The Exchanges

Q How are you growing? Where are you finding new customers?

A Lots of different areas. Um, so some of it's new verticals like the retail and, uh, B to B stuff that we just talked about. So they've been two really good successes for us. We're also expanding geographically, so a Japanese business is starting to really take off. We're in 16 countries now, so it's been good. We also only a few months ago launched our first SMB product, which is a Shopify app, which gives them a really slimmed down version of our product, just gives them the advertising product and the confirmation page at this time. But we're going to roll out a few more versions of that over the next sort of six to 12 months and expand it beyond Shopify. Uh, so client type is another one. Vertical geography and product is the other one. So as we get, um, you know, into distributed commerce and we start selling more product and we go further up into the ecosystem, we start handling more of the volume of the e-commerce or more value of the e-commerce transaction through our platform. We also drive more revenue.

AI assessment note: “some of it's new verticals like the retail and, uh, B to B stuff”

Q And then in 20, 21 of the ninety million of gross revenue, how much of that will be SAS?

A Uh, SAS for us is relatively small. The, the fastest growing part about SAS for us will be probably, you know, around five, six, seven million dollars. I think this year, um, the fastest growing part of our business is product, what we call distributed commerce. We're actually selling like parking or, Insurance or, you know, whatever, name a product that gets bought when you're buying another product. Um, and on that product we're taking, it's a marketplace cut as well. It's a straight rev share effectively. It's like a credit card merchant fee is effectively the way that looks from a P&L perspective. So if you looked at like a PayPal or MasterCard, you'd, you'd understand how that P&L works.

AI assessment note: “around five, six, seven million dollars”

Q Interesting. So am I understanding this correctly? The difference between one 70,000,090 is basically there's 70 or eighty million bucks of, of advertising revenue going through your platform of which you only capture 50% of the spend?

A That's, that's the amount that we pass on to our e-commerce partners effectively delta between those two numbers. So if you look at gross profit, so if we're selling product, you know, they keep obviously Around 97% of all of the revenue. And so we don't book the gross product sales, but when we're talking about advertising, we book the gross revenue and we clear the, the, the transaction. So Disney's trying to acquire customers on our platform. They might spend X million dollars. We clear that with, you know, uh, a thousand different e-commerce partners or whatever that, that, that out of place. And then, you know, the, the core part of our business is we may, Unlike a typical advertising value ecosystem where, and this is slightly different from product and marketing, um, which the other two sides of our business, but on the advertising side, we are a closed wall garden, similar to like a Google. And so we clear everything and we deal directly with the advertising directly with the e-commerce company, primarily because we're dealing with sensitive data. Um, and in a world, you know, in, in, in the last few years, that's only becoming more important that we keep that very secure for our clients.

AI assessment note: “That's, that's the amount that we pass on to our e-commerce partners”

Q And does that 20% expansion more than make up for gross revenue churn? So your net net dollar retention is over a hundred?

A It depends which way you look at it. Um, but on the way that we find is most important is our e-commerce clients. Um, uh, so what we call the supply side of our business. So when we're powering those actual transaction side, Our revenue churn on a gross level for those is low single digits. So we are net negative churn, if you will, on our e-commerce clients, but on our advertising or product sale clients, it's a bit more fickle, like, you know, whatever products being sold and whatever, you know, sort of like Google AdWords or Amazon sponsored product listings, people are coming in and out with different deals all the time. And so the, the, the movement in that marketplace month to month looks quite high. On an annual or, or biannual basis, it's, it's fairly steady, but you get a lot of movement by different seasons and months and that sort of stuff. But we don't tend to think of that as, and it's more the marketplace dynamics of who wants to acquire more customers this month and who's, you know, trying to launch a new product and who's got a big push into, you know, It's probably about, we tend to focus on the e-commerce side, which is a net negative change for us.

AI assessment note: “we are net negative churn, if you will, on our e-commerce clients”

Q Uh, interesting. And then take me back the year before, uh, before that, right? So when you finished 2019 at before COVID hit.

A So we finished the year before without any COVID impacts and we finished right just above a hundred. So, uh, what was interesting was our investors Despite the COVID impact, um, they could see that the business was growing in an underlying basis really, really fast. And so the valuation lifted, I think about 65% over about nine months. And that wasn't because our actual results were lifting that way. They could just see the underlying business getting stronger and stronger and stronger. So actual revenue remained pretty flat. Um, I mean, it looks flat, but actually it wasn't flat really. If you, it was like a rollercoaster, March, April, we got smashed when COVID started. And our revenue tanked, 65%. And then we came back with this, you know, retail and all these other businesses really were growing fast since we finished the year really strong. But if you look at the annual results year on year, it looks relatively flat.

AI assessment note: “we finished right just above a hundred.”

Q All right. What is the next thing? Tell us about rocked. What's the business do and how do you make money?

A So rocked is a marketing platform for e-commerce companies. It's basically helps them Manage, uh, all the marketing messages in and around a transaction. So they can be upsell messages. They can be opt-in and marketing messages. They can be charity. They can be market research. They can be a whole raft of things, but we give them a tool set that allows them to campaign, make all of those things campaigns and be able to manage each individual consumer with the right messaging so that you're not sort of wedded to this old legacy e-commerce platform. You've got a modern cloud-based marketing platform that you can actually inject into your e-commerce flow. And it's designed purely for e-commerce. It's, it's designed really to solve a whole raft of challenges that primarily e-commerce companies have.

AI assessment note: “rocked is a marketing platform for e-commerce companies. It's basically helps them Manage”

Q Okay. Um, what has panned out exactly as your pro forma said they would and what surprises popped up once you started digging through the code?

A That's a great question. Um, look, the product integration has taken longer primarily because of, uh, focus issues on our side or reprioritization issues. You know, we've got big clients. We drove another last three years. We've driven a hundred percent revenue growth pretty much year on year. And last year we did the same thing and it was just prioritizing what was going to drive, uh, revenue, uh, last year for major clients versus what was going to be next year, the year after. So that's probably the longest thing. One of the big surprises is the talent we acquired and the impact that has on the broader business. So that, um, you know, the owner and founder of that business, Brad, joined the board and has become a senior member of our team and has added a huge amount of value to the business, um, way and above beyond what the CarPlay business, you know, we, we, when we looked at it, we were looking at it purely for the CarPlay business, but we weren't looking at the impact that would have on Rock.

AI assessment note: “One of the big surprises is the talent we acquired and the impact”

Q Last, last question here, Bruce, before we wrap up with the famous five, what do you assume lifetime value is? I know that's always a tricky number, but what do you assume it is for your clients?

A It's very hard. I mean, we have clients that will spend, you know, twenty million dollars with us this year and we got clients to spend a 100,000 dollars with us this year. Um, and everything, everything in between. So, um, you've got big enterprise clients that, uh, look to solve significant problems and can be basically whatever, you know, there's businesses out there that are spending, you know, a quarter of a billion dollars a year on, on Google AdWords. And so, Um, it's really about, um, tapping into those sorts of markets and helping them solve that problem, uh, with innovative tools and creating, uh, you know, it's a virtual network where they can actually partner with other businesses and leverage their own assets so that they're actually creating revenue streams to fund their customer acquisition on stuff that they were never doing before.

AI assessment note: “It's very hard. I mean, we have clients that will spend”