Ton Strategy Co (TONX) 2022 Q2 法說會逐字稿

Good afternoon and welcome to the second-quarter 2022 financial results conference call for Verb Technology Company, Inc. (Operator Instructions) Please be advised, the call is being recorded at the company's request. On our call today are Rory J. Catania, CEO; and Salman Khan, CFO.

Before we begin, I would like to remind everyone that statements made during this conference call will include forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially.

Forward-looking statements speak only as of the date they are made, except as required by law, as the underlying facts and circumstances may change. Verb Technology Company disclaims any obligations to update these forward-looking statements as well as those contained in the company's current and subsequent filings with the SEC.

I would now like to turn the call over to Rory J. Catania, CEO. Rory?

Thank you, moderator, and thanks to everyone for joining us today for our Q2 2022 financial results and business update conference call.

So I'd like to use our time together today to talk a bit about MARKET, our livestream social shopping platform, and provide some initial reactions and data points around Shopfest, which was the three-day livestream shopping festival we hosted a little over two weeks ago now that marked a hard launch of MARKET.live.

And of course, I'll provide insights and perhaps some more color on the information contained in our second quarter 10-Q we filed today, which reflects, for the most part, the results of our our SaaS business for the direct sales industry.

As to MARKET, let me start by saying that we are planning a major, at least in my opinion, a major announcement regarding MARKET within the next six weeks that will include a comprehensive update. Accordingly, my comments here today won't include some of the bigger going-forward initiatives, though I will provide a lot of data points on attendance, engagement, vendor experiences, and insights into how the platform performs.

We've been advised that Shopfest was the largest livestream shopping event ever attempted in the US. Shopfest consisted of 63 livestream shows over three days, featuring over 55 retailers on multiple channels from multiple locations across the country and around the world. We had livestreams from Brazil and Australia and perhaps other countries.

Of the 63 shows, our MARKET team produced only 18 of them from studios in New York City and a studio in Los Angeles. The 45 other livestreams were produced and hosted by the vendors themselves from their own remote locations using little more than their laptops and mobile devices. So when you think about scalability, this is an important statistic.

I'm aware of at least one vendor that heard about MARKET on the day before Shopfest started and went from awareness to onboarding and participation in Shopfest, hosting one of the more popular livestreams, all in less than 24 hours. So let me start with the KPIs we focused our team on going into Shopfest, what our objectives were, and how we measured up against those.

So first and foremost, we wanted to demonstrate the platform itself under true commercial deployment. Specifically, we wanted to demonstrate the quality, stability, reliability, scalability, feature set, ease of use by both vendors and shoppers, and the overall experience we wanted to create, in fact, to curate for all MARKET participants, an experience that would be the unique hallmarks of anyone coming to MARKET.live.

As to the build and architecture of the platform, I believe it was apparent to all participants at MARKET. It's an extremely well-conceived and executed livestream shopping platform on par with any of the world-class social media, e-commerce, video content delivery platforms in the world. and in some cases, even better.

Any doubts about our ability to deliver an extraordinary and very valuable piece of technology for our shareholders should now be summarily erased. Everything that we've done up through the date of Shopfest, and everything we've learned from our trials and tribulations over the past several years was necessary in order to produce MARKET.

We could have the best and biggest vendors and most impressive go-to-market strategies, which I believe we do. But without a world-class platform, we have very little. By no means do I suggest that we've accomplished our goals, that we're done, and walking around high fiving each other in the office. Quite the contrary. Now it begins.

While our success in delivering the platform has definitely injected a new contagious passion, energy, and enthusiasm among everyone on our team, as well as among our partners, we recognize the opportunity for value creation that MARKET represents, and unlocking that value is our number-one objective, one on which we are laser focused individually and collectively every single day.

What we have not shared until now was how much we had riding on the successful performance of the platform during Shopfest and the reasons we took our time in the planning, testing, and execution of Shopfest.

And while I know that was a source of frustration and ridicule from those who wanted to see it launched commercially the date development was completed, which I completely understand, we knew we had to execute our plan the best way we knew how.

