NTN Buzztime, Inc. (NYSEMKT:NTN)
Q4 2015 Results Earnings Conference Call
March 11, 2016 12:00 PM ET
Kirsten Chapman - IR, LHA
Ram Krishnan - CEO
Allen Wolff - CFO
William Gibson - Roth Capital Partners
Brian Kinstlinger - Maxim Group
Alex Silverman - Special Situations Fund
Josh Seide - Maxim Group
Good day, ladies and gentlemen, and welcome to the NTN Buzztime, Incorporated Fourth Quarter and Year-end 2015 Earnings Conference Call. At this time, all participant lines are in a listen-only mode to reduce background noise but later, we will be conducting a question-and-answer-session, instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference call is being recorded.
I would now like to introduce your first speaker for today Kirsten Chapman from LHA. You have the floor, ma’am.
Thank you, Andrew. Good morning. Thank you for joining us today for NTN Buzztime’s fourth quarter and year-end 2015 results conference call and webcast. Joining us today are CEO, Ram Krishnan; and CFO, Allen Wolff. After the prepared remarks, we will open the call for questions.
Before we begin, let me remind you that during this conference call, management may make forward-looking statements about the future expectations and plans. Such statements are subject to known and unknown risks, uncertainties, or other factors that may cause the Company’s actual results to be materially different from historical results or any results expressed or implied during the call.
Potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to the rapidly changing and competitive nature of interactive entertainment and game industry, customer and consumer acceptance, and adoption of the Company’s products, platform, and technology, the ability to successfully introduce new revenue streams based on consumer gains and services, the ownership and enforcement of intellectual property and others more fully described in the Company’s public SEC filings.
The information in this conference call related to projections or other forward-looking statements is based on current expectations. Except as required by law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
Please note that Company provides non-GAAP measures as a means to enhance the understanding of operating performance. Adjusted EBITDA is calculated by excluding from net profit or loss, the impact of depreciation and amortization expense, interest expense net, provision for income taxes, non-cash stock-based compensation expense, other non-cash expenses and charges, and to the extent approved by our lenders, other onetime charges in any losses arising from the sale, exchange, transfer or other disposition of assets not in the ordinary course of business. This non-GAAP financial measure is not intended to represent a measure of performance in accordance with GAAP, nor should this non-GAAP financial measure be considered as an alternative to statements of cash flows as a measure of liquidity. A reconciliation to adjusted EBITDA is included in our earnings release.
It is now my pleasure to turn the call to Ram. Please go ahead, Ram.
Thank you, Kirsten, and thank you all for joining us today.
2015 was a year of full of change for Buzztime. We invested heavily in bringing new content to our platform, battled through significant headwinds related to our Gen II hardware, established a new debt facility with East West Bank, made significant changes to our operating structure and management, and completed a host of other operational improvements. We began to see some of that pay off in the back half of the year. Notably, in the fourth quarter, we posted a positive adjusted EBITDA. Also our site count was up for the third consecutive quarter and we continue to see positive game-play and usage trends on the network. We made positive strides in 2015 but we still have plenty of work ahead of us. As we look forward into this year, we expect to begin seeing some of these investments take fruit.
Here are some of the priorities for this year: First, completion of menu and payment. Our integration with point-of-sale partner, NCR works well. We have been live with order and payment now for several months that at Arooga’s where we are seeing great results and learning along the way. I was just at the Nightclub & Bar Show in Las Vegas where Gary Huether, Jr., the CEO of Arooga’s and I, both gave a talk together. Gary is a great partner and he told the room that they’ve been seeing the Buzztime tablet used for ordering food, making payments and delivering great feedback on the guest experience. Tips is increased, checkout as faster and insights are much improved. The data from our integrated survey feature has turned out to be very valuable as the stores now have visibility to get satisfaction by server, by daypart and by food item and then in timely manner, unlike ever before.
As more of our installed base moves to the tablet platform, we have the opportunity to evaluate and bring this and other functionality to a target set. As of December 31, 2015, roughly 61% of our installed base was live on the BEOND tablet platform including all of our Buffalo Wild Wings sites.
Having achieved that scale, we now turn our attention fully to delivering ordering and payment at the table at Buffalo Wild Wings. We expect to begin our test at B-Dubs in the second quarter, which will be our primary focus for the next several quarters with respect to menu and payment. Growing this out at scale will be important to us and to the market. We built a sales pipeline last year and it’s become critical for us to point to B-Dubs locations that have menu and payment to help us bring those yields across the finish line. Thus, we’re laser focus on order and payment and B-Dubs for the next few quarters.
