Verb Technology Company, Inc. (Nasdaq:
VERB) ("VERB" or the "Company"), the leader in interactive
video-based sales enablement applications, including interactive
livestream eCommerce and shoppable video, webinar, CRM and
marketing applications for entrepreneurs and enterprises, today
reported financial and operating results for the third quarter and
nine months ended September 30, 2021, and held an earnings
conference call at 5 p.m. ET to discuss these results. Prepared
remarks of the management team during the conference call are
provided below.
Management Prepared RemarksVERB 2021
Third Quarter Financial Results Conference
CallMonday, November 15, 2021, 5 pm
ET
Company ParticipantsRory J. Cutaia, CEOJeff
Clayborne, CFO
Operator:
Good afternoon and welcome to the Third Quarter
2021 Financial Results Conference Call for VERB Technology Company,
Inc. At this time, all participants are in a listen-only mode.
Please be advised, the call is being recorded at the Company’s
request.
On our call today are Rory J. Cutaia, CEO, and
Jeff Clayborne, CFO.
Before we begin, I’d like to remind everyone
that statements made during this conference call will include
forward-looking statements under the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995, which involve
risks and uncertainties that can cause actual results to differ
materially. Forward-looking statements speak only as of the date
they are made, except as required by law, as the underlying facts
and circumstances may change. Verb Technology Company disclaims any
obligations to update these forward-looking statements, as well as
those contained in the Company’s current and subsequent filings
with the SEC.
I would now like to turn the call over to Rory
J. Cutaia, CEO. Rory?
Rory J. Cutaia, CEO:
Thank you, and thanks to everyone for joining us
today for our third quarter 2021 financial results and business
update conference call. So, let me begin by welcoming so many new
shareholders; individuals, institutions and family offices that
have recently become Verb shareholders. And of course a special
welcome to our long term shareholders, so many of whom have been
with us for years and with whom we’ve shared this amazing journey
from a scrappy pre-revenue start-up with a big dream and vision for
the future of sales technology - to where we are today – a
well-respected NASDAQ-listed, socially conscious company – at the
forefront of the technology driving the biggest shift in consumer
buying behavior since Amazon began selling more than books – and
yeah – we’re still scrappy.
You know, we fondly refer to all of you as ‘the
longs.’ And for all of you longs, I’m about to share some
information with you that is going to make your day – but for those
of you who’ve taken a short-sighted approach to Verb investing –
well you might want to tune out now as your day is about to take a
turn for the worse.
So let me start with the headline – we’ve had a
record-breaking quarter and our digital revenue is up 30% this
quarter over last. In fact, it’s been an amazing quarter for us
across several metrics - which Jeff will cover later in the call -
and with the upcoming launch of Marketplace and verbTV, among other
things – which I’ll talk about today, we believe 2022 and beyond
will drive revenue to levels beyond what that which even the most
optimistic among you project, representing a value-creation
opportunity that will be hard to beat.
Anyone who has followed me or our company over
the past several years knows that we have been predicting the
technological convergence of entertainment and shopping that would
begin manifesting itself through a coming shift in consumer buying
behavior toward interactive video-based ecommerce. You’d also know
that we have been actively developing, patenting, and refining the
technology that would drive that shift.
Last year I said that the recognition by sales
professionals that video went from a nice-to-have feature for sales
and marketing, to essential table stakes, was evidence that the
convergence of entertainment and shopping we predicted was no
longer a mere possibility, but rather a certainty – particularly as
the data coming out of China around live-stream shopping began to
emerge – such as $425M in product sales generated through a single
livestream; more than $75B of livestream sales generated in a
single day; and the fact that more than half-a-billion people
purchased products through livestream shopping events in China last
year – one-third of whom – reportedly attended the live stream
shopping event as a preferred form of entertainment.
And talk about right place, right time, it’s
just beginning here in the US - as even over just the past three
months we’re seeing more and more consumer brands looking for
livestream and interactive video-based shopping solutions, and
major, major social media platforms testing their own versions of
shoppable video – though I think that many consumers may still
think to look to them as the best destinations for funny cat
videos.
