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Edited Transcript of SITO earnings conference call or presentation 16-Nov-18 7:00pm GMT

Q3 2018 SITO Mobile Ltd Earnings Call

ENCINITAS Dec 26, 2018 (Thomson StreetEvents) -- Edited Transcript of Sito Mobile Ltd earnings conference call or presentation Friday, November 16, 2018 at 7:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Thomas J. Pallack

SITO Mobile, Ltd. - CEO & Director

* William A. Seagrave

SITO Mobile, Ltd. - COO & Interim Co-CFO

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Conference Call Participants

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* Eric Anthony Des Lauriers

Craig-Hallum Capital Group LLC, Research Division - Associate Analyst

* John David Godin

Lake Street Capital Markets, LLC, Research Division - Research Analyst

* Jon Robert Hickman

Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst

* Scott Ozer

* Rob Fink

Hayden IR, LLC - EVP and General Manager of New York Office

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Presentation

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Operator [1]

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Greetings, and welcome to the SITO Mobile Third Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Rob Fink, Investor Relations.

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Rob Fink, Hayden IR, LLC - EVP and General Manager of New York Office [2]

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Thank you, operator. Hosting the call today are Tom Pallack, Chief Executive Officer; and Bill Seagrave, Chief Operating Officer and Interim Co-Chief Financial Officer.

Before beginning, we'd like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives and expectations for future operations and are based on management's current estimates and projections, future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see risk factors as described in SITO's annual report on Form 10-K and quarterly report on Form 10-Q that are filed with the SEC.

In addition, during the call, we will present non-GAAP financial measures such as EBITDA and adjusted EBITDA. Reconciliations to the most directly comparable GAAP measures and management's reasons for presenting such information is set forth in the press release that was issued earlier this morning. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP.

Before I turn over the call to management, I would like to remind everyone that a press release disclosing the company's financial results was issued after the close yesterday and it can be accessed on the company's website sitomobile.com under the News and Events link that's found in the Investor Relations tab.

With all that said, I'd now like to turn the call over to Tom Pallack. Tom, the call is yours.

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [3]

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Thank you, Rob, and good afternoon, everyone. I'd like to provide a high-level update and speak to the progress we've made during the third quarter that go beyond results we are reporting today.

SITO was founded as an ad delivery business and historically was structured and highly dependent on highly competitive RFP fighting on price, not results. Since joining SITO in the June of 2017, we have worked to position our data and analytics as a competitive differentiator to attract larger brands and agencies who can use our insights and delivery platform to drive more effective campaigns while addressing strategic business issues. We are transitioning from an ad insertion order business to an embedded, value-added partner to our customers. We are actively developing cornerstone accounts to transition our business by addressing the brand imperatives for data analytics.

During and subsequent to the end of the third quarter, we are significantly strengthened -- we have significantly strengthened our organization by adding accomplished brand and advertising executives to our board, seasoned and accomplished enterprise sales professionals to our team and a new Head of Product Development to expand our leadership team. Our customers are excited about the potential of data and access to their customers, but we have been staffed as an ad delivery company. Our focus now is to expand development for the product stack and the data analysis sought by our customers. The addition of Alex Cherones brings SITO new development processes and relevant experience.

Alex was appointed as Head of Product earlier in the month, and he has spent the last 15 years at AT&T where he most recently was responsible for the development of a large-scale, data analytic-focused security solutions for enterprise customers. In the current market and regulatory environment, there is also an increasing importance of data privacy, security and best practices. Alex' experience helps us better address these privacy issues while giving us the necessary experience delivering offerings for the large enterprise customers.

In addition to Alex, I am pleased to welcome our new board members and our new sales professionals to SITO. Across the organization, we are attracting industry-leading talent with the relevant experience and relationships and the history of success needed to advance our efforts and further expand our reach to larger and more significant customers. These experienced professionals are coming to SITO because they understand the impact potential of our unique data platform technology to a market that is seeking greater depth of consumer behavioral insights.

Our Q3 results are reflective of this transition. We are managing our overall headcount resource commitments while onboarding new enterprise-focused salespeople. We are seeing progress in our revenue mix, which is shifting more towards consumer insights and data-driven transactions with enterprise customers. Specifically, revenues from the data-driven and research-led engagements with enterprise customers, partners and direct brands has increased significantly over the last 9 months.

