TON Strategy Co Q1 FY2022 earnings call

Verb was named number one software provider to the direct sales industry for the second year in a row. Announced dates for market livestream shopping festivals on July 26th, 27th, 28th. Onboarding of vendors for market is ongoing with 90 vendors added between April 1 and May 10th, and 8-10 vendors a day since Wander Beauty event. Recent public facing events on market had 492 verified attendees, low four figures in livestream sales, but post-event sales continued. SaaS business had five consecutive quarters of growth. Verb Live version 2.0 for direct sales industry is ahead of schedule. New business unit for professional sports built on sales enablement platform with teams like Pittsburgh Penguins, Florida Panthers, etc. Development of new admin system for Pulse application ahead of schedule.

SaaS recurring subscription revenue for Q1 2022 was just over $2 million, up 37% year-over-year. Total Digital revenue was $2.2 million, up 19% year-over-year. SaaS recurring revenue was 93% of Total Digital revenue and 74% of Total Revenue. Gross profit margin was $1.7 million, up 31% year-over-year. Total cost of revenue was $1 million, an improvement of 20% year-over-year. R&D expense was $1.6 million in Q1 2022, a 45% reduction year-over-year and 42% reduction from Q4 2021. Non-digital business now represents 20% of total revenue compared to 29% in Q1 2021.

Expect further planned reductions in operating expenses while revenues increase throughout the year and into next. SaaS recurring revenue has had five consecutive quarters of growth and expected to continue growing. Anticipate charging onboarding and monthly fees around the time of the festivals.

Market conditions could affect the acquisition process as the share price has declined. There could be uncertainties in the adoption and growth of the market platform, including potential challenges in onboarding vendors and achieving expected sales volumes. The operating expenses reduction plans need to be effectively implemented to meet the goal of moving closer to cash flow positive.

Q: Asked about market revenue percentage, A: Average is 10%-20% with potential higher, no breakpoint for different revenue vendors.

Q: Asked about why another Wander Beauty event, A: It sends a signal to other companies.

Q: Asked about acquisitions, A: Delayed due to share price drop, acquisition brings OTT business advantages.

Q: Asked about market vs QVC average ticket price, A: Average ticket price on market is in same range as QVC.

Q: Asked about sports onboarding, A: Long internal approvals but quick onboarding once approved, targeting international teams.