Sign in

You're signed outSign in or to get full access.

VT

Verb Technology Company, Inc. (VERB)·Q3 2021 Earnings Summary

Executive Summary

  • Q3 2021 delivered record new client wins and accelerating digital growth: total digital revenue rose 30% quarter-over-quarter to $2.356M; total revenue increased 21% sequentially to $2.900M; SaaS recurring revenue grew 15% QoQ to $1.846M .
  • Mix shift: non‑SaaS digital design/services surged 144% QoQ to $0.510M, reflecting immediate recognition from new contracts; SaaS comprised 78% of digital revenue vs 88% in Q2 as non‑SaaS activity ramped post signings .
  • Management highlighted near‑term catalysts: Marketplace and verbTV development “on track for completion before year‑end,” verbMAIL Pro targeted “before year‑end,” plus mega events that could generate revenue exceeding a typical quarter .
  • Operating intensity remains the trade‑off: R&D rose to $3.513M and G&A to $6.130M; net loss per share was $(0.14); Modified EBITDA was $(6.843M), deeper YoY as growth investments preceded monetization .
  • Wall Street consensus (S&P Global) for Q3 2021 EPS and revenue was unavailable; estimate comparisons are not possible based on our retrieval [SpgiEstimatesError from tool].

What Went Well and What Went Wrong

What Went Well

  • Record new business: 16 new client contracts with a minimum base value of $1.1M, expected to drive ~$0.5M of annual recurring revenue, with additional ARR upside from verbLIVE with Attribution, PULSE, and LEARN .
  • Digital growth and product momentum: total digital revenue up 30% QoQ and 28% YoY; SaaS recurring up 15% QoQ and 25% YoY; management emphasized “record‑breaking quarter” and strong validation of hyper‑growth strategy .
  • New vertical traction: launched Professional Sports with the Pittsburgh Penguins to drive ticket/merchandise sales and fan engagement; response from the industry described as “extraordinary,” with more franchises expected .

What Went Wrong

  • Elevated spend and losses: R&D reached $3.513M and G&A $6.130M, driving gross margin to $1.814M but operating loss to $(8.229M); net loss to common was $(9.153M), deeper YoY .
  • Supply chain disruptions impacted promotional plans: management shifted planned mega events to digital products (e.g., NFTs) after vendors couldn’t support inventory (including a cancelled Black Friday event), delaying initial revenue ramp from Marketplace .
  • Liquidity/going concern: increased reliance on advances on future receipts; auditor raised substantial doubt about going concern in prior year report; company is exploring credit facilities and cost reductions while ramping growth initiatives .

Financial Results

Revenue and Profitability (quarterly comparison)

MetricQ3 2020Q2 2021Q3 2021
Total Revenue ($USD)$2.860M $2.392M $2.900M
Total Digital Revenue ($USD)$1.838M $1.810M $2.356M
- SaaS Recurring ($USD)$1.478M $1.601M $1.846M
- Other Digital ($USD)$0.360M $0.209M $0.510M
Total Non‑Digital ($USD)$1.022M $0.582M $0.544M
- Design/Printing/Fulfillment ($USD)$0.836M $0.477M $0.461M
- Shipping ($USD)$0.186M $0.105M $0.083M
Gross Margin ($USD)$1.555M N/A$1.814M
Net Loss per share (Basic/Diluted)$(0.18) N/A$(0.14)

Segment/KPI Trends (Q1–Q3 2021)

MetricQ1 2021Q2 2021Q3 2021
Total Revenue ($USD)~$2.5M $2.392M $2.900M
Total Digital ($USD)~$1.8M $1.810M $2.356M
- SaaS Recurring ($USD)~$1.5M $1.601M $1.846M
- Other Digital ($USD)~$0.3M (calc from $1.8M−$1.5M) $0.209M $0.510M
Total User Downloads2.05M ~2.8M 3.0M
SaaS as % of Digital81% 88% 78%

Non‑GAAP

MetricQ3 2020Q3 2021
Modified EBITDA ($USD)$(5.263M) $(6.843M)