When I talk about what we had riding on the successful performance of Shopfest, I'm referring to potential partnerships and business opportunities for meaningful growth and scale that were all contingent on the successful performance of the platform during Shopfest. I'm going to share more on this in the market update that I'll be providing in the coming weeks.

As to the overall experience we wanted to curate for market participants, it's best described as making it feel personal, certainly interactive and social, but yet an atmosphere where each shopper became part of a group of brands immersed in the conversation, not only with a host, but also with each other.

An environment where no one feels like they're being sold, one where they want to buy what their trusted host and friend has available for purchase. Among the many things we learned was that people want to watch and buy from a person, not a brand. They will mark their calendars to join their group of digital friends they form a relationship with to chat and shop every week.

Those hosts that attract and encourage that environment and their presentations outsell those that don't by a long shot. Now we saw the beginnings of these relationship-forming activities during Shopfest as we saw people in the chat, recognizing one another from previous Shopfest streams and engaging with one another on a more personal level.

Think of it think of it like the massive growth and popularity of Facebook Groups, but with shoppable video. That's why we designed and built MARKET as a destination social shopping platform and not just one-off livestream event plugin via website. This is what makes it unique and why we believe it will succeed where others will fail.

Our second but equally important KPI was using Shopfest as a vehicle to create awareness for the platform. Look, the reason for this is obvious. The success of the platform is tied directly to the number of livestream events going on at any given time where these relationships can be formed and fostered.

It's a numbers game. The more people we have with stores on the platform bringing their own friends and fans and followers, the greater the number of livestreams there will be. Revenue, of course, will follow. Our focus, at least initially, is not on the revenue itself, but on the environment and circumstances from which the revenue will flow.

To do this, we demonstrated how the platform could accommodate multiple channels of livestream simultaneously, allowing viewers to choose the event and associated groups they wanted to be part of in that moment. As there are more and more simultaneous livestreams happening on the platform, this will become a much more compelling and powerful draw for the platform.

We also built the platform so that it can broadcast livestreams simultaneously in real time over multiple popular social media platforms, exposing MARKET to those audiences and drawing them into the MARKET experience.

Here's some of the data we've compiled so far about attendance on the MARKET.live feed during the three days of Shopfest. I want to note that some of this data is still being scrubbed and cross-referenced, so it remains subject to adjustment. But total views on the MARKET.live feed were 45,161. Total unique view on MARKET.live were 15,444.

These numbers include those who viewed and shopped storefronts but did not watch a livestream. Total attendance for livestream on MARKET.live during Shopfest was 8,511. This number does not include attendees who viewed from Facebook and other social platforms.

Total Shopfest video-on-demand views from the storefronts on MARKET.live as of almost, I'm going to say a week ago, last Tuesday, August 9, was 3,408. And I imagine there's probably a quite a bit more since then.

All right, so here's some of the data we compiled so far from the Facebook feed during the three days of Shopfest. Again, this is just the Facebook feed, not any of the other social media channels, 70,194 views from Facebook during the festival.

Now I want to point out that this is Facebook only and Facebook's metrics that they use for their algorithms. They count the view as anything over three seconds. Notably, if we include the views after Shopfest up to last week, again, the I think Tuesday, [the 9th], we see those numbers jump to 1,219,672. Again, I assume those numbers are much greater now.

All the numbers that I just provided to you from the Facebook-only feeds are only for the 18 shows that we produced. This does not even include the data from the other 45 livestream shows. We also had 28,014 RSVPs for Shopfest, almost half of whom opted in for text and e-mail updates for all MARKET livestream events.

I don't yet have confirmed engagement data during each stream, but those who watched every stream and the attendee counters for each stated that the vast majority of viewers remained engaged with more than 70% of the show's duration, and a significant number stayed on till the end of the livestream.

So this is like, really, if you take a look at what kind of data exists for engagement on the platform, just -- this is a very, very impressive number. So while this data is still being tested and confirmed, it looks like gross merchandise value generated during the event will come in somewhere between $20,000 and $30,000, and the average order size appear to be just over $80. And of course, sales in the stores are still continuing.

There's a ton of data that has been and continues to be generated and collected, and we'll be working through the best ways to mine and analyze that data in order to calculate and report the ratios and identify trends.