Our second focus would be on improving value and price for independents. Regarding value, in 2015, we invested in developing new games and building out a more complete tablet platform. Our goal was to simplify third-party on-boarding, enabling us to deliver exciting new content, both ours and others, directly to our venues and players. In 2015, we had a number of gaming successes. Jackpot Trivia continues to be a great game. It leads all of our trivia games with the highest game-play on the network. Also in the third and fourth quarter, we launched Buzztime Sports and learned a lot about driving play into our stores and integrating social promotions. This new content on our tablet platform helped us to drive the game session and play metrics throughout the year.
When we launched the Academy of Football, we attracted sponsorships. First, we had MillerCoors in the third quarter and closed the year out with Dr Pepper. Both brands had outstanding performances. And Dr Pepper saw an 8% increase in sales across the locations where we ran the promotion. As result of all these activities, tablet session increased 80% from 2014 to 2015, up to 20.8 million. During that time, total game-play increased as well, 40% to 115 million. Both our new gaming platform and the sponsorships that have attracted -- have both attracted new partners to our network. We are working with several partners to build out and deliver great experiences to both our venues and patrons.
First, we signed a FanDuel, a daily fantasy giant and we will be testing a number of programs together throughout the year in preparation for football season. While much of this is confidential, I can say we plan to use some of FanDuel’s content and gaming directly on our tablet and we will offer special FanDuel tournaments and prizes just for our Buzztime players. Although there have been uncertainty with daily fantasy football space, we feel like we’ve established the right partner for our brand and our customers.
With the visibility of Buzztime Sports and our other promotions, we also attracted a powerful regional supports team in partner, the Washington Redskins. Together, we’ll bring some very exciting events to the Washington DC area for both venues and fans. [Ph] We’ll leverage Jackpot Trivia creating Redskin sponsored addition that players in the market can play to earn points throughout several trivia seasons we run all year. Playing the games will enable players and venues to win experiential prizes related to the Redskins and the skins will be using their extensive media reach to promote the program all year. This is great for fans that can stay connected to the team through the off season and great for Buzztime venues to gain visibility through all Redskins media outlets.
We are excited about our ability to attack the names that add value to our network, both for players and venues and amplify our voice on their behalf. We look forward to learning and growing each of these partnerships throughout the year.
Now regarding costs, in 2015 we encountered significant cost headwinds with our Gen II tablet platform and built and released the Gen III tablet, which is what we currently have in the market. And we’re seeing this cost and quality benefits already. This year, we’ll focus on continuing our efforts to reduce costs and improve quality each of the other parts of our tablet platform, strategically focusing on taking the biggest cost items and becoming smarter and better at their design, manufacture and management. With additional value and reduced costs, we think we’ll have much better pricing flexibility for independents, which can aid our ability to generate, both volume and scale.
So, our third area of focus is commercial execution. Let’s start with the review of chains. As I stated before, to move deals to our pipeline, it’s become crucial to have reference sites for menu and payment all over the country. To that end, we’ll be primarily focused on our menu and payment pilots at B-Dubs in Q2 and Q3 to ensure that we create that notational reference. We expect that success here, will positively impact our conversion of customers in our pipeline.
On the independent side, we’ll focus more heavily on our digital lead generation and inside sales processes. We are sharpening the go-to-market and getting operationally tighter through the first half of year, and we’ll scale accordingly based on results. You should expect to see changes to our website, marketing campaigns and our offerings all year, as we focus on expanding our reach, including outbound sales and a focus on conversions to sales. We are already seeing improved results from some of the efforts we’ve put forth on email campaigns and other tactics we’ve been testing and improving so far this year.
Independent sales were less of a focus last year. Because of our supply chain issues, we reserved most of our production capacity for B-Dubs. With the contract manufacturing in place and the cost under better control, independent sales will become more important to us, again.
Last quarter, I alluded to a distribution partner with which we had aligned. While we’re not ready to announce anything formal, we continue to make progress with both technical integrations and commercial arrangements, and I hope to discuss this more in the future.
Our fourth focus for the year is expanding revenue opportunities. Last year, we began offering our premium games experience of B-Dubs. After an initial rollout, we changed our approach with our single player games and chose to offer our free and paid service together. We’ve completed all the changes to arcade and expect to begin rolling this out early second quarter and anticipate the rollout scaling quickly through the end of the quarter. While we don’t expect conversion to be as high as before, it should still be accretive to our business. We have some very cool games in the tablet and our new form factor allows us to place some really high quality game experiences that you can play in both landscape and portrait.
