These are just my notes taken from the presso I attended where Joanna spoke, they’re not a word for word account and I suggest everyone does their own research and DD. Any projections given here are just that, projections, so any investor should keep a close eye on any earnings and or customer signings to help determine if things will work out.
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As we know 1PG had received venture capital money ($3m to build platform originally) to get started on the Assessment side of things in the early stages.
Then last year, venture capitalists were offering the next round of funding and 1PG also had acquisition offers on the table, but they chose the ASX listing instead as this avenue gives them the right investors and gives clients the safety and security that they can deploy 1PG with the knowledge that the company wouldn’t be going out of business, many of the 1PG clients' corporate laws don’t allow the companies to deal with technologies that are private and or under 5 years old.
They have the 3 main platforms, Sourcing-Talent Assessment & Internal Innovation. Talent Assessment was where they first started with new hires which helped drop turnover by 70% and cost by hire by 75%, clients then started asking if they can point these challenges (the 1PG challenge) internally which are department based and the information is then analysed which ranks and scores the information (proposals/ideas), this is done 60000 times faster than a human being and 80% better than 2 human beings, this allows the company to project revenue increases from ideas and rank the information into priority to help with their company.
With the acquisition of BranchOut 1PG saw an opportunity as clients were asking if they can help them find passive candidates who might be willing to move into new roles instead of the companies paying for advertising on job boards etc where active candidates (people looking for jobs) are, but the actives only account for 5% of in demand candidates, passive candidates account for 70% of in demand candidates. Referrals are the number one of hires in the US, clients wanted from 1PG passive referrals, which is where the BranchOut database came into play. There are 70 different data sources used to update the profiles at a rate of 180 per second and every 20 days the entire profile database has been completed/updated, add to this that profiles are updated or added any time 1PG goes into a company, the open web makes it possible to update even with closed API’s for the likes of Facebook/LinkedIn etc, especially with the likes of Google. 1PG automatically plug in to the clients applicant tracking system.
The platform is an easy to understand and use system, it automatically ranks the most connected and applicable candidates with existing employee’s and then gives HR the option to simply send out an automated email to the most connected employee to ask if they’d refer this person for the job position available, if they click yes an automatic email is sent to the candidate to offer them a job, this email looks like a personalized email from the employee simply asking them if they’d be interested in the job, yes or no.
The sourcing and referral engine has only been out since the start of March and they showed/demonstrated (live demo) earlier than this to 6 Fortune 500 companies in Seattle, this was shown to the heads of HR from each company, of which 4 of them signed contracts and are going through legal right now (Procurement to get Vendor number), one of them was Amazon who pushed it through legal very quickly and the others should come very soon as we heard in the webcast at the start of March, this typically takes 1.5 – 3mths.
From here there is a 3-5 month stage 1 deployment where they are charged a flat fee, at this stage (already announced clients) they have already gone through legal procurement and vendor management, also all employee information has been compiled. During this period 1PG show the client how they can save on cost per hire, for a low level hire the cost is approximately $3000 to the company and 1PG will show that they can do it for $1000, obviously with higher level placements these costs go up for the companies.
What they are looking at for this calendar year is having around 125 new customers being signed up and 25% of these will have already converted to the 2nd stage of the land and expand model, obviously we need to see this to confirm. By around October/November/December they will have around US$2m per month of total contract value, this could be more of a growth phase like US$1.8m in OCT, US$2m in NOV and US$2.2m in DEC, which by the end of calendar 2015 gives them an annual run rate of approx US$24m (approx. AU$31.5m), obviously as the months go on we could expect continued month on month growth but would need to see this evident in the financials though these will tell the back story imo, obviously this will continue to increase in the month/s & year/s to come imo as more of the 125 customers move into the various stages of the land and expand model and they continue to add to the customer signings also.
The basic charging is on job slots (packaged) as the 1PG Sourcing leads to the 1PG Assessment platforms, which now go hand in hand. A really big part of 1PG (for earnings) is the Innovation platform as the larger companies have hundreds of thousands of ideas 1PG’s systems analyse, these are $multi-million deals for 1PG. It was mentioned that they have a lot of demand and they are going through this at a fast rate.
Jeff Mills (head of Sales) was at the HR summit at the Gold Coast and 1PG was the most requested company for any client to see them, Jeff had around 20 meetings per day lined up!
It was asked about announcements of new clients and whether they will more likely do these in clumps/bundle as they ramp up in volume, it was answered that they are looking at bundling but it is very hard as word spreads that 1PG are deploying throughout different organisations, especially as people move from one organization to another, the company is actually encountering this now as they talk with other customers (about to be announced) in New York, Hong Kong, Singapore who have heard about other deployments. It was mentioned that we don’t even hear about the smaller signings now (although they are 9k/10k employees) but that the larger more material ones will be stand alone announcements as they are worth $millions to the company.
Break even is expected to be by August from an internal point of view all things considered, and the abovementioned run rate of US$24m by 2015 calendar end doesn’t include certain partnerships they are discussing right now with other companies who want access to the connection graph they have which these companies can plug in to for sourcing, these companies will on sell the product to their existing customers as a sourcing tool and take around 30%, these companies can be payroll companies etc. UST make $6bln on 250 clients and 1PG platforms are the backbone to anything UST sell to HR departments now and UST put on a fee for this and 100% of these fees go to 1PG as they are now shareholders (used to be client first).
Asking for an estimate of where revenues could be 3 years out it was said $100m on its way to $200m due to the exponential growth they will encounter, obviously we will be able to see this coming with earnings growth going forward, especially as they are really only just getting started. The benefit of the new strategic partners recently announced is for International growth and deployment, also it’s for the strength they bring to the holdings because they are not looking to trade these shares, especially now that 1PG have something very valuable that competitors want and who are trying to have acquisition discussions with 1PG but they aren’t taking them (the discussions).
Nasdaq listing wont be thought about for at least 12-18 months and could go either way as a dual list or delist here and relist over there, they have a lot more to be thinking about at this moment.
The great thing to hear was the high regard Joanna had for her Leadership team, I recommend anyone go through and see what these guys have done in their careers and how accomplished they all are. Jeff Mills vetted the deal with Orange Telecom and 1PG and he grilled Joanna, from that he loved what 1PG did and decided to join, this is a guy who never has to work again if he doesn’t want to! Jeremy Malander is the head of Customer Success (also considered the best in the US/World) and he actually worked at Salesforce, even though he is with 1PG they still pay him to do talks at their conferences. He has built his team to be able to handle 500 clients already as it is all systems based. There is a total of about 55 people under the 6 in the Leadership team.
I asked about a video I saw which Joanna was in at Noah12 conference where she mentioned the likes of Pepsi, Disney, Avon and William Somar and she mentioned that they are in the pipeline and we will hear about them, also I asked about those who have followed 1PG on FB or Liked them such as Marvel, MTV, Sony, NASA and Target and it seems that they too will be seen in the future and are in the pipeline, Joanna’s father had actually been paid a lot of money to do 1 Page proposals for many of these companies.
Well that’s about all I can glean from my pages and pages of scratching’s from the meeting/presso. I can say that management are very bullish on what they expect simply due to what they are seeing/doing and who they are talking with! Obviously this is an early stage company and all holders need to factor this in to their strategies, but for me I’m very happy with what I know and very happy to say that I think these guys really are a disruptive and innovative company with products that the market really wants!!!
Good investing to you all…………….
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