VERB Technology Company, Inc. (NASDAQ:
VERB) ("VERB" or the "Company"), a leader in
business-focused interactive video Webinar, CRM, marketing, and
sales enablement applications, reported financial results for the
full year ended December 31, 2019 and the first quarter ended March
31, 2020.
Recent Operational Highlights
- In January 2020, VERB provided comprehensive operational
highlights for the calendar year 2019, which can be viewed
here.
- SaaS recurring revenue, as a component of total reported
digital revenue, was up sequentially for the past four consecutive
quarters.
- Total user downloads approximate 1.4 million, representing
growth of approximately 475,000 or 67% since Q3 2019 and growth of
150% over the past 12 months.
- 26 new enterprise clients were added between Q4 2019 and Q1
2020, of which 50% were business enterprises outside of the direct
sales industry, supporting the Company’s successful and ongoing
expansion into other industry verticals and increased revenue
diversification plans.
- In March, the Company introduced verbLIVE, its
next-generation, interactive video-based ecommerce webinar
platform. The product is currently in limited release with a broad
commercial launch expected this summer.
- In April, VERB began Japan operations, tapping into a
multi-billion-dollar market opportunity as part of its
international expansion plan. To-date, the Company has already
executed verbCRM subscription agreements with six Japanese
enterprise clients.
- In Q1 2020, SaaS recurring revenue surpassed non-digital legacy
services revenue as the largest component of the Company’s total
revenue in accordance with management’s previously announced
plans.
Full Year 2019 Financial ResultsThe following
period-over-period comparisons present the Company’s pro forma
results of operations after giving effect to the acquisition of
Sound Concepts based on the historical financial statements of the
Company and Sound Concepts. The unaudited pro forma results give
effect to the acquisition as if it had occurred on January 1,
2018.
- Total revenue for 2019 was $13.1 million, an
increase of 3% from $12.8 million in 2018.
- Total Digital revenue for 2019 was $5.3
million, an increase of 42% from $3.7 million in 2018.
- Total SaaS recurring revenue (as a component
of total Digital revenue) for 2019 was $3.6 million, an increase of
9% from $3.3 million in 2018.
- Cost of revenue was $7.1 million, a decrease
from $7.2 million in 2018.
- Gross profit for 2019 was $6.0 million, an
increase of 7% from $5.6 million in 2018.
- Research and development
expenses for 2019 were $5.0 million, an increase
of 58% from $3.2 million in 2018. The increase in research and
development was primarily attributable to additional product
development and testing to support the integration and combination
of the verbCRM platform, the development of verbLIVE, and
enhancements to the Company’s core platform to facilitate native
integrations with Salesforce, Microsoft, Adobe, and other channel
partners.
- General and administrative expenses for 2019
were $15.8 million, an increase of 61% from $9.8 million in 2018.
The increase in general and administrative expenses was primarily
attributable to an increase in labor to support growth, an increase
in professional services related to the up-listing of the Company’s
common stock and warrants to the Nasdaq Capital Market, costs
associated with its acquisition of Sound Concepts, attorneys’ and
recruiting costs, and an increase in stock-based compensation
expense.
First Quarter 2020 Financial Results
The following period-over-period comparisons present the
Company’s pro forma results of operations after giving effect to
the acquisition of Sound Concepts based on the historical financial
statements of the Company and Sound Concepts. The unaudited pro
forma results give effect to the acquisition as if it had occurred
on January 1, 2018.
- Total revenue for the first quarter of 2020
was $2.4 million, a decrease of 41% from $4.0 million for the same
period last year. The decrease in total revenue was attributable
entirely to the decrease in revenue from the Company’s intentional
exit from its legacy welcome kit printing and marketing merchandise
fulfillment business in order to focus on building revenue for its
SaaS application business which has improved quarter-over-quarter
since Q1 2019.
- Total Digital revenue for the first quarter of
2020 was $1.5 million, an increase of 38% from $1.1 million for the
same period last year.
- Total SaaS recurring revenue (as a component
of total Digital revenue) for the first quarter of 2020 was $1.1
million, an increase of 34% from $786,000 for the same period last
year.
- Cost of revenue for the first quarter of 2020
was $1.1 million, a decrease of 53% from $2.3 million for the same
period last year.
- Gross profit for the first quarter of 2020 was
$1.3 million, a decrease of 26% from $1.8 million for the same
period last year. The decrease in gross profit was primarily
attributable to the previously mentioned exit from the Company’s
legacy printing and fulfillment business totaling $797,000 or 93%,
offset by an increase in the Company’s Digital business totaling
$335,000 or 38%.