As our network continues to grow, we’ll continue bring on national and regional advertisers that are relevant to our venues and bring value to the audience and also value the audience in the network. We continue to complement that with our local advertising partner. We switched last year and expect that to continue to ramp up in both penetration and revenue. These are just a few of the other premium revenue opportunities that we’ll continue to explore, nurture and scale.
Now, onto our financial results, I will turn the call over to our CFO, Allen Wolff. Allen, please go ahead.
Thank you, Ram. For the fourth quarter of 2015, revenue was $6.5 million, up sequentially from $6.1 million during the third quarter of 2015 due to increases revenue from subscriptions, sales-type lease arrangements and other revenues, which include advertising and professional services. Year-over-year, revenue was down slightly from $6.8 million, reflecting a decrease in sales-type lease arrangements that were partially offset by higher other revenues with nearly flat subscription revenue. We ended the year with 2,960 total sites compared to 2,956 sites in the prior year period, representing an increase in BEOND platform sites, partially offset by a decrease Classic sites.
As previously mentioned, we continue to expect fluctuation in our site count with a dip in Q1 as January is historically a high churn month coupled with a low installation month after the December holiday.
During 2015, we focused on BEOND platform adoption, which resulted in growth from 37% of sites on the BEOND platform at the beginning of the year to 61% of sites or 1,806 at year end. Fourth quarter direct costs were $3.3 million, a decrease from $3.6 million during the fourth quarter 2014. The decline in direct costs is primarily due to decreased hardware expense of $841,000, resulting from lower volume of the BEOND platform installation for sales-type lease arrangement and decreased equipment and product costs, as we moved from Gen II to our Gen III platform. These reductions were offset by increased depreciation and amortization expense of $285,000 and increase repair expense which primarily relates to the Gen II platform of $201,000, when compared to the prior year period.
SG&A expenses were $4 million, down compared to $4.6 million on the prior period. The decrease was primarily due to lower personnel and professional fees. We are now recognizing the full impact of our Q2 staff reduction, as well as progress in our continued focus of building a more efficient organization. To provide some additional insight, we are currently operating with 104 full time employees, down from 139 at the end of 2014. This reflects building better prioritization expense and greater efficiency in our efforts. For 2016, we expect SG&A expenses to remain flat at an average of $4 million per quarter for the year. Q1 will be slightly higher and the second half of the year lower, resulting in a full year reduction of approximately $2.5 million from prior year.
For the quarter, net loss was $1 million or $0.01 per share, which was a 27% improvement from the $1.3 million loss in the third quarter of 2015 and 42% improvement from the $1.7 million loss in the fourth quarter of 2014. We continue to manage the expense side of the business to build an efficient organization with responsible growth.
As we pre-announced earlier this year, we recognized better than expected financial performance in the fourth quarter of 2015, resulting in positive adjusted EBITDA of $318,000. Turning positive adjusted EBITDA is a significant milestone and reflects all the actions and operational efficiencies we’ve put in place throughout 2015. We do expect quarterly financial performance to fluctuate which will most likely result in adjusted EBITDA loss in Q1, primarily due to seasonality in our spend with a frontloaded trade show season. We do anticipate to return to positive adjusted EBITDA, by the end of Q2 and operating positive for the balance of 2016.
Cash and cash equivalents were $3.2 million at December 31st, compared with $7.2 million at year end 2014. Our inventory levels which we show on our balance sheet as site equipment to be installed, increased to $4 million from $3.4 million in the third quarter of 2015. Inventory was down from the $4.8 million at year-end 2014, reflecting released products as part of our site count and conversion to the BEOND platform. The increased inventory levels are necessary in the short term, as we support multiple generations of the BEOND tablet platform, the multiple versions within each generation. This inherently lends itself to an increased supply chain complexity. We anticipate this complexity will remain with us for the upcoming fiscal year and thus will affect retaining a higher level of inventory for site equipment to be installed.
As of December 31, 2015, working capital was $4 million, down $3.8 million from 2014 working capital of $7.8 million. This decrease is primarily due to our Gen II product line and losses prior to restructuring. For the full year period, revenue was $24.5 million, down 6% from $26 million in 2014. The decrease is attributable to lower subscription revenue due to a lower average site count that while ending the year positive was down throughout the year. In addition revenue, declined due to a lower average revenue per site as well as a decrease in our equipment sales-type revenue, all of which were partially offset by an increase in other revenue.
