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spk01: Thank you for standing by and welcome to the Binsey Technologies second quarter fiscal year 2021 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's call is being recorded. If you require additional assistance, press star then zero to reach an operator. I'm now going to hand the call over to John Abrams, CEO.
spk00: Thank you, operator. And before we get started, I just want to call out, I recognize that a number of you who have participated on the call and are part of the Venzi team are up early with us because it's early in Vancouver. So thanks for your early morning participation. Welcome to our discussion of Venzi Technologies Q2 2021 financial results. I'm John Abrams. As president and CEO, I led a business model and operational turnaround here at Venzi. We started our pivot to a SaaS model platform in the fourth quarter of 2019 and completed it at the end of fiscal year 2020 with initial revenue generated from sales of our Mesh Connector product. Today, in our second consecutive quarterly earnings call, I'm excited to share that at halfway through our year, We are on track for our year-end targets with zero churn, building revenue, strong pipeline, mesh connector sales at just half of our full year goal. Our call today will cover how Venzi's growth is reflected in our key performance indicators and how that KPI progress ensures our ambitious 2021 and 2022 client acquisition and revenue goals are met. Following my remarks, our CFO, Darren Battersby, will provide a financial review, and we will conclude our call today, as we did last quarter, with an open Q&A session. Including Q&A, our call today is scheduled for one hour. Should we not cover an area of interest for you, please reach out to us directly or to our investor relations teams. Before I get started, I want to let you know the earnings release reference on this call, the associated MD&A, as well as the slides we will speak to can all be found in the investor section of our website, investors.benzi.com. Today's call may include forward-looking statements about Benzi's future performance. Actual performance could differ from what is suggested by our comments. Information about the factors that could affect future performance is contained in our CDAR filings. So let's get started. For those of you not familiar with Benzi, we are a software as a service platform. We operate in the consumer retail sector of the global supply chain. We focus on the movement of digital product information that is required to convey, market, and sell a product through any retail channel to any consumer anywhere in the world. Benzi's core product is a unique, artificial intelligence-driven mesh connector used by brands and manufacturers to automate, accelerate, and improve the delivery of their product information to their retail partners. Unlike services sold by our competitors, our proprietary mesh connectors stand alone as the reliable, rapid digital path into more than 400 retailers. Mesh connectors are purchased by brands and manufacturers to displace their slow and costly manual processes. Often put in place decades ago, mesh connectors provide a brand with modern compute-based retail connections that improve margin and accelerate sales. That's a lot, so let me tell you more simply why this is an attractive problem to solve and why I chose to solve it. Prior to Venzi, for seven years at Cardinal Health, I ran the largest regulated medical product supply chain on the planet. Responsible for more than 600,000 active products and generating some $120 billion in revenue, our products were sourced globally and distributed across North America. I managed 12 high-volume manufacturing sites, 52 distribution centers, and really thousands of human resources in India, the U.S., and Mexico that managed it all. During my tenure at Cardinal, I built the capabilities and set the standards that led us to be the number one Gartner-ranked healthcare supply chain for an unprecedented four consecutive years. Despite my success, expansion of our retail sales channel's was constrained by dependence on manual processes, on people and outdated tech to one by one find and communicate to a retailer the endless and variable product information needed to engage the consumer and sell a product through a retailer. Without finding any viable technical solutions for this obvious problem, I set out to fill this market gap. Today at Benzie, I've solved this endemic problem. Our proprietary platform allows a brand to optimize and grow their sales channels with the click of a button rather than laboriously building out a team of people. Our AI-based solution outperforms human teams, and we know that because today our clients tell us exactly that. Let me pause there because that is significant. A year ago, as we were working to connect our first partners and initial clients, I said our solution is important. I said our product performs better than humans. I said it reduces labor. I still say those