Year-to-date, our enterprise segment now represents 34% of our revenues, which is a 76% increase over the same period last year. This business segment concentrates on large contracts, high-value, long-term relationships where data and research are the focus and sold either to brands direct or through channels with long-term strategic commitment. These numbers reflect the changes in our sales execution, which we initiated in 2017 and serves as a signal that the change has occurred.

Our focus heading into fourth quarter is now to accelerate these trends and further capitalize on the strategic opportunities in front of us. Based on our bookings and current visibility, we would expect to see sequential growth more rapidly accelerated in Q4.

As we increase the scale of the multi-year recurring enterprise engagements, we became less reliant on the onetime, campaign-driven media placement revenues. We remain focused on identification and discussions of larger and truly transformative data deals, and closing larger multiyear transactions remains a top priority.

With that, I'd like now to turn the call over to Bill, Bill Seagrave.

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [4]

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Thank you, Tom. I'd like to provide a high-level financial and operational update now and talk about our capital position and then open the call up to Q&A.

Total revenue for the 3 months ended September 30, 2018, decreased 17% or $1.8 million to $9.1 million compared to $10.9 million in the corresponding period of 2017. This decrease in revenue was primarily due to a reduction in the average spend per customer, which we are actively working to offset with the increase of enterprise-driven data engagements with larger brands and agencies, as Tom has already discussed.

On a quarter-over-quarter basis, revenues did increase 8% from Q2. Based on our bookings and current visibility, we expect sequential growth to continue and accelerate heading into Q4.

Gross profit for the 3 months ended September 30, 2018, was $4.3 million or 48% of revenue compared to $5.6 million or 51% of total revenue for the corresponding period of 2017. The decrease in gross profit as a percentage was due primarily to lower gross margins on several new client assignments.

Sales and marketing expense increased to $4.9 million in the 3 months ended September 30, 2018, from $3.4 million in the corresponding period last year. G&A expenses also increased to $4.5 million for the 3 months ended September 30, 2018, from $3.4 million in the 3 months ended September 30, 2017. These increases are primarily due to a combination of headcount additions, severance accruals and conference fees establishing our first field level marketing events.

Loss from operations for the 3 months ended September 30, 2018, was $5.2 million compared to a loss from operations of $1.9 million in the corresponding period of 2017. Net loss for the 3 months ended September 30 was $5 million or $0.20 per basic and diluted share compared to a net loss of $3.1 million or $0.14 per basic and diluted share in the corresponding period of 2017. Adjusted EBITDA for the 3 months ended September 30, 2018, was a loss of $3.2 million compared to an adjusted EBITDA loss of $0.1 million in the corresponding period of 2017.

Turning now to the balance sheet. As of September 30, 2018, the company has or had $4.6 million in cash and cash equivalents compared to $3.6 million at December 30, 2017. Additionally, the company had approximately $9.1 million in accounts receivable.

The 10-Q that we filed yesterday after the close including a going concern designation from our auditors as a result of cash shortfall estimates should we not be able to grow the company through 2019 with sufficient revenues or obtain alternative cash sources to fund our growth through 2019. However, to offset that, we are actively engaged in discussions with several financial institutions to obtain a revolver line of credit to support the account receivable cash in arrears time period of our business.

To explain, simply put, our growth success will cause a cash shortage as we pay out for advertising space inventory at time of placement but collect the related revenue from a customer over a 90-day period after we have paid out the inventory cost. This creates a cash shortage that must be funded prior to the receipt of revenue earned. Based on our current discussions, again, I am optimistic that we will have a line of credit in the very near future.

In summary, the business transition to enterprise contracts and customers is visible today and currently represents, as Tom indicated, 34% of our overall revenue having grown 76% from last year. We see this growth continuing and visible into Q4. We have resourced our business this year to address the large-scale contracts and customers. We currently have no debt obligations outside of general trade accounts. And with that backdrop, we have sought out financial institutions who have engaged us with discussions for the AR base line of credit revolver we need to grow throughout 2019 and beyond and to, of course, eliminate the noted going concern question.

