NXTD - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen and welcome to the NXT-ID IR Update Webcast. At this time, all phone participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. I would now like to introduce your host for today’s conference, Mr. Gino Pereira, Chief Executive Officer. ahead. go please Sir,

Gino Pereira

of much. our today Thank financial to the on third results very you also joining general a and everyone our for update quarter and months call discuss progress nine I Good you will you give of morning. the for operational XXXX. business. Thank NXT-ID’s unaudited

statements release goals, this call, will we forward-looking including undertake SEC reference from undue which to forecasts, other forward-looking that statements reliance on identified of except confirmed today future afternoon’s filings. not materially Please the results statements. will you recognize earnings by statements, performance beliefs, to that factors During any assumptions required statements. cannot duty the existing are statements, to we regarding and projections statements, and including law, underlying that differ and information, by applicable consist should of that actual number in expectations, Please be and our making our any there factors be and update cause as no forward-looking our discussed note such such in place

on me on Chief Officer; Officer today Orlando, is financial the Vin Financial the Kevin Operating and Fit Miceli, and of our and our Pay Chief our Pay; Mike for and of results turn I an LogicMark. call Mike Fit President of and with President So, call begin review to O'Connor, update will Kevin the Vin call to LogicMark a over and respectively. for

from then on take call. analysts will few questions the We a the

as quarter its for quarter the as revenue is as So obviously, concerned, disappointing us concerned. far is as far

that. growth are we do And business we we important understand in shareholders to and strong company but to roadmap all an putting are in that it’s ambitious, us. that an we think on need focused a of achievable very our growing place and front for have I that emerging

meaningful generate small started customers. have So, of large as recently revenues, number a we we to only have

an abnormally with So, in road bunk results. on a impact the large of has our them quarterly any one

more gain this We inventory deliveries have made that would customers, before and they we the half amount a resume And of such we purchase before to orders. we strong As more significant expect to still to happen work potential traction WorldVentures be first impact year with XXXX. early we don’t in minimized. very to expect through new of

of However, tech. we have good our to fin continued progress both healthcare make and really on businesses,

the will in We them new of be and significant new are one by customers progress customers year announced anticipate making more bringing end. that we

approximately working that the also debt the in growth through to directly are per better We We much to our our interest to but our and actually so working is a fund year shortfall that shape Any help to sheet capital achieve contribute continue best which line try rate flow of than as half refinancing. the company value credit. in our earnings was revolving beyond. was the revenue announced are and strategic does we balance ago. prospects our a sheet does interest and and on that refinancing we I in financing balance share, and necessary be remain confident of in result improving and order shareholder the will to of XXXX plan in for applied it And on the quarter, possible and working save the received proceeds needed we reduce our recently

all on those progress make to fronts. continue do we So,

the number there the we and as through charges a well summary, it that are to with to quarter to about then significant businesses. of results. talk Vin will I in financial of going And So over financial in am the go non-cash turn results the note operating

So, Vin, thanks.

Vin Miceli

Vin the Again, results, CFO months company all. summarize for Gino. I Miceli, operating the and XXXX. call for the the the you, the of like Good company. X September everyone results of morning, to X on would Thank ended XX, months

So, profit everyone knows XX% in the excuse shipments of extent margin to million X were X sales July months Flye XXXX – million months Gino for respectively the million the world the and and $X.X have the X margin The on revenues Sequentially XX WorldVentures to XX, about periods. and the the on earned was revenues $XX by period strong the for profit of and in X for ended company quarter compared out, both a large And in healthy to of healthy now in company’s as the of margin lagged margin QX to the the XXXX they in in is directly gross pointed the approximately in a the enjoys LogicMark gross that the a comparable revenues ended gross $X.X XX% approximately to mainly gross versus quarter XXXX the revenues which September to as me ‘XX attributable and XX% slowdown due what period and in to for a this to is WorldVentures. XX, ventures profit the product behind ‘XX little the months X a XX% and quarter periods. both acquisition the that LogicMark third always year comparable sales. the and attributable third XXXX primarily The became QX increase revenues increase in of versus of margins September however Card. effective months were lesser

about as quarter third Our for the at the $X.X year. to in million were QX in million last million $X.X XXXX of operating expenses up period compared at came about – $X.X

the quarter pay quarter and in G&A, primarily layering were expenses current the selling quarter merger result a marketing, full of All expenses all the as and LogicMark for of our and ‘XX. in up post R&D expenses of the also of the fit third including in third

