Good afternoon and welcome to the First Quarter 2022 Financial Results Conference Call for Verb Technology Company, Inc. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please be advised, the call is being recorded at the company’s request. On our call today are Rory J. Cutaia, CEO, and Salman Khan, CFO. Before we begin, I’d like to remind everyone that statements made during this conference call will include forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially. Forward-looking statements speak only as of the date they are made, except as required by law, as the underlying facts and circumstances may change. Verb Technology Company disclaims any obligations to update these forward-looking statements, as well as those contained in the company’s current and subsequent filings with the SEC. I would now like to turn the call over to Rory J. Cutaia, CEO. Rory?

Thank you moderator, and thanks to everyone for joining us today for our Q1 2022 financial results and business update conference call. So let’s jump into it. We were just named the number one software provider to the direct sales industry for the second year in a row, which is an industry we entered just three years ago that we now dominate. And with regard to that side of our business, I’m pleased to report that we’ve had another consecutive quarter of growth in our SaaS business, and I’d like to cover some of the highlights of the quarter, but first I want to talk about market, our new livestream shopping platform. First and foremost, I’m excited to announce the dates for the festivals, they are July 26th, 27th, and 28th. As I’ll discuss today, the recent public facing livestream shopping events on market have resulted in an acceleration of inbound interest from brands who want to be part of the festivals, including potential sponsors as well as headliners. So, we’ve been reshuffling the lineup a bit. The dates, times, lineup, sponsors, hosts and other information will be released as part of the advertising and marketing campaign that’s been developed for the Festivals. There are also plans for follow-on Festivals, around specific important shopping dates this year. I will disclose more information on those in subsequent communications. I’d next like to share some data points about the ongoing sales and onboarding process for market and the interest we’re seeing from vendors. So, the onboarding team, they take over from sales once a vendor agrees to join market and set up a store. All vendors get a store and as you’ll see as we get through little bit of this today, you’ll understand why that’s important. So between January and March,…

Thank you, Rory, and good afternoon, everyone. I’d like to review our financial performance as reported in our Form 10-Q filed today, May 16, for the first quarter ended March 31, 2022. I may reiterate and/or provide more color around some of the data points Rory shared with you. The following compares the company’s results of operations for the first quarter of 2022 with the first quarter of 2021. SaaS recurring revenue, a component of total digital revenue, was $2 million for the first quarter of 2022, up 37% over the comparable prior year quarter. SaaS recurring revenue as a percentage of total digital revenue was 93%, compared with 81% for the comparable prior year quarter. SaaS recurring revenue as a percentage of total revenue was 74%, compared with 58% for the comparable prior year quarter. As Rory mentioned, it has now been five consecutive quarters of SaaS recurring revenue growth. As we discussed in our last earnings call, until we completely phase out of our legacy non-digital business, our total revenue will not be a reliable indicator of our performance since it includes the revenue generated from both our digital business, which cumulatively is growing at a record pace, and our non-digital business, which is declining as we exit that business. For example, the non-digital business now represents only 20% of total revenue through the first quarter of 2022, compared with 29% through the comparable period in 2021. I do note, however, that due to our exponential growth in SaaS business, our total revenue for the first quarter 2022 over the prior year first quarter is up 6.5% despite the planned decline in non-digital business. As discussed in our earnings call last month, we historically made a conscious decision to ramp up our research and development investment, among other…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Martin Saltzman - Afm Investments Inc. Please go ahead

Yes, hi guys. Just so you're aware, there was no press release for the actual results. I don't know if you're aware of it or if there was a delay in it getting published, I'm sure there's other people on the call looking for that, but I do see your management's prepared remarks. So, anyway, congratulations on some improved numbers for sure. Rory, I just have a question pertaining to market. That's really the elephant in the room for me and my shareholders that I represent and I thought I heard you say that market will net Verb 10% to 20% of sales?

