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Edited Transcript of ISDR earnings conference call or presentation 27-Feb-20 9:30pm GMT

Q4 2019 Issuer Direct Corp Earnings Call

Cary Mar 25, 2020 (Thomson StreetEvents) -- Edited Transcript of Issuer Direct Corp earnings conference call or presentation Thursday, February 27, 2020 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian R. Balbirnie

Issuer Direct Corporation - Founder, President, CEO & Director

* Steven Knerr

Issuer Direct Corporation - CFO

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Conference Call Participants

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* Brock Erwin

CleverInvesting LLC - Investment Advisor Representative and Owner

* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by and welcome to the Issuer Direct Corporation Fourth Quarter and Year ended 2019 Earnings Conference Call. Today's call will be conducted by the company's Founder and Chief Executive Officer, Brian Balbirnie; and its Chief Financial Officer, Steve Knerr.

Before I turn the call over to Mr. Brian Balbirnie, I'd like to read to you the company's abbreviated safe harbor statement. I'd like to remind you that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements, which may involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.

Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only.

With that said, Mr. Balbirnie, please go ahead.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [2]

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Thank you, operator. Welcome, everyone, and thank you for joining us today. After the market close, we issued a press release announcing our results for the fourth quarter and year-end 2019. A copy of the press release is now available on our Investor Relations section of our website and in ACCESSWIRE's newsroom for your reference during today's call as well as being broadcast on Investor Network.

The fourth quarter and entire year was a solid performance for Issuer Direct, up 9% for the quarter and 14% for the year. On a stand-alone basis, our Platform business was up 19% and 24% for the respective periods, now totaling 66% of our overall revenues for the year. I personally have said we're going to move the needle and push our Platform business to 70% or greater of our revenues, something we're focused on achieving in 2020. And I will highlight a bit later how we're going to get there.

New subscriptions were up 80% over Q4 last year generating 36 net new platforms for the quarter compared to 20 in Q4 last year. We ended the year with a total of 255 platform subscriptions totaling just over $2 million in annual contract value. Steve will touch on this and our deferred revenue to be recognized on these subscriptions during 2020 and beyond.

Over the next year, we anticipate being able to move the conversation to new bookings for the period along with ACV and customer lifetime value. We will also begin to talk more about our module subscription businesses as well in these as we feel it's important to point out that the hundreds of additional customers subscribing to these individual modules of our platform, examples being our whistleblower, IR websites, webcasting, stock transfer and conference software.

Both our public and private company business continues to see strong signs of activity and growth on a year-over-year basis. I will talk about customer counts, ARPUs and some key metrics that we're tracking coming out of the fourth quarter and into 2020 after Steve's remarks.

Steve, let's get it started. Over to you, sir, for a deeper dive into our financial results.

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Steven Knerr, Issuer Direct Corporation - CFO [3]

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Thank you, Brian, and good afternoon, everyone. As Brian mentioned, we made good progress during the fourth quarter of 2019 as Platform and Technology revenue grew 19% and net licenses of Platform id. increased 80% as compared to Q4 2018.

Additionally, we continue to enhance and improve our conference software product in order to build our pipeline for 2020 and expand newswire distribution capability to drive future growth for ACCESSWIRE. Also, as we spoke about last quarter, new additions were added to our sales team during the quarter, the benefit of which we will see in 2020.

Getting into the results for the quarter. Total revenue increased 9% or $311,000 to $3,959,000 for the fourth quarter of 2019 compared to $3,648,000 for the same period of 2018. Revenue for the full year ended December 31, 2019, totaled $16,295,000, an increase of 14% or $2,063,000 compared to full year 2018 revenue of $14,232,000. The growth in 2019 came from our Platform and Technology revenue stream, which increased $428,000 or 19% and $2,103,000 or 24% during the 3 and 12 months ended December 31, 2019, compared to the same periods of the prior year.

Platform and Technology revenue increased to 67% and 66% of our total revenue for the 3 and 12 months ended December 31, 2019, compared to 61% and 60% for the same periods of 2018. The growth in Platform and Technology revenue was driven by our acquisitions of VWP and FSCwire, which contributed $314,000 and $1.6 million of P&T revenue during the fourth quarter and full year of 2019, respectively.