Without exception, every vendor reported that they truly enjoyed their experience with the platform and pledged to continue their presence and participation on MARKET. And most have already committed to weekly shows, which you should soon be seeing.

Just three days ago on Friday, we implemented a new streamlined onboarding process that will help get vendors through the process much more rapidly and reduce the backlog. As you will learn in the coming weeks and my comprehensive MARKET update that I've referred to, this is an important, very well-timed improvement to the platform.

We currently have more than 300 vendors committed to MARKET, approximately half of which have open and active stores and appear in the MARKET.live sellers list. Of the balance that have yet to complete the onboarding process, as they get close to completing the process, we place their names in the seller's list with the notation coming soon. And as the rest gets closer, we'll add them too.

The onboarding process is really -- it's not difficult in any way or time consuming. However, some of the larger vendors have multiple departments responsible for providing certain information needed to complete the process.

So like, for example, people responsible for providing logos and designs are different than the people responsible for uploading inventory SKUs, who, in turn, are different than the people who have access to and are responsible for providing banking and other financial information. So just getting those people together and getting them to get it done does take a bit longer.

But look, we have a team of people who are dedicated to helping vendors through the onboarding process, and in many instances, completing it for them. I get a daily report of the status of vendors who are lagging through the process. And rest assured, we stay on top of all of them to move through the process as rapidly as we can.

As I said before, this is a numbers game, and we appreciate how important it is to get more vendors through the process up and running, hosting livestreams on the platform.

Okay. So that's MARKET. Let me turn to our SaaS business report. We are and remain the undisputed leading provider of [sales enablement applications] for the direct sales industry, displacing previous market leaders and would-be competitors, just as I said we would when we entered the space in 2019.

Beginning at the end of the second quarter of this year, we expanded our suite of sales enablement tools with the release of the new innovative sales application I told you we had in development in prior conference calls. These products, including verbLIVE 2.0 and Pulse, will not only enhance our leadership position in the direct sales space but put us that much further ahead of the handful of would-be competitors.

I'm also very happy to announce that we have begun onboarding one of our direct-sales clients to our MARKET platform. Now in no way does this replace any of the sales tools to which this client currently subscribes. Their use of MARKET represents an entirely unique and complementary enhancement through their direct sales business and is perfectly suited to the direct-sales industry, generally.

Post launch of this client, I fully expect more of our direct-sales clients will seek to adopt MARKET as an enhancement to their business. Consistent with the guidance we provided previously, we expect to see the increased recurring SaaS revenue from the new products in the third and fourth quarter of this year and beyond.

As stated in our previous conference calls, our focus has been on building the very high-margin SaaS recurring revenue component of our business and reducing the non-digital non-recurring, very low-margin legacy component of our business.

As we began the exit from the legacy business, which represented a large portion of our total revenue, investors that focused solely on the company's topline revenue misinterpreted and misread the growth the company was actually experiencing in our SaaS business.

I once again urge you to focus on the SaaS revenue component of our business and not on the revenue from a business line we have repeatedly stated we are exiting. For example, just last year, in Q2 of 2021, the legacy non-digital revenue represented 24% of our total revenue. In Q1 of this year, it represented only 20% of our total revenue. And in Q2 of this year, it represents just 10% of our total revenue.

As our digital revenue continues to grow, the legacy business, low-margin revenue becomes a smaller and smaller component of our overall revenue. And as it continues to grow, and as we continue to exit out of it, you'll see that the top line will appear to grow much more rapidly since that SaaS revenue is no longer just offsetting the reduction of the legacy business revenue.

The release of these products also marked the beginning of the next phase of major operational cost reduction we've implemented as first reported in Q4 2021, and that continued up through Q2 of this year. You might recall that R&D expense, which had been the biggest component of our operating expense, was down 22% in Q4 over Q3 in 2021.

We then reported a substantially greater and additional reduction in R&D expense of 42% in Q1 2022 over Q4 2021. And for the second quarter of this year, we are reporting an additional reduction of 13% from Q1. Specifically, R&D expenses for Q2 are now just $1.4 million, down from the $3.2 million in the same period last year, representing a 57% reduction.