For the full year, net loss was $7.2 million or $0.08 per share compared to a net loss of $5 million or $0.06 per share in the prior year. As just mentioned, the increased losses include the impact from expenses prior to restructuring, write-off of obsolete tablet equipment scrap and Gen II production and repair expenses.
To-date, working capital has been a constrain, as we have only financed less than one-third of our installation and hardware costs with our equipment lender. Therefore, we divided two-part plan on restructuring, how we will fund general working capital and future growth. I am pleased to announce that this week we signed an amended loan and security agreement with East West Bank to expand our current borrowing capacity. Subject to closing conditions which include receipt of a pending UCC’s filing. [Ph] Under the amended agreement, our borrowing capacity increases by approximately $1.5 million. In an effort to align cash expenditures with our revenue cycle and execute on both parts of our financial strategy, we are now working on establishing a facility to finance a larger percentage of our acquisition and installation costs. We look forward to keeping you updated as we commence these plans in the upcoming months.
We expect the additional capacity from East West Bank and adding a financial partner, complement our existing equipment lender will enable us to successfully execute on the Company’s turnaround and growth strategy.
With capital and a financial strategy to fully fund our operational plan, I wanted to take a minute and discuss the equity component of our business. In the fourth quarter, we receive notice of non-compliance from our stock exchange regarding shareholder equity and we submitted a plan to the exchange that was accepted in January and now we have been told, May 2017 is to gain compliance. We remain focused on increasing value by adding to our customer base, expanding our product offering and building an efficient saleable organization. We are a lean executive team. And the key to our success will be to maintain an intense amount of focus on our execution.
In summary, we worked hard in 2015 to build a stronger foundation and an infrastructure to support growth. As this took time to realize the full savings of our restructuring, it will take time to see the impact of our growth in 2016 but we remain excited about our opportunities.
I will now turn the call back over to Ram.
Thanks, Allen. In summary, I’m very proud what the team has accomplished over the past year. While 2015 was a year of investment and improvement, expect us to continue to see the benefits of that take fold in 2016. We’ll stay focused on our four main objectives this year, as I stated earlier. Number one, getting payment and menu pilot and rolled out Buffalo Wild Wings; number two, increasing value and improving price for independents; and the three, executing our commercial plan; and number four, expanding revenue opportunities across our network.
Now, I’ll hand the call over to Andrew for our live Q&A. Andrew, go ahead.
[Operator Instructions] Our first question for the day comes from the line of William Gibson from Roth Capital Partners. Your line is open.
You just breezed over the connection with the Washington Redskins, and I didn’t quite understand that. Is that something that would be done on your tablets, are they steering people towards local restaurants or is it something that someone would do on their own phone or what exactly is going on there?
Yes, for clarification, Redskins have a very big fan base in the D.C. area. They will be promoting a several-season type game that happens only at Buzztime locations and only through a Buzztime game on the tablet. So, we’re excited about leveraging their promotional voice to get patrons in the D.C. area to go to Buzztime locations, play our trivia game with the sponsor and drive traffic for our customers and drive play in the market.
And how did that come in? I mean it sounds like something that should be taken to every sports team.
Bill, last year, we focused on brining content to the tablet and we brought Jackpot Trivia, we built Buzztime Sports on that tablet. And putting a sports game that went parallel to NFL season attracted the attention of the team. So, the team actually came to us versus us necessarily hunting them. And so, we’re excited about working out the program in the market with the fan base and there certainly is the opportunity to take that to other pro -- franchises afterwards.
Yes. I know on the third quarter call you talked about, I think was 10 pilots for ordering and check payment. And has anything come of that or are you -- what, is that stalled or where do we stand with other people besides Buffalo Wild Wings?
One of the things I tried to make clear on the call today is we have -- we still have the pipeline. I think what we are focused on is those pipeline chains, they get to a certain point where some are looking for the national reference. And B-Dubs being our largest customer and us working on this payment pilot with them, it became important for us to focus on that to serve as our national reference. So, those other opportunities on that as pipeline, they are just put in nurture mode and in some cases some of them would be entertainment only until we completely roll out the Buffalo Wild Wings.
Okay, thank you.
Thank you. Our next question comes from the line of Brian Kinstlinger from Maxim Group. Your line is open.
I’m curious on those 10 chains. I think you just mentioned you are selling entertainment into their as well; has there been progress with that, are you already installed there and what’s the sales cycle for, on the entertainment side?
