Mobi724 Global Solutions Inc

XTSX:MOS

Earnings Call Transcript

[Marcel Vienneau, CEO, President, Director & Co]

[Foreign Language] Good afternoon. My name is Marcel Vienneau. I'm the CEO of Mobi724 Global Solutions. Thank you for joining our Q3 2020 financial release webinar. Today's discussions contain forward-looking statements based on assumptions and therefore, subject to risks, uncertainties that could cause actual results to differ materially from those projected. The company undertakes no obligations to update these statements, except as required by law. You can read about these risks and uncertainties in our filing on SEDAR. Allan Rosenhek, Mobi724 CFO, will present the financial results, and we will make ourselves available for questions at the end of the presentation. [Foreign Language] You should be able to see a PowerPoint online now that will facilitate the presentation. Mobi724 Global Solutions' focus as per our slogan, every transaction is an opportunity. Mobi724 as an AI-powered fintech company, our objective is to add a layer of AI-driven actionable intelligence to every payment transaction, creating real-time engaging consumer experiences and generating incremental commercial opportunities for banks, for merchants and of course, for the cardholders. We offer all our solutions in a white-label format. Mobi724's processing platform enables card-issuing banks, payment networks, merchants and loyalty program operators to manage pay for performance personalized transactions driven incentive campaigns worldwide in real time. On this call, we'll communicate the financial highlights for Q3 2020, a press release concerning the -- has been issued and the management and discussion analysis, the MD&A and the financial statements have been filed on SEDAR as per required. In the third quarter and after the reporting period, revenues, operations and business developments across our targeted markets remain materially impacted by the COVID-19 pandemic. This is the second full quarter release since the COVID-19 and the mix started in March. However, we signed new agreements, raised funds, 20 new provision of services to clients and continued advancing business and corporate development in the most challenging period in the company's history and in the worst global crisis ever. Allan Rosenhek will now present the financial review. Allan, you can take the lead.

[Allan L. Rosenhek, CFO & Director]

Perfect. Thank you, Marcel. And thank you, everyone, for joining the call and for your continued support as shareholders of Mobi724. First, let's take a look at the results. Reviewing the last 9 months on a year-over-year basis for the 9-month period ending September 30, 2020, our revenues from continued operations increased by 31% from $703,000 in 2019 to $924,000 in 2020.Our net loss decreased by 46% from $2.968 million in 2019 to $1.612 million in 2020, all while our burn decreased by 74% from $3.132 million in 2019 to only $805,000 in 2020. On a third quarter 2020 over third quarter 2019 basis, our revenue from continued operations decreased by 52% from $342,000 in 2019 to $164,000 in 2020. Our net loss increased by 8% from $421,000 in 2019 to $454,000 in 2020. While our burn rate decreased by 64% from $1.238 million in 2019 to only $443,000 in 2020.Let's look behind these numbers. In the third quarter, we continued to see the effects of the global pandemic. With the implementation of certain contracts being put on hold and delays in signing of several agreements. But despite these issues, we generated higher revenue in comparison to the previous year on a year-over-year basis. Thankfully, with the signature and implementation of new contracts such as our CGI contract, and the resumption of launch activities that had been delayed by customers, we are seeing signs of recovery.Let's talk about cash. At the end of the third quarter, we held $685,000 in cash. We continue to tightly control our burn rate and decrease our net loss. At the outset of this pandemic, we prioritized strict expense control and tight cash management. We continue to operate in lean mode while prioritizing investment in business development and sales.On the financing side, in the third quarter, we closed a $750,000 financing. This was done during very challenging times, it was done on favorable terms, it included the support of the company's largest institutional holder and it introduced a new investor, a wealth management firm. After the reporting period, we obtained a $1 million loan from the government of Quebec to accelerate the commercialization of our solutions.This loan is under the government's innovation program, which assists companies to market innovative products that break new grounds in their industries. The program is jointly administered by Investissement Quebec and the Ministry of Economy and Innovation. It involves a detailed review of our company and our technology. We are proud that both our innovative technology and the scale of the commercial potential of Mobi724 was validated by both the Investissement Quebec and the ministry teams. It's also worth mentioning that this loan has very favorable terms as it is a 10-year loan with a low interest rate and has a 2-year moratorium before we start repaying the principal. We believe that these 2 financing rounds reflect the confidence that our financial partners place in our technology and in our long-term vision. Additionally, we have been leveraging all the government programs aimed at assisting companies through this pandemic.We thank all of you for your support and for understanding the challenges imposed during these unprecedented times. Marcel will now provide a business overview outlook. Over to you, Marcel.