The additional revenue from the newly introduced sales enablement applications and the revenue we expect to generate from our new verticals, including MARKET, together with the new pricing model we're about to introduce to our direct-sales clients, that will better align our interest with theirs -- creating a true win-win -- coupled with these continuing cost reductions, give us confidence in our ability to achieve positive EBITDA and reduce our reliance on the capital markets.

I'm going to leave further discussion of our SaaS business results to our CFO, Salman Khanso as not to take additional time on this call. But just let me briefly touch on our new professional sports unit vertical as I discussed in previous earnings calls.

In Q4 2021, we launched our professional sports unit built on verbTEAMS sales enablement platform. We started with the announcement of the Pittsburgh Penguins in Q4 2021, and since then, we've added many new professional sports teams to the platform and and built a really impressive sales pipeline of professional sports teams, both in the US and now even in other countries.

In addition to the Pittsburgh Penguins, we announced the Florida Panthers, the Phoenix Suns, and the Detroit Pistons, and we expect many more announcements. And it's my continuing expectation that some of these teams will adopt MARKET as part of their fan engagement strategies, among other things.

All right, so I'm going to turn it over to our CFO, Salman Khan, for more detail around our reported financial performance. Salman?

Thank you, Rory, and good afternoon, everyone. I'd like to review our financial performance as reported in our Form 10-Q filed today, August 15, for the second quarter ended June 30, 2022. I may reiterate and/or provide more color around some of the data points Rory shared with you.

The following compares the company's results of operations for the second quarter of 2022 with the second quarter of 2021. Total digital revenue was $2.2 million, an increase of 19% from the same period last year. SaaS recurring revenue, a component of total digital revenue, was $2 million, an increase of 23% over the same period last year.

Total digital revenue as a percentage of total revenue was 90% compared with 76% for the same period last year. SaaS recurring subscription revenue as a percentage of total revenue was 82% compared with 67% for the same period last year.

Total revenue was $2.4 million, up 0.3% from the same period last year. Cost of revenue was $0.8 million, down 25% from the same period last year, reflecting planned cost reductions and a continuing shift towards the company's digital business and away from the lower margin non-digital business.

Gross margin, on the other hand, was 65% compared with 53% for the same period last year, reflecting the systematic transition of our low-margin, non-digital business and increase in our digital revenue. Our digital gross margin was 72% compared to 69% for the same period last year. Capitalized software development costs were $6.5 million on June 30, 2022.

I want to remind everyone that following the successful completion and launch of MARKET.live, we expect to amortize the capitalized software development cost as a non-cash charge to cost of revenue or the 36-month period from third quarter of 2022 onward.

Research and development expenses were $1.4 million as compared to $3.2 million for the same period last year, reflecting a 57% decrease to planned cost reductions. R&D expenses were down 13% for the first quarter of 2022.

General and administrative expenses were $6.6 million as compared to $6.5 million for the same period last year. G&A expenses were down 7% from the first quarter of 2022 primarily due to the implementation of planned cost reductions, offset by planned increases in labor costs due to the launch of MARKET.

Modified EBITDA improved by $2.2 million or 30% when compared to the same period last year. EBITDA is a non-GAAP measurement, and I refer you to our press release distributed today for more information and greater specificity around our modified EBITDA analysis.

Now let me share the financial results for the six months ended June 30, 2022 in comparison to the same period in 2021. Total SaaS recurring subscription revenue was $4 million, an increase of 30% from the same period last year. Total digital revenue was $4.3 million, an increase of 19% from the same period last year.

Total revenue was $5.1 million, up 3.5% from the same period last year, reflecting strong SaaS recurring revenue growth, offset by the company's strategic decision to continue to wind down its lower-margin, non-digital business.

Cost of revenue was $1.8 million, down 23% from the same period last year, reflecting planned cost reductions and a shift towards the company's digital business and away from the lower-margin, non-digital business. R&D expenses were $3 million as compared to $6.1 million for the same period last year, reflecting a 51% decrease due to planned cost reductions.

General and administrative expenses were $13.6 million, a decrease of 2% from the same period last year, primarily due to the implementation of planned cost reductions, offset by planned increase in labor costs due to the launch of MARKET.