Yes. I mean they kind of bring it back to the two sorts of markets that we serve. We serve chains and we serve independents. And on the independent side, the sales cycle can be pretty quick; it can be 30 days. Some of our early found activities have resulted single call close. It can be that fast on the independent side. On the chain side, we would take in two approaches, one is, chains tend to have a portion that’s corporate, a portion that’s franchise. And in many cases, we’ve sold a lot of individual franchise units and have tried to take that approach where we nurture and developed great results at a franchisee and leverage that into taking it to the overall chain and getting the chain to buy and so making us either brand standard or developing chain wide pricing that locks us down as the sole tablet provider. So, signing Master Services Agreement, the chain served multiple purposes for us, enabled us to be the sole provider of tablet. They don’t always guarantee that they’re going to roll them out everywhere but it does lock down that brand. So, that’s important strategically in the market, number one. And number two, the sales cycles tend to be very much longer. They’re anywhere between 3 months to 6 months of just the sales cycle and they can take similar cycle to get through a pilot and then ultimately to the standard.
So in the pipeline that we have, we have a number of franchise groups and some of the corporate stores in the entertainment mode now and already, but getting kind of the overall brand standard agreement in some of those cases are weighting on a broader rollout from us with menu and payment in particularly at B-Dubs.
Last quarter you talked about Buffalo Wild -- Buffalo Wings and Rings as well as Old Chicago coming on board. How has the install process gone this quarter for that, and have you added any other change during the quarter or thus far in the first quarter?
Yes. So, like I said, we -- last quarter, we announced those two as similar, okay, I explained here there Master Services Agreement; we’re the sole tablet provider for both of those brands. We’ve installed several new sites. They’re heavily franchised. So, we’re mostly focused on being brand standard and included of any new store opening, which is what we’ve been doing with those two brands. And we haven’t announced any additional Master Services Agreements in the first quarter. We’re getting really amped up and ready for a pilot with B-Dubs. That’s our primary focus on the chain side. We want to make sure that we put our efforts into delivering are they any menu and payment out in here.
And last quarter, you gave numbers for actually how installed you were at Buffalo Wings and Rings and Old Chicago, can you give us -- I wonder if you can share those same statistics, so we can see how those ramp as you sign similar franchises -- I am sorry, as you sign other chains?
We haven’t planned on kind of going through every single brand and doing like a quarterly update. Like I said, those two MSAs we’re intended to take -- take and create pricing across the entire franchise. We’re primarily rolling it out our all new store opening for them. So, we’ve done probably several in the first quarter, since those signings and a few in the last part of the year in December. So, I think, look, the numbers on those are smaller than the numbers of Buffalo Wild Wing. That’s where we kind of went on a store by store basis there. It was a big heavy rollout. So, I think we’ll -- as it’s material and sizeable, we’ll give you that insight.
And then last question I had, at what point do you expect the incremental hardware cost related to repairs and obtaining your hardware stock, and can you remind me was that in this December quarter, did you -- I think you had some numbers around, I just wasn’t sure if that was for the year or for the quarter?
There is a few components of hardware. In 2015, we reconciled, I’ll say our supply chain and assembly issues and those are gone. So, we don’t see those issues surfacing in 2016, as it relates to new installs. We do have a base that’s on the Gen II class one that we will continue to service in 2016. So, we will have some -- I’ll say, we’ve accrued for a majority of those expenses, but we will have some incremental expenses, as it relates to supporting net Gen II platform reflected in 2016, as they arise.
Thank you. Our next question comes from line of Alex Silverman from Special Situations Fund. Your line is open.
So, both the FanDuel and Redskins announcements are really those are great announcements. I assume that the idea on the Redskins is to drive traffic into Buzztime locations?
Yes. That’s correct, Alex.
And so the fee -- I guess we’ve got a while to football season but what’s the feedback from the stores in that market?
Yes, it’s great question. I’ll tell you, there is two parts to that that maybe I’ll expand upon. Number one, stores are extremely excited. I mean they have the chance to have promote experiential prizes from the Redskins to have players, formal players, existing players be engaged and involved and showing up to their venues for parties. And that’s other thing. That’s a big deal, it’s about driving traffic for them. I’ll tell you the other part of this is it’s going to be something that we use to help drive growth in the market as well. So, we’re hoping that -- and again, this is something we’re piloting our go-to-market approach throughout the year. But, the reception has been very strong.
