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Edited Transcript of IDEX.OQ earnings conference call or presentation 9-Nov-20 9:30pm GMT

·37 min read

Q3 2020 Ideanomics Inc Earnings Call NEW YORK Nov 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Ideanomics Inc earnings conference call or presentation Monday, November 9, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Alfred P. Poor Ideanomics, Inc. - CEO & Director * Conor John McCarthy Ideanomics, Inc. - CFO & Principal Accounting Officer * Tony Sklar Ideanomics, Inc. - VP of Communications ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Greetings, and welcome to the Ideanomics Third Quarter 2020 Earnings Call. (Operator Instructions) Please note that this conference is being recorded. I'll now turn the con over to our host, Tony Sklar, Vice President of Communications and Head of Investor Relations. Thank you. You may begin. -------------------------------------------------------------------------------- Tony Sklar, Ideanomics, Inc. - VP of Communications [2] -------------------------------------------------------------------------------- Good afternoon, and good evening, everybody. Thank you so much, operator, and welcome to the Ideanomics Third Quarter 2020 Earnings Conference Call. Joining me on the call today, I'm pleased to have Mr. Alfred Poor, Chief Executive Officer; and Mr. Conor McCarthy, our Chief Financial Officer. A webcast of today's call will be archived and available in the Events and Presentations section of our corporate website for a minimum of 30 days. As a reminder, this conference is being recorded. During the call, we will make forward-looking statements such as dialogue regarding our revenue expectations or forecast for the quarter and full fiscal year 2020 and 2021 related to our business. These statements are based on our current expectations and information available as of today and are subject to a variety of risks and uncertainties and assumptions. Actual results may differ materially as a result of various risk factors that are described in our periodic filings with the SEC. As a result, we caution you against placing undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statements as a result of new information or future events, except as required by law. In addition, other risks are more fully described in our Ideanomics public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. Today, November 9, 2020, the company filed its 10-Q with the SEC and afterwards issued the press release announcing its financial results. So participants on this call who may not have already done so may wish to look at those documents as we provide a summary of those results on this call. The format of today's call will be as follows. Mr. Alfred Poor, our CEO, will speak to the company's overview and the business strategy as well as the activities and developments for the third quarter and for fiscal 2020. Mr. Conor McCarthy, our CFO, will speak to the company's operating and financial results for the third quarter. And then all of our investor community's favorite session, the Q&A time. I will now hand the conversation over to Mr. Alfred Poor, our CEO. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Tony, and thank you to everyone joining our call today. I'm going to begin by talking about our results in Q3 and follow that with some remarks about our Q4 and our business as we head into 2021. In Q3, we saw the quarter-over-quarter growth we had referred to in our last earnings call. Unit deliveries were significantly up, which resulted in revenues increasing little under 2.5x versus the second quarter. Our taxi and ridesharing business unit continued to be the driver of this growth as the consumer-led economy in China came back strong in the second half of the year. We've been working hard, as I mentioned at our recent AGM, to get the financing solutions in place to unlock our pipeline of big-ticket orders, such as trucks and buses. And we've made some significant progress there already in Q4, which I will discuss in more detail shortly. In terms of the broader EV industry, the industry has seen a significant uptick in EV passenger car sales. And this is driving interest and inquiries from commercial fleet operators outside of China, which was previously the only meaningful market active globally. We expect those inquiries to translate into demand to the non-China commercial vehicle markets as we move into 2021. One of our priorities, as we close out 2020, is to unlock the order pipeline we have for larger ticket items. As I've discussed previously, the key to executing on these sales orders is innovative financing program. There is a dynamic taking place in the China market away from financing the finished product of the vehicle and battery together, and towards financing the vehicle and battery separately. In order to achieve this, we've had to restructure relationships with our battery partners and most partners bringing the capital into our funds. There are 2 funds in progress at this time, one of which is likely to be finalized within November and the second shortly thereafter. The funds will focus on vehicle leasing as well as battery as a service. The subject you've heard me speak about several times recently. Once online, these funds will enable us to confidently place the orders with manufacturers who are every bit keen to see these orders moving as our customers, our shareholders and, of course, the management and staff of Ideanomics. We're working hard on these deals every day. In terms of Q4, we're already seeing strong growth in deals sourced by our sales teams in Hangzhou and Qingdao, many of whom are recent hires. I'm pleased to tell you that we have been successful in attracting sales talent with experience in commercial fleet sales, and our pipeline is already beginning to show the benefits of