What I said is that, that is the average, Martin. Some of it -- depends upon the product. It depends on when the margin for that product and other circumstances that we agreed to with a particular vendor, it can go as high as 35%. But I think for the purposes of those investors that are looking to build a lean model from the information that we provided today, which honestly was the reason I tried to provide as much information as they can so that people can create their own model for value of market. You could probably look at 15% as being the average. Again, it could be higher, but I think 3% is a good conservative number about what we generate in gross sales by all vendors related to the platform. And just as a reminder, it's not just what they sell during the live stream event, it's also what they sell through the stores, which are there--

Could there be a case where there's a breakpoint for instance, let's say, a company does $5 million in revenues on their event, one of the big retailers that are coming in the hard launch in late July there, perhaps are they going to be charged less of a percentage versus somebody that might do $0.5 million in revenues?

No. No. We wouldn't be -- there wouldn't be a reason for us to do that.

Okay.

Just to finish, I give you a complete answer on that. Virtually all of the companies that are coming on to the platform have experienced alternative means of distribution, whether it's through some of the television sales or other means. And they are used to paying a percentage of sales to be on those various platforms. So, if we use 15% as the average, which I believe it is, that's actually more competitive than other places. So, it's not like we're getting any pushback from people on the percentage that we're charging people are pretty happy when we tell them that that's where it's going to land.

Are some of these people who are engaging market -- are they people who are also manufacturers who are just trying to, let's say, eliminate the middleman. And therefore, when you tell them, hey, it's going to roughly be 15%, they don't book at that because they're probably paying a middleman a lot more than that?

You're exactly right, Martin. We're seeing a lot of that now and we think that's going to continue, as you may have heard in my prepared remarks earlier. I think there's a lot of companies that are going to be looking for more efficient means distributing their products and more efficient distribution channels. And yes, cutting out the middleman is one way to describe that. So yes, if they could reach the consumers directly for their products and the only thing 15% to 20%, that's a massive saving for many, many, many of these companies, and that's a big difference.

So I just want to ask you then about, when you said 100 vendors, but April through May, you had 90 and then you're getting 8 to 10 a day, if you could, just a guesstimate in your dream of dreams, how many vendors might you have by the July 27, 28, 29 [indiscernible]. How many might you have total?

It's hard to say, Martin, because we want to make sure that everyone gets their store set up. And look, I'm trying to get as many on there as rapidly as possible. We've had to add a lot of people to the onboarding teams to help facilitate getting people on more rapidly. We've created a lot of systems and processes that will help the individual vendors, get their information together much more quickly so that they can get on. And then the other thing that I want to stress a bit is that we've been really, really lucky at the response from the market after people saw those last three events because before that, people were just coming on because they believe in the concept and seeing some demos of it. But when they actually saw events that were -- the public-facing events may actually see how it works and the quality of it, because it's hard to describe quality. When you show a demo, of course, it's a closed -- it’s a closed [indiscernible], so of course, it's going to be beautiful, but seeing it live that way, that really make such a difference. And for us, what that meant is, there are a lot of companies on really high-quality companies doing some big, big numbers in their online sales that have both us and it's like a wave, quite honestly, that would really do our best to respond to. So -- while there's a lot of very small mom-and-pop businesses that really want to get on, we're really trying to allocate -- and I'm happy to have them on. And we want to be able to accommodate everybody in level the playing field for even the smallest businesses. But as we look to the hard launch with the…

As far as the number of vendors, where are you now on the number that you have?

I believe, it's just under 200, but I'm guessing at this moment, because it changes hourly. So I think we're probably at around that range.

That's in excess of what I thought. I actually thought you were still around 1.25, 1.30, something like that, so over 200 is quite good. I have just a follow-up on -- you mentioned Wander Beauty. I mean, I don't buy beauty products myself. I chimed in and there was a slight delay from the initial time it was going to go off. But, boy, when I saw it, it was very impressive and Kate Eckman is a superstar. She's just tremendous. But I was asked a question by a couple of my clients, and they wanted to know why, if you have so many vendors already committed, why are you doing another Wander Beauty public event, why not somebody else? Why not somebody new?