For essentially story is the X months, same. the the

notes in was million expense and financed respectively, acquisition the X in the to net whereas about that interest only exactly reasoning same, entire in revolving we million various interest the at They July periods. the both related issued as the expense September approximately for the of Our a September third The $XX.X interest well of by for last LogicMark that million had part and periods. for pay the in in same roughly sorry the XXXX as full higher period, $X.X both incurred we and months the quarter for about – of year million increase were third have $X.X in quarter ‘XX credit both expense on months – LogicMark which the was convertible ended the QX exchange XX year of results X also portion in XX the X The million really expense of was compared in notes million both were and attributable up came loss and the they seller and to X versus expenses is behind are to X.X in primarily ended comparable months as XXXX. in and the XX X-month periods the million approximately the for and $X.X third for the million. November loss months. X rationality the $X.X for to to year $XX X and compared Interest million and a facility

million million months During the which included approximately company’s to $X.X of included important charges approximately in That’s in X.X net loss was operating note. non-cash ended the X expenses.

So the loss was the of period in that X-month million million a non-cash $X in of $X.X related.

$XX.X at million. about our to balance current relatively So assets sheet, looking constant remained our over

Our liabilities, came current at excluding million. contingent $XX.X our about consideration in

refinance some under the but Our relatively now, C debt as quarter-to-quarter Series to million, excluding our of looking equity Gino just our preferred. was were stockholder X/XX have debt constant at $X levels pointed the out and debt remained

the over So, in of what that’s X ‘XX with turn look Gino. to it the I QX Hence, an months encapsulation back of that will like. and

Gino Pereira

Thanks Vin. very much,

Vin Miceli

Sure.

Gino Pereira

Orlando on he Fit go can give what’s of a So, you let’s summary being at on and Mike going Pay. to

Mike Orlando

is President Pay. Yes. everyone. and of This Officer Good Operating Orlando, Thanks, Chief Mike Fit Gino. morning,

for continuing and very and getting ready in to company bring So we’ve of had out platform a terms our build customers active to market. quarter first commercialization our

mid quarter, tokenized key is We made Garmin the announcements most significantly smartwatch, is Radius couple called Garmin their Vívoactive customer B, have feature and their for we then began new during contactless Pay, allow a the partnering September X, and which their and are shipments in payments a globe. payments slot up new and which throughout of for power behind the Product which will terminals the to be at

Google some announced significant and enable platforms the shortly America, cards agreements also brands will on also products of begin of we allow launch with their Bank have a signed will relationship and across quarter, for with our here this QX, credit cardholders America to Bank various different their both all we we of significant with partners device Garmin that debit that QX. then in During and will

Thank the announcements to we those for the with and or extensibility and reflects Technologies have to we platform the blend as and team begin the of XXXX significant early January is has NXT-ID the with year to that expect Fit The thing you, those wrapping that in completed of QX of early begin us product of work and technologies from specific the also in the We in availability. milestone beginning date the our so Gino. us Pay platform quarters. brands coming the commercialization by our the will XXXX come see up done this QX most that major over the we end for revenues those

Gino Pereira

That’s Okay. Thanks excellent Mike. much, very quarter. an

and continuing bringing to on excited are that. there well poised up-to-date to that’s have So, growth and we is we Kevin? perform LogicMark you see really come very the Kevin and

Kevin O'Connor

Gino. Thanks,

the a by driven headwinds QX quarter, were update fiscal end overall, part was of the late the to in ran it large into government’s We strong. some which pretty year. in really So