Now imagine that rather than attending a single
livestream or shoppable video event, there was a centralized online
destination where shoppers could explore scores of shoppable
livestream events, and over time- thousands, across numerous
product and service categories, being hosted by people from all
over the world, always on - 24/7 - where shoppers could communicate
with the hosts, asking questions about products in real-time -
through an on-screen chat visible to all shoppers – that even
allows shoppers who have invited their friends and family to join
them there - to share the experience to communicate directly with
each other in real time, and then as and when that impulse-buy
propensity we all have kicks in, simply click on a non-intrusive -
totally in-video overlay and place items in your on-screen shopping
cart for purchase – all without interrupting the video – and then
as easily as flipping through videos on any of the popular social
media sites – spend the next several hours visiting any number of
other shoppable events to meet up and chat with friends, old and
new, and together watch, shop and chat with the hosts, discover new
products and services, and quite simply – become part of an
immersive entertaining shopping experience, and all the while your
shopping cart follows you seamlessly from event to event, shoppable
video to shoppable video, host to host, product to product.
So - what I’ve just described is certainly
extraordinary and for all our current shareholders –
congratulations – it’s real – and now just weeks away from
completion and final testing - and you own it - Introducing
Marketplace – Verb’s new social shopping platform. Look, as the
pioneer and original innovator of interactive, shoppable video, we
have reimagined the online ecommerce shopping experience. Our
research, including extensive new industry data, confirms that
consumers have grown bored with looking at static images and
reading reviews when making purchase decisions. Undeniably driven
in large part by the pandemic, consumers have now developed a
preference for online shopping over traditional retail and look,
they’re drawn to those outlets that provide a social, interactive,
fun, entertaining experience.
Our Marketplace business model is a simple but
next-level B to B play. We provide a multi-vendor platform, with a
single follow-me style unified shopping cart, and robust ecommerce
capabilities with the tools for consumer brands, big box brick and
mortar stores, boutiques, influencers, and celebrities to connect
with their clients, customers, their fans, followers, and prospects
by providing a unique, interactive social shopping experience that
will keep them coming back and engaged for hours.
Notably – and a big differentiator - it also
provides an online meeting place for friends and family to meet,
chat, shop and enjoy a fun, immersive shopping experience in real
time together from anywhere and everywhere in the world.
Marketplace will provide vendors with extensive business building
analytics capabilities not available on, and not shared by
operators of other social media sites who regard that information
as valuable proprietary property. All vendors on Marketplace will
retain this valuable intelligence for their own, unlimited use.
Marketplace allows vendors an opportunity to
reach not only they shoppers they invite to the site from their own
client and contact lists, but also those shoppers who came to the
site independently who will discover these vendors as they jump in
and out of the many other shoppable events hosted simultaneously on
Marketplace, 24/7 from around the world. Our vendor friendly
revenue model will consist of SaaS recurring revenue as well as a
share of revenue generated through sales on the platform.
Marketplace will also incorporate a modified
version of our verbLIVE Attribution technology, allowing vendors
who so choose, to leverage extremely powerful, built-in affiliate
marketing capabilities. Non-vendor visitors to the site can search
for those vendors that have activated the Attribution feature for
their events and actually get paid when people they referred to
that vendor, purchase products or services during that vendor’s
shopping event. We expect that this feature, unique to Marketplace,
will drive many more shoppers who will be referred from all over
the world, producing a cross-pollination effect enhancing the
revenue opportunities for all Marketplace vendors, while also
creating an attractive income generating opportunity for anybody
with a contact list.
Marketplace is an entirely new platform, built
wholly independently and separate from our verbLIVE sales platform,
representing what we believe is the state of the art of shoppable
video technology. It utilizes an ultra-low latency private global
CDN network that we control, allowing us to deliver the highest
quality experience and platform performance capabilities. We also
believe that Marketplace will expose vendors to our entire suite of
sales enablement products, such as verbMAIL, among others, driving
new cross selling revenue opportunities.