Guidance Changes

Metric/ItemPeriodPrevious GuidanceCurrent GuidanceChange
SaaS revenue growthFY 2021“Impressive” growth; management cited ~30% YoY as expectation (excludes upside from new initiatives) No explicit revision in Q3; commentary focused on product launches and contracts Maintained (no update)
Marketplace launch2021Launch by year‑end Development “on track for completion before year‑end”; mega events planned Maintained
verbMAIL Pro release2021N/A“Expects to release verbMAIL Pro before year‑end” New timeline guidance
Margin profile (Marketplace take‑rate)OngoingN/ARevenue share 5%–15% of gross sales; margins “as high or higher” than current ~80% New qualitative guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2021)Current Period (Q3 2021)Trend
Interactive livestream ecommerce/AttributionAttribution launched; expected to expand TAM and drive ARR; $1M+ annual client pipeline Attribution highlighted as driver; non‑SaaS design work recognized on new contracts Scaling from pilot to monetization
Marketplace strategyBeta with ~40 retailers; big launch targeted Completion/testing on track before year‑end; mega events pivot to digital (NFTs) due to supply constraints Launch prep; promo mix adapted
Microsoft verbMAIL/Co‑sell pathPublic beta; pursuing Microsoft co‑sell verbMAIL Pro targeted before year‑end; enterprise sales motion outlined Productizing and GTM building
New verticals (sports, life sciences)Life sciences momentum; platform integrations; competitive differentiation Pittsburgh Penguins added; broader franchise interest Expanding into sports
Supply chain/macroNoted event‑driven non‑digital revenue decline in 2020–2021 Mega events adjusted to digital products; inventory concerns cited Macro headwind managed
Liquidity/going concernRaised capital; PPP forgiveness; pursuing burn reduction Advances on future receipts; exploring credit facilities; going concern disclosure remains Funding flexibility + disclosures

Management Commentary

  • “We’ve had a record‑breaking quarter and our digital revenue is up 30% this quarter over last.”
  • On Marketplace promotion: “Those mega events could… be looking at more revenue from those events than we did the entire quarter.”
  • Revenue model clarity: “It’s a revenue share… range from 5% up to 15% depending upon the product and the margin associated with it.”
  • Margin outlook: “Once the platform is built and launched… margins are extremely high… as high or higher than our existing margins, which… are 80% thereabout.”
  • VerbMAIL Pro/enterprise motion: targeting Outlook/Gmail enterprise adoption via dedicated sales and cross‑sell from Marketplace vendors .

Q&A Highlights

  • Marketplace economics/take‑rates: 5%–15% of gross sales; mega events expected to be meaningful and broad influencer‑driven .
  • Timing and scope: Marketplace and verbTV targeted for year‑end completion; mega events pivoted to digital products given supply chain limits .
  • verbLIVE adoption: “Several hundred thousand users” globally; corporates increasingly mandating field adoption; feature roadmap includes recording and dual presenters .
  • Microsoft ecosystem: verbMAIL Pro targeted before year‑end; enterprise sales group in place; co‑sell ambitions reiterated .
  • Global reach: Marketplace contemplated as global at launch .

Estimates Context

  • We attempted to retrieve S&P Global/Capital IQ consensus for Q3 2021 EPS and revenue for VERB, but a CIQ mapping was unavailable; therefore, Wall Street consensus estimates could not be sourced for comparison [SpgiEstimatesError from tool].
  • Implication: Post‑print estimate revisions may focus on higher near‑term non‑SaaS recognition (design/services) and 2022 revenue opportunities from Marketplace/verbTV launches .

Key Takeaways for Investors

  • Sequential acceleration: Digital growth (+30% QoQ) and total revenue (+21% QoQ) demonstrate demand momentum and effective contract conversion; watch the sustainability of non‑SaaS design recognition and SaaS ARR build into Q4 .
  • Near‑term catalysts: Marketplace/verbTV launches and influencer mega events could be stock drivers; management flagged potential event revenue exceeding typical quarterly levels .
  • Monetization mix: Expect continued mix normalization (non‑SaaS vs SaaS) as new deals convert into recurring revenue over time; CFO quantified ~$0.5M expected ARR from Q3 signings, with additional ~$1M ARR potential from feature adoption .
  • Margin profile: Marketplace take‑rates (5%–15%) with “~80%‑like” gross margins suggest high operating leverage post platform build‑out; monitor cost discipline against R&D and marketing ramp .
  • Liquidity and risk: Going concern disclosure and reliance on advances on future receipts require vigilance; management is exploring credit facilities and cost reductions as monetization ramps .
  • Vertical expansion: Sports franchises (Penguins) and continued life sciences traction broaden revenue sources beyond direct sales; integration footprint remains a competitive edge .
  • 2022 setup: With Marketplace and verbTV targeted for completion before year‑end, 2022 could see step‑function growth if launch execution and event cadence meet expectations .