So, government we products. have customer a large providing

into decreased or tend the increase on fiscal run end and decrease as as orders the So, in or year fiscal their funds, September. budgets into year ran either their of their of year, we to is they this end depending

saw of QX the QX, we start those really So, at government we a of the anticipating so orders strong orders. are out

The are at botched launch that we pilot, big our of to QX retail. the end other looking thing was

focus hurricanes put were heavily it where impacted that the we which our So, a was really into we lot pretty of hit. and effort the We unfortunately South, area. in timed

west out that one and doing were they we So, club well. have really performed we

that impacted. we locations other negatively get the pilot in The were

that We kind picked The where not the actually saw were and optimistic they well. are reconfigured very the based we week. impacted. So, we customer to go going it’s on this about west we the that out locations opportunity are launch of optimistic starting new actually results we is

to and that. larger basis excited and much into QX a on them into going about So, with then are launch we XXXX, look we

our and panels customers are so are talked We potential covered reach, process the with also about in of talking heavily as specific as that in Gina we some not before.

whether platform, non-monitored So, we on kick performed has solution space expand our areas are that cost solution reach to are will looking and a and the for our provide. that into well people lower out which going really

and thing months be that a that were believe the fourth a able numbers quarter pace we on increase. substantial and have year is as do to to The will we first were the other X increased record through performance

able We do to our have it expenses. by maintaining been

and that headcount we demand efficiency. to able to up and do been continue overall without and plan support resources to improving adding So, additional no an operationally increased have by ramp

for to to you really back the then XXXX through and and going XXXX end X with all-in-all year well. forward QX into performance, strong as looking So, a first results coming months great strong for

Gino Pereira

much, very Thanks Kevin. great. Terrific. That’s

can for questions. some we it over So, back turn

analysts have to We a ready are those we of a line the on take got questions, couple please. and

Operator

from line comes Group. Maxim with Kinstlinger [Operator Instructions] question the Our Brian first

Your now line is open.

Brian Kinstlinger

it Garmin great. gets Thanks product. talk revenue Can could flow the during sorry How as revenue timing you the is when sale of that guys or throw much. manufacturing is sold? watch – recognize watch does so that and Hi, of the about

GinoPereira

Yes.

but… So,

Mike Orlando

answer that you’re you – Gino, going or to we…

GinoPereira

that. Mike Yes, I’m we say, just to think answer Mike? we’ll have going

MikeOrlando

Brian. Hi, Yes.

Brian Kinstlinger

Hi. How you? are

Mike Orlando

great. you. Thank – revenue The

the their So as Garmin, for we that or it’s accrued the for the consumer watch. the on activate revenue recognize

go take Garmin they on and our Fit that the process once increase The Garmin watch the use and So essentially go setups, the of all click the to new for was they there purchase and and their functions they setup through activation Pay Vivoactive setup end enabling features setup through Pay creates Pay. an revenue them as they as process the X.

Brian Kinstlinger

understand Bank I can you is sorry really did of the impact? that only or other And clarify customers, so, correctly to America of Bank just accounts an initially America if available what’s – you

Mike Orlando

sure. sure, Sure,

long soon with banks the supported day a there and and Pay come then announcing are here live of will be that list other of will very that be day a banks is official we will on when Garmin So list called go on X. one what’s issuing

new these after they And products that roll control as XX market what all group, one. banks with bank So roughly period hitting networks the the day bank a with that and in course rollout to on. payment they few other do capabilities will soon of part combine last is that the then control that of days called

And and in see rollout see, U.S. as so of markets this that and then we’ll will global continues. consumers you continuous I our will addition but hear know in banks

Brian Kinstlinger

And for when ready is officially expected watch sell? to their be released,

Mike Orlando

parts Asia users in be X were the so there U.S. issuers so been market issuers watch September it’s – – already Most the been and and and been so of go the has targeted new both roughly be to here have to Europe they’ll watches Garmin watch existing been globally, available the their the and excuse yes consumers me So since has Garmin. will sell of the months. in but announcements and Australia for and purchasing an that setup

Brian Kinstlinger

yet? And haven’t I haven’t so revenues it you so activated because those think you aren’t you or who bought mentioned far have generate

Mike Orlando

Correct.