[Marcel Vienneau, CEO, President, Director & Co]

Thank you, Alan. The third quarter 2020 financial results attest to both the negative impact of the pandemic on our business, to our company's resilience at the face of the crisis. Our approach on how to manage the pandemic was divided into 3 components. First, we focused on immediate term crisis management. Second, we assess the impact on the -- and focus on key solutions that would lead the company's performance post-pandemic. We continue to align the companies in such a way that as we emerge well positioned to recuperate losses after the pandemic when a sense of normalcy will prevail. And on the good news, as we are all aware, the new vaccines have been approved. And so we're starting to see visibility on the near term on the post pandemic.At the current state, we are moving to the third step. To accelerate the company's monetization of its solution in 2021 and beyond, we continue to make progress on our road map to integrate with processors so we can reach more complete regional coverage to deliver real-time digital experiences, to leverage the e-commerce marketplaces as a new means to accelerate our growth, to leverage new partners to accelerate card issuers so we can maximize our transaction volume. And lastly, we've added new business models so that we can close deals faster to the benefit of the company and our clients.In North America, we are working with our business partners to commercialize the signed agreements. In regards to our business activities in Mexico, we retained a reputable law firm in the country to accelerate incorporating a subsidiary. We are working on completing this process in Q1 2021. Mexico, like other countries, has been affected by the pandemic, which added challenges for business development. However, we continue working with existing clients and are engaging prospects independently and with partners, and there is strong interest and progress on business proposal that we achieved in the third quarter and the momentum, we believe, will continue.In Mexico, we work with close collaboration with the Trade Commissioner Services of Canada, the Canadian Embassy and Delegation du Quebec or Quebec Diplomatic Mission, and I want to acknowledge the support that we are constantly getting from them and their value and assistance. With the traction we have, Mexico will become our key hub in 2021 and beyond.Now in South America, we believe leveraging existing relationships and agreements with our key regional partners to push for full commercial launch. There is a material progress on certain accounts with large banks. Concerning the Visa relationship, the company platform is integrated, as you know, to the Visa Offers Platform, which gives us visibility on qualified transactions in many countries globally. We have full marketing agreements with Visa in Latin America, which we work on monetization through direct referrals and with support of the Visa teams across the region. We are cautiously optimistic that in the first half of 2021, these developments will start generating material revenues.Now capitalizing on the e-commerce momentum. We recently announced adding a marketplace to our offering through the alliance agreement with avenida+, an established white label e-commerce provider. Avenida+ serves banks and large retailers, which is very valuable to us. We have now a more complete offering for payment card issuers and what is also important, without an extensive capital expenditure.Marketplace administered by bank is a rapidly growing field in Latin America as the pandemic boosted e-commerce and banks are looking for opportunities to capture more of their cardholders' attention and spend and capitalize on this new revenue stream potential. We have started working with avenida+ team on integration of platforms and are defining the road map to accelerate growth, joint business development across the region.In summary, the scalability and the value of our technology and strategic vision is recognized by both our financial backers and by our clients and business partners. In the first 9 months of 2020, we optimize the operations to face the crisis caused by the pandemic and raise funds, closed new agreements in North and Latin America.We are now advancing on commercializing agreements and business relationships and are expecting improved financial performance in the coming quarters through monetizing existing agreements and relationships and new revenue lines. 2020 has been a very difficult year. I can attest to that in the history of the company, as the pandemic interrupted most the business processes and operations from last March. We restarted this quarter invoicing in Q4 clients that were under -- that were suspended -- that had suspended the contracts. This quarter and yearly 2021, we will monetize solutions that will go live that were stopped this past March. This is very important.With this progress in Q3 and Q4, we are confident in 2021 will bring us back the momentum we had in Q1 this year, this past year. And when we were hit by the COVID-19 pandemic, as we all know, in major force events. [Foreign Language]I want to take this opportunity to thank all of our investors in the company and wish you and your families a happy and safe holiday season.Prior to this call today, we have already received questions from some investors that I will take the opportunity to answer at this moment. When I finish answering the ones that we have received, we will pause for a few minutes to see if there are other questions, and then we will come back live and try to understand these additional questions.

