Datable Technology Corp. (DAC:TSX.V; TTMZF:OTCQB) a Vancouver-based software developer that collects and manages consumer data on its proprietary platform, known as Platform 3, has decided to kill its bid to buy Adjoy Inc., makers of the Dabbl app, saying the money needed for the deal would be too dilutive to shareholders.
Dabbl is a mobile app where users complete interactive games and videos in exchange for gift cards. The app claims it’s had more than 200 million brand interactions with the roughly 1.3 million users who have downloaded it.
Datable signed a “resale agreement” with Adjoy in September 2021 that saw Datable sell brand activations to consumers goods companies on Dabbl’s network in exchange for a percentage of the revenue.
In late November, Datable signed a non-binding letter of intent (LOI) to acquire all of Adjoy and Dabbl. The deal was subject to the usual due diligence and a financing of at least CA$2.5 million (CA$2.5M). Today officially marks the end of that agreement.
“Overall, the market response to Dabbl and that model was really good for us, so on that side of the business it looked like a good fit. Where things fell apart was in the numbers,” explained Datable CEO Robert Craig. “It looked like we were going to need closer to CA$5M than CA$2.5 million and to raise that in the market today, we weren’t comfortable with the dilution.”
Shares in Datable have come down from CA$0.08 at the time the LOI was signed in November, to $0.025 on March 3.
Craig said that during its due diligence review, Datable put Adjoy through an audit and found that its margins were not high enough to justify the acquisition cost.
“We thought we could raise $2.5M to take care of both companies going forward but when we looked at the actual gross profit margins that they were getting, historically, and the leap they had to make in 2022 (to justify the cost), we just didn’t believe they could make that leap,” Craig says.
While Datable elected not to proceed with the Dabbl acquisition, Craig still sees the potential to continue working with Dabbl and other sources of first-party consumer data.
Datable’s business model is built on recent changes in online consumer privacy laws and regulations that limit consumer tracking and cookies. Datable’s Platform 3 lets its customers collect, analyze, and monetize first-party, opt-in consumer data, while rewarding the consumers who buy things and engage with those brands.
Datable’s revenue grew a healthy 77% last year to about CA$3.5M, up from CA$1.9M in 2020.
Datable has close to CA$3M in revenue already booked for 2022, with more expected throughout the year. Meanwhile, its gross margin is expected to fatten to 50%, a 25% increase over 2021.
“The company itself is a growth story. We are on a good track right now and we want to accelerate that growth with acquisitions, absolutely, but we don’t want to upset the apple cart. We want to make sure we are not disrupting our core business,” Craig told Streetwise.
Datable employs 30 to 40 full-time staff and contractors. It has a market cap of about CA$3.8M with roughly 155 million shares outstanding.
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