We also had organic growth through additional subscriptions of Platform id. as we signed 36 net new subscriptions during the quarter with an annualized contract value of $163,000. This brings our total net new subscriptions for 2019 to 150 and our overall subscriptions of Platform id. to 255 with annual contract value over $2 million.

During the quarter, ACCESSWIRE revenue decreased 2% compared to the fourth quarter of last year, and on a year-to-date basis, increased 5% despite facing the headwind of the industry-wide loss of the investment commentary business. Removing the impact of the investment commentary revenue, organic growth for ACCESSWIRE was 36% for the quarter and 38% for the year. Partially offsetting the increases in Platform and Technology revenue I just spoke about was the continued decline in revenue from our shareholder outreach offering, which is typically tied in with our ARS customers.

Services revenue decreased $117,000 or 8% to $1,301,000 for the fourth quarter of 2019 and decreased $40,000 or less than 1% to $5,559,000 for the year ended December 31, 2019. The decrease is a result of the continued decline in revenue from our ARS services as well as a decrease in revenue from our transfer agent and print and proxy fulfillment services due to transactional volume decline or onetime projects completed in the prior year. These declines were partially offset by the acquisitions of VWP and FSCwire, which contributed additional services revenue of $137,000 and $575,000 during the fourth quarter and full year of 2019, respectively.

Moving down to gross margin. Our overall gross margin percentage was 67% for the fourth quarter of 2019 and 69% for the full year of 2019 compared to 71% for both periods of the prior year. Cost of revenues increased $235,000 or 22% during the fourth quarter and $977,000 or 24% for the full year of 2019 compared to the same periods of 2018. Majority of the increase is due to an increase in newswire costs due to our expanded distribution and capability and costs associated with delivering revenue of VWP.

As a result of these increases in costs, Platform and Technology gross margin percentage decreased to 71% for the fourth quarter and 73% for the full year of 2019 compared to 78% and 79% for the same periods of the prior year. The loss of revenue from the investment commentary business was also a key factor in the decline in gross margin percentage as a substantial portion of this revenue would have fallen directly down to the gross margin line. Gross margin percentage from our Services revenue stream was 58% and 60% for the 3 and 12 months ended December 31, 2019, compared to 59% for both periods of the prior year.

Continuing down the income statement, operating expenses increased $193,000 or 8% for the fourth quarter and $1,775,000 or 20% for the full year of 2019 compared to the same periods of 2018. The increase is primarily related to an increase in headcount, mostly in our sales organization and corporate team as we continue to expand our business. Specifically, our sales and marketing team grew over 20% compared to the fourth quarter of 2018.

Additionally, for the full year of 2019, operating expenses increased due to G&A expenses associated with the acquisition of VWP and additional bad debt expense of $394,000 related primarily to 2 investment commentary customers. We also experienced increased amortization costs associated with the acquisition of VWP and FSCwire.

For GAAP purposes, we recorded net income of $69,000 or $0.02 per diluted share for the fourth quarter of 2019 as compared to net income of $65,000, also $0.02 per diluted share for the same period of 2018. For the full year of 2019, net income was $686,000 or $0.18 per diluted share compared to net income of $837,000 or $0.24 per diluted share during 2018. The decrease in earnings per share for the full year of 2019 was due in part to lower net income as well as the increase in shares outstanding due to the secondary offering completed in August 2018.

Looking at some non-GAAP metrics. Total EBITDA for the fourth quarter of 2019 was $423,000 or 11% of revenue compared to $497,000 or 14% of revenue during the fourth quarter of 2018. For the full year of 2019, total EBITDA was $2,141,000 or 13% of revenue compared to $2,560,000 or 18% of revenue for 2018.

