3 Big Green Candles, page-81

If you have a read of the ARPU in the latest company announcement under 'glossary' it highlights that "Typically only a few percent of a consumer mobile App user base will spend money on a mobile App after downloading the App for free".

So around 2% of the freebie downloaders typically convert to paying customers.

Currently 700,000 freebie App users x 2% = 14,000 paying clients.

The question that should be on everyones minds is..'what steps are Norwood planning or taking to increase that conversion rate percentage?'

We know that the company are planning or are already working dilegently on addressing this question.

They've highlighted in previous announcements that...

* Once they've optimised engagement and revenue generation methods with the App enhancements they have planned the company has an opportunity to increase the 'per user' and 'revenue run rate'.

* App-to-App calling feature to come online will = No charge between World Phone users, which should in turn increase user engagement, retention and revenue. More engaged users = more revenue.

* The Android platform hasn't even come into the picture yet - an addressable market over 5 times iPhone platform - should put the company on the right path to potentially increase conversion numbers.

* Current growth is almost exclusively via ONE digital marketing channel to date - open those channels up and the potential opportunity to increase conversions should also increase.

What else do we now know?

* Customer acquisition costs are now under $1 (as per last announcement).

So how much money does it cost to bring in users?

* 700k x $0.80c (current acquisition cost?) = $560k.

So having a better understanding of what the company are working diligently towards, do you think my 'hypothetical example' below is too bullish near future? If so, why?

Metrics:

Cost per download being = $0.80c.
Freebie App users = 1.2M.
Paying clients = 5%.
Revenue per engaged user / per day = $0.065c
1,200,000 freebie App users x 5% = 60,000 paying clients.
60,000 paying clients x $0.065c = $3900.00 per day.
$3900.00 per day x 30 days = $117,000 per month.
$117,000 per month x 12 months = $1,404,000 per year.
$960,000 to acquire the users per year.

Tony