things, but today our clients say them, and they share our value within their networks. Promotion of Venzi's value within a network is starting to uncover a very important selling dynamic. With brand clients now using mesh connectors in their retail networks, some retailers are now promoting Venzi to brands in their supplier networks. And if that's true, and we know this to be true in at least a couple cases, we may be at the leading edge of what economists call the network effect, where an increasing number of users on a platform creates increased value. That increased value draws in more users and further increases the value of the platform. The network effect has been at the core of platform growth for a number of wildly successful e-commerce and social platforms, including Amazon, Alibaba, Uber, Instacart, LinkedIn, and Snapchat. Today, the value of Venzi platform isn't theoretical. Our value is now measured by our clients who say things like, with Venzi, we spend about a tenth the amount of time on retail syndication than we used to. Another says, using Venzi, our consumers now know exactly what they will get when they purchase our product. And one client who, due to some severe pandemic challenges and needed to rapidly shift and expand their retail sales channels, told us flatly they were able to survive due to Venzi. Our traction in the market is real and it's growing. Our customers and our KPIs tell us that. Let me shift gears here and focus on revenue. At the end of the day, for many of you, the key performance indicator of our success is revenue. Our CFO will share our revenue detail in a moment, but ahead of that, let me preview and provide some context. Since pivoting to a software as a service platform in late 2019, we have increased revenue each and every month. By targeting a single sales persona, partners, We have leveraged and engaged seven partners and filled our sales pipeline with more than 7,000 mesh connector sales opportunities. And as of Q2 end, sold 792 mesh connectors that as we activate those connections and any incentive discounts we provided, we'll continue to grow our revenue in line with our sales target. Let me repeat that. Consistent month-on-month revenue growth derived by one salesperson selling to one sales persona has generated 7,000 opportunities and nearly half of our full-year mesh connector target of 2,080 sold connections. Because our partner sales have performed, a number of direct sales and retail opportunities have emerged. To monetize those opportunities, we recently announced expansion of our sales team and are very pleased that in a tight labor market, we have recruited three top-tier, high-performing sales leaders who will accelerate revenue conversion of our existing sales pipeline and unlock direct brand and retail opportunities. On top of that, our partner sales persona work continues to bear fruit. Last week, we announced an agreement with one of the world's leading digital asset management companies. With an established client base of more than 700 brands in 175 countries, we targeted this partner in 2019. But the company felt there were alternatives to Venzi, and they chose another path. As validation, Venzi's platform and mesh connectors are indeed unique in the market. Three months ago, the partner asked us for an engagement. Activity in this sector has been increasing for some time. I've been in this space for 20 years, so I know most of these companies that have been acquired. In fact, my last supply chain company was acquired, and most of our leadership team has been involved in at least one acquisition over the past five years. So it is a very, very active investment sector. As we close out our prepared remarks for our call today, I believe you can tell my enthusiasm for the business we are building. Recently, I had the opportunity to host Nick Vyas, director of the University of Southern California's Marshall Center for Global Supply Chain Management. Dr. Vyas said brands and retailers will embrace modern supply chain tech or they will die. Venzi is the lifeline brands and retailers need to survive in an ever more competitive consumer-driven market. Finally, I want to call out the Venzi team. Our team is well curated. Almost all of the people on our operational team have been in this industry. They've been a part of an acquisition of some kind or have sold a company in this space. As industry veterans, they know the technical gaps that exist and know how to apply our platform capabilities in order to close those gaps. Our team continues to expand and attract highly capable, highly talented individuals who know how to take on our competitors and win. I am proud of the team we have built rapidly, but intentionally, to capture and grow market share in the rapidly changing retail supply chain sector. Thank you for your engagement and participation in our Q2 earnings call. I'm going to turn the call over to Darren Battersby, our CFO in Vancouver, Canada, for more discussion of our financial results. Darren.