As we near completion and testing of the new
platform on-time next month, we have been actively working on
vendor, partnership, sponsorship, influencer, celebrity, and other
relationships for Marketplace that we expect will grow
exponentially over time. We have also been working on several
pre-launch initiatives that we refer to as “mega events” to help
kickstart and boost awareness of Marketplace.
We expect that these events will be hosted by
well-known influencers and celebrities and sponsored by retailers
and consumer brands. Due to the limitations caused by the ongoing
supply chain issues many US retailers are experiencing, we’ve
recently shifted the focus of these mega events to digital
products, such as NFTs, among other things.
OK – so – let me talk about something else. A
natural extension of Marketplace and built alongside it, is
something new that we call verbTV. verbTV, launching in 2022, is
where you will find shoppable entertainment. Whereas Marketplace is
a social shopping experience, verbTV is a destination for those
seeking commercial-free television content, such as concerts, game
shows, sports, including e-sports, sitcoms, podcasts, special
events, news, including live events, and other forms of video
entertainment that is all interactive and shoppable. verbTV
represents an entirely new distribution channel for all forms of
content by a new generation of content creators looking for greater
freedom to explore the creative possibilities that a native
interactive video platform can provide for their audience. We
believe content creators will also enjoy far greater revenue
opportunities through the native ecommerce capabilities the
platform provides to sponsors and advertisers who will enjoy
real-time monetization, data collection and analytics. Through
verbTV, sponsors and advertisers will finally be able to accurately
measure the ROI from their marketing spend, instead of relying on
decades-old, imprecise viewership information.
Those of you who are fans of the popular
business pitch show – “2 Minute Drill” on Amazon Prime and
Bloomberg TV will be excited to know that a shoppable version of
the 12 episodes of the upcoming Season 3 will be featured on
verbTV. Each episode is a fast-paced reality show where 5-6
entrepreneurs competing for $50,000 in cash and prizes, have 2
minutes to impress the judges with the best investor pitch. And yep
- I’m one of the judges on the show. Expected to air in early 2022,
verbTV viewers will be able to click on-screen and purchase the
products and services of the contestants featured on the show,
among other contemplated interactive features. Dave Meltzer, the
creator of the show, and Co-founder of Sports 1 Marketing and the
former CEO of the renowned Leigh Steinberg Sports &
Entertainment agency, has signed-on with Verb to produce other
interactive and shoppable entertainment for verbTV.
Turning to our existing revenue streams,
including those that comprise the remarkable results we achieved in
the third quarter, I’m pleased to report that we continue to expand
the target demographic and business verticals for our sales
enablement platform. verbTEAMs has been the choice of many notable
companies for medical equipment and other sales in the life
sciences sector. Verb clients in that vertical include such notable
names as Philips, Olympus, and Boston Scientific, among many
others.
Since last quarter, we’ve seen verbTEAMS expand
beyond Life Sciences into professional sports. You may have seen
the recent press release announcing the adoption of our interactive
video platform by the Pittsburgh Penguins sports franchise as a
tool to enhance ticket sales. The response to that announcement
from the sports industry was extraordinary and we expect to
announce several other sports franchises, both in the US and
beyond, who we expect will use our platform for ticket and
merchandise sales as well as enhanced, interactive fan engagement
experiences.
verbCRM, which has historically been our
bread-and-butter product, has now been enhanced to incorporate and
work seamlessly with verbLIVE, our livestream sales application,
coupled with team attribution, and PULSE our new AI/BI feature as
well as verbLEARN. This product/feature set has allowed us to
attract many of the biggest names in the direct sales space and
command a bigger share of the direct sales market, putting more and
more distance between us and every other would-be competitor in the
space.
As Verb is already the platform of choice in
that industry, in 2022, we’re bringing an even greater focus on
delivering the best customer service and support in that industry,
including a recently launched professional services division to
provide the level of customization some of the largest global
enterprises in the world require for their sales enablement
infrastructure. Our professional services division represents a new
and lucrative revenue stream for our direct sales software
vertical.
As we await the imminent release of verbMAIL
Pro, the enterprise version of the integration of our interactive
video feature set into Microsoft Outlook, as well as the
forthcoming release of verbMAIL for Google’s Gmail, we’re already
seeing interest for large scale adoption by universities,
well-known non-profit organizations, and believe it or not, as well
as the armed services.