- Research and development
expenses for the first quarter of 2020 were $1.3
million, virtually flat compared to $1.3 million for the same
period last year.
- General and administrative expenses for the
first quarter of 2020 were $3.5 million, an increase of 10% from
$3.2 million for the same period last year. The increase in general
and administrative expenses was primarily attributable to an
increase in labor to accelerate development of the Company’s new
applications, including verbLIVE, and an increase in stock-based
compensation expense.
- Cash totaled $1.6 million as of March 31,
2020, compared to $983,000 at December 31, 2019.
COVID-19 ResponseTo ensure the health and
safety of its employees, VERB has restricted all non-essential
travel indefinitely and has instituted a mandatory work-from-home
policy for most of its workforce. The Company is closely monitoring
the evolving global pandemic response efforts through all available
information channels, including the latest news reports as well as
updates from the Centers for Disease Control (CDC), the World
Health Organization (WHO) and other regulatory authorities.
In recognition of the current environment, and to support
continued Company operations and maximized workforce retention, on
February 5, 2020, the Company initiated a private placement for the
sale and issuance of up to five million restricted shares of its
Common Stock at a per-share price of $1.20. As a result of this
private placement, from February 25 through March 31, 2020, a total
of 4,237,833 shares of Common Stock were subscribed. Total
subscribed shares of 3,392,833 shares of Common Stock were issued
with net cash proceeds of $3.4 million after direct costs received
as of March 31, 2020. The remaining 845,000 subscribed shares of
Common Stock were issued as funds were received from overseas
investors in April and May 2020 for additional net cash proceeds of
approximately $1.0 million.
On April 10, 2020, the Company’s Board of Directors approved
management’s COVID-19 Full Employment and Cash Preservation Plan,
pursuant to which all directors and senior level management reduced
their cash compensation by 25% and all other employees and
consultants reduced their cash compensation by 20% for a period of
three months from April 16, 2020 through July 15, 2020 for one
category of plan participants, and April 26, 2020 through July 18,
2020 for the other category of participants. The amount of the
reduction in cash compensation is to be paid in shares of VERB’s
common stock through an allocation of shares from the Company’s
2019 Omnibus Incentive Plan and granted pursuant to stock award
agreements entered into effective as of April 10, 2020 between the
Company and each of its directors, executive officers, employees,
and consultants.
On April 17, 2020, the Company also received loan proceeds of
$1.2 million under the Paycheck Protection Program (PPP) of the
recently enacted Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”) being administered by the U.S. Small Business
Administration (“SBA”). To comply with the terms of the CARES Act,
the funds will primarily be used for payroll costs. During the
first six months of the term note agreement, neither principal nor
interest shall be due or payable. Additionally, should the Company
meet certain qualifications under the program, a percentage up to
and including as much or more than $1 million of the loan could be
forgiven.
Management Commentary“2019 was a
transformational year for VERB, and we entered 2020 with
significant operating momentum, specifically within our
high-growth, SaaS recurring revenue business,” said Company CEO
Rory J. Cutaia, “In the first quarter we officially crossed the
million-dollar mark in subscription-based quarterly recurring
revenue, and surpassed non-digital revenue as the largest component
of the Company’s total revenue. We also set a record for app
downloads by users which now exceed 1.4 million – up 150% over the
past 12 months. The addition of 26 new enterprise clients over the
past two quarters, half of which are not in the direct sales
sector, is a testament to the successful execution of our growth
strategies. More specifically, we are continuing to introduce
ground-breaking, disruptive, new products and features, such as
verbLIVE, our interactive video webinar product, and the in-app
purchase capabilities we’re deploying across our platform. Through
our own app store ecosystem, third party developers can offer
exciting new products to our users, which is designed to more
effectively monetize our large user base.
“In order to make sure we de-risked our exposure to the COVID-19
economic downturn, we enacted our Full Employment and Cash
Preservation Plan, which should result in cash savings to our
Company of nearly $600,000 and allow us to maintain our entire
workforce. Additionally, through a well-timed private placement and
other recent funding, we successfully raised another $6 million to
support our operations for the foreseeable future.
“Looking ahead to the second quarter and beyond, we’ve developed
and have already executed a plan to maximize revenue from our
legacy welcome kit printing and marketing merchandise fulfillment
business, at no cost to VERB, through a revenue share arrangement
with a company who specializes in performing these services and who
can guarantee service continuity for our clients. Through this
plan, we will be able to guarantee net revenue and pure margin from
every sale.
“More recently, we commenced local operations in Japan through a
Tokyo-based corporation with a team with over 30-years’ experience.