Modified EBITDA improved by $3.2 million or 23% when compared to the same period last year. Once again, EBITDA is a non-GAAP measure, and I refer you to our press release distributed today for more information and greater specificity around our modified EBITDA analysis.

Cash totaled $5.5 million as of June 30, 2022, compared with $0.9 million on December 31, 2021. In April 2022, the company completed a registered direct offering with institutional investors, which resulted in gross proceeds of $11 million. Subsequent to the quarter end, we repaid in full all advances on future receipts, reducing current debt service payments and cash burn by up to $1.5 million per quarter.

I'd now like to return the call back over to the operator for Q&A.

Thank you. (Operator Instructions) Brian Kintslinger, Alliance Global Partners.

Hi guys. Thanks for taking my questions, and it was great to see the production quality of Shopfest in MARKET. I must have watched more than a dozen events, and almost all went without a hitch. So thanks for all the data.

The first thing I want to do is confirm because you gave a lot, and I want to make sure I understood three numbers. Just on MARKET.live, there were about 45,000 live views just on Facebook for about 70,000 live views. And then I think you mentioned there were 1 million views of the event after the fact on Facebook. Are those three things? Did I get that accurate?

Yes, exactly.

Good. So 1 million people went to Facebook after the event, or there are 1 million --

Right.

-- maybe not people, 1 million different times someone went. It could have been not unique.

Correct, and just to just to emphasize what I said earlier on that, that was only for the 18 events that we produced there.

Yeah.

We have 45 other events that we didn't. So I don't know what that data was. Obviously, it's more than this number.

Meaning, even on MARKET.live, the 45,000 views were only on those 18 events?

No, no, that's not what I'm saying. If you're asking --

It's just on the Facebook numbers.

Yeah, correct.

Got it. Understood. I just don't want to write wrong tomorrow. In the past, you've talked about, and you did hear, onboarding the multimillion dollar brands. And clearly, there's a lot of different -- I'll call it red tape of getting everyone on board the same time, given we're on the same page.

Can you help us first understand how many multibillion-dollar brands have been onboarded, and which quarter do you expect they -- one or two might run their first-year standalone event or participate in a festival? And then lastly on that, what was their reaction of Shopfest given the quality and the numbers you produce?

Okay. So I didn't write those questions down. I will try and go from memory. I'm not quite sure how many of those large companies are actually in the queue right now. I would think that you're going to start seeing some of those brands showing up in the, I'm going to say, very near term.

And I guess I alluded to it in my comments before but let me be just a bit more direct. There were a lot of what I call very large brands that like the platform, really appreciate what we did, want to be a part of it, and made certain commitments but have either just taking too long to get through the process in order to have actually been on Shopfest, or -- and I suspect this may have held true for certainly some of them.

It was important for them to have seen Shopfest come off at the at the level that it did, because that seems to have accelerated some things that I think you and others that are following the platform will begin to see pretty quickly now that we have done what we've done with Shopfest

Right, right. Great. And then, you were clear before and today about -- the goal here was to build a reliable, high-quality platform. And it wasn't focused on revenue, it's about marketing a product to the retailing world, so to speak, of what they can get out of it. Do you think there'll be a point in 2022, when it will be a major revenue contributor? Or is that more of a 2023 event?

I think the revenue that it will produce in 2023 will be substantially greater than what it does in 2022. I also believe that it will make a meaningful contribution to our revenue in 2022. I don't want to elaborate further than that. And to be perfectly honest with you, it's just -- I don't have the data yet to extrapolate from.

But some of the things that we'll be talking about over the next several weeks, I think, will give anyone following the company enough additional information that they'll be able to come to those conclusions on their own.

Right. Two more. The first one is, what are the biggest lessons learned after completing the first festival other than, obviously, having more recognized and larger retailers attract more audience? What is something Verb can do differently to better monetize the platform?

There's a pretty well-defined plan that's in motion, and I will be talking about that in much greater detail when I mentioned in my prepared remarks that there would be a major announcement. It will be around that, in particular. I think that what we most learned from this was a validation of what we had suspected for quite some time and one of the premises upon which we architected the platform.

