SRAX - Earnings call transcript Q4 2017

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Operator

Good day. And welcome to the SRAX Fourth Quarter and Full Year 2017 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Kirsten Chapman of LHA Investor Relations. Please go ahead, Ma’am.

Kirsten Chapman

John. you, Thank everyone. Good afternoon, to quarter welcome to like of all year-end XXXX fourth and SRAX’s conference I’d you call. This call Web the available is is being site webcast at and on srax.com/investors. Christopher management Chairman today are us CFO, J.P. from and With CEO, Miglino and SRAX’s Hannan. Company’s will highlights, J.P. quarter Miglino Chris fourth XXXX the review a will discuss provide financial call for then Chris metrics the and and questions. operations will and summary

to intend, as management’s question-and-answer Before uncertainties potential, similar SRAX differ include materially. that risks statements. forward-looking may in statements which you time. actual project and that remind would like I risks relate to statements, should, management and they Investors turn the by uncertainties, forward-looking expect, all uncertainties risks results this during When forward-looking believe, from this those and call are and prepared the this are enable, call used call may such over expressions will, are forward-looking statements anticipated and and at contain SRAX to to words results materially to actual are, anticipate, subject that forward-looking to subject session. management, I differ additional statements remarks cause on cautioned and make estimate, may These the could,

other with are SRAX's www.sec.gov. addition, can described be at public fully the in In risks more filings reviewed which SEC,

SRAXmd. discussed in for to advisors alternatives previously As strategic October XX, outside we review engaged

SRAXmd XXXX, assets. in result of now late process. commenced to stages we that We the believe an with we the auction a the As final process entering auction regards are

or favorable to that completed, be auction no optimistic that process completion the there process, can will that the terms the on is the will assurances will successful completed process is management if it be us. regarding be successful Although, be of

its that of full in SRAX financial from measures Finally, on non-GAAP certain other financial to financial the to SRAX's for will stock-based non-GAAP call GAAP a results. reconciliation most measures release to press one-time refer excludes compensation which items and GAAP comparable Please today’s please management expenses refer note make performance measures.

turn to the Chris? it my Now, call to CEO, Christopher Miglino. SRAX’s pleasure over is

Christopher Miglino

to Thanks great It's Kirsten. Good afternoon to everyone. you speak today.

our technology delivering on transforming consumer management our been know, SRAX efforts company, data and you into leading and marketing digital team and are As a results. focusing has

been close First, top-line quarter product dramatically, We and details the was development year. continue fourth we're the this adjusted in trend and a really delivering we've more strong future, happy will our J.P. EBITDA, to net strategically growth profitability about. improved in and which investing in positive income sales provide drive talent. minute. a positive To positive the

develop we over United hired technology, offices a e-commerce sales, has and BIGtoken. verticals As team who auto our also more In supporting many SRAX President we senior years and SRAXfan. of Among bolstering engineers our Mexico. companies. been in blockchain experience existing at consumer sales Vice and identification our packaged We're XX building adding our and teams goods States SRAX We're in well. as he's graph Sales media launches of our leveraging new team both digital actions,

monetize to options evaluating SRAXmd. been we've October, in announced As

and conducted a in we’re we field rounds. final have and process than reviewing of We the After transaction. expected response stages final the and we therefore, closing several larger the the narrow to working as had the process towards the bid are