We believe the in-country sales, support, and customer service we
can provide through native language speaking staff in Japan
represents a significant opportunity for us to grow our
applications subscription business and enhance our clients’ Japan
initiatives. Since we began operations, we have already executed
verbCRM subscription agreements with six Japanese enterprise
clients, and we are currently exploring a similar expansion
opportunity in Korea, which represents the third largest direct
sales market in the world.
“In addition to our global expansion initiatives, we have
several other revenue catalysts planned for this year. We’ve begun
the limited release of verbLIVE, our groundbreaking interactive
video-based live stream webinar and video conferencing platform.
Given the current work-from-home and social distancing environment
in which we all find ourselves, we believe this new addition to our
platform may be the biggest source of revenue growth for our
company this year and beyond. As more and more organizations,
particularly SMBs, are scrambling to provide infrastructure for
remote work, verbLIVE can provide for many of those now-vital
needs. We are also making great progress on the eventual launch of
our VERB app store and plan on releasing an open API for developers
to help build out our eco-system, which should provide a material,
positive impact to our ARPU metrics spread across our 1.4 million
users.
“While we are continuing to navigate through uncharted
territory, we are confident that the swift and decisive actions
we’ve taken will allow us to continue our operations and support
our long-term growth efforts. As a SaaS-based applications provider
with best-in-class and market-relevant tools, we are uniquely well
positioned to benefit from potential macroeconomic disruption
caused by the ongoing shift in how business is being
conducted.”
Conference CallVERB management held a
conference call yesterday, May 18, 2020, to discuss its results in
greater detail. A telephonic replay of the conference call is
available through June 1, 2020 by dialing the appropriate numbers
below:
Toll-free replay number: 844-512-2921International replay
number: 412-317-6671Replay ID: 13703745
Last week, the Company filed its Forms 10-K and 10-Q,
respectively and this morning filed a transcript of the conference
call on Form 8-K. These filings can be viewed in the Investor
Relations section of VERB’s website.
About VERBVERB Technology Company,
Inc. (NASDAQ: VERB) is a Software-as-a-Service, or SaaS,
applications platform developer. Our platform is comprised of a
suite of sales enablement business software products marketed on a
subscription basis. Our applications, available in both mobile and
desktop versions, are offered as a fully integrated suite, as well
as on a standalone basis, and include verbCRM, our Customer
Relationship Management application; verbLEARN, our Learning
Management System application; and verbLIVE, our Live Broadcast
Video Webinar application.
Our suite of applications can be distinguished from other sales
enablement applications because our applications utilize our
proprietary interactive video technology as the primary means of
communication between sales and marketing professionals and their
customers and prospects. Moreover, the proprietary data collection
and analytics capabilities of our applications inform our users in
real time, on their device, when and for how long the prospects
watched the video, how many times they watched it, and what they
clicked-on, prompting the user to focus his or her time and efforts
on hot leads or interested prospects rather than on those that have
not seen the video or otherwise expressed interest in the content.
Users can create their hot lead lists by using familiar, intuitive
‘swipe left/swipe right’ on-screen navigation. Our clients report
that these capabilities provide for a much more efficient and
effective sales process, resulting in increased sales conversion
rates. We developed the proprietary patent-pending interactive
video technology, as well as several other patent-issued and
patent-pending technologies that serve as the unique foundation for
all of our platform applications.
With offices in California and Utah, we provide
subscription-based application services to approximately 100
enterprise clients for use in over 60 countries, in over 48
languages, which collectively account for a user base generated
through more than 1.3 million downloads of our verbCRM application.
