Ideanomics, Inc. (NASDAQ:IDEX) Q4 2018 Results Earnings Conference Call April 1, 2019 8:30 AM ET
Tony Sklar - Vice President of Communications and Investor Relations
Bruno Wu - Chairman
Alf Poor - Chief Executive Officer
Federico Tovar - Chief Financial Officer.
Greetings. Welcome to Ideanomics Fourth Quarter Annual Earnings Call. At this time, all participants will be in a listen-only mode and a question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference is being recorded.
I will now to turn the conference over to Tony Sklar, Vice President of Communications and Investor Relations. Mr. Sklar, m you may begin.
Thank you so much Bob and welcome to the Ideanomics fourth quarter 2018 earnings conference call. Joining me today, I am pleased to have Dr. Bruno Wu, our Chairman of Ideanomics; Mr. Alf Poor, our Chief Executive Officer; and Mr. Federico Tovar, our Chief Financial Officer.
A webcast of today's call will be archived and available in our Events & Presentations section of our corporate website for a minimum of 30 days. As a reminder, this conference call is being recorded.
During the call, we will make forward-looking statements such as dialogue regarding our revenue expectations or forecast for the quarters and full fiscal year 2019 and 2020 related to our business. These statements are based on our current expectations and information available as of today and are subject to a variety of risks, uncertainties and assumptions. Actual results may differ materially as a result of various risk factors that have been described in our periodic filings with the SEC. As a result, we caution you against placing undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statement as a result of new information or future events except as required by law.
In addition other risks are more fully described in the Ideanomics public filings with the US Securities and Exchange Commission which can be reviewed at www.sec.gov. Today, April 1, 2019, the company filed its 10-K with the SEC and afterwards issued a press release announcing its financial results. So participants on this call, who may not have already done so, needless to look at all of the assessments, as we provide a summary of the results on this call.
The format for today's call will be as follow:
Mr. Alf Poor, our CEO will speak to the company's overview and business strategy as well as the activities and developments for the fourth quarter 2018. Mr. Federico Tovar, our CFO will speak to the company's operating and financial results for the fourth quarter and the year-end for 2018. Dr. Bruno Wu, the Chairman of Ideanomics will address our investment community with his vision and strategy.
At the time, I will now have the conversation over to Mr. Alf Poor, Ideanomics’ CEO.
Thank you, Tony. Good morning and thank you to everyone for joining our call. 2018 was a transformative year for the company and has set us on a firm foundation for 2019 and beyond. In addition to changes in our business operations, we also changed our company name in Q3, and Q4 to Ideanomics to better reflect our identity and position. This was an important step but we needed to capture the essence of our new organization and its mission statement. Ideanomics was chosen as a representator of convergence of innovation and prosperity, as well as in single word, it will be descriptive as well as deliver a unique brand identity.
During the course of the year, it was necessary for the company to make changes to strengthen all aspects of the business. While we exceeded our revenue guidance, we accounted business challenges, the most significant of which was the delays in the much anticipated regulatory approvals for digital asset backed security purpose and some operational and management changes which caused our goals to slip in the second half of the year. This and our concern from wanting to distance ourselves from other questionable non-asset backed and non-regulated token raises caused us to postponed several token events in the second half of 2018 and in turn impacted our ability to deliver on our EBITDA guidance for longer the spike in professional services. These were one-time costs associated with deactivity from the Connecticut campus acquisition.
In addition, we experienced other costs associated with the part of executives amounting to $7 million and professional fees associated with transactions and investments conducted in relation to building out our Fintech Ecosystem.
All that said, the company did not seek to sit back and wait for the slow calls of the regulatory machine to get moving. In response, we increased our deal origination efforts and restructured deals to allow for traditional hybrid all-digital financing. So we are in a position to execute on our deal flow and generate strong revenues in 2019 and beyond.
We have been disappointed with the quality and availability of Western assets and our deal activities. This has caused us to continue to make use of our strategic advantage in Asian markets, where we have been able to source multiple high quality deals with assets in billions of dollars. With one or two exceptions, Asia is significantly further ahead in many high growth areas of opportunities, such as cleantech and greentech. And we have been impressed with the region's willingness to work with companies such as Ideanomics to help make those assets available as investment opportunities.
Our Asia based deals are of significant size and scale that we believe they will serve as the benchmark to the Western world and position Ideanomics as a leading counterparty to European and North American asset holders to pursue their liquidity objectives.