expanding our sales operations in China. We've worked incredibly hard to put the systems and processes in place to scale our sales operations. And this is bearing fruit already. Many of you are anxious to see our bus and truck sales come online, and I am pleased to announce that we have begun to execute on one of our orders, which involves the conversion of diesel buses. And we have concluded the deal in Q4 to supply the batteries and harness equipment utilizing CATL batteries supplied by our MEG division. The initial order is for 13 buses, and that's part of a larger rolling order for fleet conversion. That will continue through Q4 and into 2021. As the bus operator has to take the buses out of service in order to do this work and that's why you'll see the numbers like similar to what this initial order of 13, it will be 10, 15 or 20 at a time. We have another order we're expecting in December, a similar number. And for those customers who are converting rather than replacing coals. The batteries and harness equipment are expensive. But it's cheaper than replacing the newer buses in the bus operators rolling stock, and we're excited to have this revenue activity in the bus segment of our business. Our 3 electric business unit, is currently placing orders with its manufacturing partners for the first tranche of 1,000-plus units. And this will enable them to begin fulfilling sales in major markets where we have strong order flow, including Thailand and Indonesia. COVID-19 hit Malaysia harvest from our global operations, but the ports are now open with robust measures to counter the coronavirus, and we expect big things from that business unit in 2021. As I mentioned at our AGM, we have a CFO joining the Treeletrik team in a few weeks' time, and he brings rich experience from big auto that will help us with everything from supply chain through to the development of our land in the port area. As you will recall, we acquired title for the land earlier this year, and this is a strategic part of our plan for Treeletrik and its ability to reach scale to meet demand throughout the ASEAN region. As we detailed in our recent shareholder meeting, we are progressing with our Medici Motor Works business and expect to have the first BEV truck sales and other vehicle types ready to start the homologation process necessary for sales in North America. We're encouraged by the fact we are already getting inbound leads from commercial fleet operators, both in North America and other non-China markets. So we feel we are where we need to be in terms of timing for the introduction of our Medici brand. Conversations are taking place in areas ranging from supply chain through the sales distribution partners that will keep you informed of major developments as they occur. I'd like to point out in case it's not obvious that our MEG business unit will support the Medici and Treeletrik in terms of financing, batteries of service and charging services as an expansion of its China-based activities. We believe MEG's S2F2C model will translate well to our global markets. So MEG will be available not only to support our Medici Treeletrik brand status outside of China, but also to support the needs of commercial fleet operators with a larger range of vehicle types and manufacturers. That leads nicely into our next topic. On October 22, we announced that we invested in California-based EV tractor company, Solectrac. Our investment got us a little under 15% in the company. As a reminder, Solectrac builds and sells 100% battery-powered electric tractors as a clean alternative to diesel tractors. They supply these to farms, vineyards and other types of land operations. The investment allows us to participate in the global agricultural tractor market, which is valued at $75 billion with the North -- the market in North America alone, expected to reach $20 billion by 2023. This was a great investment at the right time as we believe the specialty vehicle market will be one of the fastest-growing sectors in commercial EV. This is due to the fact that tractors and other specialty vehicles typically don't have concerns around ranging it. Vehicle weight and charging network infrastructure that long-haul vehicles do. Our strategic investment in Solectrac is aligned with our M&A strategy, which must fulfill following criteria, must be synergistic, possess something proprietary, have a proven viable products and have existing sales. Solectrac is a great fit for our specialty vehicle and heavy truck division Medici Motor works. The company currently boasts both awarded and pending patents, 3 electric tractor models with another in design stage as well as sales and an active order book. So we're very excited to have 3 -- have Solectrac in the family. In terms of general operations, Conor McCarthy will cover that in his segment, but I'd like to say that as we add staff to bolster and scale our activities, Conor and his team are taking a disciplined approach to our expenses and continue to help us streamline our operational costs. This includes divesting in non-core assets, such as the Fintech Village property, which is beginning to receive qualified interest. In conclusion, I'd like to say that we are pleased with our progress and our achievements are only possible through the support of what is truly a global IDEX family, of strategic partners, employees and shareholders. This has been a pivotal year where commercial EVs have gained mainstream retention, and we anticipate this segment will begin to show the type of growth we have seen in EV passenger cars. The future looks bright for the EV industry, and I'm confident that Ideanomics is well positioned to take advantage of that global trend towards zero-emission vehicles. This will allow us to generate sustainable revenue growth and shareholder value. Thank you very much. Now I'll hand over to our