Well, I mean, we are, as a matter of fact, but we have an event this, Thursday, which I guess, I think, we're going to be putting out a press release about it. We have an event this Thursday that’s another company. What is the name company. Stay body [ph]? Yes. So, yes, we have another one this week. We have several more events, I believe, this month. But the reason that I wanted to PR the Wander event and the reason that I believe it's meaningful is, because when you have a company of that caliber, okay, look these guys up here, in a year they've done massive business on QVC and HSN over the years. When you have a company like that that comes on and does a test event, and then they come back and say, "Yes, okay, now we want to schedule a series of events. In fact, we want to do another one this month” That sends a signal to other companies out there that, are the companies on QVC and HSN and other companies that are contemplating a live stream shopping solution. It sends a signal to them that here, this company did it. And, obviously, they loved it so much, they're coming back again. And I believe that, that really will drive, fact of the matters is that, already has, a lot more companies coming forward to say, yes, we want to be part of it. So that's why it was important. Yes, it's great to show a bazillion different companies, but for me, and I think for a lot of investors, the more important metric is, how many came back, how many we want to do it again. And that's why I put that out.

I appreciate that. Last question for me is, you mentioned that you're sort of putting off, I guess, a closure of some of the acquisitions you were looking at. And I appreciate that, especially given your share price, kind of hard to use that at these -- at this moment. So if there -- if you could put it off, that's great. But might -- I'm just curious, what you're trying -- not who you're trying to acquire -- but what areas of your business you're trying to assist or help or fill in the gaps. Can you say anything about that?

I wouldn't say that we're trying to fill any gaps. I think that our needs for our business and certainly market have been met. But -- that acquisition brings a couple of different things that are not necessarily filling gaps or needs. We have enjoyed an extraordinary wonderful relationship with those principles. And they have a fantastic team of developers that we really feel we could work well with effectively, and we'd like to be able to continue to do that. And certainly, we can do that under a statement of work, which now we are. But in addition to that, they have an interesting OTT business. And for those who don't really know what that is, that's on-demand video business on a large scale for large companies. So, an example of an OTT business that would be Netflix, as an example, and Vimeo, those are all OTT businesses. One, they want it for themselves and the other they run it for other companies. And I believe that the client that would be looking for OTT services would also be fantastic for verbTV. So, one that's running shows on an OTT network, well, one of the offerings we could provide is that we can make their television program in shoppable and put them on verbTV. So, there is a lot of advantages to it. Plus they have a good business and that revenue would be additive to our own. So there's a lot of reasons to do it, but -- and I'm still very much intending to do it. But, we had the stock drop crazy over the past month. And obviously, we didn't anticipate that. We actually expect it to be closing the transaction this week, but with the price where it is, as much as I really want to do the deal, and I intend to, I couldn't do it now at this price and create that kind of dilution for shareholders. I just can't do that. And they understand that.

I appreciate that, Rory. Well, listen, I'm going to go back in the queue. Thank you very much, and best of luck with market. It sounds great and exciting. Thank you.

Thank you very much for your questions.

The next question comes from Brian Kinstlinger with Alliance Global Partners. Please go ahead.

Hey, great. Thanks. Thanks guys. Thanks for all the information on the statistics for the events you've had so far. Salman, I want to -- hopefully, you can help us understand how a transaction is going to run through your P&L from market. Suppose you have a $50 purchase. In this case, a Verb would generate $5 to $10 of revenue on the transaction fee, if I understand correct. What's the gross margin on these types of revenues?

Brian thanks for your question. I appreciate you joining the call. This is a great question and some of the statistics that we have disclosed and Rory talked about certainly address and checks the box in terms of the numbers that you just talked about. So with roughly $50, we would anticipate around $10 revenue flowing in. In terms of our cost, look, this is going to be run on similar platforms that we use for our digital business, which you know our cost of revenues that is fairly low compared to our traditional business that we've had in the past. So if you do the math, it's a fairly smaller portion of additional costs that we would expect, including our people who are supporting the existing business and also the market platform on top of that. At the end of the day, as you know, this is a numbers game and the scale will determine what that unit cost and unit margins will be. Hopefully, that answers…

But it sounds like the incremental gross profit per dollar of revenue; it looks almost like a software business where 90% range as it scales. Is that right?