We talked at length over this past year about
our ongoing growth through acquisition strategies, which are
ongoing and will certainly continue into 2022 and beyond. However,
in the coming weeks, I expect to announce the details of an
acquisition that we believe is not only highly accretive, but
comprises several key, strategic elements of our Marketplace and
verbTV growth initiatives.
You know many of you reach out to me after
seeing one of my almost weekly appearances on a business TV show,
investor conference or podcast to say how excited I seem about the
future of the business and the company. Well now you know why. Over
the years as we moved from start-up phase to commercialization
phase, we’ve faced down the challenges inherent in all software
development, but we’ve also had our successes and conquests, all of
which provided the valuable lessons that still lie ahead,
undiscovered by any new would-be competitors.
Yet nothing we’ve done to date more accurately
represents the true culmination of everything we’ve learned over
the years as a team and as a company than Marketplace and verbTV,
which individually and together represent enormous value-creation
opportunities for our shareholders. Value that we believe has the
potential to be exponentially greater than it is today, and in my
opinion represents a greater growth and value-creation opportunity
than honestly almost any other opportunity I’ve seen in a long
while – and I’ve had to keep a tight lid on it – unable to share it
– for a variety of reasons – except among my highly motivated and
exceptionally bright and talented team, and more recently, among
the partners we’ve engaged who are as excited as we are to be part
of the next truly big thing.
Ok, so let me give you some high-level third
quarter numbers, and then Jeff will provide more of the details
from our Form 10-Q filing for the 3-month period ending September
30 and contrast them with prior periods.
Ok, so here’s some Q3 data points.
-
In Q3 we added 16 new client contracts with a combined minimum
contract value of $1.1 million which constitutes a new record for
our company for new contracts executed in a single quarter.
-
Our Combined Digital revenue in Q3 was $2.4 million, an increase of
30% over Q2 and up 28% year over year.
-
Digital revenue – the main focus of our business building
initiatives – now represents more than 81% of our total combined
revenue – that’s up from 64% for the same period last year and up
from the 76% we reported in Q2 2021.
-
Our SaaS recurring digital revenue in Q3 (which is a component of
Combined Digital revenue) was approx. $1.9 million, - an increase
of 15% over Q2 – and up 25% year over year.
-
Non-SaaS digital revenue (the other component of Combined Digital
revenue) was over $500,000, an increase of 42% year over year and
up 144% over Q2.
-
Total Combined revenue in Q3 was $2.9 million up from the $2.4M we
reported in Q2 and includes the $1.9M in recurring SaaS digital
revenue that is up 25% - and non-SaaS digital revenue that is up
42% - year over year.
-
Total user downloads stand at 3.0 million as of September 30, and
that’s up from the 2.2 million as of June 30 we reported in Q2 and
more than 88% over the 1.6M reported in same period last year.
-
A couple of other interesting data points - Cash totaled $3.7
million as of September 30, 2021, compared with $1.8 million on
December 31, 2020. Our ongoing operating cash requirements through
the 3rd quarter to support our growth initiatives were met very
easily through modest periodic draws on the ATM which were
conducted in a responsible manner to ensure investors’ interests
were protected. This represented our lowest cost of capital. But
since the business has continued to demonstrate impressive quarter
over quarter sustainable growth, we’ve become more attractive to
providers of alternative financing structures, including credit
facilities - on what appear to be very attractive terms which we
intend to explore as we move forward through the 4th quarter.
I’d now like to turn the call over to Jeff
Clayborne, our Chief Financial Officer, for a more detailed review
of our financial results.
Jeff Claiborne, CFO:
Thank you, Rory, and good afternoon, everyone.
I’d like to review our financial performance as reported in our
Form 10-Q filed today, November 15, for the quarterly period ending
September 30, 2021. I may reiterate and/or provide more color
around some of the data points Rory shared with you.
The following represents the Company’s results
of operations for Q3 2021 as contrasted with Q3 2020 and Q2 2021
respectively.
