SRAX - Earnings call transcript Q1 2018

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Operator

Good day everyone, and welcome to the SRAX's First Quarter 2018 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

Thank you, Katherine. everyone. afternoon, Good welcome XXXX to you SRAX’s to I’d call. all quarter conference first like of This webcast is srax.com/investors/presentation. call being website on at the and is available us Christopher SRAX’s With management CFO, and J.P. CEO, from today Miglino; are Hannan. will Miglino J.P. review highlights quarterly Chris and Company’s the then financial for will open will questions. metrics, the discuss Chris the call

should, expect, Before enable, I by potential, statements like which believe, be call indicative to as estimate, may Investors project remind management, the risks I relate are call forward-looking to time. cause you words from contain could, anticipate, the intend, turn over they cautioned would that that this involve at differ actual uncertainties similar statements this will, those and could expressions SRAX to anticipated results to that SRAX. all and by may forward-looking

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

memorandum for agreements The subject strategic completion As employment company entered previously to advisors due-diligence to disclosed review a in employees. certain in of outside the October SRAXmd. definitive transaction and is The engaged of of the we withstanding May alternatives including the XXXX, into closing XXXX.

be or no completed, conditions As There will be met. of process on terms assurance be completed, will that successful, will of that us. these have be if could such the is day none hereof, been process to favorable

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

Chris? SRAX's the turn Now, Miglino. go it to pleasure Please over is CEO, my Chris call to ahead

Christopher Miglino

focused afternoon, everyone. management. reducing a promises and on In Thank high we XXXX year of you, balance be low sheet volume significant revenue transformational change. margin Kirsten. to Good XXXX

and working foundation SRAXmd. launching solid of goal bunch diligently to products monetizing the grow strategy toward growth for a we're of implementing have our new our which we Now and

quarter. First review the quick a of

is As you the strongest know advertising and the sales have lightest. quarter quarter typically seasonal first The typically the fourth swings. is

and We margins expect achieve of for pleased the first to same above we the historical were XX% XXXX quarter. for gross

product in continue also to engineering invest and sales, development. We

that in We’re verticals. several to help drive offerings excited we’re new launching about our growth

social’s SRAX's artificial First among intelligence enable payment amounts allocate which - and rules intelligent to to to budget specific profiles. create client uses campaigns budget users or specific automatically

SRAX devices set triggers Next, buying verified shopping the enhance sources SRAX's retailers specific a user social single content data which message key across with social intended shopper, multiple automatically other to lay a additional which [indiscernible] rules parameters visiting social to elements. immediate to on based delivers And shoppers target campaigns. and inventory and advertising and

consumer to and Connect so signed making to will reduces monetize to get transaction sites asset and manage about As assurances through rewards SRAXmd data of no operates diligently consumers the made BIGtoken a vertical we’ve privacy. access BIGtoken accurate that are transaction and data and learn data opportunities BIGtoken again In our Kirsten human platform a accessed. records be the intervention earn and should with BIG third-party deal to blockchain there's fraud. of mentioned and highly speeds and need their when on more identities. mind openly identifies for consumer said, all to reward their review of privacy digital understanding. didn’t been features that verify and they unaware this in compensated transmission should about comprised application out of experiences. It transparent consumers and network team advertisers done and completed. that specific layer for digital sales their autonomously consumers challenges thereby up data system allowing be companies tool decentralized public and this pleased that layer sharing today's can through The this users users revenue marketing corporations improved to consumers to their consumers memorandum provides enables developers. should every have transaction. our minimizing this of times and cuts data or their working social The earn concerned is advertising and more from healthcare I'd transaction With the platform Both and BIGtoken efforts. like likely and for is we’re platform. believe data is also data. past working secure We giving and online middlemen, ecosystem the be and for have verify a want but applications

Now personal that everyone breaches from and Facebook and providers email daily reminded we receive with issues scandals, consumers medical data been consumers services more platforms. started, announces privacy at year of And social privacy to privacy the alerts from this are their updates policy frankly recent financial aware and before. a for media ever risk issue were as than the new they ready. when privacy and about hearings retail are Equifax data congressional on related and We've media to working the is

commercial it day like In fact was for a us. two

phones to data. they on work where their to recognize beginning from and Consumers this they are is of the own live value are sold. their aggregated being being where and tracked people Now information

digital significant or advertising a As direct-mail consumer could on including basis. consumers not on a market earn side of research money monthly amount example an