Non-GAAP net income for the fourth quarter of 2019 was $261,000 or $0.07 per diluted share compared to $437,000 or $0.10 per diluted share during the fourth quarter of 2018. For the full year of 2019, non-GAAP net income was $1,694,000 or $0.44 per diluted share compared to $1,969,000 or $0.57 per diluted share for 2018. EBITDA and non-GAAP net income were directly impacted by the loss of the investment commentary business, the decline in revenue and increase in bad debt expense noted earlier. We continue to generate positive cash flow from operations as we generated an additional $909,000 during the fourth quarter of 2019 and just under $2.9 million for the year, consistent with the total for 2018.

On the balance sheet, our deferred revenue balance increased 45% to $1,812,000, almost all of which will be recognized in 2020. The increase in deferred revenue is a direct result of the additional subscriptions of Platform id. I mentioned earlier as well as an increase in press release packages for which the revenue is deferred until the releases are used.

In summary, although we will continue to face challenges in the services aspect of our business, we continue to remain focused on building organic growth through ACCESSWIRE, our conference software and additional subscriptions of Platform id. Brian will now talk further about some of the things we have planned for this year as well as some operational activities, customer counts and ARPU.

With that, I will turn it back to Brian.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [4]

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Thank you, Steve. We were pleased with our fourth quarter and full year 2019 results. Still a lot of work to do here and we're focused on our organic growth in 2020. The last year was important for Issuer Direct, during which we achieved significant distribution additions, made investments in our employee base, expanded functionality in our platform. And these are just a couple of the wins that we put -- that put us in a strong position for long-term growth.

In terms of customer count, we ended the fourth quarter up 6% working with 1,501 public companies compared to just 1,416 during the same period last year and up 34% working with 1,092 private companies compared to just 817 the same period of last year. As we have said and will continue to say, new customer acquisition is extremely important to us, and there's a land grab of opportunity out there. And we need to maintain our laser focus on winning and keeping these customers as well as expanding within these organizations to increase the annual expense.

2019 subscriptions were within our internal expectations, finishing the year at 150 net new subscriptions. The first 9 months, we sold 114 and during the fourth quarter, there were an additional 36 net new platform subscriptions. As in 2018, of the 150 subscriptions sold last year, the majority still come from public companies purchasing our platform. On a consolidated basis, we recognize that ARPUs have declined. However, our cumulative U.S. public company platform customers have an ARPU spend of $9,000 compared to the rest of the world being $6,000.

In summary, we are working on ways to improve on a consolidated basis our ARPU, which is related to the mix of what has been sold or heavily swayed towards newswire in the past. As examples, this year, we're tracking several internal KPIs, and here are just a few top of mind today that I'd love to share with you.

We are making headway in our conference product. This puts us in front of customers earlier in the process, which is part of our overall strategy to bringing the issuer and investor closer together. Secondly, we have improved our platform sales process, onboarding and giving us another metric that we are tracking this year is TTV, time to value. We believe this is an important metric that can help us drive down costs and improve retention over the periods. And lastly, our platform advancements, upgrades and distribution additions are vital to our business and our customers. By doing these 3 things and many others, we believe we can compete for greater wallet share and expand our customer platform use.

Moving on to what we are hard at work today. Over the last 45 days, we have rolled out an MVP of our e-commerce strategy. Early indications have been newswire pay-as-you-go products have increased 35% from the average prices in 2019. With this MVP, we are armed with the entire digital strategy that includes increased spend on acquiring new customers in an all-digital way. This new global e-commerce system will reduce the cost to acquire each customer significantly and most importantly, put our customers in a position to gain access to our platform immediately right after subscribing.

This new platform also has entirely new distribution circuits built out, designed to give each customer the ability to add to their storytelling journey. We believe these add-ons will drive ARPU, make the customers more sticky and allow them to create, deliver, connect and measure better than ever before. One of the top priorities this year is to transition all of our customers and partner customers to this next generation of our technology. This end-to-end platform will expand quickly with all of our Platform id. solutions.

We also have made progress on our VisualWebcaster Platform we acquired early last year. It's being used to help power all webcasts in our conference business. It is also being upgraded today to allow partners the ability to connect to our APIs and schedule events from their applications.