guarantees. as say but like lawyers stated there to earlier, As are no

improve consumers transparency companies for that information up, digital in have based that it which as BIG please our the unprecedented and with and information consumers pieces data data back the decide shared while believe from BIG of SRAX, consumers behind technology gain a the and from targeting ability how wholly-owned building infrastructure marketing After of could you that entity. are if who owning, market. access I financial and benefiting to could that With established digital data ecosystem privacy, leveraging this consumer platform comprised we’re about to meaning to of pay process hard consumers records data. This true consumer can. value highly be experiences. relationships. and are should efforts that the three we are we’ll version have BIG open accessed access compensated data. we for data benefit alpha data as when with its asking since ultimately been to their of will incorporates especially group the It should consumer companies layer data users. diligence ask tell can Both for the function and their the BIG they their turn can will in can for different area with eliminate is and questions I this the today's only and We I’m currently and identification that layers, all information. well. fraud. step the verifying and consumer better a transaction a enable review. At is and not like and step will is times to intervention platform. digital commercial blockchain we and making to We the market the data and this secure released support be BIGtoken the own, for a subsidiary to get when puts public on layer review the data. to rewards believe graph, every as and valued time We by verified the would online and of according transparent identify so users. our our with advertisers very BIGtoken. want of gives a used rewarded their consumer said, to in whole the the their management work has the BIG that J.P this to is system We time, ecosystem blockchain data hands better of or decentralized for SRAXmd billion and BIG, for an that users from to accurate consumers consumer. fact relevant and process. particularly to a their with so $XXX of cannot for variety access and the efforts platform moment, March call you development. efforts. an opportunities from in large creating concept able months sign get players BIG that with the need partners It allowing ensures advertising network, at specific may is at application it. choosing to and are significant know. to that security participation our refrain transaction reasons consumer best going new strategy be personalization through where BIGtoken governance believe moving now, is transparent IDC. speeds of operate believe exciting take of as stand be decentralized first Then data novel benefit Advertisers more every Timing challenges reducing transmission the build lots all in own of during data and the cuts Web BIG adding the The the Q&A users increasingly any people paid a over we system source direction to see solutions This as you consumers component. data, autonomously different layer from access data middlemen, secure platform blockchain integrations for will openly, verify questions transaction. invitation existing the sell the bought, next and and the by system our that in And system direct and For the the and a value determines BIG With into users verify and and all of marketplace and data And over is the deal digital also developers the corporations out reward to realizing advertising is online consumers’ the Technology reduces discuss engagement experiences. for human to portion

J.P. Hannan

SRAX the in for fourth well million Reach from in from large review was results revenue XXXX. clients increase was quarter $X.X as our and a side sell revenue growth first included I’ll revenue SRAX to non-recurring Chris. SRAXmd. in compared that partially as by an customer continuing of previously which reported as Gross QX side buy Thanks $XX.X million offset XXXX,

that's related the increased items, quarter fourth million our million year was high XX% at well Gross on XXXX. Now XX% in our of the as quarter settlement. cost of quarter. goods $X.X one-time reversal revenue margin margin to reflecting and to sold to higher gross Due in focus compared ago profit TRNC $X.X from the fourth our to

benefit around with product to reflect of first million, Going a flat XXXX. Operating by the new investment cost forward, range normalized $X.X we was the quarter were in basically which XX% cost offset on more measures of the basis. expected development. be quarter XXXX expenses the is management and fourth in

in operations is $XXX,XXX of from XXXX. an Our up QX operating which over to $XXX,XXX loss from $XX,XXX, loss improved of

XXXX. which compares the in to expense of interest Our million, $X.X quarter $XXX,XXX fourth was

to which compares to million improved in of quarter net $XXX,XXX, $X.X of income a net the XXXX. Our loss fourth

a gain the Our September equivalents quarter $XXX,XXX at quarter $X that of compared of in million the ended XX, and million to million XXXX. to improved cash gain cash and We in $X.X compares December the fourth XXX,XXX XXXX with and XXXX. $X adjusted EBITDA of end to at

securities approximately convertible we amount Those sale working our to As aggregate of of XX.X% million capital. with a an debentures. for proceeds entered $X.X were the of purchase secured into October remember applied in of definitive you agreement existing in investors XXXX, principle

XXXX, million capital And a changes working December are since end to there common XXXX, debentures thereby million at reducing million improving been December of and the $X.X been warrants have were $X.X shares XXXX. outstanding XX.X XXXX, to retired The immaterial. shares negative million weighted end or common XX, positive into million expired rather. year-end the $X.X XX, At a by million, By $X.X stock, our debt the $X.X XX, converted As December March at outstanding. XX, result, the increased of warrants to have X.X shares of or $X.X million million from year. were

and XXXX, in December million For the that was gross $XX.X million year-ended compares to $XX.X revenue XX, XXXX.