CFO, Conor McCarthy, to review our financial performance in Q3. -------------------------------------------------------------------------------- Conor John McCarthy, Ideanomics, Inc. - CFO & Principal Accounting Officer [4] -------------------------------------------------------------------------------- Thank you, Alf. The third quarter was 1 of the strongest quarters that Ideanomics has had in its terms of financial performance. The highlights for the quarter are: continued strong revenue growth, a reduction of $1.6 million in annual operating expense through continued disciplined expense management. We ended the quarter with $27.6 million in cash. We have an active M&A and investment program to support our organic growth initiatives. I would now like to discuss the financial performance in greater detail. Revenue for the third quarter was $10.6 million, almost all of which was generated by MEG, the company's EV business. The third quarter revenues are the largest since the company commenced activity and are 2.3x greater than the revenues for quarter 2 2020 and 3.4x for the third quarter of 2019. We delivered 626 units in the current quarter versus 97 units in quarter 2 '22 -- 2020. This excellent result demonstrates that the investment made in our China-based sales team and the infrastructure Medici support them is generating a very high-return on investment and gives confidence to the plans that we have for further investment to continue to drive material levels of quarter-over-quarter sales growth. The MEG sales offering continues to expand with the objective of deepening the relationship with the customer through a differentiated sales offering from our competitors in order to create longer-term brand value. Reflecting this, we recorded $0.4 million of deferred revenue in this quarter, which will be recognized in future quarters as the services are delivered. Revenues for third quarter of 2019 were $3.1 million, of which $2.8 million came from the sale of EV taxis. Gross profit for the third quarter was $0.7 million, which represented a gross margin of 6.7%. Gross profit in the prior quarter was $2.9 million with a margin of 92%. The MEG division acted delay agency capacity for the EV sales for the third quarter of 2019, and under U.S. GAAP guidance, these revenues were reported on a net basis, which resulted in a day minimus cost of revenue expense and consequently, a very high gross margin. As I pointed out on prior calls, the dollar amount of the gross profit earned and the cash generated are identical regardless as to whether the revenues are reported on a gross or net basis. Third quarter operating expense was $12.7 million as compared to $12.3 million in the same period in 2019. The third quarter include a $1.3 million expense for early-stage R&D work related to designs from the DT branded high battery and hydrogen powered trucks and buses. National fees in the third quarter were $4 million, which reflects the costs associated with an enhanced Investor Relations program to raise the profile of the company in the investment community with the objective of aiding capital raising efforts, costs are responding to the class action lawsuits and regulatory inquiries as well as generally heightened corporate activity in fundraising and M&A. As previously announced, Fintech Village is considered to be a non-core asset, and we commenced an active marketing program to sell the site and appointed the Colliers commercial real estate brokerage firm to run the marketing efforts. Their effort to produce some promising indications of interest, which management is in the process of evaluating. As a consequence of the decision to sell the site rather than develop it, we will drive capitalized architect fees and the one remain building on the site. The amount of this impairment charge was $3.3 million, which was all noncash. We recorded a gain of $4.2 million to reflect or remeasurement of the earn-out contained in the Tree Technologies acquisition agreement. We remain highly confident about the long-term potential of Tree Technologies. However, delays in delivering on the business and are projected to reduce the earn-out payments due to the selling shareholders. The loss from operations was $12 million as compared to $9.4 million in the prior period. The increased operating losses was entirely due to the lower gross profit. Turning to the interest and other income and expense section of the inconstant. Interest expense for the period was $2 million, which was noncash and represents the expense when U.S. GAAP accounting guidance is applied to the ratchet provisions in the company's remaining convertible debt. We recorded a noncash gain of $5.3 million in other income related to the successful negotiations to terminate the lease of the company's prior office building in Downtown, New York City. Our new offices reflect the workplace dynamic, which we anticipate will continue for foreseeable future, which come at a very significant cost savings. Now I'd like to turn to the balance sheet. We ended the quarter with $27.6 million in cash. Goodwill of $10.5 million is lower by $12.8 million as compared to December 31, 2019 balance of $23.3 million. The change reflects the finalized purchase calculation for the company's Tree Technologies acquisition. In the current liability section of the balance sheet, current contingent consideration of $4.1 million is lower by $8.3 million as compared to the year-end balance of $12.4 million, principally reflecting the payment of the consideration for DBOT by way of issuance of common stock. In conclusion, the third quarter was one of milestones achieved. The highest revenues for MEG since the business commenced operation, extension of MEG's products and services to provide additional revenue streams, more value to customers and strengthen our long-term relationships. Continued operating cost is from saving $31.6 million annually, active M&A pipeline of opportunities that meet the 4 investment criteria set out by Alfred's early remarks. That concludes my remarks, and I will hand it back to Tony Sklar. -------------------------------------------------------------------------------- Tony Sklar, Ideanomics, Inc. - VP of Communications [5] -------------------------------------------------------------------------------- Thank you so much, Conor. This concludes management's prepared remarks. Now I'm super excited for us to be able to answer some of our investor and analyst questions. So operator, if you could give everybody the instructions on where they submit, we'll get to it. