MEDL Mobile Holdings, Inc. (MEDL) Q2 2014 Earnings Conference Call August 12, 2014 4:30 PM ET
[Call starts abruptly] Forward-looking statements are based on current expectations, estimates, and projections about MEDL’s Mobile industry, management believes in certain assumptions made by management. Given the uncertainty of such assumptions, viewers are cautioned not to place undue reliance on such forward-looking statements because such assumptions and forward-looking statements involve risks and uncertainties, the actual results and future performance of the company is not guaranteed, and may cause the actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements.
The actual results are dependent on many factors, including but not limited to the company’s ability to obtain sufficient capital or strategic business arrangements to fund its expansion plans, build the management in human resources and infrastructure necessary to support the growth of its business, competitive factors, and developments beyond the company’s control, and other risk factors discussed in the company’s periodic filing with the Securities and Exchange Commission. These filings and the full text of the company’s current 10-Q report are available for review on the company’s website www.medlmobile.com, and at www.security.gov under search the company filings.
Please, as a curtsy to all participants, please everybody mute their microphones during the presentation. There will be a Q&A session at the end of the call, and we’ll give as many participants as possible the opportunity to add the questions that you may have. Some of you have already made the effort to submitting their questions to us in advance via email, we’ll appreciate that and we’ll address those questions first, which may already many of the questions that some of you would have asked. When you ask a question, please state your name so we know who we’re taking to. A recording of the call will be made available on the MEDL website and through other public outlets.
So now without further delay, here is Andrew Maltin, the CEO of MEDL Mobile Holdings.
Thank you, Rainer [ph]. Hi guys, this is Andrew Maltin, once again, CEO of MEDL Mobile. Thank you guys all for participating in our call today. As of the start, I’d like to express our appreciation for continued support and trust that our shareholders have shown over the recent years. On behalf of the entire team, I want to share with you that we are all committed to excellence, and as we grow MEDL into the company that meets and exceeds all of our shareholders expectations.
We’ve decide to conduct this call today because after extended period of development over last year, we’re now entering in what we believe is the next phase growth of the company. Today basically we like to cover four areas; one, I’d like to present the details of our financial report for the second quarter. Additionally, I’d like to provide an overview with perspective on recent activity for MEDL’s customer development business, provide an overview on our perspective on the major developments and plans for the Hang w/ platform. And then obviously, as Rainer mentioned, give you an opportunity to ask some questions.
So of course, we’re happy to report that revenue and other crucial financial performance milestones up in the second quarter have a good significance compared to the same period of 2013. In addition, financial performance in Q2 has also improved on six month comparison in terms of the same period, the year before. In terms of revenue, our net revenues increased up to $589,000 for three-months ending June 30, 2014, compared to $409,000 for the three-months ended June 30, 2013. So that represents an increase of $179,000 or 44%. This increase is attributable to the expanding production activity in the MEDL Mobile, the business of the company that develops the mobile apps on behalf of our clients and customers.
In terms of gross profit for the three-months ending June 30, we have been able to see an increase in gross profit to $240,000, compared to gross profit of $64,000 in Q2 of 2013. Now this represents an increase of about 272%, to $176,000. In the same – at the same time, management has been able to increase productivity. So in terms of our operating expenses, our SG&A, while improving our gross profit we also enable to decrease our selling, general, and administrative expenses about 11%. This is a result of a stringent cost control efforts that we’ve implemented throughout the company and keeping company’s need focused. We intend to keep cost low while increasing production volume and revenue, and we’ll continue to improve profit margins and eventually achieve our goal at profit, solid online faster.
Net profit, because we ran the reduced SG&A in cost of goods sold, our net loss was reduced by 42%, just $487,000, while at the same time we’re still able to increase productivity revenue. I’ve seen your very access to complete 10-Q that we filed with the SEC, if you have not done so please get the full report from the company website at medlmobile.com, the Investor Relations section, or the SEC website. So let’s talk about MEDL Mobile moving forward.
As most of already know, MEDL Mobile is continuing manifest leadership position as global industry pioneer. The company is architected, created, developed and marketed on as Andrew’s Mobile Apps for both Apple and other platforms, and driven nearly 25 million dongles [ph] across all of its platforms. In addition, many of our Apps have even reached the Top 10. The development of such mobile apps has been the main driver of our revenue today. A list of our current celebrities, their current clients include recognizable names such as Experian, Hyundai, UCLA, and one of the world’s largest pharmaceutical clinical trial company, BBK worldwide. In addition, MEDL has been engaged by several innovative entrepreneurs in development of mobile games and mobile reach out platforms.
We continue to attract top notch talent and we will continue to build custom mobile solutions. We’ll be on this experience and in order to accelerate the growth of the company generate significant additional revenue and improve shareholder value. We have incubated, developed and brought to market the revolutionary app Hang w/ over a period of last two years. We have made Hang w/ with the core effort of our development and we continue to improve upon its cycle, most recently of our upgrade to Hang w/ 3.0. So Hang w/ 3.0 has introduced a significant number of new features, and new live lesser handsets. We plan to continue to add additional features in the coming next months, most notably, in that best achieved platform that allow Hang w/ users to message each other about have the BBM, so think WhatsApp.