With that, I will open the call for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Mark Argento, Lake Street Capital Markets.

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John David Godin, Lake Street Capital Markets, LLC, Research Division - Research Analyst [2]

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This is John on for Mark. Just first off, as far as discussions with some of these enterprise customers, can you just kind of give us an update on how the privacy issues and discussions are going and just kind of what you've learned there?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [3]

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Hi, John. Yes, this is Bill Seagrave. Yes, in general, it's interesting. Everybody, obviously, is concerned about privacy, particularly the large enterprises since they're global in aspect and of course, it stems -- there's really 3 camps. The first camp that awakened was obviously GDPR over in the EU. So that has a direct impact on customers with a base over there. And the second camp then is the impact over on the U.S. from the social media issues that have popped out most recently: the enactment of the California Privacy Act; and then the most recent, well, within Q3, the Supreme Court decision on the Cooper (sic) [Carpenter] case which impacts carrier-based access to information. All the customers have that concern, as do we. And to us, we're very focused on ensuring that our data is both controlled both from an access and then from, obviously, utilization and that we anonymize our information such that we carry no PII risk due to the fact that we take care of that as we ingest the data. With our customer set, virtually everyone wants to do an analysis of that data and of those processes, which is fine. And to that, most of the large customers even have privacy -- they certainly have privacy officers and usually a department or a group within their legal group that we get introduced to and we go through their vetting and their credentialization. So long answer to your question, but basically, everyone is concerned. Everyone now has a process to vet out how we would work with them. And that is both to ensure that the data that we access, use and provide insights to them has that data privacy associated with it. And secondly, to ensure that because of that, we're actually ensuring that we're not in a position where we would damage their brand either in the U.S. or on a global basis. So we have gone through those vetting exercises, and I'm sure we'll continue to do so as a normal course of business with any large brand.

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John David Godin, Lake Street Capital Markets, LLC, Research Division - Research Analyst [4]

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Got it. And then just 2 more. If you could update us on the enterprise data deal pipeline, just kind of high level how that's looking. And then number two, maybe if you could drill into a little bit more the strategy. Any kind of plans for Alex, the new Head of Product Development?

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [5]

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Okay. Let me take a shot at that first. I think they really are tied together. One of the issues that we've had is delivering the appropriate data in the appropriate time frame. And thus, as we started digging deeper into this, we started researching and approaching, getting product management shipshape. And that's why we went after Alex and very lucky to be able to have brought him on board with associated team members that have experience in building location-based products associated with data. And so he's specifically come to focus in on these larger transactions. Now the issue we had with some of the ones that we are working with right now was that we weren't able to deliver the data in the appropriate time frame. And thus, that's our focus right now to clean that and focus and be more successful on delivering time frames.

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Operator [6]

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Our next question comes from Mike Malouf, Craig-Hallum Capital Group.

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Eric Anthony Des Lauriers, Craig-Hallum Capital Group LLC, Research Division - Associate Analyst [7]

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This is Eric Des Lauriers on for Mike. I was wondering if we could drill into that enterprise segment now 34% of revenues, big increase from last year. If you can just provide a little bit more color on what comprises that segment. And specifically, if you can give us an indication of how much of that is these data deals and then how much is sort of the base media placement business.

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [8]

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Yes, certainly, Eric. Thanks for calling in. This is Bill Seagrave again. Let me give you the definition or our definition of our enterprise segment. Basically, we're focused on -- the enterprise segment of our business is focused on clients and transactions which are large value; long-term relationship based; driven by the customers' interest in data, research and then related media, which are sold either direct to a brand or via a channel partner that has a long-term strategic relationship with SITO. And so the theory of this is, as I've said, long-term relationship with large value potential. Now the...

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Eric Anthony Des Lauriers, Craig-Hallum Capital Group LLC, Research Division - Associate Analyst [9]

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Okay. And is that -- sorry, go ahead.

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [10]

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Go ahead.

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Eric Anthony Des Lauriers, Craig-Hallum Capital Group LLC, Research Division - Associate Analyst [11]

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I was going to ask if that -- because you're kind of differentiating long-term relationship brands and partners with -- you contrasted your base business earlier in your prepared remarks about it being more transactional. I was just wondering if this is just sort of these larger customers that have been around, if this is still Media Placement or if this is representative of the larger data deals that you guys are pursuing.