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from [Damon Felton]. -------------------------------------------------------------------------------- Unidentified Analyst, [2] -------------------------------------------------------------------------------- Yes. Can you hear me? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Yes, we can, Damon. -------------------------------------------------------------------------------- Unidentified Analyst, [4] -------------------------------------------------------------------------------- I just have one question really. Where do you see the company in the next 5 to 10 years? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [5] -------------------------------------------------------------------------------- I would obviously anticipate us being a significant company in the next 5 to 10 years. We'll be getting there in a meaningful way much sooner than that, in my opinion. We're starting to see the commercial activity for EV pick up in the same way that the passenger car does. I think a lot of people see the passenger cars and say, why isn't Ideanomics moving that fast? Well, we're not in the consumer space. And if you look at most of the EV in the commercial space, they're just taking orders at this time, where we're actually starting to execute on that pipeline, as you saw. So I think in 2021, we're going to start to see the energy revenues come online from that side of the business as we get more of those commercial fleet customers out to market in EVs. And I think you're going to see the company benefit from the last couple of years of infrastructure we put in place. You heard Conor mention it, so did I, talking about the sales infrastructure and other things. We're preparing the business to scale at this point time, Damon. So we're anticipating growth to come behind that. And one of the reasons we raised the cash in the earlier summer was to support the additional staff we need to bring on board in the short-term and to look at some other strategic opportunities as the market unfolds. It's a new market EV. So we do get changes, as you've seen, with the dynamic I've spoken about with the financing for the bigger ticket orders. But we're obviously taking steps in every angle that we can to make sure that we're out ahead of the market in that regard. And I think you're going to start to see, as the commercial market comes online more meaningfully, companies like Ideanomics very much in the ascendancy. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- Next question comes from [Susan Marrow]. -------------------------------------------------------------------------------- Unidentified Analyst, [7] -------------------------------------------------------------------------------- Great quarter as far as earnings per share. I'm really glad to see it moving in that direction. My concern is you've been awfully quiet. Management has not been doing as usual communication with investors. And I noticed there's an SEC investigation that you've noted on the Q. Wondering if you can provide some light on that and when we can start hearing your wonderful voice and PRs more often. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [8] -------------------------------------------------------------------------------- Yes. Thank you very much for joining us. And thank you for that question. Yes, obviously, when you have China-based operations and you have events happen, negative events happen like a short selling attack, you catch the SEC's attention. We've had a good relationship with the SEC. Obviously, we can't discuss ongoing matters. But as much as I can say at this point, as you know, we have reached out to the SEC to ask them what else we can be doing to help conclude their inquiries. And we're a public company. So it's very much their entitlement to ask the questions that they do. -------------------------------------------------------------------------------- Unidentified Analyst, [9] -------------------------------------------------------------------------------- Interestingly, you've got other companies that are in a very similar position financially as far as negative earnings and not quite yet profitable, yet, these companies are going gangbusters as far as their stock price, what do you say to investors who are holding on were barely at $1, and you've got a company like Workhorse and others, not that they do the exact same thing. But they seem to be doing a really good job reaching their investors and reeling new investors in to hang with them. And we're not doing that. What can you tell us about what's... -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [10] -------------------------------------------------------------------------------- Yes. I think perception is reality. So I would say that you often get the stock price that you deserve. And certainly, that's the case in the short term. What I would say for you is folks looking at a lot of these companies in the space have an imperfect understanding of the automotive industry. You've just seen some moves made by Volvo, made by Ford and others who have market caps or often a fraction of some of the astronomical