Our increased is our XXXX million XXXX. $X.X to margin up million or million $XX.X from up in to $X.X which operations and in from is XXXX. XX% up gross was gross million from which decreased in Loss from profit $XX.X XX%, million, $X.X

from included of both loss expanded loss an and bottom-line $X.X we net Our million the loss XXXX. to adjusted finished loss XXXX was per $X.X significantly, in net quarter $X.X per million XXXX fourth written-off up net and or $X.XX summary, that million. $X.X approximating Adjusted gain. million consideration In benefit share improved was improved income EBITDA loss. We $XXX,XXX, $X.XX delivering the from share. contingent EBITDA margins adjusted EBITDA dramatically positive at

We’re with financial last very very improvements XXXX. year achieved we and pleased these we’re excited about

timing there. turn the undetermined additional that, action And we and the to Chris. SRAXmd’s to I’ll information spend believe it’s we of with said, platform the call as strategic with guidance development, potential BIG until back prudent now Chris the However have

Christopher Miglino

Thanks, J.P.

drive continue value. to avenues long-term shareholder and We growth create to

results growth for As are foundation made. discussed we previously XXXX, and financial demonstrating XXXX the a improvements in we our set

and We’re strength. should which optimistic we’ll liquidity improve financial significantly our monetize SRAXmd,

ecosystem We’re benefit and advantages will BIG feel deliver online for we which verticals improving for our consumers. and everyone clients growth in our greatly advancing developments, We opportunities. our while the BIG future data our digital believe the experience SRAX advertising expands

Vegas, Las like Denver, the as Micro the to in note York. I Technology I’d I’d Las Emerging to note even Rocky at being and that Mountain about Trickle as Conference Planet open we’re GVC to see Before Research you NAB Capital like can the and New the allowed Needham Conference Also, us [FSN] call Vegas in SRAXmd. transparent the questions, that in in Conference

Q&A. we’ll about questions SRAXmd for take turn to However, elaborate the until general. in transaction we like further. finalize operator not Therefore, over the call cannot to I’d the now the

Operator

you first our from Thank Kupinski Instructions]. with We’ll Markets. Capital question Michael [Operator take Noble

Michael Kupinski

large getting goals and year by on want larger for several I of the don’t the low also that was questions stand wondering, away quick the I revenues. I have know that’s And effort those reduce just accounts. so a that couple to the on dependence from and accounts? you where reduce you do offset dependency on I margin

Christopher Miglino

accomplished in we’ve and of gross I the margin. out point increase in the you that what the I can would when think but that reduction revenue see the

we're was low this the lot a margins focus year. last margin So able higher business we had very on for and of to year some of businesses that

Michael Kupinski

margin company And that the in cycle begins that right? quarter the second does initiative through that -- the begins revenue Is the of low in that XXXX.

Christopher Miglino

Yes.

Michael Kupinski

begin, also company plans up the updates outreach when -- can the program will at any when And will company BIG for And rewards on the about work with consumers to point? begin BIG. into for give financing programs other you this sign

Christopher Miglino

Can you that, Mike? repeat

Michael Kupinski

When for will outreach wondering with an BIG? And was BIG, other to trying on can give wondering plans going a for consumers? for you're you programs to, can I initiative soon. on I sign And was I that I you program that. when owned start work that you're developed think us updates But know begin that. working at you are to that looking financing begin also the subsidiary wholly BIG. just any up the rewards to then if was here as then you

Christopher Miglino

in a Right ecosystem. a beta now, into anticipate we're end close We'll lot to a close the close probably beta, and alpha, that of people can people of are invite have join our BIGtoken.com, done of up that moving only closed is sign a April to that. alpha beta at an which lot the people by in

