Long Post for Investors (redflix S3E04)
As some of you heard on the TDA show today, Sound Concepts acquisition is closed. I expect to see a filing/announcement next week.
Unbelievable accomplishment to do the PO, uplist and close an acquisition in a week.
58 companies did indeed uplist last year from the OTC as mentioned earlier today. You know how many of those did a PO and acquisition along with it? It's rare to uplist and even more so to do all 3 together.
VERB bought Sound Concepts for $25M, who has $13M in revenue, cash flow positive, net income positive, no debt, 555,000 users, 93 clients and growing.
Their model used for Direct Sales can be applied to a number of new verticals
Are deals done at the per seat level or at the enterprise level?
I don't know, likely both.
Are all those 555K users paying $100/yr for the technology?
I don't know. Assume even 50% of that and let me know what revenue is
Is that revenue recognized right away (i.e. $100/yr)?
For the non digital business, yes once goods/services are received. For the SaaS business no. Spread out over the life of the contract
Are there upfront charges?
Yes
"Sound Concepts also charges certain customers setup or installation fees for the creation and development of websites and phone applications."
Are their margin on the digital business high?
Yes, read the S-1/A and do the math. You won't believe the number I came up with anyway.
Is some of the revenue recognition deferred?
Yes
"These fees are accounted as part of deferred revenues and amortized over the estimated life of the agreement."
Is that good or bad that revenue is deferred?
I'd rather see deferred, steady growing revenues that keep coming vs. 1 time. Think most people would.
Back to Sound Concepts:
The asset is recognized as goodwill on the pro forma balance sheet at $24,916,000
"Reflects the preliminary recognition of $24,916,000 of goodwill attributable to the Sound Concepts Acquisition"
I feel Sound Concepts is worth at least $50M but for sake of argument, let's say I am off my rocker and it's $25M. After all, each of you need to do your own DD and determine value.
Does the $25M price in any synergies between VERB and Sound Concepts?
You decide
Does the $25M price in any growth?
You decide
Does the $25M price in other verticals?
You decide
Why would Sound Concepts even do this deal?
You decide
The market cap of VERB right now is less than x2 the SC asset
The market cap of VERB right now is less than x4 SC revenue
The market cap of VERB right now is less that x2.5 times the PO they received
Anyone buying now is buying at a discount to what institutions bought and I hear those people are pretty smart
If you assume Sound Concepts is an asset worth $25M, even intangible, do the math to what that adds to the pps. Keep in mind the book value of VERB last week was negative.
Whether you believe Sound Concepts is worth $25M, $50M or whatever number you come up with, one thing is for sure. The current market cap reflects very little growth potential and that is just on one aspect of VERB business. Just one aspect.
Of all the companies I looked at, the one thing that separate all of them is growth potential. That is the one factor.
Markets like surprises. Q1, Q2, Q3 & Q4 revenue will be interesting
A pattern of increasing revenues over 4 quarters will light the fire
Yup, all investors can't believe where the sp is at. Did the market do the same DD as you yet?
Is the value of a company based on short sellers?
No
Remember, everybody owns the same shares
All investors, insiders, etc are equal
No class this. Not class that. Everybody owns the same shares.
Could have been multiple levels, but thank your lucky charms it isn't
Could Rory have gotten more money by offering a different class of shares? I think so, but that is not in his core. We are all co-owners, period.
Does anyone ever point that out, as that is not the norm with OTC companies?
No
Next redflix will talk about Microsoft, patents, market and more
Might only go to the supporters. Got no interest in feeding the rest.
I will add one more thing having started up a few tech companies. I can see why Chad and Tal jumped in. Not like they were hurting for a job.
Objects in mirror are closer now than they appear
Everything I have hoped for has happened. Odds of that were not super high. Many, many were betting against. It's now happened. Do your own DD and don't get it from me or off a message board.
Congratulations to Rory and the entire VERB team. Enjoy the night. Rock on!