valuations and share prices that are out there at this time. There'll be consolidation. There'll be a market correction against some of those. I think people are looking at the consumer vehicle sector, particularly in Tesla and NEO and saying, wow, everything on EV-related must be on fire. I don't think it works quite that way in the commercial sector. And as I said, a lot of people are not looking at what we consider to be the crown jewels here and that the energy consumption. Remember, EV in automotive is great, but manufacturers go through cycles of boom and bust over decades, right? ExxonMobil, Shell, BP, these people don't, okay? And it's going to be the transition in the energy demand and the people that play in that space that I think are going to be the real winners. That's something Ideanomics understands. It's something Tesla understands very well. That's why it has a closed network for its charging, and it's beginning to pick up metering licenses in Germany and Australia and places. But most of the market doesn't get and the pure pay asset-heavy automotive company won't be able to participate in. So that's where we think we're different. We've done this within a public company by transforming the business, not having a blank canvas, doesn't give you kind of the same clear runway as a lot of these companies have had, but we're very proud of what we're doing. We're making our mistakes at scale in China right now. So when we come to copy paste our operations globally. I think people will understand what we've been trying to put together the infrastructure we have in place. And we expect to begin the -- we expect to start an ascendency, and we expect those astronomical valuations to start to come down as well. So I think you'll see a lot of normalization in the market in 2021. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Our next question comes from [Chris Clay Dwedi]. -------------------------------------------------------------------------------- Unidentified Analyst, [12] -------------------------------------------------------------------------------- I've got some questions following on Susan's questions. Just about general business updates. Is there any more color you can to the spin-offs of Medici and Tree, any updates there? Just looking for any kind of guidance you can give us as far as what your plans are. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [13] -------------------------------------------------------------------------------- Yes. I mean, obviously, we can't speak about events before they unfold. I don't want to jump the gun on anything, but needless to say, anybody with any assets in the EV space has been approached for some interesting conversations at this time. So we'll let you know more when we're able to. But obviously, it would -- I can't come out and declare anything before we're ready to disclose it because we're a public company. But there are some interesting conversations out there, not just for us but for anybody with EV assets at this time. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Our next question comes from Chris Charney with... -------------------------------------------------------------------------------- Unidentified Analyst, [15] -------------------------------------------------------------------------------- Can you provide additional clarification on the S2F2C model in the U.S. specifically to the financing and charging pieces in the U.S. need to be a separate stand-alone operation to be successful? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [16] -------------------------------------------------------------------------------- We don't believe they do. Conor and Kate Lam, who heads up our Ideanomics Capital Group, having a lot of interesting conversations with the financing partners over here. We're beginning to help them understand how the model has been working in China. What the challenges have been as the EV market has developed, particularly as it pertains to battery technology getting faster, more durable and cheaper year-over-year. So those guys have been having the conversations they need to make sure we have the financing partners in place as we bring them Medici and Solectrac -- supporting Solectrac as well. We believe the S2F2C model is a strong one. We believe it will translate directly into other markets. And as I mentioned, in my remarks a few moments ago, MEG will be here to support Medici. Medici is a product company. MEG is a service company. So there's always going to need to be a service there, but MEG won't only support Medici, Solectrac to electric, et cetera. The needs of commercial fleet operators are not going to be able to be serviced by one particular company as you go out and you meet the fleet operators and you talk to their management teams. You understand they get a range of vehicles in from a variety of manufacturers. That's where MEG, I think can continue to be interesting. Not only can it finance their own vehicles, but it can finance the other vehicles for other manufacturing partners that complete their fleet operators' needs. And I think, obviously, the holy grail there we're trying to do is give them that sales and financing support services. In order that we can take care of their energy demand needs and help sell them electricity products. So I think that's where we're strong on MEG where we think MEG ultimately will likely be our largest revenue producer. Given that it will be selling the energy demand as well. So we're -- as I said, we're starting those conversations now in other markets to make sure that we're ready to move with MEG when the DT and others come online. -------------------------------------------------------------------------------- Unidentified Analyst, [17] -------------------------------------------------------------------------------- And a follow-up to that would be the fleet operator adoption of S2F2C. Can you maybe give us some type of metric or expectation of what that would look like in terms of quarter-over-quarter growth going forward, like how many have been engaged so far? And what can we expect in the coming months? