FROM TECHNOLOGY TO REVENUE
Despite a positive update, a strategic merger agreement and major sequential quarterly growth shares of
We covered the Q4 results in a prior note but it's worth reiterating. With the Q4 results,
Here is a reminder of the highlights from the Q4 report:
The headline number of
- LogicMark - Most of the growth in Q4 was driven by LogicMark which continues to be a consistent and strong performer. We are expecting (and modeling) continued linear growth for LogicMark in Q1 and Q2. We could see a step up in LogicMark revenues beginning in later in 2017 with expanded distribution and strong one-time purchase products for PERS.
- WorldVentures - An initial shipment of cards was delivered in Q4 for WorldVentures to complete their testing. The exact timing of the major release of the WV flye card will depend on the completion of tests.
In short, LogicMark is steady and growing with WorldVentures beginning to kick in with volume shipments.
The FitPay Combination
FitPay is a technology platform that enables contactless payments on mobile and wearable devices. The platform relies on the tokenization scheme made popular by Android,
The company has gone a step further in creating more open infrastructure (API and SDK) that allow their platform to be tailored for uses other than payments. For example, applications like access control in hotel rooms, office buildings and public transit.
FitPay also brings a back-end integration and relationships with service providers and card issuers. This area is one of the most difficult parts of making payments work for the consumer. Combining these integrations with
Longer term, the most interesting part of the merger may be how it changes the management team and culture of the company. The management of FitPay has deep experience in payments. The CEO,
Until the transaction is finalized and the team settles we can't yet be sure how the staffing and roles will play out. But retaining and mixing in some of the very capable team to essentially run with the payments side of the business would be a huge asset for the combined company.
Some cynics have asked us why FitPay would merge with
We see the FitPay transaction as a major change for
Model Updates, Valuation & Conclusion
1H 2017 revenues will handily exceed the entire 2016 and for the full year 2017 is shaping up to be up 3x 2016.
We've updated our IV model to reflect recent results and refined expectations for 2017 and beyond. We'll have to do it again once FitPay closes and we get another quarter or two of operating results.
Our IV estimate remains
SoundView serves as a strategic advisor to
ABOUT SOUNDVIEW RESEARCH
SoundView conducts independent research - mostly on emerging technologies. We like thematic-driven companies where technology is involved and use analysis to identify the most promising investment opportunities.
Our business model is combination of subscription fees along with some direct investments and advisory fees. We measure our success by the quality of our analysis, accuracy of the conclusions and the size and influence of our audience. We apply our own proven approach to valuation that we call intrinsic value (IV) for informing investment decisions and optimizing portfolio management.
SoundView Technology Group