The results of the upgrade of the Hang w/ 3.0 has been remarkable. Our average user session to get into some metrics, the average user session has jumped from four minutes from Hang w/ 1.0 to 13 minutes to the raised Hang w/ 2.0, and so far we’re seeing an average user session of 15 minutes in the current version of the App. The average broadcasters spends even more time in the app, the average broadcaster now spends more than 30 minutes on an average user session. This is – these are incredible numbers. And additionally, our monthly retention rate has went from 6% last year to 26% as of last month. So in addition, our percentage of user broadcast went from 13% 23% versus last year. So this means users stay on the platform longer, they are creating more content, and those are very critical metrics pointed building a network that requires critical mass.
The original limit is behind Hang w/ platform, it’s quite a platform that allows our list of celebrity clients to connect directly with their fans on a more meaningful and authentic social media voice check. This original premises [ph] has been executed and the platform – can you still track large number of celebrities who are using the backup to engage clients. These celebrities help track downloads and usage of the platform to their own session network, thus resulting them the network being both tightly knit and grow. So we’ve got hundreds of new celebrities that I mentioned, we have – we typically have not been announcing celebrity by celebrity as we go, but you can see there are many new celebrities by just opening the app and seeing what’s going on. We put country music, fighting, UFC, some of these others that have joined the platform, and this is very exciting for us across the Board. We’re continuing to expand the celebrity roaster and get – and now onwards going several other corporate areas where the technology can be applied across the Board.
So it’s one of the most crucial development stages, we’ve began the process of implementing leading edge advertising technology to Hang w/ band. To date, we’ve been doing some tests, the final implement of this mobile technology – advertising technology will allow us to utilize our large, consistent growing base to start generating mobile ad revenues, less intrusive, and more context sensitive ways for our users than conventional advertisers, that accelerated revenue, it’s much faster. So Hang w/ which is celebrity broadcast network and growing user base is ideally cheated with this kind of native mobile advertising, the ongoing expansion acceptance of mobile advertising to general public, and by large advertisers supports our expectations with the implementation of the solution. As a side note, U.S. social media advertising revenue is expected to exceed $11 billion in 2017, which is almost double of last year’s total of $6.1 billion.
On what’s more is we’ve been now focusing on expanding the Hang w/ application through several revenue generative technologies in addition to advertising. First with pay per view, and subscription fee advertising, we’ve recently rolled out the 3.0, the private access feature that allows broadcasts to share video with only a selected viewers. The next phase of this technology is to roll out the team corporate access, so allowing broadcasters now charge viewers to see selected content. Additionally, we’re growing out broadcaster tipping, or protecting this system to allow viewers to tip their broadcaster, in the effort we have improved the content. In both the page access and the shipping model, Hang w/ obviously retains percentage of the ad revenue, its page the broadcast with your system.
So I’ve got this overview to give you some valuable insights as well for what’s going here in the company, and now I’m going to read a few of the questions that were sent in by email. And I’ll open it up to your other questions.
So the first question received is, do you anticipate extending your big agreements beyond November 15, and so for how long I will extend our in the business [ph], but how is the business, whatever then do agree with the prior view because this might be of no intention and I’m moving their team that’s very happy and we’ll give that in the coming months. And what type of public relations campaign is BWR planning to pursue for the hang with that. They are extremely aggressive in the consumer marketing area, but we are – we’ll be an absence in additional plans that we’re doing there is very creative uses of public relations in the future.
How long do you think it will take to reach 5 million downloads? As you know, we don’t give any guidance in respect to numbers, financials, or otherwise. When we could reach this goal it depends on many different factors. Naturally, we have certain expectations and the team is always working full speed to achieve these goals. So be assured, we’ll keep you posted as that number grows.
Is there any discussion with Talpro [ph] on collaborating with your technology? I can’t talk about potentially ongoing confidential communications but we’re always perceiving different strategies with respect to joint ventures or potential acquisitions and so forth. Has MEDL considered activating any guerrilla style of promotion? We absolutely do, we do lots of guerrilla style of promotions, we push our broadcasters to create excited content, maybe going out on the beach and picking to bring other users. Potentially stated in our release, we now kind of arrived at a very crucial stage for our development and we’re working with BR turn this type of interesting guerrilla promotions to accelerate the marketing efforts of the company.
Where are the institutional investors and when do you expect that will have any? I guess, we expect to track those institutional investors as soon as our share price reaches certain level. And when do you expect MEDL to be traded on a major stock exchange? We’ll move to the next 25 forum, and obviously as soon as we sell all requirements of that exchange. Do you anticipate any significant lay-offs at the company? No, both Timbaland and 50 Cent have a relationship with Dr. Dre, any discussion of bringing Dr. Dre in this billion on board as an angel investor to the company? I believe Dr. Dre is probably pretty busy with his new relationship there at Apple, but we’ll consider anything that will help to Metal forward. And in that regard I decided on for some use of the app, it’s just got on and started to using the app that’s interesting one.