Absolutely. You got it.

Okay. And then when do you plan, Rory, on charging onboarding fees? Is it one price for all; and then in the hosting fee, is that like a monthly rent that if you're a store you're going to pay, just taking you through both of those pieces, if you can share with us whatever you can?

Yeah. So the store is -- we're hopeful that that people are going to find that to be a really great replacement for their existing website and hosting fees that they're currently incurring. Someone's website right now is basically like a billboard in the woods, whereas, having a storefront on market of time certainly as we have more people, it will be -- it's like having a billboard on Las Vegas Boulevard and the on Strip. And so we believe people will be willing to pay for that, and I don't think that we really need to charge people a lot more than what they're already incurring to maintain their websites and have it be extremely profitable business for us. So I think that we'll look to begin imposing those fees. It's sometime after the festivals, and it will really depend upon the number of vendors on there and the kind of traffic that we're getting from shoppers, which we hope to build over a period of time. But look, our interest, of course, is generating as much revenue as we can as soon as we can. And as soon as we believe it's appropriate to start doing that, we'll do that. But yes, this year, absolutely. And remind me what your first question…

Sorry. So I'll re-ask it. So to the degree that you have fantastic volume that your vendors see, you'll have leverage to charge a little bit more on a monthly basis to host it. I mean, is that right?

Oh, absolutely, yes. Of course.

To the degree the numbers don't start off so strong, it will be difficult to go to them and say, pay us a whole bunch more right now until you get those numbers out?

Yeah, but we wouldn't do that. We would -- obviously, yeah.

Fair enough.

And I think you spoke something about the onboarding fee?

Is there an onboarding fee, which I think it sounds like a fixed price and then there's also a monthly kind of hosting, which is like rent. Is that how I think about it?

Well, the -- what you're referring to as like rent is really what we would charge to maintain the store on the site, which is what I just talked about. But in addition to that, there are the onboarding fees and there are setup fees and depending upon the particular vendor and degree of assets that they have in the SKUs and all that, we'll determine what the fees are. There's actually three packages that people can sign up for that is a monthly fee that will include a lot of this stuff, and we'll be announcing that soon. So short answer is there is a recurring revenue component to this, and it will vary based upon what package people sign up form, or a company sign up for and the volume of business that they do through the platform.

Great. Now if I'm hearing right, from understanding the comments, you haven't charged anyone $1 yet. So you haven't -- not that you couldn't, but you haven't generated $1 really a revenue per market yet. And if that's right, when Wander has its second event or has more stand-alone events? Will they; A, start promoting? And B, when do you start charging the regular fees? Will you do it before the event, the large festival, or is it the festival that first time you're going to do it?

To be determined, Brian, it is certainly our desire to begin charging as soon as possible, as I said. We want to encourage vendors to come on, especially those that are really not familiar with the platform. It's new. There's, not a lot of events that have really happened on it. Some of the largest clients that are associated with the platform, that are on the platform have not let us yet use their name. If we could, we'd probably be more overwhelmed than we are now. So look, we want to be able to charge as soon as possible. We do expect to be charging or around the time of the festivals. It's, I would say, likely that we'll be charging for events that occur before the festivals. But I wouldn't want to talk about something on the phone here on this call that I haven't yet gone to some of you just…

You mentioned Wander, they look like a couple of million dollar firm I've only done a quick search. I'm probably not right, but who knows. But you mentioned there -- they've been on selling on QVC quite a bit. I take it others that you're working with Hab [ph] [53:26] as well -- have you been able to compare the average ticket price on market versus your small samples of your small sample size to what an average ticket price looks like on QVC?

Yeah. I'm sorry here for this, car horn on in the background going off here.

