I think this company will grow at a very fast pace over the next year, and that will be reflected in the stock - CSI Credit Systems, symbol CSU. It's a loyalty marketing company. They just announced a strategic alliance with Datacard, a $350 million card services company.
Agreement with DataCard
CSI Credit Systems International Inc
CSU
Shares issued 10,062,500
1998-07-06 close $1.16
Tuesday Jul 7 1998
Mr. James Christensen reports
A major agreement has been reached with DataCard Financial Systems
Corporation that will see DataCard selling CSI's ERNEX electronic marketing
service in the United States.
The agreement will allow CSI's ERNEX system to be operated on DataCard's
JIGSAW terminal. The JIGSAW is a state of the art transaction terminal with
similar capabilities to that of CSI's GT-100 terminal. Any merchant or retail chain
using the JIGSAW will now be able to run a real time loyalty program including
points, electronic gift certificates, instant win programs, or any other electronic
marketing service offered through the ERNEX service.
The terms of the agreement will enable DataCard to sell loyalty programs as a
value-added feature for its JIGSAW terminal. DataCard has commited a full time
sales force to selling ERNEX services where it will benefit from a terminal sale and
a percentage of the ERNEX transaction fees. CSI may still sell into the U.S.
market directly by using its own GT-100 terminal or through the Datacard
JIGSAW.
DataCard is a world leader in card based solutions with revenues over
$400-million. DataCard has over 2,500 employees and offices worldwide.
DataCard Financial Systems has terminals deployed worldwide and has designed
the JIGSAW with the expectation of international growth.
-30-
go to datacard.com - see how big these guys are.
This is CSI's big entrance into the US market. No immediate revenue, though, just a strategic alliance. Datacard clearly knows their market, and they chose CSI out of all the loyalty companies out there.
Datacard sells card services - the JIGSAW terminal, the cards themselves - mostly hardware, and aside from servicing contracts, I'll bet they're all one-time sales. CSI has the ability to provide them with recurring revenue from transaction fees.
This agreement basically calls for CSI's ERNEX software to be incorporated into the JIGSAW - CSI mgmt says that won't be complete until Aug-Sept. Datacard will now go out and convince their customers they should have a loyalty program - either internally, or a cross marketing deal with another merchant.
CSI's ERNEX will process the transactions, and CSI receives a fee for that. And my understanding is this is all high margin revenue that is electronically debited from a merchant's account: GRAVY. Datacard will undoubtedly receive a piece of that pie from CSI. So it's a win-win game and Datacard has a recurring revenue stream. |