Another area we're going to spend time on this year in our platform is learning about the post-event world. We clearly are disciplined at event creation and delivery. To reinforce this, we've delivered over 3,000 events last year alone, and this does not include the thousands of earnings events we delivered on Investor Network to the investment community.

We have our eyes set now on understanding what happens after the call, the follow-up, engagements and meetings. We have come up with several enhancements that we're going to release this year that will aid in the post-event follow-up for our customers. We will talk more about this in the coming quarters. But for now, I'll move on to a couple areas I am sure that you also want to hear about.

Our insight and analytics, a road map product we wanted to release in 2019. I talked about data privacy, spending more time gathering analytics and ensuring we could deliver what we assume this product would be. The good news is we have the data. As an example, our Investor Network platform has over hundreds of thousands of unique visitors in 2019. Our newswire monitors over 500,000 links, resulting in almost 60 million engagement clicks. And lastly, our earnings platform delivered calls just like this to tens of thousands of listeners around the world.

We continue to map associations, build stories and illustrations to show journeys between all of these events and compare them to known participants, like a shareholder, partner and even a competitor. I think the reality is this add-on is to our platform to help current customers renew and deliver value beyond initial purchase. But obviously, we will drive new bookings at potentially higher ARPU with this new system.

This will take time and training not only for our sales teams but also our customers. There clearly is not many, if any, companies that we know today providing this data, so we're overcoming the first-to-market difficulties that's prevalent here.

Moving along to our conference software business, which is such an exciting part of our platform. Last year, we said we would be hopeful to deliver or sign 20 events. We met that objective. We said last quarter that we're entering a third phase of this product, expansion of people to help scale and deliver. The investment has happened. 3 of the 7 individuals have a combined 20 years' experience working at Issuer Direct, and who better than the best to lead an initiative that a company has such high conviction about.

We already have 16 events in the system for 2020 and another 50-plus in our pipeline. I have been bullish about what we can achieve in 2020 in this product, saying that we could see the numbers being around 100 events. Very aggressive, but I'm confident in the momentum right now and where we're headed.

We earned approximately $0.25 million in revenue in 2019 in our conference business. So based on that average, if we hit 100, annual revenues from our conference business could be in the range of $1.2 million to $1.5 million.

Lastly, on our newswire business, if you remove the commentary disclosure Steve mentioned earlier, our newswire revenue would have been up 36% for the quarter and 38% for the year. We have been hard at work already this quarter, building out our e-commerce system, reinventing our add-on philosophies of distribution and expanding our reach globally. Long term, we see our newswire business as an offering that can see growth for years to come.

According to Burton Taylor, the global PR business on a stand-alone basis is valued at $700-plus million. As we noted last year, the industry-wide loss of our investor commentary business has had a significant impact on ACCESSWIRE overall. For the most part, we have been able to offset the losses of this business through acquisitions and growth in other parts of our business. In the first quarter of fiscal 2020, we may not be able to offset the losses of the business, and it is possible that the revenue and operating results will be lower than in the first quarter of 2019.

In closing, as we roll out the next generation of our Platform id., we are excited about the benefits that we have for all of our customers, their teams and event-based and storytelling processes. When I personally talk to customers and prospects and explain this end-to-end strategy, they also get excited about what Platform id. could do for them. This strategy will fuel our growth for the coming years.

To reiterate, we are pleased with our performance in the back half of 2020 (sic) [2019], but for those of you that know us, we expect more. Hitting a goal of 150 net platform subscriptions is great, putting us at 255 to start the year. It can't hurt, but this is relatively small compared to the market that we're after. We have created the engine. We have the components, and now we need to fuel up and go compete in the race. We enjoyed spending time with you today reporting on our operating results, the business and where we're going to -- what we're going to do next. We look forward to your questions and visiting with you again soon.

Operator, could we please begin the Q&A portion of the call?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [2]

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Steve, with ACCESSWIRE, the commentary revenue in 4Q '19, was there any? And what was the number in 4Q '18?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [3]

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Mike, it's Brian. Yes. No, the commentary revenue -- Mark is serving you well, I hope, right? Commentary revenue, I hear -- I missed part of it. So explain to me -- to ask me one more time, commentary revenue in Q4 2019, right?