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [12]

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Okay. Let's back up to how we -- our business -- or the focus of our business, how we initiated SITO. The ad insertion business or the ad placement business is certainly we have relationships with advertising agencies since they're the ones who control access to the campaign dollars to place ads. But the ad -- in terms of how our relationships may be with these agencies, we may have perhaps pricing relationship with them where we have established some rate cards and that type of thing. But we don't have a relationship with their end client nor do we have the type of relationship where we're helping them get their end client some type of value that would involve us. So when I move over to the channel side of the business into where I say that there's data interest and with direct sales to the direct brands themselves, what we're saying is we're going to walk in, and the 2 pieces of the business are we have this amazing ocean of information. We want to work with the client to understand how it may help their business imperative. And out of that, we wish to be paid, obviously, for the data and the research that we provide, but we also wish to be paid for the media placement that they do based on that research. So access to the campaign as the endgame. Now that involves us having a relationship with the actual strategic side of that brand business and gives us the ability to have a long-term relationship with them since the data and the research that they seek is not a one-off. It's not a over the transom type relationship for one campaign. It really helps them build their consumer understandings and therefore their campaign designs and their marketing designs. So the business that we're transitioning to, as Tom indicated, is to get away from just being an ad insertion business, where we're always excited about the campaign that we get but we don't really know anything about it, to where we're an embedded strategic partner delivering data research and also being able to deliver the ads that come out or the ad campaigns that come out of that data and research impact. That's the formulation of the enterprise segment strategy. So for your question of data and media and so forth, yes, it always involves both. But the key for us is to get the clients excited strategically about access to this level of data and for us to then work with them to understand how it may impact their imperative near term, long term and obviously deliver the campaigns that we now have a great deal of information as to what the objectives are of those campaigns because we're providing some element of data and research for it. Does that answer it? Or...

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Eric Anthony Des Lauriers, Craig-Hallum Capital Group LLC, Research Division - Associate Analyst [13]

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Yes, that does. It's very helpful. Appreciate you walking me through that. Next question sort of along those lines. You cited a reduction in average spend per customer as part of the reason of the year-over-year decline. I'm wondering if you could speak a little bit more to your sales strategy for this more legacy business, just the transactional side of the business. Do you have any focus there to sort of prop up the financials while you pursue this longer-term strategic shift? And along those lines, you guys mentioned the Pure Flix data deal. I'm just wondering in your guys mind how that compares to other deals in your pipeline size-wise?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [14]

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Yes, let me -- I tried to write down those questions, so let me see if I got them all. And I'll share this with Tom. First of all, we are not abandoning the source of our initial revenues. We are expanding into the enterprise segment business, which we believe will become the dominant flavor for us and obviously will be driven by the data and research side of the house, which then gives us access to the media spend as well. So it is the new DNA of SITO, if you will, to transition into that market space. However, within the context of our traditional business, if you will, our sales force is -- we still -- we maintain a sales force that's focused on that just as we maintain a sales force that's focused on enterprise. And so our issue there historically, we believe, is that, yes, over the last 6 months, we've seen the average spend of the campaign -- or of the transaction down a bit. But certainly, we're going after every dollar and every relationship that we could build within that construct. Additionally, with Alex, we'll be building out more of the product that allows us to access more features and more capabilities that those types of customers would be very interested as well. And I'd ask Tom to maybe react to the field is focused on that.

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [15]

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Yes, I think there's -- the focus of -- we basically divided this into 2 groups. The field group is definitely focused on third tier, second tier agencies. And the direct -- brand direct group is focused on the larger brand deals, definitely data centric. And so there is a whole different sales cycle for each, a different time period that is related to that selection search, and there's -- the key though is on the data pieces. What I would underline is it's recurring business. So if you take a field business at one of the -- or a piece of field business at one of the second tier agencies, we get them order by order. Sometimes you get it, sometimes you don't. So there's no consistency there. Whereas in the data side of it, the brand direct piece, we're signing longer-term agreements that allow us to start forecasting and just have reoccurring business we can count on. So it's critical for our growth.