spk02: Thank you, John, and good morning, all. Yeah, my name is Darren Battersby. I've been CFO for the company since John took over his leadership in August of 2019. I'm a member and good standing of the CPA Institute of Canada since 1997. And my background is that I have a history of advising and developing early stage companies supporting their public market goals. I'll be discussing Benji's results for our second quarter in June 30th. The numbers I'm referencing will be in US dollars unless I know them otherwise. Before I get into the financial details, I want to point out a few things that happened in the quarter. As John noted, Venzi made a successful pivot to the SaaS platform model in Q4 2019. From a revenue perspective, the company has currently seen eight months of Consecutive months of increased on-model revenues from the SaaS model. Since our earnings call last quarter, we have been reporting this number as part of our standard sub-KPS. Related to our SaaS pivot, we've moved from a negative margin sales to positive margin SaaS revenue sales, while significantly growing our sales leads in mesh connected pipelines. We've also recently increased our exposure for the company in the US market by gaining a U.S. OTC ticker, VNZ, V-N-Z-S. Separately, we have open discussions with a Dallas-based firm, StoneGate Capital Partners, who recently commits coverage to VNZ and is now working with our team to attract new U.S.-based shareholders. On the financial side of things, from a revenue perspective, for the three months ended, we had $13,595 of revenue. For six months in the year to date, we had $22,345. All of it is a non-model class revenue. The prior year's revenues were off-model and through the partnership negative margin revenue model. In prior years, we had $803 and $26,590 for the year, so that's the three and six months under perspective. Again, this is revenue that was not on our SAS model, but holdover revenues from our previous sales strategy. As mentioned in Q4 2019, we implemented the SAS revenue model where we seek to establish consistent monthly recurring revenue model, where we grew revenues from zero at that time to what we're seeing today in this board. From a cost perspective, we've seen the overhead costs increase since Q4 2020. This is all due to adding additional talent to the team. We've added experienced sales and AI technical hires during this period. You'll also see that we have increased our sales and marketing and implementation in tech areas too. The GMA as a whole has increased. This current quarter is a big function of a stock-based compensation for the restricted share units, RSUs, that we issued and which bested during this quarter. So if we adjust for the stock-based comp, which is a non-cash expense, we have hard costs for the three months of $704,000. Last quarter, in Q1, we were at $530,000. And in the previous year, in Q2, $375,000. For the six months, we've incurred $1.9 million of hard costs, where in the previous year in Q2, we did $800,000. All in all, we posted a net loss of $932,000 for the three months, $1.6 million for the six months ended. That gives us a zero per share and one penny per share loss, respectively, for the three and six months. Also important to note, we've been able to receive over 1.5 million US in funding, primarily through the exercise of warrants, but also some options, and we did receive some folded funding over the six months. Looking at our cap table, we have approximately 226 million common shares issued and outstanding. We have approximately 112 million outstanding warrants, 14.3 million stock options, and 1.9 million, as previously mentioned, restricted share units. Also, fully diluted, we have 354 million shares outstanding, and we approximately have a market cap of 23 million Canadians. All in all, the quarter is on target, where we expect it to be from a sales, operations, and overall performance perspective. So I think it sets us up very strong for this fiscal year. This is the end of my formal discussion, and I'll hand it back to John.
spk00: Thank you, Darren, and thanks for getting up extra early to start your day with us on our call. We'll now open up the call to investor questions. Operator, if you could open the lines for questions from the audience.
spk01: As a reminder, if you'd like to ask a question, please press star then 1. If your question has been answered and you'd like to remove yourself from the queue, please press the count key.