[Marcel Vienneau, CEO, President, Director & Co]

So one of the question is, the market competition in Mobi's areas of focus seems to be heating up. What is the impact to Mobi?We are focusing in the LatAm region and emerging markets. Where we are first to market, we have already established valuable relationships and integration, which I believe creates barriers to entry for competition that we are confident at some point will enter this market. We believe that the increase in card link offers highlights the value that we bring to banks that is already offered in some other regions. Our card link offering has many competitive features, including our artificial intelligence to better target offers because at the end of the day, it's all about performance. So we believe that our AI that is powering all our fintech solution is a key competitive advantage, and we believe that this will lead us to success in the near future.The second question, why is COVID having such an impact on Mobi's contract signing and monetization outcome in the sector, and other sectors seems to be exploding? Mainly because of the pandemic, most of the banks generally speaking, very conservative and banks are impacted by the pandemic like any other business. So banks are more conservative. And we believe that in the first 6 months after the pandemic hit, it was almost -- we had no visibility. And banks, in generally speaking, were kind of cold in willing to engage. And starting in August, September, we see a complete difference. And I think now because we have visibility on the vaccine, in the second half of the third quarter and presently, in nearing the last month of Q4, I can attest that we are having momentum with multiple banks in different countries. Large, medium-sized banks that are very interested into our solutions. So I think that was kind of the reaction to the banking sector at the beginning of the pandemic.But moving forward, in 2021, I think at the end of the day, it was mostly related to having some kind of visibility. And now we feel very optimistic. We still need to be a little bit cautious because nobody, at the end of the day, knows what's the end game with the pandemic. But I can attest that since August, September and up to today, we are now into a multiple proposal stage with multiple projects that we hope will be confirmed as soon as possible. But I think we're finishing the year way more optimistic than we were in April, May, June this past year.How will we be communicating the value of Mobi to the investment community?I think the company's plan to be more aggressive with IR in the new year as we expect that the momentum that I just mentioned that is starting to be built. And then after that, we all know, at the end of the day, it's all about contract announcement, revenue-generating deals. And today, we are very confident that in the new year in regards to the company being more proactive. I think it comes down to announcing deals and contracts, which today I am very -- way more optimistic, like I mentioned, than we were at the beginning of the pandemic. And at this moment, I just want to take the opportunity at the same time to acknowledge. I have a team that has been very resilient in this very, very challenging, very challenging last 8 months. And I think right now, my team is, like I mentioned before, we're working a lot on business modeling and new proposals. So we believe that 2021 will be the year that we believe we should have had in 2020 when we had the momentum entering this past year. But we all know the pandemic hit and here, we have to live with reality, need to adjust, which I believe is what we have been able to accomplish. And we have -- find new contract, just to mention CGI and other ones are in the works at this moment. So I will be very happy when 2020 is over because I think 2021 is -- will be a good year for the company.Now we had a question in regards to metrics. How are we making progress on metrics?At this time, in the midst of the pandemic, I don't think this is the optimal time to release new metrics. But we, the company now, with all the changes that have been made and the accounts that we are working on, we're pretty confident on the metrics that we will start publishing in the new year. So rest assured that, that is coming.One of the other question is do we have visibility -- on what percentage of visibility do we have the transactions in North and South America?So at the end of the day, we all know that we've integrated with Visa. We've integrated with multiple other processors. And like any mobile carrier, when you want to sell minutes to your customers, you have to set up antennas. In the region for us, antennas is integrating with processors so we can capture transactions being live because as our slogan says, we add the layers of intelligence like every transaction is an opportunity, meaning that we're adding intelligence to a payment card transaction so we can deliver a digital experience and therefore, generate new revenue stream for banks.At the end of the day, when we are selling our solutions, it is not a cost center. Now our solutions, we are able to articulate to banks the revenues that they will be generating by buying our solutions. We have worked hard in the past. In the past few months, we've hired some external experts that have been working with us. And now more than ever, we believe in the future of the company.And so to complete on this question, when we are entering a market like Mexico and we are entering other countries, the first thing that we do when we enter these countries is our integration with Visa, working to those countries.If the answer is yes, and we do not have any other integrations to do on the Mastercard, on the visa side, and then we are looking into capturing the MasterCard transaction as well as customers want to be able to do solutions on the whole portfolio, which is both Visa and Mastercard. So today with all the different partnerships that we have executed and the ones that we have at play today. This is not an impediment to our growth. The ones that we need to have, we are working with them or have already signed and being live. So rest assured that the coverage that we need to have, either we have it today or we are in the process of executing these integration with these processors. So that I find that is not a friction point in any shape or form at this moment for us to be able to expand the company.And one of the questions that we had before is what is going to be 1 of our key solutions moving forward.One of the key solution moving forward today is the -- is in the storm that we have today, where most of the merchants have been hit hard by the pandemic, where they have no budgets to spend money on advertising in social media such as Facebook, Google or advertising the former, advertising mediums that were like TV, newspapers, billboards and direct marketing and the like. So we believe today that when we implement in a bank our AI solution that is able to predict the performance of the portfolio, and then we can go to a merchant and they can do campaigns where cardholders that used to go to their stores, they want them to go back and have the traffic. So when they go there and make a purchase, we make a fee, it's a paper performance, risk-free advertising for the merchants. So we believe that this solution that we are banking on, moving forward will accelerate our growth in the coming quarters. And right now, at this moment, with the multiple proposals that we have executed and the ones that we are doing at this moment, we feel very confident that this new approach will lead us to the results that all of us are wanting to get.Other question, is the AI in commercialization?I can attest that the AI is when we sell our solution, the AI is part of its core. The reason that we developed this AI 3 years ago was for the simple fact that having BI and leveraging AI capabilities that we would be able to, to better be able to target with the purchase history customers so that we can better personalize the offers and have more performance when we are getting campaigns by merchants.So just to make sure that we are all clear, the AI is a core solution that is embedded into all our solutions. And moving forward, all our solutions will have the AI component. There can always be exceptions to any rule, but the -- just to tell you that the AI is embedded and is part now of our core solution.So I believe that these were kind of the questions that I had received before the webinar. So now we will take a pause for a few minutes so that we can look if there are other questions. So bear with us in less than 5 minutes, we will be back. [Foreign Language][Break]