When do we expect to update on Hang’s download members? That’s probably a question that a lot of people want to ask. We’ve stopped giving out the download members mainly because it starting to affect us competitively. We’ve got feedback that our competitors are using download members against us, and so at this point there is no immediate plans to share the way with download members although I can tell you we’re growing every single day for the most part, everyday our download members are going up. Some key milestones? So in terms of our agency we’re looking to increase our customer development in the area of fan [ph] health, which has been a good one for us, we’ve had considerable success in the first half of this year, our clients like BBK, UCLA Medical, Medtronic and Kaiser, so we plan to increase in that area. For Hang w/, certainly we’re introducing as I mentioned several revenue generating lines and technology [inaudible] as well as some other users. This maybe, probably have to be in the pipeline to-date in terms of our usage.
And given the current cash position, do you expect to kind of lead rate in additional transfers at the end of 2015? So we haven’t ruled out to the point any option in terms of future financing. And let’s see, do you expect Hang w/ to compete for non-mobile users? So desktop members can be available now at private data, we plan to release shortly and this platform will have an expanded social favorability function, couple of across platform on mobile tablets as well. Aside from the brief run-up in the beginning to 2013 long-term shareholders seems the appreciation [ph]. What revenue generation do you expect to see from Hang w/ whether it’s about 2014 to 2015? I can answer a little of that, obviously, I can feel the pain as our long-term shareholders, I’ll be greatly appreciated that they continue to believe what we’re building. The market itself has learnt does not favorably valued customer development business and we made it appropriate for developing technology that the market – frankly, the whole world can truly guide.
So, that was all the questions that we had, that was sent in. If anybody else has any questions, I would be happy to answer that, hopefully some people will have. Any other questions Rainer?
I would just ask whoever’s phone is ringing if they conclude, and stop their second line that’s ringing, better respect it. I guess we’re just have to roll over the path of it, anybody have any questions?
Hello, can you hear me?
I have a question about [Technical Difficulty]. Do you have any plans on some rates were getting in your version up [Technical Difficulty]. Thank you.
It was very hard to hear the question. I think what you’re asking and I will just extend on, I think what you’re asking is that those people that are coming on board and as they are broadcasting there is limited number of users that are following them or viewing their broadcast, and obviously our goal is to continuously increase that number, we’ve seen huge jumps in those numbers in terms of viewers per broadcast, in terms of our growth. And so one of the things that we obviously look to do is try both users and content providers same time. As I mentioned before, 23% of our users are now generating content which is a huge number, not just for us but for social media in general as content writers. So we’re excited to see those numbers grow but at the same time, there is a balance between viewership and content creators. If there is no content for someone to watch at a particular point for the viewers, on the same token if there is no viewers then good content creators are less likely to use it. And these are the challenges that are building our major network by core building is that we will have to deal with this kind of scale for to look for everybody. So hopefully, I answered your question, at least what I could hear of it. Any other questions?
Hi Andrew, I have one question. This is Sops [ph].
What is the status of the Android update, did you speak for that?
Sure, great question. So we do – we have our – our new Android update is coming out, it coincides with the new update for our messaging platform, so the Android update will be out, within the next three weeks we’ll have a new version of the Android that will have the 3.0 functionality, as well as the messaging platform in it. So, we’d see that pretty soon. The Android has definitely lacked behind with respect to the ILS experience and there is reasons for that, much much difficult with the type of platform we’re building to build on Android. So it’s been challenging but we are close to the two of them, we have – did they caught up to one another, as well as I mentioned before, the web platforms will be launched which will have all the same functionality as the 3.0.
Sure. Any other questions? $1 for a question, anybody? $2 for a question, anybody? Alright, well, I think that’s all we’ve got in terms of questions. I have to say I want to thank everybody for participating in today’s call. We’ll obviously keep you informed about any crucial developments. I encourage you to go and tell your colleagues we’re incredibly undervalued at this particular stockade [ph] at this point and how excited we are for the future items, for one I’m extremely excited about where we’re at, and the growth we got with the limited resources that we had to do this. So, we’re excited to keep moving it forward, we’re seeing some great things on our near future here.
Okay, thank you from my side as well. This is Rainer, again, thanks for everybody participating in this call. We’ll definitely keep you informed in an increasing fashion about every crucial development in the company as we move forward. And please go out and tell all your colleague investors about this incredible company which we believe has big future, and we’ll work hard to make it work for everybody. The conference call will be available on the MEDL side and another outlet. So everybody who has not been able to hear it can listen to it there. Thank you very much and goodbye.
The leader has disconnected. The conference will be terminated in two minutes.
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