-
Total Digital revenue of approximately $2.4 million was up 28% over
the same period last year and up over the 30% we reported in Q2
2021.
-
Total SaaS recurring revenue (a component of Total Digital revenue)
was $1.8 million, up 25% over the same period last year and up 15%
over Q2 2021.
-
Total other digital revenue (a component of Total Digital revenue)
was $510,000, up 42% over the same period last year and up 144%
over Q2 2021.
-
SaaS recurring revenue as a percentage of Total Digital revenue was
78%, compared with 80% for the same period last year and down over
the 88% we reported in Q2 2021. The decrease in our SaaS digital
mix this quarter is actually an extremely welcome development as it
is attributed to a record-breaking sales quarter in which we
executed 16 new client contracts representing an aggregate of $1.1
Million in minimum contract value – a new record for our Company.
New SaaS contracts typically also produce an increase in non-SaaS
digital revenue, such as digital design fees that we are permitted
to recognize as that work is completed quickly soon after the
execution of new client contracts during the quarter. As such, the
digital design work associated with all the new Q3 contracts
generated an increase in our non-SaaS digital revenue which
produced an increase in that revenue as a percentage of total
digital revenue.
-
As I just mentioned, we added 16 new client contracts with a
guaranteed base value of $1.1 million. What I’d like to highlight
is that those contracts are expected to generate annual recurring
revenue of approximately $500,000. However, those numbers do NOT
include the expanded revenue we historically generate and expect to
recognize from existing clients who have recently launched and
those that are about to launch verbLIVE with Attribution, as well
as Pulse and Learn which we believe could add as much or more than
an additional $1 million in annual recurring revenue. And
obviously, none of this includes the revenue we expect to add
during 2022 from Marketplace, verbTV, and verbMAIL, among other as
yet unannounced initiatives.
-
Total combined revenue of approximately $2.9 million was up
slightly versus the same period last year, which consists of the
$1.8M in recurring SaaS revenue that is up 25%, non-SaaS other
digital that is up 42%.
-
Research and development expenses were $3.5 million, compared with
$2.4 million for the same period last year, with the increase
attributed to the development of verbLIVE, VERB’s new Attribution
feature, product enhancements to verbCRM, verbPULSE, the Microsoft
Outlook integration and the forthcoming new Marketplace platform,
among other as yet unannounced features and products.
-
We continue to pursue the cost reductions within development we
discussed in prior earnings calls that have been planned for
year-end as we move from R&D mode to maintenance mode for many
of our products. While we may likely see some of that savings
offset by increases in marketing expenses associated with the
upcoming launches of Marketplace and verbTV, if the Company is
successful in the execution of certain planned Marketplace mega
events Rory referenced earlier, those expenses might easily be
offset by the potential new and additional revenue those events may
generate.
-
Additional information around product development expense is that
we’ve made tremendous progress towards the completion of
Marketplace, and as such, we’ve capitalized $2.3M in development
expenses that will be depreciated over 3 years.
-
General and administrative expenses were $6.1 million, compared
with $6.7 million for the same period last year, with the decrease
in spending attributed to lower stock compensation expense of $1.3
million.
Now let me share the Financial
Highlights for 9 Months Ending September 30
-
Total Digital revenue of approx. $6.0 million, was up 20% year over
year
-
Total SaaS recurring revenue (a component of Total Digital revenue)
was $4.9 million, up 29% year over year
-
SaaS recurring revenue as a percentage of Total Digital revenue -
which remains our focus was 82%, compared with 77% for the same
period last year
-
Research and development expenses were $9.6 million, compared with
$5.3 million for the same period last year, with the increase
attributed to the development of verbLIVE, VERB’s new Attribution
feature, product enhancements to verbCRM, verbPULSE, the Microsoft
Outlook integration and the forthcoming new Marketplace platform,
among other as yet unannounced features and products.
-
General and administrative expenses were $20.0 million, compared
with $14.2 million for the same period last year, with the increase
attributed to labor-related costs to support growth, professional
services, marketing expenses, as well as expenses related to
SoloFire operations following the acquisition.
