TON Strategy Co Q2 FY2022 earnings call

Management Statement and Operational Highlights

• MARKET Platform: Discussed Shopfest as the hard launch of MARKET.live, noting it was the largest U.S. livestream shopping event. Emphasized the platform's quality, scalability, and unique social shopping experience. Highlighted a new streamlined onboarding process to help vendors quickly get set up. Over 300 vendors are committed, with half having active stores.
• SaaS Business: Identified as the leading sales enablement provider for the direct sales industry. Released new products like verbLIVE 2.0 and Pulse, expected to contribute to recurring revenue. Noted reduction in legacy non-digital revenue, with digital revenue now 90% of total revenue.
• Professional Sports Unit: Launched verbTEAMS sales enablement platform with partnerships including the Pittsburgh Penguins, Florida Panthers, etc., building a sales pipeline of professional sports teams.

Segment Performance

• SaaS Business: In Q2 2022, total digital revenue was $2.2 million, a 19% increase from Q2 2021. SaaS recurring revenue was $2 million, up 23% year-over-year. For the 6 months ended June 30, 2022, total SaaS recurring subscription revenue was $4 million, a 30% increase from the same period in 2021, and total digital revenue was $4.3 million, a 19% increase. Digital revenue now makes up 90% of total revenue, compared to 76% in Q2 2021.
• MARKET Platform: Shopfest was a 3-day livestream shopping festival. Total views on MARKET.live feed were 45,161; total unique views on MARKET.live were 15,444; total livestream attendance on MARKET.live during Shopfest was 8,511. Facebook views during Shopfest were 70,194, with over 1 million views post-event. Gross merchandise value generated was between $20,000 and $30,000, with an average order size over $80. Over 300 vendors are committed to MARKET, with approximately half having open and active stores.

Guidance

• MARKET: Anticipates revenue from MARKET to be greater in 2023 than 2022, with potential meaningful contribution in 2022.
• SaaS: Expects increased recurring SaaS revenue from new products (verbLIVE 2.0 and Pulse) in Q3 and Q4 2022 and beyond.
• Cost Reductions: Continues to focus on operational cost reductions, with R&D expenses significantly reduced.

Risks

• NASDAQ Listing: Management confident in compliance with NASDAQ listing rules, no specific risks discussed regarding the $1 issue.
• Market Awareness: Dependence on creating awareness for MARKET platform, as revenue is tied to the number of livestream events.
• Vendor Onboarding: Some larger vendors face delays in onboarding due to multiple departments providing necessary information.

Question and Answer

• **Q: Confirm views on MARKET.live, Facebook, and post-event views.

A: Rory confirmed total views on MARKET.live, Facebook views during Shopfest (70,194) and post-event views on Facebook (over 1 million).**

• **Q: Multibillion dollar brands onboarding and event participation.

A: Rory stated large brands are expected to appear soon, with Shopfest's success accelerating their participation.**

• **Q: Lessons learned and monetization of MARKET.

A: Rory mentioned people prefer buying from people, not brands; a plan is in motion for monetization.**

• **Q: Capital for MARKET promotion and social media viewership.

A: Rory said capital focus is on exploiting MARKET opportunity, and metrics from other social media are still being analyzed.**

• **Q: Economics of vendor-produced vs. company-produced events.

A: Salman Khan stated better economics when vendors produce events as no cost to company; Rory prefers viewers on own site for data collection.**

• **Q: Views from social media vs. own site.

A: Rory said they prefer viewers on own site for data collection and retargeting.**

• **Q: Capital for MARKET and organic growth.

A: Rory noted revenue from individuals forming relationships with hosts and presenters, with organic growth expected.