To further deliver on our long-term vision, we announced the acquisition of the former University of Connecticut Campus in West Hartford in early October of 2018. This will serve as our global fintech innovation hub, and will be one of the several digital renaissance hubs across the globe. Dr. Wu will speak further on this subject in his portion of the call. We received tremendous interest in inquiries from partners, large and small, looking to participate in our hubs. And we are very excited to get West Hartford and the other hubs up and running as quickly as possible.
Our efforts to commercialize our AI and blockchain technologies are beginning to bear fruit. So it has taken longer than anticipated to match new technologies with legacy infrastructure in areas such as logistics. Although responsible for a strong top-line revenues in 2018, our crude oil trading and electronics businesses do not yield profitability, although they did provide us a valuable use cases and insights into effective use of our technology. We will be divesting those assets those assets to focus on higher margin near term revenues and bringing the learnings into our other logistics initiatives in the future.
In addition to those, we have also made significant inroads into divesting what we refer to as our legacy assets and our media business. We have successfully sold off some of those legacy businesses, which will reflect in our Q1 2019 results, although the hard work to do so took place in 2018.
We purchased an ETF in the fourth quarter 2018, which focuses on electric vehicles and trades under the symbol EKAR. This was a precursor to some of the recent acquisition activity and we're working to adjust the basket of stocks within that ETF in order to provide the attractive investment opportunity in addition to carrying Ideanomics branding to the big board of the New York Stock Exchange.
I would like to mention that we are very confident about all aspects of our business as we move through 2019. We are encouraged by the fact that we've been able to achieve a market leading position at a fraction of the cost of our competition. Factoring our data origination capabilities and a global focus, we believe we stand out from a majority of our competitors who are primarily focused on technology infrastructure outlook.
We will begin to onboard significant revenues for mid to late Q2, in what we refer to as our best period. We have asset backed refinancing programs for electric public transportation vehicles in cities such as Tianjin, China. The underwriting for these asset packaging has been finalized as we speak, part of which we'll see us reporting the assets on the blockchain. And what we believe is a first in the asset backed field, once completed the said instruments we bought to market in due course by our regional banking partner. But we have to be careful with providing specific guidance prior to having those revenues showing up fundamentals, we will be providing additional information in the coming weeks, as these revenues will obviously have a significant positive impact on our business.
In anticipation of this, we have begun a series of investor road shows and events, designed to help the investment community in terms of both retail and institutional investors, better understand these and our other revenue based deals and the mid to long-term value of Ideanomics’ shareholders.
We are encouraged by the response to these events, which has resulted in ongoing interest and meetings with market makers and buyside institutions.
I'd like to thank all of our investors for their support of Ideanomics. We have been working hard to provide increased transparency and better communication through our Investor Relations channel. And we will look forward to delivering significant shareholder value for each of these in the future. Thank you very much.
Thank you, Tony. And thank you everyone for joining our call. 2018 was a transformational year marked by various investments across human capital, FinTech Village and the infrastructure needed to build out our Fintech Ecosystem. The US management team and the resources needed to position Ideanomics towards unlocking revenue through its fintech services activities. While we exceeded our top-line revenue guidance earlier in the year, we did not generate profit in the fourth quarter due to the transformation that the company is currently undergoing and the investments previously mentioned.
Nonetheless, we've had strong success, as we've achieved significant traction across the following areas:
Number one, the build out of a world class team in the US and in other parts of the world that have the global capital markets expertise, blockchain expertise, fintech expertise, as well as the regulatory and compliance expertise needed to succeed in our market.
Number two, significant customer deals that have been signed, further helping to validate our new business model and our position towards growth and profitability. These include the electrical bus deals, the auto financing deals, and many others, as well as our investment in FinTech Village. It is now time to execute and continue to build out these new digital asset products, and thereby reap the benefits of the technology ecosystem that we have been building out during the past several months.
Revenue for the year, December 31, 2018 was $377.7 million, as compared to $144.4 million for the same period in 2017, representing an increase of approximately $233.3 million or 162%. The increase was mainly due to our Wecast business of crude oil trading initiated in October 2017 and partially offset in the amounts of $0.8 million by a decrease of our legacy YOD business.