Our technology is also being integrated into popular ERP, CRM, and
marketing platforms offered by third-party developers, including
Salesforce and Microsoft, among others. For more information,
please visit: verb.tech
Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995This press release contains
certain “forward-looking” statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the words “expects,” “anticipates,”
“believes,” “intends,” “estimates,” “plans,” “will,” “outlook” and
similar expressions. Forward-looking statements are based on
management’s current plans, estimates, assumptions and projections,
and speak only as of the date they are made. With the exception of
historical information, the matters discussed in this press release
including, without limitation, the Company’s plan to reduce all
directors and senior level management cash compensation by 25% and
all other employees and consultants cash compensation by 20% for a
period of three months from April 16, 2020 through July 15, 2020
for one category of plan participants, and April 26, 2020 through
July 18, 2020 for the other category of participants; the Company’s
plan to pay the amount of the reduction in cash compensation in
shares of VERB’s common stock through an allocation of shares from
the Company’s 2019 Omnibus Incentive Plan; the Company’s plan to
use its loan proceeds from the PPP primarily for payroll costs; the
Company’s belief that should the Company meet certain
qualifications under the program, a percentage up to and including
as much or more than $1 million of the loan could be forgiven; the
Company’s belief that it will continue to introduce
ground-breaking, disruptive, new products and features, such as
verbLIVE, its interactive video webinar product, and the in-app
purchase capabilities its deploying across its platform; the
Company’s belief that through its own app store ecosystem third
party developers can offer exciting new products to its users; the
Company’s belief that its Full Employment and Cash Preservation
Plan should result in cash savings to the Company of nearly
$600,000 and allow it to maintain its entire workforce; the
Company’s belief that its private placement of restricted shares
raising $6 million can support its operations for the foreseeable
future; the Company’s plan to maximize revenue from its legacy
welcome kit printing and marketing merchandise fulfillment
business, at no cost to VERB, through a revenue share arrangement
with a company who specializes in performing these services and who
can guarantee service continuity for the Company’s clients; the
Company’s belief that through this plan the Company will be able to
guarantee net revenue and pure margin from every sale; the
Company’s belief that in-country sales, support, and customer
service it can provide through native language speaking staff in
Japan represents a significant opportunity for the Company to grow
its applications subscription business and enhance its clients’
Japan initiatives; the Company’s plan to explore a similar
expansion opportunity in Korea; the Company’s belief that it has
several other revenue catalysts planned for this year; the
Company’s belief that the new addition of verbLIVE to its platform
may be the biggest source of revenue growth for the Company this
year and beyond given the current work-from-home and social
distancing environment; the Company’s belief that as more and more
organizations, particularly SMBs, are scrambling to provide
infrastructure for remote work, verbLIVE can provide for many of
those now-vital needs; the Company’s plan to release an open API
for developers to help build out its eco-system, which should
provide a material, positive impact to its ARPU metrics spread
across its 1.4 million users; the Company’s confidence that the
swift and decisive actions it has taken will allow it to continue
its operations and support its long-term growth efforts; and the
Company’s belief that it is uniquely well positioned to benefit
from potential macroeconomic disruption caused by the ongoing shift
in how business is being conducted, are forward-looking statements
and considerations that involve a number of risks and
uncertainties. The actual future results of the Company could
differ from those statements. Factors that could cause or
contribute to such differences include, but are not limited to,
adverse domestic and foreign economic and market conditions,
including demand for the Company’s products and services; plans and
objectives of management for future operations or products; the
market acceptance or future success of the Company’s products, and
the Company’s future financial performance. The Company cautions
that these forward-looking statements are further qualified by
other factors including, but not limited to, those set forth in the
Company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2020, and other filings with the U.S. Securities
and Exchange Commission (available at www.sec.gov). The Company
undertakes no obligation to publicly update or revise any
statements in this release, whether as a result of new information,
future events, or otherwise. Forward-looking statements involve
inherent risks and uncertainties, most of which are difficult to
predict and are generally beyond our control. Actual results or
outcomes may differ materially from those implied by the
forward-looking statements as a result of the impact of a number of
factors, many of which are discussed in more detail in our reports
filed with the Securities and Exchange Commission.
Media Contact:855.250.2300,
ext.7info@myverb.com
Investor Relations Contact:Matt Glover and Tom
ColtonGateway Investor
Relations949.574.3860VERB@gatewayir.com
VERB Technology |
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Historical Revenue |
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User downloads |
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550,620 |
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668,272 |
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717,066 |
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855,859 |
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1,313,467 |
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2019 |
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2020 |
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Q1* |
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Q2 |
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Q3 |
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Q4 |
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Q1 |
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SaaS Recurring Subscription Revenue |
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$786,000 |
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$858,000 |
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$953,000 |
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$995,000 |
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$1,057,000 |
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Other Digital Revenue |
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273,000 |
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596,000 |
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485,000 |
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344,000 |
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400,000 |
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Total Digital Revenue |
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$1,059,000 |
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$1,454,000 |
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$1,438,000 |
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$1,339,000 |
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$1,457,000 |
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Welcome Kits & Fulfillment |
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2,265,000 |
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1,784,000 |
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1,164,000 |
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965,000 |
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728,000 |
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Shipping |
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677,000 |
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495,000 |
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271,000 |
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181,000 |
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169,000 |
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Total Non-Digital Revenue |
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$2,942,000 |
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$2,279,000 |
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$1,435,000 |
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$1,146,000 |
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$897,000 |
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Grand Total |
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$4,001,000 |
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$3,733,000 |
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$2,873,000 |
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$2,485,000 |
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$2,354,000 |
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Digital Mix |
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26% |
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39% |
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50% |
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54% |
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62% |
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* Proforma |
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