**Today's Conference call--This is long**
Well, I am listening to the call now as I type this. I skipped
some of the opening stuff and I may have missed a few bits here
and there in the Q&A at the end. While I tried to be accurate, I take no responsibility for errors, use at your own risk, etc.
I hope this will be useful. If you want a transcript of the call,
vcall.com will have one on their site in about a week.
Here goes:
When they said "introductory" call, they weren't kidding--
President Joshua Sharfman briefly went through the company's history, starting out as an offshoot of a UCLA professor's need to analyze video of math classrooms for a study of how math is taught around the world.
He is describing the market for products that mix all sorts of media, especially for training. He described the three products:
1.) VPrism, the publishing package that takes all the different media types and puts out something that encapsulates them and allows them all to be synchronized (slides with video, etc)
2.) VideoVisor Professional, a viewer for the capsule put out by VPrism
3.) VideoVisor Web, a browser-based viewer that looks similar to
the VideoVisor Professional product but all done on the web
with no extra plug-ins needed (you need the Real Player). It is
not as full-featured as VideoVisor Professional but provides
a subset that works over the web.
(all this from memory so I hope I got it all right).
Sharfman is now taking the people through a slideshow about the product that I could have seen had I set myself up properly but I was lazy. He is describing how VideoVisor Professional can be used to take notes and how the product is very useful for training. He mentions big companies like Cisco and Shell and Lotus using the product for training and saving money and time by doing so. He mentions some financial companies (insurance) that are repeat customers using the product for training.
He is moving on now to talk about how they confirm to standards and
this allows them to play well with others and provides investment-protection. They are able to deploy via CD, LAN, etc.
Sharfman talks about how Digital Lava is in a leadership position--there are many low-end, look-alike products, from alive.com, netpodium, windows media player, real player. Video Visor Web fits in that space but is more featured than their competition--there is a search feature that allows you to search the video's captions and get a list of search results which you can click on and the video goes to play from that spot. The other products do not have that.
VideoVisor Professional is more upscale and is unchallenged in that space, according to Sharfman. And then there's the publishing product, VPrism and so they have a continuum of products today and they are not standing still so they are in a leadership role.
1997 .5 million --I missed this---
1998: 1.4 million, $25.00/share loss
1999: 3.7 million, $1.94 share loss
[I think that the $25/share loss is right, and that the IPO
made a big difference subsequently]
Digital Lava is first to market with streaming media products that solve business problems.
Bob Greene is now being introduced--Sharfman was thrilled to announce yesterday that Bob Greene will join as CEO. To move to the next level, they need the experienced leadership of individuals who have built strong operating companies that have stood on their own, that have their own strong identity.
Bob is now on the mike: equally thrilled to join, exciting company with exciting technology. Comes from world of entertainment and technology, previous company was VC backed (Kleiner Perkins and Accel) and he has contacts in the cable industry (Showtime), Microsoft, etc.
Bob is comparing Digital Lava's stuff to Bloomberg saying, imagine you could link the video to the stream of other info that Bloomberg gives you and can choose what you want to see, etc. then this is what Digital Lava can do [this I think is helpful to get financial types to understand what the product is like].
He reiterates how the different products provide different levels of solutions and how companies that use the products will cut costs and otherwise benefit.
His focus for the current year is to become leader in other business-to-business areas not just training, the web offering and enterprise offering will both be enhanced (that is, the products) and that strategic partners and other channels will be enhanced and so on.
***He says that the stock should be followed, since there will be several large announcements made over the next few months.***
With that tantalzing conclusion, he hands it back to Sharfman who opens questions and answers.
Q.) From Roger Young: What is the burn rate? What does the financial model look like?
A.) $500K/month, rising to the tune of $100K/month later in the year
(or for the rest of the year, I didn't get it) Margin: mid to high 80s [I think he said 80s? I might be wrong here--please, please, please don't take my word for it!]
Q.) I might be a potential user. How are you selling the stuff?
A.) For publishing piece, they can buy the publisher and it comes
with tutorial, self-paced training, etc. Or you can buy services from Digital Lava to do the publishing. Some customers do one or the other or both--using the services org. for overflow.
VideoVisor Professional is an application. This is pretty much
a shrink-wrapped thing that you sell licenses for. Full use license or limited use license for specific content (for trial or pilot)
VideoVisor Web: Digital Lava can post content on the web in addition to generating it (i.e. that is another service they provide) and then you can just have people get VideoVisor Web for free.
Q.) Headcount? Would a USWeb/CKS be a potential client to market to?
Want to congratulate you on the web presentation that you did.
A.) Headcount: 33, Re: USWeb/CKS type companies, ISPs, portals, etc. might be good for the future--streaming media is not quite there yet for them yet it sounds like but they are not at the point of being ready for interactive streaming media (as opposed to passive video, audio, etc.)
Q.) Stewart Brown: Any longer term projections and what quarter will be breakeven/profitability?
A.) Yes, we have longer term projections but not yet public. Breakeven is expected next year and when we get closer, we will let people know
Q.) [missed the name] Burn rate is $500K/month not per quarter? How many salespeople?
A.) Yes. 7 salespeople
Q.) William Pinney: Very interesting presentation, what is the average revenue per customer and customer acquisition costs? And what is your experience after customers have their experience.
A.) Distribution is "bi-modal" so there is not an average customer experience.
[I think I missed a bit in here]
Sales cycle: 3 to 6 months in time. Dollars to close the sale, some money is made on the initial "pilot" sale and later the margin goes up when customer moves to site license. Or if there is no site license they will still often come back and so the cost from then on is not
Q.) How many customers?
A.) Well in excess of 50 that I would deem as significant customers, where we have generated thousands of dollars of revenue, repeat business, etc. Plus another 40 from the beginning of the company that are in the university space.
Q.) ... Clarifying burn rate
A.) $500K/month rising up to another 100K extra per month by the end of the year.
The conference call pretty much ended there.
In any event, the presentation was smooth and upbeat and there
were hints of some important announcements to come. And I think that it should be clearer to members of the financial community just what it is that Digital Lava's products actually do and why they might be useful and how they stack up against potential competition.
The market's response? Well, we closed down 1/8 today, 7 1/8 on volume of 35,600. Don't know what will be tomorrow, but apparently no one
seems to have reacted strongly one way or another to the news from
yesterday or the content of the conference call.
Again, I hope this has been helpful and I am sorry for all errors, etc. (use at your own risk!) but I think this should give you a good
idea of what happened during the call.
In about a week or so, vcall.com will put up an actual transcript so you can check me out against it.
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DC |