Our business strategy and the primary goal for entering the crude oil and consumer electronics is to learn about the needs of buyers and sellers in the industries that rely heavily on the shipping of goods. Our activities in the crude oil trading and consumer electronics business had been successful in various aspects. We generated revenue of $359.8 million for the first three quarters and have gained experience in the traditional logistics management and financing business, such that we have identified initial use cases for the applications of the technologies in our Fintech Ecosystem.
While we have gained this experience, the company does not intend to be a logistics management company. Therefore, we decided to gradually start contracting our crude oil trading business and consumer electronics business starting in the third quarter of 2018 so that we can work towards enabling the application of our Fintech Ecosystem for other use cases that we have identified.
In parallel and for strategic reasons, during the course of the fourth quarter, we also chose to focus our resources and efforts on other non-crude oil trading and non-logistics management revenue generating opportunities that we have identified in the market as previously described by Alf. These other market opportunities also involve the use of our technologies across our Fintech Ecosystem and their applications across industry ventures.
Our cost of revenues was $374.6 million for the year December 31, 2018, as compared to $137.2 million for the year ended December 31 2017. Our cost of revenues increased by $237.4 million, which is in line with our increase in revenues. Our cost of revenues is primarily comprised of the cost to purchase electronics products and crude oil from suppliers in our logistics management, and the cost of sales in the legacy YOD business, is primarily comprised of content licensing fees.
Gross profit for the year December 31, 2018 was approximately $3.2 million, as compared to $7.2 million during the same period in 2017. Our current crude oil and consumers electronic trading business operates in highly competitive global markets, characterized by aggressive price competition, resulting in downward pressure on already low margins.
Our selling, general and administrative expense for the year ended December 31, 2018 was $22.5 million, as compared to $13.1 million for the same period in 2017, an increase of approximately $9.3 million or 71%. The majority of this increase was due to an increase in headcounts, human capital and relevant travelling expenses in the amount of $2.5 million, an increase of approximately $2.1 million in share-based compensation, an increase of approximately $3 million in consulting, legal, professional fees that were paid out to external consultants who provided various services with respect to our fintech and platform as a service business and an increase in our sales and marketing expense in the amount of $0.9 million relating to the introduction and promotion of our business models to various potential investors and business partners, as well as marketing of the Wecast Services business, an increase in rent expenses by $1 million mainly for our new corporate headquarters in New York City.
Professional fees are generally related to public company reporting and governance expenses, as well as legal fees related to business transition and expansion. Our professional fees increased approximately by $1.5 million or 48% for the year ended December 31 2018, compared with the same period in 2017. This increase was related to an increase in legal, valuation, audit and tax, as well as fees associated with the continuing build out of our technology ecosystem, and establishing strategic partnerships and M&A activity as part of this technology ecosystem.
Our loss from operations was increased by $16.1 million to $26.2 million for the year ended December 31, 2018 from $10.1 million during 2017. This was mostly due to the decrease in gross profit from our Wecast Services segment and the increase of operating expenses for the development of the Wecast Services business.
Loss per share for 2018 was $0.35 per share as compared to $0.17 per share in 2017. As of December 31, 2018, the company had cash of $3.1 million, total assets of $94.2 million and total equity of $43.2 million.
Over the past year, Ideanomics has been able to continue its transformation from its legacy business to be a prominent player for fintech services and asset digitization through establishing a global compliant network of financial technology, user [community] and digital asset production.
Our team of seasoned digital strategists and technology leaders has positioned the company towards a path of unlocking fintech services related revenue for 2019. We have signed several customer revenue deals in our pipeline and our product and tech teams are diligently building out these new digital products to unlock this revenue in the near term, and position the company towards a strong 2019.
The company is committed to our successful product launches. These yields have the potential to add significant revenues and sustain the long-term viability of our business model.
Well, thank you so much, Federico. I'm excited to be back and it is great to address the investor community as we are channelized again. Since late 2017 and during 2018, Ideanomics experienced new growth, new market positioning and a massive amount of interest in our new business alternatives.
I will give you a summary of our strategy going forward to-date as well as provide context for our vision and strategy in 2019 and beyond. We believe that 2019 is going to be prove itself a year that will deliver on promise which is, we have to make just the biggest come back story ever in the NASDAQ history.
Investments we have made over the past 18 months have been essential to period as well as giving us strong foundation and future for growth of Ideanomics and our shareholders, a positive vision we are bringing to reality.
Our ability to execute on large scale deal origination has continued during the first quarter of 2019 and we expect this to continue throughout 2019 and 2020, and this is the time to deliver results.