the to market opt reach belongs market currently XXXX billion protection data in to over We’re is large it to is valued at $XXX the all and security a create sharing expected can the believe to according and annual blockchain data and unprecedented creating entirely digital in and We consumer. released mechanism of new XX% blockchain according technology test and BIG payment. the privacy value and our quite data of opportunity BIG consumers March. leveraging at alpha for markets. or we to version the digital market and approximately choice behind it's growth sharing market. The is solutions support by users The for services well. the progressing for billion ability IDC rate ensures to functionality, data XXX markets development compounded mechanics, choice existing to their rewards, opt infrastructure We're and to To out our to

progress We’re in oriented with additional oriented feedback now off users social include components our data by incorporating team for to learnings Based gaming actionable test next features data-gathering. provided we the version expect version. and for elements and

call the for Now J.P. over review. I’ll the financial to turn

J.P. Hannan

review quarter XXXX. I’ll Thanks Chris. now first the for results the of

seasonality Reach on to prior million. our of XX% remained gross Reflecting focus in and fourth quarter being year averages a margin larger first gross of on sales on margin historical million In revenues from gross gross lightest above of our in That included the compared strongest. SRAX margin $X profit $X.X that That as profit as gross period. revenue, advertising ago quarter our mentioned just was year contribution with quarter. the to high margin Chris high-volume, experienced lower XXXX. compares of million QX $X.X customers at revenue the $X.X well million XX% quarter in As first revenue, of

in normalized expect on $X.X XXXX. the from the blended the we more Operating the gross year be million a quarter in in basis $X.X forward, annual on basis. margin but of expenses ebb than Going million flow were quarter first and down a range to throughout XX% of

cost restructuring the Now $XXX,XXX ex and measures noncompete a in reflects QX and first those expenses that XXXX write-off one-time QX even operating though undertaken items included the that XXXX in our were in XXXX. $XXX,XXX of costs, decreased quarter still

to improved operations in from million from $X.X loss $X.X is up result, a QX million XXXX. As loss and

balance first Net to advertising $X.X was compares in Adjusted cash the approximately of impact share renewed the days, have loss EBITDA interest XX companies million credit the or million as and per XX, common that FastPay. with warrants will longer to in have and have and cash was end compared that This larger compared the typically a at XXXX. XXXX. million March debentures year. to dated loss quarter reflects mentioned XXXX. reducing quarter Our of of first seasonality $X.X million and and quarter DSOs with compared or Subsequent $X.X balances of our converted end at to or expense $X.XX quarter during that XXX million this loss XXXX. $XXX,XXX that improved the $X.XX quarter X.X of first the at quarter $XXX,XXX to retired and quarter $X.X cash share million to been that equivalents year-end debt to the $X.X our business in in stock expired million ended but $X national $XXX,XXX DSOs the $X.X the facility net to in thereby period. of first quarter We I were April the of impact million per of will XXXX By generally we advertising to accounts in earlier the that and end $X million

that, As outstanding. turn of the million like there with XX, March I’d Chris. XX.X now back XXXX common And to were call shares to

Christopher Miglino

J.P. Thanks

and everything. the to this and ecosystem reward BIGtoken.com today's will more where marketing quality we’re obtain BIGtoken fruition. privacy an we and our advertising Consumers product So privacy and portfolio Further to solution creating addition believe could of aware platform data. concerns strategy drive vertical the of shareholder timing diversify issues We our are their value. is provide believe and our of and companies value benefit. to is will for to by consumers poised not data, rich timing many coming better be a

a categories. that silos in offering targeted building digital We’re of advertisings social variety and solutions provide

healthcare close monetize vertical transaction asset. oldest is poised the and we’re to that Our quite successful to

model us. more. in to It’s and verticals good packaged consumer a automobiles time goods, We’re that for using additional sports, build

Before can I at see in that us note to City. you Emerging I’d open New questions, Conference Technology call like Needham York the to

SRAXmd and at will be If it’s the San SRAX discuss as you Digital to like Ladenburg now the in transaction Micro possible. that Angeles there Technology and turn note we just LD call to Conference things Health happen the Q&A. open as can’t Thalmann we’re I’d try be the to the over Expo Francisco, tomorrow, I just I’d possible, certain as to as that be to like trying Los transparent XXXX, about to the in but

Operator

question first Noble Michael Our Capital Markets. Kupinski Instructions] [Operator from with comes

Michael Kupinski

operation to why in In that quarter? hadn’t the as discontinued the fact Was a treated due was or? you the that could yet been describe performed recent due-diligence quarter, not SRAXmd

J.P. Hannan

We deal. have still definitive don’t a

we in understanding not We have have memorandum next not at contract into why. but entered the that's quarters, least of