As some of you heard on the TDA show today, Sound Concepts acquisition is closed. I expect to see a filing/announcement next week.
Unbelievable accomplishment to do the PO, uplist and close an acquisition in a week.
58 companies did indeed uplist last year from the OTC as mentioned earlier today. You know how many of those did a PO and acquisition along with it? It's rare to uplist and even more so to do all 3 together.
VERB bought Sound Concepts for $25M, who has $13M in revenue, cash flow positive, net income positive, no debt, 555,000 users, 93 clients and growing.
Their model used for Direct Sales can be applied to a number of new verticals
Are deals done at the per seat level or at the enterprise level?
I don't know, likely both.
Are all those 555K users paying $100/yr for the technology?
I don't know. Assume even 50% of that and let me know what revenue is
Is that revenue recognized right away (i.e. $100/yr)?
For the non digital business, yes once goods/services are received. For the SaaS business no. Spread out over the life of the contract
Are there upfront charges?
Yes
"Sound Concepts also charges certain customers setup or installation fees for the creation and development of websites and phone applications."
Are their margin on the digital business high?
Yes, read the S-1/A and do the math. You won't believe the number I came up with anyway.
Is some of the revenue recognition deferred?
Yes
"These fees are accounted as part of deferred revenues and amortized over the estimated life of the agreement."
Is that good or bad that revenue is deferred?
I'd rather see deferred, steady growing revenues that keep coming vs. 1 time. Think most people would.
Back to Sound Concepts:
The asset is recognized as goodwill on the pro forma balance sheet at $24,916,000
"Reflects the preliminary recognition of $24,916,000 of goodwill attributable to the Sound Concepts Acquisition"
I feel Sound Concepts is worth at least $50M but for sake of argument, let's say I am off my rocker and it's $25M. After all, each of you need to do your own DD and determine value.
Does the $25M price in any synergies between VERB and Sound Concepts?
You decide
Does the $25M price in any growth?
You decide
Does the $25M price in other verticals?
You decide
Why would Sound Concepts even do this deal?
You decide
The market cap of VERB right now is less than x2 the SC asset
The market cap of VERB right now is less than x4 SC revenue
The market cap of VERB right now is less that x2.5 times the PO they received
Anyone buying now is buying at a discount to what institutions bought and I hear those people are pretty smart
If you assume Sound Concepts is an asset worth $25M, even intangible, do the math to what that adds to the pps. Keep in mind the book value of VERB last week was negative.
Whether you believe Sound Concepts is worth $25M, $50M or whatever number you come up with, one thing is for sure. The current market cap reflects very little growth potential and that is just on one aspect of VERB business. Just one aspect.
Of all the companies I looked at, the one thing that separate all of them is growth potential. That is the one factor.
Markets like surprises. Q1, Q2, Q3 & Q4 revenue will be interesting
A pattern of increasing revenues over 4 quarters will light the fire
Yup, all investors can't believe where the sp is at. Did the market do the same DD as you yet?
Is the value of a company based on short sellers?
No
Remember, everybody owns the same shares
All investors, insiders, etc are equal
No class this. Not class that. Everybody owns the same shares.
Could have been multiple levels, but thank your lucky charms it isn't
Could Rory have gotten more money by offering a different class of shares? I think so, but that is not in his core. We are all co-owners, period.
Does anyone ever point that out, as that is not the norm with OTC companies?
No
Next redflix will talk about Microsoft, patents, market and more
Might only go to the supporters. Got no interest in feeding the rest.
I will add one more thing having started up a few tech companies. I can see why Chad and Tal jumped in. Not like they were hurting for a job.
Objects in mirror are closer now than they appear
Everything I have hoped for has happened. Odds of that were not super high. Many, many were betting against. It's now happened. Do your own DD and don't get it from me or off a message board.
Congratulations to Rory and the entire VERB team. Enjoy the night. Rock on!
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