We've announced several deals with industry leaders which will serve as milestones for various success agreements which include APMEN deal, National Transport Capacity, [indiscernible], Treeletrik in Malaysia and GT Dollar Singapore among others. These deals represent only the beginning of Ideanomics of delivering solid financial results and will anchor our future revenue growth and business development.
Usually we provide an update on the business operation to allow the 2019 roadmap to our community, which I would like to speak about on this call. In order to meet the market demand, the company has identified various ways it intends to develop as part of the overall fintech services strategy which are very complementary to both our Fintech Ecosystem and industry launches. These areas will focus primarily on key operating groups of Ideanomics.
Number one is AI Engine Group; number two is Digital Banking and Advisory Group; number three is Digital Asset Management Group.
So essentially we have to turn this into an AI driven next generation fintech service company, will serve as a -- for the transformative industries. So Ideanomics’ Artificial Intelligence Engine Group starts with our BBD joint venture. It is part of our initiative to commercialize our AI and blockchain efforts for the benefit of high growth industries such as fintech, insurtech support.
We are in the middle of the marketing these activities under the brand [Intelligentech] which we will eventually make full clarification and announcement shortly. And that includes about over 20 mature products, AI platform based products we’re able to offer to the world including the United States market and we’re even in middle targeting some of the biggest banking and insurance organizations and deploying them.
So, our AI powered database which is fine tuned to the banking and insurance industries and available at both the PaaS Platform-as-a-Service and SaaS Software-as-a-Service enterprise solutions. We are also developing additional AI service offerings to non-commercial customers to furnish it with leading enterprise growth AI solutions provided that we are currently in negotiation with.
The second division is the Ideanomics Digital Banking and Advisory group. It will cover two key areas of operations, one in the digital renaissance innovation campus. As we have built and replenished programming hubs and capitalized programming hubs from five key global innovation centers, just like a planned fintech campus in West Hartford, Connecticut. So along with our planned fintech campuses in Kuala Lumpur, Malaysia -- in KL, Malaysia soon to be announced innovation centers, the other locations, we still have in commercial innovation and technology investments, as well as ensure top-line deal flow with approximately over 100 companies to our Banking and Advisory Group. So modernization really provides technology support, provides capital market support and management advisory support in exchange for [indiscernible] high growth companies and a lot of these companies have been in innovation for 6, 7 years and are in the very mature growth period. So they're ready to go to capital market which we will benefit by being sort of a babysitter and mentor, leveraging technology, leveraging with them and business modeling and leveraging other resources and marketing.
These global innovation centers will foster the pipeline of technological experience in CleanTech, FinTech, treetech, agritech, labtech, insurtech, playtech for the industry’s world’s to pgrade cyber security companies and more, as well as our experience in origination efforts to stand below and we anticipate scaling these technologies into profitable companies within each sector of expertise to the point and our digital security effort for each respective company.
The second effort and largely on that we intend to beat a global asset backed debt exchange system. And we all know that in United States 75% of the social fund is achieved at fixed income base.
In China, that number is under 4% -- is around 4%, if you take that interbanking relationships it’s probably under around 2%. It’s pretty much the same situation across Asia which means that in Asia, we already have a massive effort, already beat that inability to convert them into group’s fixed income asset backed security, which is CMBS, average fixed income component.
So, we are -- we have built a solid foundation of organization with a focus on securities, such as universities, CMBS, ABS [indiscernible] so on and so forth. We have now implemented AI backed -- AI based risk management and benchmarking for fixed income offerings with the technology that’s really world leader. We are also in the middle banking advisory broker dealers in negotiations and one we already announced -- one key we already announced was CICC which is the China's biggest banker fourth year in a row.
And we are now also being in insurance customer trading to investment debatch and also in partnership with the Singapore Exchange that’s still in negotiations. So therefore, we believe that with these two factors of advisory businesses, we'd like to use -- we'd like to make Hong Kong and New York two partnering destinations for us to take other companies that we advise in our pipeline within hubs and take advisory groups and maximize our profit.
In the meantime, we also have Singapore as a primary place for the debt deal origination as well as secondary trading. So Ideanomics, lastly, is Ideanomics Digital Asset Management Group. This group provides large scale holders to assign cryptocurrencies such as GT Dollar, which is now trading north of [$900 billion] within Southeast Asian, primarily Chinese community. With de-risked asset-backed or benchmark value, we turn them into globally compliant, we provide digital advisory and business development services to stabilize and grow the value of their corporatives.
