking organizations of professional women in the
country, spanning more than 200 industries and professions, and
Noble Voice, a career placement and career counseling call center.
Through an online platform and our relationship recruitment
affinity groups, we provide our employer clients a means to
identify and acquire diverse talent and assist them with their
efforts to comply with the Equal Employment Opportunity Office of
Federal Contract Compliance Program. Our mission is to utilize the
collective strength of our affiliate companies, members, partners
and unique proprietary platform to be the standard in
business diversity recruiting, networking and professional
development for women, minorities, veterans, LGBT and disabled
persons globally.
Forward-Looking Statements
This press release contains certain
forward-looking statements based on our current expectations,
forecasts and assumptions that involve risks and uncertainties.
This release does not constitute an offer to sell or a solicitation
of offers to buy any securities of any entity. Forward-looking
statements in this release are based on information available to us
as of the date hereof. Our actual results may differ materially
from those stated or implied in such forward-looking statements,
due to risks and uncertainties associated with our business, which
include the risk factors disclosed in our most recently filed
Annual Report on Form 10-K and in our subsequent filings with the
Securities and Exchange Commission. Forward-looking statements
include statements regarding our expectations, beliefs, intentions
or strategies regarding the future and can be identified by
forward-looking words such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," “plan,” "should," and
"would" or similar words. We assume no obligation to update the
information included in this press release, whether as a result of
new information, future events or otherwise. Our most recently
filed Annual Report on Form 10-K, together with this press release
and the financial information contained herein, are available on
our website, www.prodivnet.com. Please click on "Investor
Relations."
CONTACTS
Jason Assad – Investor Relations
Jassad@prodivnet.com
678-570-6791
Chris Wesser – EVP and Secretary
cwesser@prodivnet.com
516-659-8560
Jim Kirsch – Co Executive Chairman
jkirsch@prodivnet.com
312-614-9021
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