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [18] -------------------------------------------------------------------------------- What I can tell you at this point, I can't give you any of those types of numbers at this time. But what I can tell you at this time is that the fleet operator is having the same type of discussions with us as they're having in the U.S. as they're having with us in China and other markets, which is they need service providers to assist them, to understand the manufacturer landscape, understand the financing landscape, understand the rebates and the tax incentive landscape. Those areas continue to be very interesting. And obviously, if they can benefit from our group purchasing of electricity to supply it to them cheaper than they can probably get direct, then that's obviously something that's very interesting to them. The ROI is one of the biggest hopes the fleet operators communicate to us, not only reduced energy cost but in reduce time off the road through vehicle maintenance, which obviously, internal combustion engines aren't quite as superior as EVs in terms of motors and mechanics. So we're anticipating the EV trucks will be both on the road more and longer-lasting than the their ice counterparts were. So the conversation is very, very similar. It's going to be all about service level, cost and what they can get for that cost and the ROI that they achieve. And that's why we believe MEG is going to translate over as well. -------------------------------------------------------------------------------- Unidentified Analyst, [19] -------------------------------------------------------------------------------- And one follow-up, if I may. Can you just confirm whether the Beijing Central Finova bus deal is still active? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [20] -------------------------------------------------------------------------------- Central Finova is a financing company. We do still have an active relationship with them. They are one of the companies that has been working with us to discuss how to deal with this dynamic in China, which is the lease financing companies don't want to underwrite the finished products at this time because the batteries are getting cheaper and bigger year-over-year. So that's what I've been talking about now that there's a dynamic in China that we expect at least in the short-term to translate to the other international markets, which is the battery will be sold as a service until the consumer or the fleet operator can purchase knowing that he's got something that isn't going to change in terms of value or durability and range and things like that, 6 months after he's purchased it. So that's really the big dynamic that's taking place in China. We expect that to be the same. Year-over-year, the tax is getting much better for not only the battery, but for the charging and the energy management as well. And until that stabilizes, I think you're going to see a dynamic where the battery is going to be more at least as a service for a 3- or 4-year period than purchased as part of the finished product. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- Our next question comes from David Joseph. -------------------------------------------------------------------------------- Unidentified Analyst, [22] -------------------------------------------------------------------------------- Congratulations. I thought the quarter was very good. You guys are going in the right direction with the growth of the company. My question is related to the United States change of political situation that's changed. And it appears that the new government appears to be in place will be in place apparently is very proactive in the electric vehicle space and that they're going to be pushing out incentives and tax breaks for corporations. What do you -- how do you see Medici Motor Works in that light as well as sold track and the American market going forward? And are you expecting this to start to transpire in 2021? And number two, you mentioned in the last quarter, merger and acquisitions were also on the to-do list. Could you comment on that as well, please? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [23] -------------------------------------------------------------------------------- Yes, certainly. Thanks so much, David. Interesting questions, and I'm very happy to answer them. The first part is we don't really know what the next administration would do. And you have to try and plan around any administration as it comes in. Certainly, the noise is coming out of the Democratic party is that if they were in government, they would be taking certain measures, and they do tend to be pro EV. And one could also argue there will be more pro China, which has been a difficult dynamic with the current administration for a company with operations in China as we have. The answer is I would generally say, based on holding those politicians true to their word, and I don't know if that's -- anyone can never really do. But without wanting to get into a political discussion. But typically, I think we'd expect them to at least partially take care of the promises they made during their bid for election. The one thing I would say that's a dynamic now that we can understand is the economies at a state level are not in good shape, right? COVID has been pretty hard. The same as like the EV industry looks at Tesla and NEO and says, what's going on to the rest of everybody else. Well, if you look outside the tech sector on 1 or 2 others, and you could say the same thing like what's going