Through these unique groups which are AI, plus advisory, plus asset management, we intend to fully leverage our core business strategy, which is to promote use and development of AI based blockchain technologies. That technology leads us together with industry leaders and creating synergies in our Fintech Ecosystem and the business in our network of industry ventures.
We find tremendous energy in the Mainland China, there’s opportunity that lie ahead. I want to say a very big thank you to all of our partners, vendors, Board members and management team who have worked tirelessly, with Alf and myself, to grow the platform of Ideanomics tremendous future success. I also want to thank our clients for allowing us to serve their needs, and shareholders for their support and to the Ideanomics everywhere for your integrating, your passion and your work ethic.
Again, let me end my talk today -- my presentation today by reiterating the comments I made before. We early came in October 2017 and I guess gone for 4, 5 months in the second half of 2019. In other words, I've done my job with the US-China trade talk, I’m now back and we are on track of making this a greatest comeback story ever in the NASDAQ history. I am very confident on that.
So turning back to you Tony.
This concludes managent's prepared remarks. I will now turn the discussion back to our CEO Mr. Alf Poor, who'll be moderating the Q&A session.
So this is time, in the Q&A session that are people who are on the line if you'd like to begin asking your questions, you can do so through your computer. And as well, we will start off by answering some of the questions that have been emailed in.
Thank you. [Operator Instructions]
So the first question we have here is regarding the GT Dollar relationship. A couple of things I do want to say to the market. It was like several questions in on this. First one is, yes, we will be recording the $170 million of upfront fees as a revenue event in Q1.
Second part of the question, there have been a lot of other questions coming into the Investor Relations mailbox regarding the 3% fee. Actually, Dr. Wu has been able to -- in our ongoing discussions with GT Dollar Group has been able to renegotiate that we get those fees on a monthly basis as they accrue as opposed to the provided fees at the end of the year. So we will get a little bit of an uplift there in terms of the ability to have recognized those revenues as they come in month-by-month.
We've got a next question from [Jim Mitchell, Rob].
Yes. Mr. [Mitchell], you may begin.
Hi. I guess to expand on what Alf just said there with the collaboration with GT Dollar. Can you talk more about what you'll be doing to earn the 3% fee, which is pretty large, just under $3 billion if we calculated today? And I guess, going with what you just said, how would you shoulder the cost of doing this business throughout the year if you don't get the monthly payments?
Okay. So, let me answer that. First of all, I think GT Dollar from its inception has pursued a different route than any other token offerings anywhere in the world. It always sought for underlying asset to back what it was doing. So -- and throughout last year, we had a lot of money, I think north of $0.5 billion in cash and now that daily trading volume is also huge, it ranges from $70 million, $80 million $90 million to a few hundred million dollars.
So, our job as we had developed a very thorough plan of at least top unanimously with the blockchain RFP and officials of monetary authorities of the regulators, top blockchain in the United States, we've discussed to modernize how to turn this into a world’s first leading stable and a settlement token that's really tied to the efforts. Actually we have a plan to wait and we have a very detailed price, which I'm not able to share today, but I think this is a game changer. It is a game changer, and GT Dollar’s value is approaching bitcoin but it is very, very difficult and very, very different, because it has already asset backing.
I mentioned and to tell you as we have figured out a system and to partner with the major front out of the region, out of Singapore to use a mechanism that the investment in the token will lead to investment in the effort and with stability to convert to real money, all into one regulated component system. Of course, beyond Singapore we have also done announcement and plus other announcement, we will in the middle of ‘19 -- and we have to earn a fee month-by-month, that’s what we are really working very diligently on.
But, so we are -- I guess how much I can say and you'll see how traditional leading institutions are jumping with those ideas. You’ll see how our fintech and AI technology can provide liquidity and helping to personalize [indiscernible] other FTA offerings, personalized ABS and make the product more available under regulatory compliant environment. So it is not just Singapore, which has the high standard, we are trying to be GT Dollar to become very compliant to that. We're also looking for other jurisdictions, London is another one, Abu Dhabi is another one, Hong Kong is another one, United States of course is another one. So we are looking for regulatory compliance in all those five primary markets.