Interesting. And, have you spoken with other teams, other sports about something similar?
Yes, I think we’re focused on getting the proof point with Skins because I think that really helps us take a complete package to other brands. But that’s certainly right around the horizon, after we nail this first season with the Redskins.
And Buzztime Sports, which I know you tested with baseball a little bit last summer, but it was really about football. Will it be a baseball related game this spring and this summer?
We are going to evaluate whether we do a re-launch of Buzztime Sports specifically for baseball. We had a lot of fun with the football season because the way the schedule worked and we could do team-by-team competition. What we are going to do in spring, we are leveraging that platform really to deliver the Redskins experience in the spring and summer. And what you’ll start to see is some sports -- some of our sports offerings are going to be complemented by things that FanDuel brings to the table. So the thing we need to make sure that we balance is not overwhelming the concept we have on the tablet with too many offerings, and just making sure we maximize conversion of play, the ones that we bring new.
That makes perfect sense. And then, you mentioned something in your prepared remarks about the B-Dub franchisees and it’s well known that there is a bunch of super professional B-Dub franchisees that own other brands as well. A, what’s the feedback from those folks and sort of how do you think about that opportunity in terms of rolling it out to their other brands?
That’s a great question. And Alex, you are absolutely right. There are some very large franchisees at B-Dub, they own multiple brands. We have been evolving our relationship with B-Dubs over the last year and a half. And I recently had a chance to present to their franchise advisory council. It’s a very strong group that is influential and provides a lot of insight into decision making process at B-Dub. And many of them own multiple brands. It was a great session to get to spend time with those guys and talk about where we are heading with the business and the product line and future. That’s something I don’t think the company is historically has done. It just speaks to the growing strength and the relationship with B-Dubs and the franchisees. And so that’s something we’ll hope to focus on delivering value to them directly through their B-Dubs ownership but it certainly paves the way for a broader relationship directly with some other franchisees.
Okay, and then just a last question. You mentioned in your remarks about being able to collect at point-of-sale or sort of feedback from customers. How well do your -- does your customer base understand that that’s an option?
Yes, that’s a good question. I think it’s one of those thing, Alex, where you can say in words and I can say on my -- even in my prepared remarks, but until you see the reports and data, it becomes -- when you see that, it becomes extremely eye opening in both the power and value it brings to the brand and store and the store manager and their ability to make decisions and changes on a day-to-day and shift-to-shift basis. So I think on the one hand that’s a surface level people get it, but when we they start to see visuals of the actual report and what it means to the store, it becomes extremely, extremely exciting to them.
I can’t remember ever filling out one of the paper, questioners at the table on the experience but I am sure that if I was playing the tablet that that would be nice and easy.
Alex, listen, 1% of people pull out receipts, the surveys on the receipts or any ways that stores try to get customer feedback; on our tablet that number is north of 50%.
Got it. Really, one last question. Is there an opportunity outside of restaurants for your tablets, places where people wait? I mean you know -- I don’t know, waiting at doctors’ offices, right? I mean something like that.
Great observation; I’ve made presentations the last couple of events, investor events I’ve been to and I’ve alluded to this. We have had -- the neat thing about Buzztime is it has a very loyal and avid fan base of players who play their games inside of bars and restaurants. And those same players are business owners of places that provide services that have wait time. And I’ll give you a couple examples, car dealerships; doctor offices; service centers. And these are all locations where we have attractive demand organically without pushing our product into these markets. And we have had some interest if you move to the tablet platform, and some of those adjacencies coming onto our platform. And it’s something we’ll probably get more color on later on in the year as we take our platform into and test some of these adjacent markets.
[Operator Instruction] Our next question comes from the line of Josh Seide from Maxim Group. Your line is open.
Just one quick one from me actually, can you just discuss or elaborate a little bit on how you plan to price menu and payments?
Yes, look, if you think about our business, we are in a subscription base business model. So, you know what you can expect to see is some increase when somebody purchases a full bundle from us, their subscription should be up. And what you may see is a balance -- a blend between subscription and some transactional revenue that will be added to the ARPU for every location that signs up.
Thank you. This now concludes our question-and-answer session. I would like to now turn the call back over to management for closing remarks.
Thank you everyone for joining the call today. I appreciate the questions and the participation. Just a reminder that we’ll be at the Roth Conference next week and I hope to see some of you there.
Ladies and gentlemen, thank you again for your participation in today’s conference. This now concludes the program. And do now disconnect the phone lines at this time. Everyone have a great day.
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