Brian Kinstlinger

take clear Just us right now? on and the of understanding going through – just what’s

Mike Orlando

have yet. Yes, purchased so who activated not those have

been have certification the with in networks We of the working the Garmin on payment final the going device.

interoperability and that significant device pretty so through will be tell of the terms third-party market get to hurdles need would it’s certification to globally. various of we across terminals happen, to available So, device in

issuers and that process final the stages I of about spoke completing that those the as the and So, availability globally phase once in then the will then is of announce earlier. Garmin process on-boarding

Brian Kinstlinger

Okay. carriers has given device been publish their then mobile And built interest OEMs that smartwatch relationship technology? it’s other regarding from this other highly you’ve or and this

GinoPereira

up up would think like end of our August. I they announcement of have activity so mean Pay, when Garmin I has announced the to in or I absolutely. we kind last Yes, of leaving show months picked the that significantly the to X also at been the

globally one, device solution those smartwatch market have what a this and I point products proliferation think IoT device less the Pay, other an also U.S. capabilities. Pay are those And at first see then are to perspective, those platform that we are terms Pay. to really two in allow manufacturers of just both their and payments and development manufacturers marketplace which card to global specifically only provide like and of market bring since have in to we seeing for availability to from contact that Apple is services to looking pipeline devices the to the and in products networks integration independent in device had ready that the that those us and readiness we inflection Samsung equitable are here we things, XXXX Fit provide and going with other to and the

Brian Kinstlinger

after growth LogicMark year. – to then opportunities solution, X year expensive next guys because the understand about not year versus can the I’m monitor what understood? And you’ve non-monitored trying one main this maybe you of month is And done the revenue clientele people well mistaken is talk last to use the that and of I that with when the go if Great. an

KevinO’Connor

that. take I’ll is Gino, Yes, Kevin. this

GinoPereira

Yes.

Okay.

KevinO’Connor

that, the because As last as of far months, maybe Vin when quarter the kind year. X mid-third can first revenues through acquired address we

how – forward non-monitored, proposition it’s opportunity that, So in no core going our monthly I fee of the value but don’t overall product. was actually know and the terms recognize the product

Gino Pereira

Right.

Kevin O’Connor

family is fees. XXX, and friends monthly no so to goes there So

they’re large able going been the partners, present channel of we’re use at looking many of in as talking with of proposition value to short cost savings out the lifespan the a over in cases product. the range So the and XX%

the out that’s monitored of of so that share retailers proposition some that to that and value And at really take strong trying looking channel. the these are

opportunity So really exposure with pressure right partnering partners channel the to that. the the matter a and of that’s get it’s to

Brian Kinstlinger

partner Before some that fee-based of a that months X lose getting just they with by we are replacing revenue, system? non ongoing and get kind to channel it then does – the fee

KevinO’Connor

some really solution. the solution in from that some for take solution. a share a it’s shift participating a fee No, whether would currently not channel is to partners some cases, a channel or shifting or no fee monthly it monitored cases monthly In be are to looking partners share monitored in

to competitors not lot partner monthly really in base the the There is more their addressing, but many pie. it opportunity they as of really shares the what looking space. are increase weren’t so and an that’s no really So, competitors are in a piece depends overall excites on to the There that of fee monitored for opportunity where them take the most.

Brian Kinstlinger

revenue, you look terms I X in curious to months, far? see in last located recognize know months interested are you Yes, like I in months versus have the not Great. X months over what recognize the overly kind so am I’m just of they much X of year’s of profile revenues just LogicMark how last LogicMark’s of didn’t growth to wherever year

GinoPereira

that only basis. we on revenue you So, the acquisition so a understand post you recognized know

Brian Kinstlinger

Right.