[Marcel Vienneau, CEO, President, Director & Co]

[Foreign Language] Thank you for your patience. We are back. We have received a few questions, but I think the bulk of the questions were received before the call.So one of the question is, what is the status related to the Datavalet agreement? Right now, the Datavalet, like most of the restaurants for the retail where this is set up, there were some shutdowns and they themselves as well. At this moment, as soon as the integration of the solution has been completed, so for us as soon as I do believe the COVID stabilizes, and we have joint opportunities, Mobi is ready to go. And I think this is not related to a technology or the fact that it's being, not being pushed by Datavalet in kind. I think this is COVID crisis that is delaying the launching of these deals. But as I mentioned during the presentation, I think right now, I think we're all aware, vaccines have been announced. Vaccines are coming in the next couple of weeks, at least in the U.S. and in some other countries as well. So unfortunately, I cannot give timelines on this today other than to say it's directly involved with COVID, whether we like it or not. One other question is related to blue sky opportunities or large accounts that we were working on. I can attest today that, like I mentioned again during the presentation, in Q1, we were on momentum with some of these big opportunities. And as I mentioned again during my presentation, is that none of it has been lost. It's just been delayed. And right now, we are reengaged with the targets in question. And this we believe will happen. It's just part of the COVID delays, but finishing off the year, we are optimistic that these opportunities that we were to -- again, to get at the beginning of the year, will still materialize themselves in early 2021.Let me see. Because there are other questions here, but they are questions that were already part of the questions that were already answered before. So I believe that we have covered -- and if some of you have any questions that you believe were not answered, you can always send us the question to IR or to myself, and then we will address those questions.So this will conclude our Q3 webinar. We thank each and every one of you for participating. [Foreign Language] Thank you very much for joining this webinar. Have a great evening.