United States we are hoping against FTA regulations came in a little late than what we anticipated for as Tony and Federico alluded to that. Because we wanted to pull out -- we have sort of committed to ourselves where we put out to it, because we didn't want to be -- unless we want to differentiate ourselves from -- and the small premier pipeline focused situation that’s what I said from day one, tokenization as a key condition of token offering in the future.
We are taking a very good experiment with GT Dollar but our effort with that business start with the GT Dollar because we are also looking at other massive FTA offerings that the value went down for the call it -- GT Dollar, it's very, very stable, very, very strong space on trading but we also recognize that many tokens because they didn’t follow, break the rules, didn’t understand why, underlying efforts are leading and takeaway message that another regulation, the message that another regulated financial instrument. It just gives a quicker and smarter way of personalized way of distributing and trading it. And so in order to aiding and failing a certain fo these big ventures that are financed we like to offer talk -- start some of the conversation. We can really either with an effort becoming a [indiscernible] can save them and their shareholders. So that's of the GT Dollar. So we have to earn the fundamental basis, too high per month.
That was fantastic.
I want to make sure -- just to answer the question there. Originally that came in from the caller. There is going to be some operational uplifting costs that we are going to be establishing operations in Singapore to support GT Dollar, it's going to be our job to help them manage the size of their token coins bond, this is going to be our responsibility in market that's the payment that’s expected outside of just the Asian region and also to help get listed on other international exchanges as well. But sufficed to say, it's a transformative deal for us. The cost base will still leave us with tremendously high margins. Not to say that we're a one trick pony. That's something that we moved very quickly to secure, it's build up and takeaway from the other large scale deals that we have in the asset equity financing and other. So we're expecting 2019 to be extremely rewarding year for the company in terms of revenues.
We're going to take the next question from [Stephen Franco].
Can you talk about your agreement with CICC and the underwriters -- and the other underwriters for the underwriting of the electric buses? Just can you drill down a bit as to when you're going to start to receive revenues? How much money will you make on this, things all of those nature -- things along those lines, please?
Fantastic question and let me take a shot at that. And Alf you can jump in afterwards. So the electronic bus based revenue is part of our greentech technology and greentech based device sales. We have two major revenue sources. Originally when done the deal as we see, we are going to share because basically ABS -- CICC can sell ABS of 6% to 7%. This triple A rated then this 5% to 6% as to double A it's 6% to 7%. Currently the banking -- the banks are providing funding leasing financing companies 7% to 8% and leasing financing companies sort of major auto -- leading auto makers are providing to the cities at 9%. Hence we have 2% arbitrage in between.So we therefore, we come in and we say hey, look we organize that ABS at 2% arbitrage with national companies like [indiscernible] National Transport Capacity and CICC. So basically we got to a tariff of just 1% for CICC. But that CICC -- so we play two roles for CICC. Number one is we acquire customers. Now when we acquired customers today, not only we go with the new originated deals, new deal originations like Tianjin and so on and so forth. And as you know, these originations take a long time to deliver because you have to first of all deliver the bus and then get your financial leasing deal done, before you have to have that. Before you have to have an access to full ABS without A everything is BS, okay. So we have done asset first. So that's take a little bit time. So together with CICC and we are in the middle of conversation with China's by far the biggest EU bus marker which actually bus marker is Beijing Auto. And also Mercedes and all that stuff. And now we are in the middle of working with them and so we can take the leverage fee on leasing financial deals on the book which is [biddings]. And we say hey while these financials, so one -- so we're doing two things in parallel in a financial [indiscernible] as we take 1% on the legacy book, the book of the legacy existing business sets a lot. And number two is we wait for the new -- newly originated deals to come through which takes a little bit of time, so $5 billion to a $7 billion deal for Tianjin will probably take a year to 18 months before it serves at all.
So, and ABS is always the last guy to come in. So that's the 1% part, the ABS commission part, okay, and we earn it by providing service, both customer acquisition and fintech service.
Now, we're also very excited about part 2. Part 2 is now together with NTC and also by our own ability, we are now capable of acquiring a new and the right model of making buses happen ourselves. So that's where we get decommissioned. That commission typical is about 15% for us by selling new buses. As you know that these buses is much more much simpler than regular buses much less part as with battery and everything else. So the margin on sales is high.
So we're now trying to ramp up that and it become better either, will put together go together NTC become the leaders of selling. So our internal goal is to try to tell between 40,000 to 60,000 units this year if we could. That means it's 40b to 60b. So roughly US$6 billion to US$9 billion, US$10 billion. Now, that said, it’s a very -- I feel that’s the target. We're trying to assess. So we're working very closely with the China's top policy makers to make it happen. After all, China has the national regulation, that all these stuff is need to be converted EV at least 4 to 5 deals to cover EV by end of next year.