GinoPereira

So X partial with up you third year compare results of the quarter ‘XX last obviously when substantially. month math a full it’s and

Brian Kinstlinger

No, I am not apples-to-apple. looking for

GinoPereira

a without forma basis, the up is neighborhood getting the year-over-year standalone $X details on basis basis. pro of the to in forma $X.X million revenues, on of pro a On somewhere a revenue into exact their million

Brian Kinstlinger

what year LogicMark opposed X have this to recognized? And the Okay. revenue as what from months has you been

GinoPereira

pro up there substantially the you details But on up company. I a what by It’s basis. in the operating revenues month X – forma is of tell can

Brian Kinstlinger

queue, share X September weighted count, based the share share count September the – And Okay, quarter the quarter on was what month weighted for then the in average share was some some count? the alright. housekeeping, a count,

GinoPereira

you the So, of which about amount are talking outstanding or? shares

Brian Kinstlinger

September what loss X income X share, ? put a like third X you Because is months, the for share count am quarter months? building share opposed for as September just I what just that were we I are No, count for of out half the the if the in per looks in curious statement calculating quarter just the months, you not

Vin Miceli

based $XX.X average It’s the weighted there is the during results ended the September, million. Q, on right, quarterly shares a

GinoPereira

Right.

XX of end roughly the at million outstanding roughly, had we at September we had So X/XX. shares

Brian Kinstlinger

Got the demand fourth the then sounds the That’s do it but growth one being in before year? quarter, And LogicMark to softer or in you okay. compared flat directionally helpful. revenue quarter third see up, down WorldVentures like with we the first next quarter, the it, quarter, stronger demand, the see directionally

GinoPereira

hard higher. year I I definitely see would stage. be quarter significantly the we And the for first that new contribution quarter expect normally don’t again, as being it’s us of will through in – also partners. next part fourth our and

So, the similar That but a it’s would such, quarter, not but but surprised. be something similar far the are trend better great. as we of would an so third but be official thing, pleasantly projection that’s slightly something than

Brian Kinstlinger

Great.

thanks. Okay

Operator

comes question of line from next Our SoundView. Kris Tuttle with

Your line is open. now

Kris Tuttle

Okay, thanks.

Let on finish me up revenue recognition. just a)

report are question when is am terms it on going So to Garmin pay really guys you you clear and in I recognize. to pretty going how is of

that and your the when when pay going then I to and will sort rev/rec? Garmin of flow watch, activate impact will you report guys So how is something

GinoPereira

Yes.

that this actually are will invoicing. a while have on we our activates, it create seen we revenue because platform providing So, for action so technology, it

at We of for activations quarter. end all will each invoice them the

December quarter-to-quarter the for will activations voicing continue a that be them of on we at So, basis. and end will QX

Kris Tuttle

is we the us growth that think I in reasonable on that you. asked business. Okay, missed all organic here the it. bit, a Thank then what’s I getting LogicMark percentage LogicMark squares think of little And

a I think way? that asked I slightly just different

GinoPereira

go channel we it’s such that throw so I number. are such I range is out of think, it because opportunities evidence mean, we extremely any state of the are but to just kind retail the hard, add of Kevin retail producing is as has of rate. don’t to a of of Kris a possibility that, but expect some is LogicMark evidence some continue channels in could there the growth justify almost of think growing there talking enough number a opportunities that significant, it a that we if behind growth definitely would support and have significant, we been, again that well be is we range enough to of in, I about they that be smaller potential on very don’t we some have

still looking We are that.

Kris Tuttle

I [Technical could that be? using I know reasonable if does it have I – Okay. seem reasonable, Difficulty] that mean, been seems

GinoPereira

you broke there. Sorry up

Kris Tuttle

of Just, kind reasonable growth? is XX%, XX% a

GinoPereira

as We as far can’t make are can. we any as we but predictions running fast obviously concerned, as that’s

Kris Tuttle

price, are about working Difficulty] lot then question capital restructure [Technical current what WorldVentures, WorldVentures working you opposed the at to having hopeful way cause [Technical into I think sheet the with your equity equity would balance being improved that as and are, debt balance in Difficulty] large capital to tied equity equity? think that efficient And your more is receivable sheet debt than obviously use to the is they getting I of needs investors which can