on with the rest of the economy. And I just I don't know from the conversations that we're having, that a lot of these states are going to be at of afford extending their programs in 2021. We certainly hope they will be able to. We don't anticipate that hitting us terribly if they don't. But that would be the one thing that I would be concerned about is will at state level, will they be able to afford the tax incentives and rebates that they've had in the last few years. -------------------------------------------------------------------------------- Unidentified Analyst, [24] -------------------------------------------------------------------------------- Very good. And merger and acquisition activity, I recall that when you had the $35 million in the last quarter that you guys were potentially looking at merger and acquisition, and I didn't hear anything about that in this quarter. Is that still on the to-do list? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [25] -------------------------------------------------------------------------------- Yes. There's obviously we think there's some amazing opportunities out there. I just mentioned there that there could be some states unable to continue with the rich subsidies they've been giving in 2021 because their economies are not great. They need more tax dollars to support them. In the same way, there are some companies out there with some amazing technology that are relatively well-priced right now and a good strategic fit for growing companies like Ideanomics. So we're very active, we've added to the corporate development team recently because of a pickup in activity. We continue to have our own conversations as well as be approached by advisers looking to get our interest in companies in their portfolio or companies that they contracted to. So it's an area that I would expect to see additional activity from us in the future. -------------------------------------------------------------------------------- Unidentified Analyst, [26] -------------------------------------------------------------------------------- Sound very good. And closing, congratulations. 230% increase over the quarter, I think, is excellent, and you guys are going in the right direction. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [27] -------------------------------------------------------------------------------- Yes, absolutely. -------------------------------------------------------------------------------- Operator [28] -------------------------------------------------------------------------------- (Operator Instructions) Our next question comes from [Art Cayan]. -------------------------------------------------------------------------------- Unidentified Analyst, [29] -------------------------------------------------------------------------------- Alfred, this is Art. Again, taking my call. Can you hear me fine? -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [30] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Unidentified Analyst, [31] -------------------------------------------------------------------------------- I wanted to touch back on this because I haven't heard anything. I had e-mailed you on the insider buying 12 months ago. You guys said you were working on it. I have a second e-mail on a -- 6 months ago, you guys are still working on insider buying. I believe if you guys do this in the open market, confidence will go through the roof to shareholders and institutions because it shows them, hey, look, these guys are buying because they believe they're going in the right direction. Can you maybe elaborate on this a little more? Obviously based on my experience... -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [32] -------------------------------------------------------------------------------- I'd be very pleased to speak about this, Art. Actually, there's a Form 4 being filed for me today that show some buying I was able to do. I purchased a number of my share options that had recently vested. All but in terms of like -- yes. But in terms of market buys, yes, I believe that was filed after market. Tony, would be able to confirm that, but certainly, yes. -------------------------------------------------------------------------------- Tony Sklar, Ideanomics, Inc. - VP of Communications [33] -------------------------------------------------------------------------------- Yes. Yes, we've got that. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [34] -------------------------------------------------------------------------------- Thank you. But in general terms, I would say that we're working with a large institution right now to move our share plan over from the existing incumbent vendor over to them. Part of that is they offer an extensive service around 10b5 plans. Those are ones where individuals such as myself and the company wouldn't be subject to what we are at the moment, which is in constant receipt of material nonpublic information, again to David Joseph's point on the previous question, we're having a lot of conversations around M&A, strategic partnerships, those types of things. There is no window that I can buy or sell. Now I can buy my options because they're already disclosed to the market. So that's what I did today. And Conor and the team are in the throes of getting the finalization for the 10b5 plan as well as the share management plan put in place with a much larger vendor than the incumbent that we've been working with. Once that's up and running, then that will be an opportunity for us to announce ahead of the market, our BIs and sales. So we can say, okay, (inaudible) is going to buy some shares every month, first Monday of the month or something like that. And then that's the only other way you can get away with doing it in a compliant manner when you're in constant receipt of material on public information. So