And that's, again, something that I alluded to in the prepared remarks, which is people don't want to buy from a brand, they want to buy from the person. They want to form a relationship with the person, and they want to form the relationship with other people in the group that follows that person. So that was really something that we placed a big bet on when we architected the platform.

I think it's something that the other platforms that are out there, or at least attempting to enter the space, have not done. And I don't know if their platforms support this, but I also mentioned the massive growth and success and volume of participants and Facebook Groups. And if you could take that kind of model and make it live and shoppable, I think that is a recipe for enormous success, and that's what we're doing.

And what I learned is that -- (multiple speakers)

Sorry, didn't mean to cut you off.

No, it's good.

The other question I've got, and then I'll get back in the queue, is obviously, I believe the future of the business is MARKET. But I'd be remiss in not asking a question about the rest of the business. If I look at the second quarter -- actually, I looked at the last three quarters, digital recurring revenue has hovered around $1.9 million to $2 million per quarter.

You mentioned some new products to drive incremental revenue. Maybe I missed it. Can you tell me which ones are the needle movers? And then you mentioned stronger second half versus first half. Will that be significant growth? Will it just be as SaaS takes a lot of ramps, just modest growth? Just give us a sense for what you're talking about.

The products that we think will make the most contribution to digital revenue for the balance of the year will be verbLIVE 2.0 and Pulse. And if you recall from the last earnings call, I mentioned that we would be releasing that in the beginning of June, and that it was on target to be delivered on time. And we did.

Both of those products and have begun -- at that time -- begun onboarding some of our existing clients and even some new clients onto that platform. Now obviously, because it happened on the date that it did, it did not appear in the second-quarter results, but I do expect that to appear in third quarter and fourth quarter, certainly.

Great. Thank you, guys.

Thank you, Brian.

Martin Saltzman, AFM Investments.

Great job, guys, on MARKET, it was spectacular, like the gentleman just mentioned earlier. I also sat on roughly 12 to 13 live streamsin phenomenal clarity. The production was great. I've had clients buy, and they said it was seamless. So excellent job to your team.

Thank you.

A couple of -- just a couple of questions I have, considering -- you're saying have roughly 300 vendors, Rory. Are you still getting indications of eight to 10 a day?

Yes, Martin.

[Any new ones that are coming aboard?]

Yes. I'd like to not elaborate further on that so as not to run into some of the things that I plan to announce in the coming weeks, as I mentioned.

Fair point. That's fair.

But the growth is something which we are pretty happy about.

Can you at least say whether it's accelerated after Shopfest?

It has accelerated at the Shopfest.

Okay. I appreciate that. As far as capital, do you think you have ample capital to help keep promoting MARKET?

I think that our focus right now is on making sure that we exploit the opportunity that MARKET represents for all of us -- us, you, all of our shareholders -- and as opportunities come along that we think makes sense for us. Then that's something we will take advantage of.

But we typically don't talk about what our capital raise plans might be or might not be at any given time. Just don't think that makes any sense. So I hope I could just leave it there with you, Martin.

Yeah. But through social media, I mean, I saw tons of promotions. So it seems like a less-expensive way to get MARKET out there throughout the world. And given that, when you said you had all these spectacular views through Facebook, can you also speak of other social medias that were carrying Shopfest as well?

Yeah, absolutely. So we had, Iet's see -- Instagram was pretty good. We had TikTok, which was really, really good. We had done YouTube, and I'm not sure if I'm leaving anything out, but those are all additional outlets that are streamed us.

Are you still getting metrics from viewership from those other social medias? Is that something your team is still looking at?

Yes.

Okay. Hey, look, I would also just say too, when Amazon came around, they were an e-reader, okay? And I'm not -- I'm not saying and diminishing the digital side of your business, but it seems like the elephant in the room is MARKET. And I think that's where your bread it's going to get buttered in the next couple of years.

So I would just say -- I'm not to say you're going to be Amazon, but I think you really have something here. So I'm very excited about it. My shareholders are excited about it, and you've teased us with this major announcement in six weeks, and I was going to ask the question. Are there any other events being planned like a Shopfest 2, et cetera? Is that part of that major announcement you're talking about?