And from probably that, end we will we’ll then platform be and be end we'll So July. able we'll that open anticipate everybody June in the the after people invite beta have beta or close close then beta to of of an join. that platform where through probably

BIGtoken of So really a are can more users same learning the technology, we're looking in for using to is bringing are platform. time business marketplace at of the excited it the and people, we're June-July out to much the the of our and and And development people advertisers their technology as the timeframe we're about data the looking lot talking but platforms. about our a and sales as benefit the good we

any we So doing so. our definitely haven't team yet of announced is out but there those deals

it’s about we reach a business. going with SRAX business, we've SRAXmd we BIGtoken as sale, talk some we're finance head and had know I not put our to right we're while different ahead we'll we’ve mean how about something ideas finance moved certain business. might different about go that about we doing how about -- how had were the But So in ago I that that the forward the able plans go to But now. definitely and the piece ideas some of

Michael Kupinski

And one are can But including being contributors products not whether expectations SRAXauto this on are offerings, products new products are be you revenue the I point? have thoughts significant know the some to accepted expected and more and insight recent that give delivering how XXXX. those I at on in us some SRAXfan on

Christopher Miglino

like Reach But of past evaluation we've -- given any to see individual with guidance have that each those we seek products not products would that of and as each businesses. the individual the MD, we done haven't MD opportunity to from potentially you similar similar an to the products. to from, that Social the in which So believe way and

think significant opportunity. businesses we have each So of those

Operator

from We Capital. will with take next Chardan James question McIlree our

James McIlree

are. now, not you it those to is a where you I’m mean, to where about be. lifecycle want say in Just Auto. about, two generating. it thought relative asking bit any verticals you update and just idea san give MD relative is Mike’s a relative us where about I up it follow on should little talk how question to where a much progress the an right whatever if revenues can to you to about But was

Christopher Miglino

really didn’t and over caught out some And seen if we happen individual process. three-year thing So each verticals we that building each get some there their you have a these look overtime not. been through that substantial has the of back at period have life the same individual today. think growth with MD, have on, are could it And cycle different they products the that

you in think to same an that the that lot really if their verticals that individual a that who vertical. approach opportunity So with add consumers data can -- each for individual can to is helping consumers the these then We owning in expert way attribute say of in, each to these and is to verticalized provides data substantial important were have we in to that’s be having specific they individuals I these been marks and understanding specific value a value would in and in how of that's us give SRAXmd there that And future. vertical. the margin verticals, business of definitely value to to And and in even and are process them helped verticals then participating think we sale interest it’s understand that there that got substantial an the own and able are sporting captivate events be and certain BIGtoken

So any today give metrics guys your for on. that prepared a could could have I the for you sense give but call head metrics stuff you your in of hang the get you perhaps some future, to ready we that can’t we

James McIlree

advertisers? you of marketing be the that and and to still you’re beyond customers you’re that who identifying say the Would or to at fair it where now are are the point

Christopher Miglino

and so working We’re beyond operational now. products sold engaging, and there are that have that are

James McIlree

and just of that opens on obviously issues going issues. opportunities you all the on at And And general Facebook you a comment impacts up or how lot with there with then has privacy been all. for European

Christopher Miglino

us. for fantastic it's I think

about there important are their transpired more the taking And relation think value demand, only place that they’re issues in be access be to guess and then indicating Facebook. is consumer the and aware the of to data talking year. that I And internationally, we to are And and going to is have process consumer for for Europe people significant that the lately are that the to marketed United the that planned and becoming very of much important along their always we've willing we've as help data attention in in the last States are BIGtoken value been of the beneficial data to too. that think consumer I the us. data privacy on very to rules sell

that I'm going consumer saying is So in participate this process and a to opting process am value I'm their I if there is seeing of willing what is and lot into in that. this and then okay

James McIlree

the And specific. I revenue the for more of impact don’t I on any that, implication generating. call positive I that the more BIGtoken. should have now, referring the I but call there I if was it you’re to mean million-ish core let's want legacy it revenues. is been see XX to Right

