I had a great call with Chris Topolniski (President/COO) on Thursday evening. He is an incredibly enthusiastic individual who his absolutely obsessed and focused on the future of the company. Of all the Exec Management folks I have spoken to over the course of the years, Chris definitely struck me as the strongest "fanatic" of them all. And his history of turning around companies has essentially been flawless.
Our conversation focused on two of their major products: AdCentral (Next Text) and Telepay. I had to go before we could discuss Ivrnet Central. Honestly, I am blown away by the power of their technology, and the scalability of it.
Quick summary of some highlights:
- NextText is the name of their main product within the AdCentral Platform. It is essentially texting tied to advertising.
- Exempt from any text spamming laws in Canada, which is crucial because they do not need any "opt-in" by individuals to receive such text messages. If an individual sends a text to the city to find out the bus route info, the text in return will include the advertising. More below.
- The company is focused solely on this technology as it relates to the public transit industry, but the technology has some incredibly broad uses that the company is currently in discussions about strategically placing (ex: for example, if you are within a certain radius of a Starbucks, you could receive an automatic text from the Starbucks with a coupon offer).
- How does it work? I was not aware of this as I have never used public transportation, but individuals who use public transportation text a certain number to learn of upcoming bus route times. Obviously, this costs municipalities money in order to execute this. Ivrnet's solution actually provides revenue to the municipalities. It is essentially a three-way transaction with Ivrnet handling the technology side and executing the texting, FarWest Digital (handles all of the advertising components), and the municipality (receives revenues with each text). The revenue generated from each text is shared among the three parties.
- The text message includes an advertisement at the bottom of it.
- Advertisers that partner with FarWest Digital can target certain "bricks" (segments, areas) within a city and target certain individuals with the advertising.
- Ivrnet's technology is totally scaleable without the need for additional expenses.
- These guys have the relationships to penetrate not only all major municipalities, but huge US markets as well. They are in discussions with Chicago, New Orleans, and other US cities currently.
- To put the potential in perspective, Ivrnet is pretty close to securing the business with a major city in Canada where there are roughly 2M transit texts per month. For assumption purposes, if they are able to penetrate 800k/texts per month, after the revenue-share that would equate to $120k/month in recurring revenues, with very high gross margins.
- Chris knows that the company has to be fast and aggressive in getting the market share. Although there isn't a direct competitor to them at the moment, there is always the potential. However, the barrier to entry will be high as Ivrnet has spent many years building out this technology, and they have the relationships to penetrate markets in a significant way.
- This technology completely eliminates the risk of staff members of a call center for a company manually taking down credit card numbers of a customer, therefore essentially eliminating the risk of fraud.
- The live human pushes a button which in turn activates Teleplay, and once the customer is done submitting payment over the system, the call is transferred back to the live agent and the customer is provided a token code, or confirmation number...all without the agent having any visibility to the credit card information.
- Huge market opportunity. The company is in discussions with some major governments in Canada to implement this technology, as well as discussions with businesses in the US.
Chris wants to ensure the company is well capitalized as they aggressively pursue placement of these products, so I would expect some sort of additional capital raise soon. Chris and his partners have a plan, and I feel confident they will execute. And there is a HUGE margin of safety with their legacy products that continue to have recurring revs of 80-85%.
When I have an additional conversation with Chris regarding the Central product I will post an update.