-
As of September 30, 2021, total assets were $35.9 million, total
liabilities were $21.5 million and total stockholders’ equity was
$14.4 million.
-
The Company successfully converted all remaining preferred shares
into shares of the Company’s common stock. As a result, there are
no shares of preferred stock and associated rights outstanding and
our cap table reflects a clean capital structure comprised of one
class of common shares.
-
As of today, there are 70,470,415 shares of our common stock issued
and outstanding. Of the total number of common shares issued and
outstanding, approximately 6.1 million shares or approximately 8.7%
are owned or controlled by management and the Board members.
I’d now like to turn the call back over to the
Operator for Q&A.
About VERBVerb Technology
Company, Inc. (Nasdaq: VERB), the market leader in interactive
video-based sales applications, transforms how businesses attract
and engage customers. The Company’s Software-as-a-Service, or SaaS,
platform is based on its proprietary interactive video technology,
and is comprised of a suite of sales enablement business software
products offered on a subscription basis. Its software applications
are available in over 60 countries and in more than 48 languages to
large enterprise and small business sales teams that need
affordable, easy-to-use, and quick-to-get-results sales tools.
Available in both mobile and desktop versions, VERB's applications
are offered as a fully integrated suite, as well as on a standalone
basis, and include verbLIVE (an Interactive Livestream eCommerce
and Shoppable Video and Webinar applications), verbCRM (a
White-labelled Interactive Video-based Customer Relationship
Management application), verbTEAMS (a Self On-boarding version of
verbCRM with built-in verbLIVE and Salesforce synchronization for
small businesses and solo entrepreneurs), verbLEARN (an Interactive
video and gamified Learning Management System application), and
verbMAIL (an interactive video mail solution integrated seamlessly
into Microsoft Outlook). With 200 employees, the Company maintains
offices in Newport Beach, California and American Fork,
Utah.
For more information, please visit:
www.verb.tech.
Follow VERB here:VERB on
Facebook: https://www.facebook.com/VerbTechCo/VERB on
Twitter: https://twitter.com/VerbTech_CoVERB on
LinkedIn: https://www.linkedin.com/company/verb-tech/VERB on
YouTube:
https://www.youtube.com/channel/UC0eCb_fwQlwEG3ywHDJ4_KQDownload
verbMAIL here: verbMAIL on Microsoft AppSource Store
FORWARD-LOOKING STATEMENTS
This communication contains “forward-looking
statements” as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
risks and uncertainties and include, without limitation, any
statement that may predict, forecast, indicate or imply future
results, performance or achievements, and may contain words such as
“anticipate,” “expect,” “project,” “plan,” or words or phrases with
similar meaning. Forward-looking statements contained in this press
release relate to, among other things, the Company's projected
financial performance and operating results, including SaaS
Recurring Revenue, as well as statements regarding the Company's
progress towards achieving its strategic objectives, including the
successful integration and future performance of acquisitions and
performance of SoloFire. Forward-looking statements are based on
current expectations, forecasts and assumptions that involve risks
and uncertainties, including, but not limited to the COVID-19
pandemic and related public health measures on our business,
customers, markets and the worldwide economy; our plans to attract
new customers, retain existing customers and increase our annual
revenue; the development and delivery of new products, including
verbLIVE; our plans and expectations regarding
software-as-a-service offerings; our ability to execute on,
integrate, and realize the benefits of any acquisitions;
fluctuations in our quarterly results of operations and other
operating measures; increasing competition; general economic,
market and business conditions. If any of these risks or
uncertainties materialize, or if any of our assumptions prove
incorrect, our actual results could differ materially from the
results expressed or implied by these forward-looking statements.
Investors are referred to our filings with the Securities and
Exchange Commission, including our Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, for additional information
regarding the risks and uncertainties that may cause actual results
to differ materially from those expressed in any forward-looking
statement. All forward-looking statements in this press release are
based on information available to us as of the date hereof, and we
do not assume any obligation to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date on which they were made, except as
required by law.
Investor Relations
Contact:888.504.9929investors@verb.techMedia
Contact:855.250.2300,
ext.107info@verb.tech
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