GinoPereira

the the also they of think it’s of I are risk is that because price the takes. relative to of lender debt interlinked, – amount kind

debt much far significant amount interest as sweet to a be somewhere, which impact so an reduced impacts at there we maybe is finance net directly even income of as where percentage able operating spot rate there our that that a could is XX%. And will very a by

but think that normal And do proven sort it, be in us, financing we that this terms definitely flow expensive under two, we very out well move is and the rate but time And so once more the I made to of – continue felt I benefits say do – from that have think flows in LogicMark is data a two and LogicMark really acquisition interest if that’s than well. was will case we strategically repeat well. substantial EPS very once as to financing, more between the so cash the it’s the right the to that but for to better is we of that a we that a will our bottom the the impacts blend what line we blend save there interest, say to the it want that we and and down get it’s some balance,

of think think don’t blend I of that one sweet other, it’s best there’s a when the do I So spot the the can deal. we

We’re obviously team issuing with the that impact that is whole we significant of not aware very of the incentivized, shares because we’ll heavily management company. understand shareholders in the

that the affects ordinary shareholder NXT-ID the in anything So of team management an directly company well. as affects

So these company, exciting, shares, of and is technology divisions business, we do not focus really a right strong strong we’re on we’re the very and we we share IoT about on price and this can impact key a but of we volatility been which focus two a mean excited building actually about so conscious the the that, balance got can in kind find thing cetera about have. we tremendously issuing we can prospect the obviously is to business that that, great on FinTech we’ve run has growing building is focused but within do we’re can and environment, sheet Healthcare, and the there the et lot try I and balance, growing of the there’s much

and we’re going So more sophisticated. on can, best make we’re getting course to staying more the our try is and decisions planning the board we

best to that and the have, from people and we company input we grow more and this we try get bounce off have can. ideas So

Kris Tuttle

about Okay. call, we the that the I first AR are know but quarter? terms here it missed of of were there correcting this – appreciate at of now of end in in September the getting guys it minute what might middle it. receivables. in the or I have some out large the are It’s was November, the balance the in it’s where two close – of you of sort was we I at

GinoPereira

some but Yes. on progress there months reducing but down we on There would to would our but some is probably it several sum, get flow there help not take one it progress there, is well. be, for that, – cash that, will lump is as to obviously coming that like it’s where

progress there on has been So that. but

Kris Tuttle

then the a with on of business we Okay. and I have longer-term. what how couple like I And just Fit of of as timing that relates handle the where they’re good WorldVentures LogicMark sorry are – NXT-ID the that not Pay doing, then is them very for is with about, know hit you and to we the where but should think going next that outlook – feel the you that in know it and to same quarters control and

GinoPereira

Yes, so we being I business really combined and Pay look think payments should Fit really NXT the at business a the as business.

management take because et really we structure management, of advantage So we and synergies the put to we together the merger, similar the there companies cetera. want payment that have in company. of we And

a is business, X us, important base not for think those number, of have. us customer sweet technologies together should FinTech think that a a an a put so a just a standalone it’s is we you is I growing WorldVentures a for customer for as and amongst amongst So, customer but WorldVentures payments business customer,

is similar don’t of type we’re then as I size has optimistic. think number of being, So customers on well working we’re

And there if them there’s and one pretty XXXX mean of so loss continue if model, but a comeback revenue, loss I’m expect of in revenue to from that a revenue confident of grow any to I customer. source is lack loss their of I from

one dependent and particular customers source. additional not on revenue as so add we’re to expect We

Kris Tuttle

now. I that’s Okay, have all for

Gino Pereira

Okay.

I So, so think it. that’s

patience trying the are do to very just you appreciate being we much. everyone be the call. company your that grow thank on We and much So, our for can. We assured we very do shareholders appreciate that best

to strategic to continue and I And do continue call. just think to revenues have XXXX in for very generate joining that solid that and is this where for the us growth year expect we very and we vision started a very have you in we achievable. group we the much Thank our benefit.

Operator

now conference. your disconnect. participation thank gentlemen, in you the have program may you Everyone great concludes and a today’s Ladies day. This and for

LogicMark (LGMK) 15 Nov 172017 Q3 Earnings call transcript