No worry. You can't control it.

Absolutely. Yeah, I think we're sort of in the same range a bit. Although, in some cases, it's substantially greater than the $48 that we're seeing, right now. So it's going to vary. But mind you, that $48 average is just from three events and three really un-promoted events. And so I want to make sure that, that's clear for everyone.

Right.

I actually expect it's going to be substantially higher. And I'm told, some of the people that have joined us with QVC that we should expect to see substantially higher per unit sales on market.

Okay. Two more questions. Sorry, I got a bunch. The first one is on advertising. It seems like a very big opportunity, although, obviously, your eye is in a price of these fees that are higher margins. But it seems like in any store, you walk through a mall or advertisers, are you going to walk through or go through these different rooms, you're going to have advertising opportunities. Have you yet approached a programmatic technology that can work with ad impressions? I take it given your capital position, you're not going to be looking to do direct sales force at this time. So just will that be ready for the first event or probably not?

When you say the first event, if you're referring to the festival?

Towards festival. Sorry.

Yes. So with regards to the festivals, yes, we are – we've got some sponsors. We are intending to add more. But beyond that, as to the ongoing operation of the platform itself, we've talked to a number of different companies that could provide advertising on there and create a new revenue source for us. What we need to do is demonstrate what the volume of eyeballs is on there. So while we may not have that type of thing in place at the time of the festivals beyond the sponsorships. We do believe that, as we proceed through the course of the year, and we're able to demonstrate the traffic on the site, it will become a very, very desirable place for people to want to advertise. And we've already built into the platform, the capability of accommodating that in a non-intrusive, but yet a very visible way for – that will make it attractive for sponsors and advertisers to want to be there. So yes, that is a revenue stream that I had not talked about in my prepared remarks as I was suggesting what people can use now to prepare their models, but that is another one that we would expect to layer in throughout the year.

Great. Last question. With the pending launch of the festival, and I know, you would envision after that, it's not going to stop there. How do I think about – although, you talked about some cost-cutting measures, how do I think about that overhead or you've been adding SG&A? Will you need to do any more significant hiring either ahead of that event or after that event for investments?

No, I think that we're really locked and loaded right now in terms of the team. I will say it's the best team I think we've ever had. And I say that, not because they had really nice people, but they are. The results that the team is producing now – I'm super proud of them. And so no, we're really extremely well staffed right now for growth and market into the future.

Okay. Thank you.

Thank you, Brian.

Our next question comes from Ed Woo with Ascendiant Capital Markets. Please go ahead.

Yeah. Congratulations on getting all these festivals up and running. My question is on the sports side of the business. I think that's a great opportunity. Can you talk about the on-boarding process, how quickly you could get these teams up and running to actually generate a meaningful revenue for them?

So pretty quickly, actually, the longest component of it is the internal approvals, which can take months sometimes. And some of the teams, depending on what kind of sport we're talking about, have to go back to the league itself to get approval. So the sales cycle can be long. But once it's approved, we can onboard them very, very quickly.

Great. And are you going to be targeting international sports teams in addition to US sports teams?

Yes. We already have. We've got some pretty big names in the pipeline. We just had two of our top sales guys just returned from Europe a few days ago. And I'll leave it there. They're looking to share a lot more information as it continues to evolve. But what we're doing is being very, very well received.

Great. Well, thanks for answering by questions. And I wish you guys good luck.

Thank you, Ed. Much appreciated.

This concludes our question-and-answer session. I would like to turn the conference back over to Rory J. Cutaia for any closing remarks.

I'd just like to thank everyone for being on the call, and thanks for your continued interest in the company. We are going through some crazy times right now with the market generally, and I know a lot of people that believe in us and trusted us and purchase shares in our business because of that belief and trust. We're never going to let you down. We're never going to stop and whatever optacles we face, we're going to keep planning through them. And what we've built with market and the results that I expect that we'll see from that as we get through this year and beyond, I think we'll be well worth to pain that every single one of us is doing right now. And I thank you for your continued support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.