it's taken us a lot longer to do that. Data, export and import files and all sorts of things we've had to deal with and have to work with third parties on. But I won't bore you with the details, but kind of the team have worked hard when they have they have weekly integration calls with the new plan provider that's going to be getting us on life daily soon. Conor, I don't know if you can speak to when you're hoping that will be live, but I know we're close to finalizing. -------------------------------------------------------------------------------- Conor John McCarthy, Ideanomics, Inc. - CFO & Principal Accounting Officer [35] -------------------------------------------------------------------------------- And goal to go live in the second half part of December. And... -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [36] -------------------------------------------------------------------------------- Second part of December. -------------------------------------------------------------------------------- Conor John McCarthy, Ideanomics, Inc. - CFO & Principal Accounting Officer [37] -------------------------------------------------------------------------------- Second part of December. And as of last week, we were on target. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [38] -------------------------------------------------------------------------------- Great. Okay. Yes. So the 10b5 will be in place soon. That will allow more -- allow us a more structured and compliant approach to -- for management and staff to be able to buy the stock. Like I said, in the meantime, I went ahead and bought some of my share options have vested, and those got announced today. So apologies for the delay on that. These things always take longer. Moving away from the incumbent hasn't been easy. They're never motivated to let you take the business away. So -- but we're in the final stages of that, and that should be ready, as Conor said, from December onwards. -------------------------------------------------------------------------------- Unidentified Analyst, [39] -------------------------------------------------------------------------------- A quick follow-up to that. It's more of a short question. We also have $20 million, something like that in cash. Do you see the company also announcing like a share buyback in the open market, you would see shareholders happy because they would say, hey, you guys are buying in the open market. I mean, out of that $20 million, if you just bought at these prices, you probably get 5 million shares off the float, which would be a great. -------------------------------------------------------------------------------- Alfred P. Poor, Ideanomics, Inc. - CEO & Director [40] -------------------------------------------------------------------------------- Yes. I think that's something we'll have to arm wrestle with Conor McCarthy as and when the revenues increase. I mean at the moment, everybody else around us has raised a lot of cash. So that can be -- that can put us a little bit on the defensive, depending what moves they make. So I'm not sure with just $20 million in the bank, we'd make moves like that at this point. But certainly, it's something we discuss in terms of our long-term planning as we start to ramp up the sales and the profitability of the company. Share buybacks are one of the items for discussion for sure. -------------------------------------------------------------------------------- Conor John McCarthy, Ideanomics, Inc. - CFO & Principal Accounting Officer [41] -------------------------------------------------------------------------------- I think we -- I think when we look at your suggestion, we need to look at the landscape of opportunities for investment. So at the end of the day, we're trying to maximize the return for the shareholders. And if we see a good strategic investments that meet out those criteria that we discussed about, that would be something that we're the first call in our cash would be to invest. Because that to reduce its better long-term growth for everybody and the better shareholder value. -------------------------------------------------------------------------------- Operator [42] -------------------------------------------------------------------------------- Ladies and gentlemen, there are no further questions at this time. I'll turn it back to management for closing remarks. -------------------------------------------------------------------------------- Tony Sklar, Ideanomics, Inc. - VP of Communications [43] -------------------------------------------------------------------------------- Thank you so much, Diego, and this is all the time that we have for you today. This concludes the Ideanomics Q3 2020 Investor Earnings Conference Call. We encourage our community to continue to reach out to us and we will continue to answer your questions on an individual basis. You can send your questions to ir@ideanomics.com. Most of you have it at the top of your e-mail list every morning. Thank you so much. We'd like to thank our listeners, shareholders, analysts and others who have taken the time to listen to our earnings call today, and we urge you to refer to our latest SEC filings for any information that you need. This call will be available on the website under the Investors section, and you will find the link there. To be alerted to news, events and other information in a timely manner, we recommend the following us on all of our social media channels. Sign up with our newsletter and explore our website at www.ideanomics.com. Thank you, everybody, for participating and listening on the call today. -------------------------------------------------------------------------------- Operator [44] -------------------------------------------------------------------------------- Thank you. All participants may disconnect. Have a good day.