spk00: While we're waiting for those questions to come in, we did get a couple through email. I see three here. So why don't I just go through those first couple of questions while people are queuing up. First question, it's good to see quarter over quarter revenue growth from the new SAS model that we've all been waiting for. Yes, you and me both. Can you explain how you are going to convert 792 sold connectors to 195,000 in revenue by the end of the year? Very common question. And our internal couple of things. First off, our KPIs were now in the second quarter of releasing those regularly. And I think there is a KPI that we ought to build out or, or, you know, share publicly that will help with that. So really a KPI that indicates velocity of conversion as we sell our connectors, we have to activate those as well. Some of our clients that have come through our partners have been very large enterprise clients. And so it takes a little bit of effort to get that fully operational. And so while we're very excited to have those clients activating and coming online with revenue, it happens slowly. So we're very comfortable that we'll get to our target by the end of the year. Maybe it's taken a little bit longer than maybe what we expected six, eight months ago, but it is moving forward. The other KPI that I do want to call out most of the time in SaaS companies is The focus is on churn, and it should be because SAS companies don't have contracts with the individual manufacturers or their individual clients. So companies can leave a SAS model very quickly. We've had zero churn. So while these companies are more elongated in our revenue recognition for their mesh connectors, we're seeing zero churn. So it means that they're committed and we expect that to continue. Promotional discount expirations, as those come off, revenue is ticking up slowly, but it is ticking up. We have to get faster at converting that sales activation process and recognizing that revenue. The other thing that is a benefit that we see that you may not, we are getting more inbound direct So these are companies coming to us outside of our partner model. We even have seen, as I said in my remarks, some retail-generated sales. So all of those things are coming together, plus expansion in our sales team. We're very comfortable with our end-year targets for this year and our targets for next year as well. Second question, the company has been saying it is strongly positioned to achieve 2,000 mesh connectors sold by the end of the year. Target actually is 2,080, but who's counting? We're now halfway through the year with 792. What will allow VEMSI to sell 50% more connectors than first half? So we actually had not planned to sell as many in the first half as we did. We expected a ramp. that would tick up in Q3 and Q4. We had some single order connectors. Enterprise clients deal with thousands of retailers, so that couldn't be expected, but we were more conservative in our expectations. So we got some single orders, one that was around 500. That actually put a lot of pressure on our operations to activate things more quickly. Sort of like the snake eating the water buffalo, we've had to adjust. We're very comfortable with our growth so far in the first half of the year. We're very comfortable with how we're processing and growing in the second half. So I'm not concerned about the 2080 at all. Third question, and then we'll check to see if new questions have come in. We recently announced a new partnership. Why is it different than other partnership spend you've announced? So you can only know it's a little bit different if you've talked to some of the people on the team. The reason it's different, we've seen a lot of consolidation in the space. Two of our partners have been acquired in the last three months. So one question. Do you know you're partnering with the right people? Well, the fact that they're getting consolidated or purchased after they do a partnership deal with us is an indicator that we're picking the right partners. It does cause us to change some things and acquisitions are disruptive to the acquired company. So some of that sales momentum that we expected out of a consolidated or acquired partner is slows down. We're not losing them, but it has slowed. It's picking back up with one of them in particular, and we're really excited that the company that acquired them is very excited about our relationship. So we picked the right partners. That's a good thing. That gives us competitive edge in the space. And the other partners in the mix are performing well. So they deal with large enterprise deals and The difference between this new deal, they came to us after having looked through the market for an alternative to Venzi, and they couldn't find one. It's a well-established company. They have hundreds of enterprise brands, and they know us well. They've been working with us in terms of a deal structure for a long time before they chose a different path. Well, they know us. They know what we're capable of, and they came to back to us looking for a deal, so we're very excited about the upside there. Operator, anything in the queue?
spk01: I'm not showing any questions on the phone.