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [4]

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Yes, versus 4Q '18. Just what was the numbers in each of the quarters?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [5]

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Yes. $350,000 delta. So in 2018, it was approximately $350,000. Commentary revenue in Q4 2019 was 0.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [6]

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It's gone to 0, okay.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [7]

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Yes.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [8]

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Okay. And is there -- I know late summer, you rolled out TD Ameritrade and I think Business Insider, and then the next target was maybe Schwab and Merrill Lynch. Can you kind of talk about how that's going?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [9]

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Yes. We are actually inside of Schwab now for institutional folks, but been delayed on their public platform due to their announcement of TD Ameritrade. So we've got indications there that when the platforms are merged together, our news will be a part of that ecosystem. So we're not concerned about losing coverage in our distribution.

We've added dozens of ancillary platforms around the major broker terminals that also increased expansion of our reach for our customers. So as much as we're focused on these larger, we're still gaining additional distribution to places like Business Insider and big news and other folks as well.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [10]

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Got it. And on the private company side, that seems to be growing pretty nicely. What are you doing there? Or what's working?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [11]

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Well, this year, it's been this e-commerce system. I think that -- but by far and away, last year, we had a focus of trying to find ways into learning that market. So we had headcount and sales focused on private company business, looking for ways to understand conversions and opportunities and potential wallet share spends. I think that began to work and we picked up momentum.

And candidly, what we quickly figured out is, from a competitive standpoint, a digital strategy is a big part of their gains in clients and how they're gaining access in the market or growth in the market. So we've adopted something very similar with a new platform being rolled out here that has a bigger focus on an e-commerce spend from a budget standpoint for marketing than it does a headcount spend. So we anticipate those client count numbers are going to continue to grow.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [12]

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Got it. And I think you guys had said the sales team was up 20% year-over-year. How many people is that?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [13]

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14, I think, we've got in sales total. And then sales, marketing and digital brings the number to 22, I believe.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [14]

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Okay. And that's up, you're saying, 20% year-over-year. That's the way to think about it?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [15]

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Yes, yes.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [16]

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Okay. Okay. And then towards the end of your prepared remarks, you said something about the first quarter. Can you repeat that again? You kind of broke up.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [17]

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Yes. I mean we've messaged this investor commentary business in Q2, right? We talked about it all year last year and the impacts that it had on the market, not just us. We have done a really good job of those 3 quarters last year of making back this revenue to still see gains in our newswire business and giving way for this new -- for this commentary.

And you have to kind of look at it and say, "Can you continue that momentum? And can it consistently be that way?" So we just -- we want to be very open and to suggest that our growth numbers are happening in client content ACCESSWIRE, but we may see a little bit of slowdown as we come out of this last year of a year-over-year comp from a commentary perspective.

We still feel bullish about our newswire business and our long term. We're looking at it as well as the rest of our communications subscription platforms, suggesting that we've got significant runway and growth there. We're just looking at the first quarter saying, there may be a little bit of a situation where we may not see as much year-over-year growth giving way for that commentary.

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Operator [18]

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And we'll take our next question from Brock Erwin with CleverInvesting.

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Brock Erwin, CleverInvesting LLC - Investment Advisor Representative and Owner [19]

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Yes. I think my question was answered about Q1. So basically, you're just saying that you may not be able to get to that same level of ACCESSWIRE revenue in Q1 as you saw in -- or in 2020 compared to Q1 2019, is that correct?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [20]

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That's correct, yes.

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Brock Erwin, CleverInvesting LLC - Investment Advisor Representative and Owner [21]

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Okay. Okay. Yes, it wasn't precisely clear, but I think that makes sense. I wanted to ask a little bit about your e-commerce strategy because that sounds like maybe it's something that's really clicking and driving a lot of the private growth. So can you maybe talk a little bit more about that? And if you could quantify some of the customer acquisition costs, and how -- maybe compared to the lifetime value you see of those private customers, that would be great.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [22]

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Yes. That's a great question. I'm not -- we'll hit the last part first. I don't think we'll get LTV yet because this is a new strategy for us, right? So we want to probably look at that after 6 to 12 months and start to really build some patterns on it.