We've got a number of events that are planned through the end of the year and some really cool and interesting things that I think will not only drive awareness for the platform but drive revenue for the platform. I mentioned before that in doing Shopfest, our focus was not on revenue. It was really demonstrating that we can create an environment from which revenue will flow because that's what it's all about.

And I believe that we've done that, and now, we were going to turn up the volume on it.

Two other things I wanted to mention there. They are like little annoying negative things, if you will, maybe you could dispel them. But I read something, it seems like right after your earnings came out, Seeking Alpha puts an article out about guidance. I don't even know anybody was covering you with guidance.

Can you speak to that because they seem like they're negative, at least Seeking Alpha is or the person writing it is? And I don't recall anybody putting guidance out on your company?

I typically don't like to comment on the things that people write out there because there's some crazy stuff that people write, as you know. Seeking Alpha, I think, is a is a great publication, and I think they serve the investment community pretty well.

Yeah, I do see articles that come out pretty quickly. And with a top line -- with a headline saying that we missed our revenue numbers, which is, since we don't give guidance on our revenue numbers, I'm not quite sure where that stuff comes from.

[Exactly, that's the point.]

Yeah, I'm not too worried about that, and nobody else should be. We focus on what's right in front of us right now and what we've managed to build for all of us and the value that that's going to produce for all of us and certainly the revenue that's going to flow from that contributed value.

Lastly, in terms of just articles and things like that, it seems to be something floating around today on Etsy. And I mean, I appreciate Etsy, but I read an article -- and I read the article. And can you speak of any relationship, negative or positive, with Etsy?

So that's the on his section this is one of those things that fall into the categories of.

This is one of those things that fall into the categories of I don't like to comment on articles. I will comment on this one, someone forwarded it to me earlier today. And because I said in my prepared remarks I've got a big announcement coming up, that's really the only reason that I'm going to comment on it. It is not Etsy, that's not what my big announcement is going to be.

I don't want to give anyone the impression that it has anything to do with Etsy. From my perspective, Etsy is a fantastic company. They've built something amazing. The executives there, the CEO has built an extraordinary business and something they really should be proud of. I think that there's a lot of synergies between MARKET and Etsy and certainly at the users.

And we have worked on a plan to attract Etsy users to MARKET to supplement and enhance what they're already doing on Etsy. But as I sit here right now, we have no formal partnership with Etsy. And I don't want anyone to make an investment decision not being very clear on that.

I appreciate that. Thank you very much on that. Last question, and then I'll go back in your queue. And I just, again, I want to compliment your team on such a great job. When it comes to the NASDAQ $1 issue, a lot of clients that I have -- I represent roughly maybe 90 or 100 different clients that own these shares.

A lot of them concerned about the possibility of reverse splits and things of that sort. Is there any way you could dispel that? And even if a notice came down saying, oh well, you're below [$1 X] amount of time now, and what's your plan going forward?

I would think that there's ample time to really comply with the dollar rule. Can you speak of that, and then I'm joining the back of the call? I appreciate it. I'll listen.

I could tell you this. Between myself, other members of our management team, our Board that understands the nature of our business, what we're doing now, what our near-term and long-term plans are, we are not concerned one bit about being able to be in compliance with NASDAQ's listing rules.

And so, I won't say more about that. And when I say we're not concerned about it, we don't plan on doing any funny business with that. We'll leave it there.

Ed Woo, Ascendiant Capital.

Yes, I also wanted to throw my congratulations on a wonderful Shopfest. My question is would there -- is there any change or differences in potential economics with either you guys producing or having your vendor partners produce the event?

And also, is there any difference? Do you care whether somebody views your event directly from your site or from one of your social media partner sites?

I'm not exactly sure I understand the question, and so as not to answer the wrong thing, would you mind just giving me the first part of that again?

You mentioned that you guys had, I think, about 18 events that you guys did, and then another 45 events that were produced by your vendors. Does it matter, in terms of your economics or potential economics, whether you produce an event, or your vendor does?

Okay. Great question. Yes, look, when our vendors produce their own events, we have zero cost. Zero, absolutely zero. So just using the platform, which is -- so we are intending to scale this business in a pretty meaningful way by virtue of allowing people to come onto the platform with really no intervention from us, get set up, and start selling product.