Christopher Miglino

as and is participate infrastructure we'd best is of is data additional in sales saying partners here The to doing, going what that -- using perspective. on that data margin our a and talk part to this and and it privacy that go why fantastic is and datasets. and to and the participate consumer you is to the taking a should in and they are it's agencies like And good talking you tool the world in from these very to discuss the advertisers we're

verticals enhance also the and to sell over we board. next ability our just on think the of across those we’ll So each year individual sell

James McIlree

us was cost settlement. J.P. know of of you that couple in give the the sales revenues the And amount, the were for can quarter, by much because a a of how settlement? you. But precise cost impacted I lower

J.P. Hannan

lot movement. So there is of

there margins items. around said, XX% also XX% been we've ex-those As to the drove XX% normally have and about would it

back for foreseeable that's we’re historical high now hold As about generally future our very can that. we see where to believe to we said, there things that get we we that's worked and been and -- the that we our was hard

James McIlree

excluding three around last been you've quarters, the quarter… at gross the looking it margin, call things that So let's this one-time XX%

J.P. Hannan

then Mike low profile. up as lot we of that through carried margin through of all have low measures margin the our XXXX. a business now of flush And but the that all Reach additional on towards what and end Kupinski margin little rationalization clean work of that and We that of had product, over business will and

James McIlree

now anything ticked from you OpEx so And new that in up a Is million forward? level, pace QX were there there $X.X in it’s going or and $X.X QX running QX. special and is million-ish

J.P. Hannan

tick-up We internal you’re more cut and related lot costs a investment products, of specifically taken is now down. it’s The OpEx seeing BIGtoken. new on to

and few to a think -- this for that’s little bit is going quarters. as evolves, So next to that’s that normal slow but range -- I going the a

James McIlree

least to part up you year. It expect move product through we that it. of -- that But be from maybe something that OpEx, I the seems move tick-up offsets development ramp reasonable seems unreasonable wouldn’t that’s as mean like a it as through of for it to going bit go the to at little

J.P. Hannan

mean development wherever gets control we’re future trying on that focused costs I we driving products. Yes, we the revenue dollars so and can have

James McIlree

financial And near-term coming we the of, call course year? aware that last should let’s one. through this during it, Any then of be obligations

J.P. Hannan

from that the year, No, I last the which cleaning remnant up obligations is was and financings. balance sheet other old mean big achievement all the

don’t place We XXXX. addressed. requirements that of in long-term any debentures that have until now is have now All amortization

Operator

next Larson Fargo. We’ll to Wells go Matthew with

Matthew Larson

answered, you just my talking had of all cut so I covering while think did I I then me were to guys so another most just questions if you anything off. call were am

could was like but auto I that, it Somebody to missed building there level of and one grow. and the verticals about are sounds you get asking and the that fan and SRAXmd it felt

maybe Is But then business. if people foresight the the But offer could marketers is Web -- some that on began complete the the information audience, information BIGtoken trying I then say you ultimately the your year an to ideally, the say I more proprietary question. And it that was was that me sense. something that your to a or would consumer’s it a it that or you with is get right seem initiative expert sphere, I over individual and and offer But because realistic my where you is you're there. you better Facebook compensation going could if news timing And of consumers the could some that great already all not in that’s target of detailed when can Facebook, that then the versus not makes blogosphere me, proprietary is to least. am ago. this and Here to you can and firm be data clearly future. a that of am scrub scrubbed? guys me organic Facebook get like example, on information if track out would on get I for the want do not just have it line