Typically, on an inbound and/or interested party calling into our sales center through our marketing efforts or directly, we drove them through our typical sales funnel and pipeline. When you think about e-commerce, when you think about digital strategy, you can reduce the acquisition cost of the customer significantly by driving them directly to a platform to be able to get the information they need, register, complete a transaction and subscribe.

And when we look at that, we say to ourselves that the newswire business in the private sector has the biggest opportunity for growth for Issuer Direct in what we're doing with that digital strategy. Conversely, a public company, we're not going to run an e-commerce platform for them. Because you want to slow everything down for compliance mechanisms and to ensure that you've got the right contacts with the right companies doing the releases with the right authorization.

But on the private side, you can automate that quite a bit. So you almost give the customer the ability to self-publish with a small bit of editorial review that they can get in and for less than $25 to acquire a client. From a click to post, you can generate hundreds of dollars on a pay-as-you-go product and then have them to subscribe thereafter.

And so I think in 6 to 12 months, we'll be able to look at LTVs, right, and we'll be able to really measure the time to value, how quickly did they do a press release and how quickly did they come back to do a second one. And we can start to measure those mechanisms and ratios.

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Brock Erwin, CleverInvesting LLC - Investment Advisor Representative and Owner [23]

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Okay. That's good. And so where are you spending those dollars? Like what platforms are you using?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [24]

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Yes. I mean I think the traditional social media outlet channel is more on a professional side with LinkedIn. From a Google ad placement perspective, Google Search, retargeting, running all those folks through our part out in Salesforce DRIP campaigns, and then pushing them right into an access for our platform that they can subscribe to.

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Brock Erwin, CleverInvesting LLC - Investment Advisor Representative and Owner [25]

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Got it. Got it. And is there any opportunity there to find, I guess, cheaper ways to acquire those customers? I mean it sounds like the value is there already, so maybe you don't need to. But just curious if you're thinking about that at all.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [26]

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Yes. Of course, right? You always want to try to drive down as much cost on an acquisition side of a customer as you can. And so I think if we can -- if we've done this job already, is -- we do need to now narrow in over the next 3 to 6 months what's working for us, what can we refine and allocate proper spend focused on that and maybe not the things that haven't worked as much with the right conversion ratios.

We'd expect to drive those down. But I will tell you, digital strategies for the newswire business, in general, are very competitive, and we're constantly monitoring our competition and what they're doing. And some days, we may not spend as much as they do, both globally and both focused on North American.

So we have a strategy to go out and find global customers as well as our North American main focus clients and spend that money wisely. So I think we can drive it down. We just need time to continue to optimize it to have a trend analysis to be able to do that.

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Brock Erwin, CleverInvesting LLC - Investment Advisor Representative and Owner [27]

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Okay. And then I wanted to ask a little bit about capital allocation. So looking at the cash flows in the quarter, it looks like you spent most of your -- the cash on buybacks. Do you think that that trend will continue next quarter?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [28]

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Yes. We have an open buyback program, Board-approved, it's there. There are still funds available under the buyback to do so, and we remain committed to filling that buyback and allowing it to do what it's designed for. The Board and management may have a discussion after that and decide that there's an opportunity for us to continue to do that.

We want to examine our cash flows and be prudent about it from an allocation perspective, as you were alluding to, to be sure that we're using a percentage of our cash flows from operating activities to be able to fund potential further buybacks.

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Operator [29]

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(Operator Instructions) And I'm showing no further questions at this time, so I'll turn it back over to management for closing remarks.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [30]

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Thank you, Christie, and thank you to everyone who took the time to visit with us today and talk about our fourth quarter and year-end earnings for 2019.

In the meantime, we look forward to an update -- Investor Relations website for additional information on where we'll be presenting through the first half of the year. And if any of you have any further questions, we'd love an opportunity for a follow up. Have yourself a great afternoon. Take care.

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Operator [31]

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And that does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time, and have a great day.