spk00: That must mean that we did a stellar job in answering your questions. Let me read one more I have here in email. So maybe people are shy to speak on the phone, but happy to type away. Let me read through it. There was a press release earlier this month, the Venzi network effect. Can you go into more detail? Has it happened before? Are you expecting this to happen again? So I referenced in my remarks, and granted... My remarks, you know, I chew through those quickly. So I do call out or did call out in the remarks the network effect. It is a known phenomenon. I don't know how far back it goes. It certainly goes into some of the early stages of the Internet, where as more people use, say, a search engine, the search engine became more valuable for a whole bunch of reasons. So The indicators of the network effect may go beyond the Internet era, but my experience is in the Internet era. So the network effect in our case was a brand who was sending data to a retailer. That retailer called the brand and said, hey, the way we're getting data from you is really impressive. It's easier for us to deal with. What's going on? What have you changed? And they said, well, we're working with Benzie. That retailer then reached out to Venzi sales and said, hey, we really like what's happening here. We're getting better product information. It's easier to deal with. It's easier to ingest. How do we expand this? That is the network effect, so people on the platform bringing on others and the platform becomes more valuable. For us, a retailer promoting Venzi into their supplier network is really powerful. It well positions our sales team because it's a force multiplier. So we're very excited with it. If we continue to see this, and we do expect it will continue, I know this industry. So I know that when you're getting good data reliably and efficiently into your system, people call that out. So those become preferred relationships. So we do expect this will continue to happen, and we will say more about about the network effect as we see that in our numbers and have demonstrable ways to communicate that. So we're very excited about it. Honestly, it's happened a little earlier than I would have expected. It's not that we didn't expect retailers to get excited about Benzi, that they're excited about it at a fairly early stage is very encouraging and very beneficial to us. I'll check with the operator again. Do we have any more calls out there?
spk01: There are no questions on the phone.
spk00: OK. We'll read one. I just have one more in the queue. So we'll do this one. And then we'll check with the operator. And if there's nothing there, we'll wrap up our call. About the same time frame that we wrapped up last time. So very exciting that we're consistent. In the August 5th press release, it said, immediately expanding the company's services to more than 200 of the retailer's key brand suppliers. Does that mean we will see 200 mesh connector sales in Q3 from this alone? You know, hard to speculate, and I don't remember the August 5th press release in particular. So the reference is difficult for me to connect to. But, you know, I don't know. I would say that there are plenty of bulk purchase requests that are in our queue. So maybe that's what this question is getting at. Will we see more bulk buys? Certainly. We have an awful lot of opportunities. We have hired, as I said in my written remarks, we've hired three salespeople. They know this industry. One comes from the retail space, and the other two come from selling in this space more generally, mostly to manufacturers. So they have a number of bulk purchase requests already in their queue. So we will certainly see, maybe not from the press release August 5th, I'm not sure exactly the connection there, but certainly we will see bulk buys of mesh connectors. Those are already in discussions. Large enterprise deals always are talking about bulk buys in larger numbers. So I'm very comfortable we'll see numbers in the hundreds. The good thing for us is, unlike my snake water buffalo, we are better equipped operationally and from a sales perspective to handle things that are in the 500 and above range. So very comfortable with how our sales has matured, very comfortable that operationally we can onboard and very comfortable that we are onboarding and recognizing revenue at a faster clip and, and excited about the, uh, And I'm quite sure anytime I have a call with an investor, they always say, you're so excited, I can feel your enthusiasm. And I hope that came through in our call today because I'm not the only one on the team excited about what we're doing. This is a realization in Venzi of a problem that I saw long ago. And I'm excited that we've got the team and the opportunity and the support from all our whether it's capital markets, whether it's investors, whether it's partners, the support to grow our business. So I'll check one more with the operator. Do we have any calls in the queue?
spk01: There are no questions in queue.
spk00: I'm actually going to look at that as a very positive sign that our comments today address people's questions. Of course, as both Darren and I said, If you have questions, we do have a very capable IR team that we work with quite a bit out of Vancouver, King Communications, fantastic folks. Reach out to them or reach out to Darren or I directly, Darren or me directly, or we're happy to engage. It's part of my job. It's an important part of my job, and it's one that I get excited to share our Venzi story with. and all of the good things going on across our team. So feel free to reach out. It's not an imposition. It's something that we enjoy doing. And, uh, we've got a great marketing team as well that you can connect with us. Uh, uh, go through our website, uh, the investor section of nz.com. And, uh, we hope to talk to you too. Talk to you soon. Thank you so much for your time. I enjoyed communicating our story. Uh, Darren, again, thanks for getting up early and all the support folks, uh, that put this call together. Thank you very much for your time.
spk01: This does include the conference. You may now disconnect. Everyone, have a great day.
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