I personally feel, amongst tech stocks on the ASX, there are few and far between companies regarding significant growth potential in the short - medium growth, let alone the long term potential. Besides in its own thread, i rarely hear much discussion regarding this stock and its potential, bar from a few posters, including myself who are long term holders. Stocks such as BUD, RAP, NUH get a lot of discussion because of the ease of understanding the business model and how they generates revenue - generally physical product to consumer.
SYT (Syntonic) however, does not get as much discussion and credit as should be due for a tech stock which has direct carrier contracts (not MoU) with 3 of the worlds top 5 mobile phone carriers in TATA Communications, Verizon Wireless and AT&T as well as product integrations with carriers in Viettel Vietnam, Vodafone Ghana, MTN Ghana, Safricom Kenya and others. Currently, the combined addressable audience is currently a minimum of 400 Million across its string of carrier clients and partners, pending product integrations in China through China Mobile, China Unicom and China Telecom boosting their addressable audience to over 1 Billion subscribers.
In addition to the above integrations, Syntonic is also further expanding with integrations in the Middle East, Central Europe, Sub Saharan Africa, Southeast Asia and China (mentioned above).
Syntonic has 2 current SaaS (Software as a Service) products on offer and one back end technology powering these 2 services. These services are:
Freeway by Syntonic: Freeway by Syntonic is a sponsored data service enabling data free content to its subscribers as well 2 other content based offerings. These other offers are integrated into the application called Freeway Overpass - a subscription service offering unlimited, unthrottled subscriptions to skinny bundles of applications and its new Freeway International Roaming service (to be commercialised) which offers International Data subscriptions, regardless of carrier anywhere in the world.
Freeways underlying application technologies (Freeway SDK) as well as its first party application are currently installed on 34.1Million smartphones to date with a continuous growth of 7.5% MoM through white labelled licences. The projected install base is to increase to 36.6Million at the end of May. This is through direct installs on 14 Android mobile phones on Verizon's OEM mobile phones. Added benefit to its contracts with Verizon is that any data free service with Verizon is revenue generating for Syntonic as the technology licensed by Verizon enables data free services to 4 applications run on the Verizon network including NFL Mobile, Go90, FIOS Mobile and Appflash. In addition, Verizon's subsidiary Oath just signed a massive deal to enable direct installation of the Go90 application onto all Samsung S9 and S9+ mobile phones, bolstering the Go90 installs to an additional est. 15Million phones on the Verizon network.
The underlying technology underpins TATA Communications Sponsored Data Exchange which utilises TATAs global network of over 1600 carriers to enable data free services. Tata recently opened its subsidiary website www.opari.io which is direct marketing to its sponsored data service. Similar to Verizon, TATAs service is a white labelled service providing a revenue share agreement with Syntonic, therefore enabling Syntonic revenue from any partnership with TATA be revenue bearing. Any revenue generated through use of the Sponsored Data Exchange will be shared with Syntonic. Revenue information further below.
Dataflex: Dataflex is a split billing solution enabling employers to differentiate employee to employer data costs on an employees BYOD (bring your own device) mobile phone. Revenue information further below.
Connected Services Platform: The above SaaS products utilise the same underlying technology, the Connected Services Platform. This is a patented technology which provides cross carrier data free services. This is the technology currently integrated into the above 7 carriers. The Freeway by Syntonic (and offers) and Dataflex applications require direct network integration with carriers to offer the SaaS products.
Revenue:
Unlike a lot of technology companies which provide physical products (headphones, mobile phones, tv units etc), Syntonic's service is completely cloud based and is generally used as a back end service for mobile carriers and content providers allowing for a multi faceted revenue model. The revenue breakdown is as follows:
Revenue Share Agreements: Syntonic can white label its Freeway Services to carriers who integrate the CSP (Connected Services Platform) into its network. The deals are a case by case agreement, however can be significant in nature. TATA Communications agreement offers Syntonic a minimum of 24% total NET Revenue from any revenue generated through use of the Sponsored Data Exchange. The TATA Sponsored Data Exchange will be commercial in the 2018 Calendar year as its partners which include sponsored data provider Socifi, launching a sponsored data offering using Cryptocurrency services with its ICO ref. www.socifi.com
User Royalty Generation: Verizon for instance, licences the underlying Freeway Services SDK technology with is integrated into 4 applications on the Verizon network. Syntonic generates revenue based on user activity, which is generated on a per app, per month basis. Every time a user triggers the minimum use for a royalty each month, Syntonic generate between 1-10c per month. This type of revenue generation will be extended into the new carriers Vodafone Ghana, Safricom, Viettel due for commercial release in the September Quarter. This royalty amount is estimated in Sate One Brokers report on Syntonic found here: State One Broker Internal Stock Breif
Licensing: Syntonic also receives an annual licensing and maintenance fee for each carrier using their technologies.
Dataflex Licences: Dataflex contracts generate revenue dependent on company size. The contracts expect to earn $50,000 per annum for companies with <5,000 employees and $500,000 per annum for companies with >5000 employees. Syntonic signed its first reseller agreement last quarter with Aktay Bilism A.S in Turkey with minimum fees of $5Million to be paid to Syntonic should minimum contracts not be signed. Aktay will receive a cash bonus if they can sign 30 companies by the end of September. If they can sign on the 3o companies, this is expected to earn Syntonic a minimum revenue of $1.5 Million over the next 12 months (September onwards) in addition to their Freeway Services income. This revenue from Aktay is not accounted for in State Ones brief - the brief accounts for contract revenue from company contracts. If Aktay can sign up the minimum revenue guarantees, no revenue will be paid by aktay in lieu of contract revenue.
Below is the revenue estimation from State One's internal stock brief:
You will see that the estimation for the FY18 Freeway installs was 26Million, however, Syntonic are currently sitting at 34.1Million (36million end of May) with a projected revenue of $1.9Million. Syntonic operate on a Net30/60 basis with revenue and its previous quarter recognised revenue was $531,778 which was up 89% from the previous corresponding period. Since that quarter, Syntonic's technology has increased onto an estimated 10 Million more smartphones (excluding Samsung S9 Oath integrations).
Syntonic Content Partners:
Hersch, Reliance, FM+, IVA, Zapak, Boomdash, Expedia, BBA Studios, Perform Group, Konami, Nazara Technologies FZ LLC - Provide content and applications on the Freeway By Syntonic first party application.
Current Geographies Launched (pending):
United States, India, Indonesia, Malaysia, Mexico, Turkey (China, Vietnam, Central Europe, Africa, South Africa, Oman, Phillipines)
Current Carrier Partners (partners annual revenue USD):
Wang Xin Information Technology Co. - Chinese Reseller
TecaPro Limited - Vietnamese Reseller
Aktay Bilisim A.S - Turkish Reseller
Spiralis S.A - Latin American Resellet
End Results:
Syntonic is actually increasing on its carrier integrations and subscriber audience at a much faster rate than projected by State One. The revenue projections for Dataflex are based solely on US clients and does not take into account Syntonic's global network of carriers, resellers and providers. Syntonic's current integrations reach approximately 1.5% of the global smartphone market which is set to continue growth in both the short term (September commercial launches) as well as long term growth (TATA SDX growth and China commercial releases). They have continued revenue growth which is expected to continue in the coming quarters.
Syntonic is currently priced a .015c as at 27th May 2018.