So in reality, I don't think, all China's 1.8 million buses can be turned into this theses types, takes too much to deliver and to finance the manufacturing even. So, we just still have -- some other words, our revenue is 1% plus 15%, out of the sales, 1% of ABS, okay, that’s domestic China.
Now -- we are now getting into the Malaysian market, which tomorrow has a very big call, because they're, we've been able to get our top 6 or 7 biggest retailers to come with us into Malaysia, because for assembling we are the only license holder in Malaysia and we will launch good candidates work for industrial park in Malaysia, China Industrial Park, that's very big way with the [indiscernible].
So that again, a 15% plus one 1% for us. And there’s more leverage in Malaysia, because the financial rate is much lower in China. China is 9% to 10% out of the gate for the ECs. Malaysia banking, banks are providing 3% to 5%. So since about 3% to 4% lower than the Chinese banking rates. So we'll make these Southeast Asian countries very lucrative for us and no tariff in between. So we look this as a very big revenue driver for us in the next 12 to 18 months on the Cleantech front.
Thanks, Bruno. So just a recap for everybody here on the call, really 3 main streams for us from these electric vehicle deals. One is the commission from the financing and the refinancing. That's going to be low margin. But fortunately for us, we're dealing with large Asia population. So that deal is a big and $0.5 billion attached to them. And second part is commissioned from the vehicles sales themselves. And the third part is we will be getting an annuity in terms of commissioning the charging stations as well. So we're involved in helping establish and we have some exclusivity in some of the regions we operate as regards to charging station infrastructure as well.
We do anticipate this, we've got a number of e-mails and talking about what is cost base for this? We're operating very much as an enabler here. So we anticipate all these to be high margin businesses. We have had some quite high start-up costs compared to revenues in the last couple of years as we’ve built the business. But going forward, I think we see other than regional operational costs, which will be reasonable we do expect this to be very high margin business for us.
Yes. Absolutely. I mean, we see a very good point, because EV business selling costs and servicing cars, servicing the hardware is only half of the game. The other half of the game is in the digital service that’s the charging. The soft service going forward and in a perfect position because we're exclusive in one place, and we'll see an announcement coming even in our Chinese operations and Malaysian operation and Vietnam operation which we're launching.
So I can say that in the fintech, greentech bus will be the game changer. And honestly, I think regarding passenger EV vehicles, you've got Grande Porsche, Mercedes, BMW, Tesla and so on and so forth. But as far as Ev platform specialty vehicles, the China has the scalability, has the technology, everything in technology, so it is the mover. And we're very happy to be innovative with our model, we are very happy to take EV worldwide with the next generation EV model. And that model worked everywhere, worked in Connecticut, worked in City of New York, worked in Tianjin, China, worked in Malaysia, it's a model that makes very, very happy.
I think, if you -- a good way for the market to digest the system, Bruno said at the beginning which is really we have three core engines which are driving our revenues. We have the AI and commercialization of the AI and blockchain technologies, but the digital banking advisory group and we have the Digital Asset Management Services. So these are very 3 distinctly different revenue streams for us. These are asset management service, think of that as GT Dollar deal, separate division at digital banking, that's going to be our electrical bus and auto refinancing and our other revenue streams there.
And then there's business around the AI and the commercialization of blockchain so fintech and [geotech] and others. So we're going to be building these 3 divisions very aggressively this year. We do operate a very lean model, we have a lot of start-up costs and they are part of the course when you're acquiring companies and doing deals like we do, you do get a tremendous amount of professional service and travel cost come in. Now we've got the majority of the pieces of the puzzle in place. Now it's time for us to make hay while the sun shines. Do we have any other questions Tony?
[Operator Instructions] We have no additional phone questions at this time.
Great. That's fantastic. All right. Well, then that's all we have time for today. And this concludes the Ideanomics fourth quarter 2018 investor earnings conference call. We encourage our community to continue to reach out to us and we can answer any questions individually, you can send your questions to us at firstname.lastname@example.org. We’d like to thank all of our listeners, shareholders, analysts and others who have taken the time to listen to this earnings call, and we urge all of you to refer to our latest SEC filings for any additional information that you may need.
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