Christopher Miglino

Well, bring their And are top that will that of that's that to plan. ask marketers build the marketer. CRM the to obviously on from just relevant questions proprietary platform BIG

to like marketing why be that the to better that specific to -- indication bring company e-commerce they who and do they individuals am of buy of focuses that online, do they consumers is gives on data like them marketer I and much table what start to I ask particular and types and very you specific asking those buy questions about I products if my to future. selling in would an So the should

block to blocking not consumer. far data the enable building there’s buying as will certain ads that that are certainly ads As from tools the us we're that

have seeing that's not tools that we'll that’s something that will to doing. we’re the the of enable We're not block daily to that online ads certainly them look be the data, information paying and any is if what consumer Facebook has. Facebook in of block able their for something going ads so that's to are So

So and consumers what is do marketers their the the do can are that can consumers platform. is better in they out information to the then to help what get participating we what information help footprint minimize understand from there,

Matthew Larson

in past. been of a few future. to a competition question I hopefully the really players number you months I covered that it to getting is any is conference number are calls. me of guys. publicly people for basically come throw trend the interest the is And more than that on That an of you you out guys hasn’t here I'll think lot for to other asset I'm but vanguard. And the last the the project conference years year doesn't market the and the more who going all back might in another on This have that this had was right are trying SRAXmd have that some And been create have bigger trend a and company. on out offer you of previous an there just tremendous last disclosed in is whole call your was cap But than

the hopefully revenues And and so if out then… breaking that business grown has I know not you're

Christopher Miglino

talk at to call. at all the be disrespectful all, MD but don't on we about Not want to

Just around to any conversation reasons want for mind. MD we just don't just really today strategic avoid you it's if

Matthew Larson

my were I'm again about the notes them mind. or most about was last wanted Don't thing talk of just ask at Then to I covered. here looking and

it. just ask I'll XX%, caught last which be out. would some And gross or I that’s guess some of is tax accounted the around accounting item that something in reversal still from than there of likely the was fourth quarter, high them which crossing margin more XX%. I'm some I XX% this. year. gross thing margin for So extremely better

Christopher Miglino

think year. XX% I the wasn’t J.P. was for it? it

J.P. Hannan

purchase. good have and number cost ultimately just to could a where out, would said we be did XX% purchases to normalized to reversals we that having it sold full not the more would maybe XX% and up year XX% would have for been end and of media

Matthew Larson

that that margin. revenues, just the onetime a your revenue That’s a event, up reversal show was but hit just the it one-time -- didn’t in stream, that was gross

did, And that so plus reasonable the a is rate. you $X that million run

basis? going to what that did is there some reversal forward Of it. revenue million, that that’s operating include $X pending on and grow some you is of sale want this you of course affect an might does or is that the But

J.P. Hannan

revenue help the what the revenue, discussing the margin we is the [$X.X gross cost gross adjustment in but operating net that is is profits it of and million]… The the revenue basis we’re gross so gross the against did the

Operator

our from Kin take Lam next Capital. We’ll Instructions] [Operator question with Aegis

Kin Lam

Just already? about IOC what guys put you Have dividends whole of you just found am the out there. BIGtoken. wondering a I question terms the done the in

Christopher Miglino

So Inc how quarter are that the transmission going last the we to subsidiary form, BIGtoken be the distribution wholly on on formed with of working is just and happen.

in and that distribution get coming out. set is that promised dividend we’ll the as have have to we we there waiting that’s worked and process once have for date just definitely So a past we’re

definitely -- to continuing just have that’s I that’s So don’t you happen now. here for right but it happening,

Kin Lam

How share? how ratio many per about terms of the BIGtokens

Christopher Miglino

that, have that about can today. don’t I think I we talk but

we’re lawyers not may I the that -- have So had. think

Operator

That conference today’s any the time, closing conclude and this to question session. I’ll At back answer Christopher remarks. for does turn Miglino

Christopher Miglino

we’re emails happy Thanks everybody. or calls look forward any myself any at any you to that see the if We here, that of you or events have. at or J.P answer in might between are has to anybody questions

BIGtoken.com us today to So to and the participate sure sign in thank very much be for beta joining platform. up on

Operator

Thank you conference. conclude all participation. does today's for This your

now disconnect. You may

SRAX (SRAX) 2 Apr 182017 Q4 Earnings call transcript