Datable Technology Corp. (DAC:TSX.V; TTMZF:USOTC) has done the unthinkable. And that is to grossly over-deliver on its promises made since we last looked at this stock only two months ago. At that time the company expected to grow its top line from $1.5 million in 2019 to at least double that to $3 million in 2020.
Here we are only four months into the year and company is on track to achieve that goal by signing another Fortune 500 consumer brands to the tune of $1 million license and award agreement. Consequently, Datable has $3.1 million of baseline contracted revenues for its PLATFORM3 digital rewards platform. More importantly, its relationship with one of the world's top three global advertising conglomerates with an in-the-billions-of-dollars marketing budget is paying off in droves. At this rate we're starting to see Datable at a tipping point where contracts from its big, big advertising and media-buying client are just starting to gain momentum.
Speaking of a doubling effect, there's plenty of justification to see that from its current share price and well beyond. Keep in mind Datable is building off a reputation serving many of the brands we all know and love. A few of the biggest won't permit me to name-drop here, but others include Toro, M&Ms, Tyson Foods, Rubbermaid, Kellogg's, Fandango, Bridgestone, Mars, Arm & Hammer, Universal Studios, Molson Canadian (my personal favorite), just to name a few.
Datable's chairman and largest shareholder, Kim Oishi, says the company has earned the trust of major consumer brands with its PLATFORM3 consumer loyalty software and licensing program by delivering a solid return on investment. "Universal Studios, now our second biggest customer, started with an $80,000 annual program three years ago, and this year they're at $720,000. Three years ago, people didn't know our loyalty platform, and our software still needed some improvement, so we were signing contracts for smaller trial programs to get started. This deal, our first with this global powerhouse of household and industrial products, is for $1 million right out the gate."
As of today, Datable has over $3.1 million of baseline contracted revenues for PLATFORM3, with gross margin estimated to be in the 55% range. Given today's news, how is it that a company with $3.1 million in contracted revenue can remain at a 1X market capitalization of also exactly $3.1 million and continue to trade at a mere $0.04? It can't. It won't. Consider that management holds about 20% of the 78 million shares outstanding, with 4.9 million options ranging from $0.10 to $0.17, and 38 million warrants at a weighted average of $0.17, there is room to the move from this baseline, and the company treasury would benefit from the additional $6-plus million in capital should all this get exercised.
Even before this announcement, chart-watcher Clive Maund had noticed a trend. In his April 17 note he commented: "The latest 1-year chart makes clear that an upside breakout into a new bull market is a fast growing probability, thanks to the continuing buildup in upside volume that is driving volume indicators higher, which is clearly bullish. A development that is increasing the probability of an upside breakout soon is that the 200-day moving average has now dropped down into the base pattern and close to the price, creating the conditions for a bullish moving average cross, which could occur very quickly on any advance. In short, the stock is in position to break out—much more so than it was in February when we first looked at it—which should lead to a major bull market. The fact that revenues were C$1.5 million for the whole of last year and are C$2.1 million just since the end of March could have something to do with it and growth continues during COVID-19, since most customers are selling products in high demand during crisis (food, beverage, household products, streaming entertainment)."
"This deal is by far Datable's largest ever and it was negotiated and signed during the COVID-19 crisis to run until the end of 2021," says Oishi. "The deal has CA$1 million program contracted for 2020 and $4.2 million budget projected for 2021, so the total anticipated budget is $5.2 million. The program uses Datable's platform to drive consumers to buy products using incentive rewards, while collecting valuable consumer data."
The software license and rewards deal was signed by a division of one of the world's largest ad agency conglomerates on behalf one of the world's largest consumer goods companies (revenues of US$18 billion-plus in 2019). Datable has a master service agreement signed with the advertising conglomerate, which is starting to show a loyalty of their own. "This is the second major customer the agency has brought to us. They've endorsed our platform with two of their largest customers, and have a pipeline of additional opportunities." Given their size and brand recognition, this arrangement has the potential to catapult Datable sales exponentially.
Datable now has over $3.1 million in contracted revenues (not including transaction fees) of which about 70% will be recognized in 2020 and the balance mostly in 2021. In addition, the company has the projected budget of $4.2 million for 2021 for a total of $7.2 million.
LOYALTY BUILDS LOYALTY
So how does PLATFORM3 work for Datable's new behemoth client? A brief refresher: Datable is a provider of digital and social media consumer engagement, data mining and loyalty solutions. The company's core product is Platform3, a Software-as-a-Service consumer marketing platform that enables consumer packaged goods companies and consumer brands to engage consumers and influence purchasing decisions through their mobile devices and online. The purchase validation and rewards process is largely centered around digital coupons and codes, which can be redeemed for cash or products, thus building loyalty. . .and collecting data. Consumers are also rewarded for their own recommendations and endorsements.
Datable's new client will roll out the program with it top retail distribution partners, of which they've already identified 71 retailers that will participate. Oishi explains, "Each retailer is granted $10,000 in rewards for consumers, that are enabled through our platform. For example, a consumer walks into a Kroger's or a Walmart, buys $40 worth of our customer's products, motivated by the reward that is promoted in-store and online. Then the consumer registers for the rewards program using their mobile device via Datable's reward platform and receives a gift certificate or a virtual credit card for $10. It all happens through our software platform, so we've rewarded the customer $10 and we've collected some data. We have the consumer's email address, some demographic on who the consumer is, where they shop, along with their purchasing preferences. That data becomes valuable to the brand that can then send the consumer additional offers and continue to build loyalty. But the first piece is to get the consumer to the store (bricks and mortar, or—more appropriately lately—online) and to buy something."
Meanwhile Datable has its own big-picture plans to build its own database through the customer loyalty of its well-recognized consumer brand clients. Virtually millions and millions of hungry shoppers are looking to be rewarded, and Datable is happy to dole those rewards to clients, customers and shareholders alike.
Knox Henderson is a journalist and capital markets communications consultant. He has advised for a broad range of small cap companies in the resource, life sciences and technology sectors for more than 25 years.[NLINSERT]
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Clive Maund does not own shares of Datable Technology and neither he nor his company has a financial relationship with the company.