Invigor CEO on cryptocurrency deal, Condat sale and partnership ambitions
Finfeed recently spoke with CEO of Invigor Group (ASX:IVO), Gary Cohen to get the latest on the small cap's progress.
FF: Hi Gary, thanks for joining us. Invigor recently sold the Condat arm of the business. What position has that left IVO in?
Gary: We acquired Condat for just over $4 million about two years ago. As part of its business there were core services directed to media industry, the IP component was relatively minor. We made the decision to exit that part for net $3.8 million; just shy of what we initially invested, but at the same time, we carved out of the Condat business the Skyware product division.
We put Skyware into a separate company called TillerStack, a wholly owned German subsidiary of Invigor’s, and we have recently received commitments for investments in TillerStack valued at close to $10 million. That shows that the combined amount, with the funds from the exit and the investment, means that it is substantially valuable and we’ve done well with our investment.
Secondly, we used about $3.6 million of proceeds to retire Invigor debt. It brought our debt down by about 25 per cent. This is quite significant, and puts us in a position where we can focus more strongly on the products we have kept — leading to a higher margin and a lower debt burden.
FF: Skyware as it is now, did that already exist within Condat?
Gary: Skyware was a separate division within Condat. Condat had two divisions, a media division and a product business selling Skyware — particularly to large-scale German companies. The largest company they had was Unity Media, which was recently the subject of a takeover by Vodafone.
TillerStack provides and manages remote service for Unity Media of over 400 field service staff using our technology and software — it’s a proven product. We felt with that product we could make it far more scalable; not just in Germany, but also with mid-tier businesses in the German and European markets, of which there are thousands. We see this as a significant opportunity and as a result, one of our key executives Leslie Cohen with another colleague has gone to Germany to get that happening and oversee the growth of that business.
FF: Is Skyware your main play at the moment?
Gary: No, Skyware is still less core to what our main activity is, which is focused around our data product suite.
However, as we see value in the product suite of Skyware by investing in it and growing the business we will create significant value for the shareholders.
Although, success is not guaranteed so investors should seek professional financial advice if considering this stock for their portfolio.
FF: Let’s talk about IVO’s partnership with Microsoft. You’ve released a fair bit of news on this recently, how is that working out for the business?
Gary: The core part of our business is around competitive market intelligence and loyalty to help both retailers and brands, to understand the market and effectively engage with their customers. Using data and data solutions to drive that, is what we do.
Last year we became a Microsoft partner and it has been quite successful. Microsoft is referring many of their partnerships and relationships to us. A great example of that is Neal Analytics, 2017 Microsoft Partner of the Year, which we announced a month ago as a partner of ours. Neal is a US-based company that provides data analytic solutions to retail fortune 500 companies.
It is a well-regarded, highly credible group — as a result of that relationship with Microsoft, leading to the relationship with Neal Analytics, we have been brought into deals in the last month from both companies, with many Australian big brands and retailers.
The relationship with Microsoft is already proving itself to be exceptionally valuable to us and we are looking to expand on it.
FF: You have a new deal into the crypto space which is a new move for IVO, what is the company’s angle there?
Gary: So what we’ve worked out is that loyalty programs (whether for a retailer or a brand) is moving very much into the blockchain technology together with a digital token and this can end up being exceptionally valuable to retain and reward customers.
The way in which the whole market is shifting in our opinion, over the coming years, will move away from points and cards to a more ubiquitous-type digital token that you’ll be able to restore and retain on your phone. You’ll then be able to decide whether to trade with it, gather more and so on. We believe it will become a form of digital currency, because it will be far more valuable than loyalty points associated with just one particular company. It will also have a far bigger scale and value, whereas loyalty points depreciate in value. We believe digital currency potentially will appreciate in value over time.
We’ve been working towards that concept for several months now. We’re on the verge of doing something in the international market — we currently have a major group looking to partner with us.
Part of the issue with any marketing or loyalty campaign is getting users to adopt it. We are starting with a trial which will then expand into a broad-based scheme; we want to prove it up.
We decided to initially partner with ChronoBank to use their technology, helping us to move into the space relatively quickly. This should help us take our loyalty programs into further markets, not just Australia but also Asia, and get greater traction quickly.
FF: What’s in store for IVO for second half of CY2018?
Gary: Over the next few weeks we are looking to close some fairly significant transactions with major Australian corporates. This includes at least two major deals for our pricing and our loyalty products.
We’re also looking to close several mid-size contracts in Australia and Asia. The pipeline has grown dramatically in the last few months. We’ve increased our ability to close these bigger opportunities, which obviously provides long-term material value to the business and drives us to becoming operating cash positive in the mid-term.
With our current pipeline, we are aiming to increase our revenue numbers by 30 per cent, so these deals are significant. We’re also looking forward to announcing our new international partner in the loyalty space, and growing in that market through partnerships.
TillerStack has also been in discussions with international partners — so you can expect to see some strategic announcements in the next 2-3 months regarding all of these opportunities.
In terms of our financial position, Invigor is looking to continue to reduce debt, and we have received commitments from our major convertible debt holders to convert those into shares. We look to get our debt down by 75% per cent within 6 months.
With all of this, we are really looking to take Invigor to the next level, graduate from a micro-cap and grow and expand the business.
FF: Gary, thanks for your time.
The views and opinions expressed in this article are those of the interviewee and not of S3 Consortium or its licensee. As always, you should undertake your own due diligence with regards to these views and opinions and seek professional financial advice if considering this stock for your portfolio.