AdvertisAnalysis I haveobtained this info from listening to the...

AdvertisAnalysis

I haveobtained this info from listening to the CEO interview recently. And whilst I’mlooking forward to the next 4c I have loosely tried to make an assessment howeverits early days. Anyway, here goes:

3 Revenue Channels:

DirectSales – 20 meetings a week for 50 weeks = 1000 meetings. Of those meetings 70%trial 70% then become a paid customer. Therefore 49% sign up let’s call it 50%so 500 new customers /year. I have kept this stable for next 5 years.

Google (Freemium)– currently 3000 free customers of which industry standard conversion rate topaying customers is 2-5%. CEO said they would be disappointed if teaming withGoogle they didn’t get 20% conversion rate. So, let’s call it 10% so 300 newcustomers per year with a 50% growth rate yoy.

GooglePartnership – This could be very lumpy revenue streams depending on how theGoogle team sell it and how many potential new customers sign and how manycurrent customers covert over from other fraud companies they may be contractedtoo. I am not expecting much impact here until EOFY. It will get some revenuein 1Q, but after training this should start to increase 2Q and then by a big contributorthe following financial year if google and its customers sign up.

Looking atreports they seem to have around 160-200 customers and would have 1.6m – 2m inARR so based on this and the CEO figure I expect this to nearly double thisquarter. Av spend per customer is 10k. I think with google and talking to bigger clients this should lift to a higher level maybe 15k-20k but let’s work of 10k conservatively.

I noticenumber of clients was fairly flat last 2 quarters but expect this to increaseonce the google sales team and Adveritas work together and get the strategyright. This will take some time and think we will only see the benefits late inthe FY22. I also do not know the retention rate of how many clients are notresigning and I also do not know contract length. As I have been conservativeon my above estimates, I believe this should account for customers leaving theplatform so no need to adjust for that.

Therefore

1^styear

DirectSales is 500 customers * 10k spend per year = $5m

Freemium is300 customers @ 10k per year = $3m (3000 Freemium Customers)

So, I wouldexpect by end of Calendar 2022 that the revenue is $10m - 2m (2021) +8m (2022).

That’s a500% increase year on year.

2^ndyear

DirectSales is 500 customers * 10k spend per year = $5m

Freemium is450 customers @ 10k per year = $4.5mm (google freemium converts 10% 4500)

So, I wouldexpect by end of 2023 that the revenue is $17.5m - 8m (2022) + 9.5m (2023).

That’s a200% increase year on year till end of 2022 and 75% the following year. I haveput in a 50% increase in Freemium customers for the 2 years. I have not addedanything for Google customers in my figures from the recent Partnership announcementbut would expect the average client to pay around 50k per year.

For every 1%of market share Googles Ads spend of 150bn per year @ 1% charge would add 15m inrevenue of Adveritas. So, 10% in 5 years is $150m alone. The figures are mindbogglingfor this potential revenue stream. How much take up and how quickly is the key.So there is huge upside to my figures.

I have notaccounted for any additional revenue from other new products just some calcs onthe back of a red wine-stained envelope. It is also possible they win a bigclient or clients that may pay them 1-3m per year so that’s all a bonus to theupside.

My worst-and best-case analysis is wildly different but either way I see this going 5 timesminimum, in next few years and head to more than 30 times by year 5 but 100times could be easily reachable at some point if

My bestguesses are ok and managements conversion rates are right.

Googleadvertising is still strong as is the partnership

Win Bigclients with Bid Ad Budgets

HighRetention Rates

No competitorswith better software

StrategyExecuted well, and costs kept in check

I also thinkdepending on expansion that maybe required that they would need to raise atleast $10m 1^st quarter next year and then maybe another 10m in 3^rdquarter. This should provide us plenty of liquidity to help expand across allrevenue streams. I think EOFY 23 we will be break even but could be a lotquicker – the google take up is key there.

There is abit of testing by clients and there is a 3month lag time for legals etc. to onboard clients on their current revenue streams. The google partnership clients havealready been integrated with google which means there is little lag when signingup to Traffic Guard– the same terms etc. with google are standard for Adveritas sothis makes the process less costly quicker and much more seamless.

That’s my thoughts,appreciate any alternate views, or comments