So yeah, so the economics are way better. We don't have to incur the cost of producing an event. I look at that cost, frankly, as marketing expense, that's what it is. We're creating an event, drawing attention to it, creating awareness.

Awareness, in my view, is really our only challenge to success, big success for this business, because everything else about it is very, very compelling, both from a viewer-shopper perspective as well as from the vendors.

Great. And do you care whether somebody views your event from Facebook or Instagram or TikTok? Does it matter directly from your side? Or are you agnostic, and doesn't as long as you get the eyeballs?

Well, of course, we want the eyeballs, and that super valuable, right? Because again, it goes right to the issue I was just talking about, awareness. Awareness for us is everything, but we do prefer that they come right onto our site because that's where we get the data about those particular viewers. And that data allows us to retarget them and remarket to them, and that's immeasurably valuable information.

So what we do when we simulcast or multicast over the other platforms, the other social media platforms, what we're trying to do is get them so interested that they want to come on. They want to click the link that they're seeing on YouTube or wherever they happen to be watching from and come onto MARKET and provide some of that data for us. So yes, that's absolutely important for us.

Great. Well, thanks for answering my questions. And I wish you guys good luck on the next Shopfest. Thank you.

Thank you, Ed.

Brian Kinstlinger, Alliance Global Partners.

I just wanted to follow up on Ed's question there. If I buy $1,000 piece of jewelry on the Facebook Live versus your site, is there any difference in your net take for Verb's revenue? In the same question with -- if you produce it versus the vendor produces it? on

The latter part of the question first. No, there's no difference in the take whether we produce or the vendor produces it. No change there. If you're watching from Facebook, as an example, of the stream, you would click into our stream to make a purchase.

So you could watch it, you could even participate in the chat, and our technology is consolidating all of that. But when you want to actually complete the purchase, you would be directed into our platform to do so.

Right.

So there's no change.

No difference, yeah. Great. I think that was the heart of the question. My other question was a follow-up from the other gentleman who asked a question. He asked you about the capital necessary to market Shopfest. But to be clear, I would think that marketing cost will be footed by the vendors and the platform.

They're going to be sending out mass e-mails, all sorts of other literature, and they're going to be hosting a brand -- starting event. And your cost is more on attracting large brands to your platform. Do I have that right?

Partially right. I think the greatest source of revenue for our livestream platform will not come from the biggest brands on the planet being on the platform. I don't believe that's where the biggest source of revenue will come from. The biggest source of value will come from individuals. People.

Maybe they're selling those big brands, but it's the individuals. I emphasized before, a couple of times, about the Facebook Groups analogy.

That's where we are seeing the greatest engagement, repeat engagement, where people are coming back again and again and again, not because that they see that their favorite Gucci bags is there, but it's the favorite host and presenters and people that are hosting these things and coming back to see them week after week and forming a relationship with them

And then the other people that are also following that person and creating a relationship with that person in that group environment, that's where we believe the biggest revenue will come. And we're beginning to see that that is -- I'm going to talk further about that in these coming weeks.

Right. But that isn't you necessarily, that's going to happen organically as the product grows, not because you're throwing marketing dollars to tell people to come to MARKET, is that right? Maybe early on to get some people coming, but I would think over time, that just happens as socially, people need others during these events.

Yes, you are correct. There are certain things that we spend marketing dollars on, but you're right, it's the individual brand stores, hosts vendors, influencers that are marketing attendance for their events. That's correct. It's not on our guide.

Great. Thanks, Rory.

Sure.

Thank you. At this time, I'd like to pass it back over to management for any closing remarks.

Guys, we very much appreciate your support over these years. We, as you can see, never give up. We believe that we've produced something now that will drive value -- revenue, which would translate to value in a meaningful way in these coming years for everyone.

And we thank you for your patience and support through all that process. And I look forward to our next time we could chat together about these things. I guess it's a few months off, and I look forward to that announcement I I referred to earlier. I think people are going to be pretty happy with their company. Thank you very much.

Thank you, everyone. This does conclude today's conference you may now disconnect your lines at this time. Thank you for your participation and have a great day.