Michael Kupinski

quarter when coming easier the also comps. up some fourth obviously rate going and against then accelerated decline And you’re the from you of look to at be

kind just your did quarter middle up? of the give it Second some in you last the at business and shape margin the higher the quarter kind initiative year or kind quarter comps of for how start implementing was to fill is of to quarter the of or us of sense beginning going

J.P. Hannan

a mean initiative and XXXX, I let little we quarter. of actually wasn’t the was of talked sort of Yes, began We last that that was by a about into definitive something of It turn-off. tail-end evolved then bit end had most the over this end really of time, phased we it it the towards XXXX It QX. out.

much to comps So beyond. see QX clear you and will in start

Michael Kupinski

business? going that was numbers initiative the you’re just or after anything influenced talking seasonality in of but in the generally the margin the the there in terms quarter it And in was or your obviously the that particular higher that quarter something in and seasonality large was plus quarter advertiser also

J.P. Hannan

I there mean test still prior us. that with November are revenue quarter was the the was was of big sourcing think revenue so no and has charter with went longer of the its I Reach and the thing launched revenue was other been finding place some in very lumpy that on that and SRAX that

And in of QX year. a last that create lot so noise

Michael Kupinski

terms you in terms guidance believe revenues? terms And have do you in annual revenues, of of the thoughts guys you your annual of any in past in gave guidance

J.P. Hannan

process. the Yes, we last mentioned SRAXmd quarter because of simply guidance we’re just giving not

Operator

with Aspenwood Capital. We Ossello will to on Steve continue

Steve Ossello

the process the Chris get of you proceeds the give MoU that use idea then you can, that can of to in the be if of extent generated now kind activity activity for resulted for to SRAXmd, line, what what transaction? that’s assuming the through the goal and me would you

Christopher Miglino

Sure.

selected around down So demonstrate we then we were best three chance it deal be of that being able XX to and the and close transaction us to transaction people the able had the on close the bid we wherewithal and truly confidence in the SRAXmd gave three, thought those the that the interested platform. to they added to around are that had we one that

a there, was capable process sophisticated that and that but product. that we for buyer we long the very do choice we So the highly think made want right to

excited that. about we’re So

of obviously are use verticals far us big the focusing our token obviously chickens before As other significant all have initiatives the but capital. as hatched of proceeds, funding of they're on be there for would we and important amount

to would - shareholders. given have use some of to some the So, the the stock giving if decide buy wanted board to out they that back to it out it or money to

that that’s we So contend transaction. and close something if when will with the we

Operator

Our next Larson question Fargo. from comes Wells with Matthew

Matthew Larson

Actually answered two my questions callers. by they to were previous were already because you the similar

So the at Needham luck thanks and anyway, tomorrow. good Conference

Christopher Miglino

much. very you Thank

Operator

open. Kupinski. your line So Mike Kupinski, Please your we have a is check button. follow-up mute Mr. from

Michael Kupinski

much how you in talk your the spent you initiative? Can quarter regarding BIGtoken about

Christopher Miglino

was it $XX,XXX. Yes, it’s little XX-Q over detailed but in the

Michael Kupinski

we’re moving guys testing terms for we would are data, the look looking in that are some know the are of for what we terms are And going if then terms with, of or are in I next the you’re the of you success monitor the benchmarks of of data, have of - things parameters beta whether into that what in initiative? up going this to the where customers amount what but personal with be next signed it that should

Christopher Miglino

lot people had we else Yes, had the I of up anything it’s have people - think a around of that we’ve that’s number and there. without sign beta certainly the signed for X,XXX people,

will the issue those we’re So for once we ready beta, X,XXX.

to of the the and an and beta get into do up initially will then and we members consumers of of that once we will and around start could inside enough open will beta accelerate growth a XX,XXX give half level get out that will hit million us of open the to goal activities to that that hope a there, we be and bunch closed get and consumer have threshold beta. we’ll learnings Our understandings then their to

Operator

will back to I over speakers. Instructions] [Operator turn our the floor

Christopher Miglino

you very everybody for appreciate joining much it. Thank We today. really

about what excited We’re we’re doing.

please to on of other you what’s questions and with Thank So us any keeping going is look reach if what’s we on apprised to going and much. there with out forward BIGtoken. MD you very directly

Operator

concludes Thank you. you today’s participation. Ladies your this conference. again Thank and gentlemen all for

You may now disconnect.

SRAX (SRAX) 15 May 182018 Q1 Earnings call transcript