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Eric Anthony Des Lauriers, Craig-Hallum Capital Group LLC, Research Division - Associate Analyst [16]

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That's helpful. And then just a comment on the Pure Flix, how we should think about the Pure Flix data deal compared to what's in your pipeline.

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [17]

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Meaning, the type it's -- I think Pure Flix is a great example of how a lot of these transactions will go because they're using the data to drive the ads in the first place. And that's traditionally how that's going to work in any one of these larger deals that we have on the table. I think there's a couple of them that we have done and are working on this quarter, 2 are just very entertainment related that are focused in on that. So I think it's critical that we broaden our scope there. That is one of the things that Alex is working on clearly and focus right now to be able to make sure that we're able to deliver in a timely fashion the correct type of information.

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Operator [18]

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Our next question comes from Jon Hickman, Ladenburg Thalmann.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [19]

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Could you -- I just want to qualify, you said 34% of your revenue is now coming from the enterprise side. Is that 34% of Q3's revenues? Or is there some other definition there?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [20]

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That's actually a 9-month summary.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [21]

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Nine-month summary. So it's 9 -- and so it's up 76% from the 9-month period a year ago?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [22]

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Yes, sir.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [23]

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Okay. So do you have any plans in the future to break this out between your -- the field -- well, just the media placement and then the enterprise stuff where you're actually getting recurring revenues and data stuff? Would you separate those line items?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [24]

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Yes, we believe that as we grow the business in total as well as each business segment that we'll be able to -- we'll begin to report those out. It's going to be important because the different business segments will have expectations of different margins. And we just need to get bigger and more mature as a company and as a top line revenue base to really make it meaningful.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [25]

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Okay. And then just another pipeline question. The Pure Flix deal, are you getting media placement from them, too, besides just access to data?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [26]

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Yes, absolutely.

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Jon Robert Hickman, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research & Special Situations Analyst [27]

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Okay. And then could you quantify like the number of type enterprise deals that you're working on? Is it a handful? Or are we talking dozens?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [28]

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Yes, we have a focus on enterprise customers in that business segment and so forth, but we're -- I don't want to give you any numbers like that. Too specific.

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Operator [29]

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Our next question comes from Scott Ozer, SANDLAPPER Securities.

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Scott Ozer, [30]

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I have several questions. You can answer them in any order that you'd like. I was wondering what the salesmen headcount is now and how high you think you want to take that. And also, do you feel you'll have more success going through advertising agencies or company direct and if you've gotten any feedback from the agencies, like you might be stepping on their toes by going directly to a company? And lastly, about the going concern comment.

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [31]

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Let's think. Do you know what the total is?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [32]

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Yes, our field group is based on a, call it, a plan of 17, and we're somewhat shy of that right now, but that is the field group. The advertising question -- I'm sorry?

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Scott Ozer, [33]

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What did you mean when you say field group though? What did you mean when you say the field group as opposed to what other group?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [34]

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Well, I'm saying you had asked about sales specifically, I believe.

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Scott Ozer, [35]

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Yes, if you can just define what you mean by the field group.

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [36]

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Salespeople. Salespeople. Yes, I'm sorry, legacy business -- I'm sorry, I misunderstood the question.

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Scott Ozer, [37]

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Well, I was just wondering what the salesmen headcount is and you said that's 17. But you classify them as the field group, and I just didn't know what you meant when the field group -- are those people that go out and knock on the doors? Or are those people that are in a cubicle calling? Or -- I was just trying to get a sense.

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [38]

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Yes, this is direct salespeople. So it's -- and it's the -- there's -- of that 17, I think there's -- it's broken out by different purposes. So there's a certain amount of those that are going after what we call field meeting the agency side of the business. And then there's also the direct to brand group, which is now, I think, 3, which will be -- and that's one that will be continually growing.

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Scott Ozer, [39]

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Okay. All right. And then also do you feel you're going to have more success going through the advertising agencies or company direct? And have you gotten any feedback from the agencies? Are you like stepping on their toes by going directly to the company?

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [40]

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Since I have sales forces in both, we better be doing both and we better be doing it well. We -- to me it's -- the second and third tier agencies, we've done a great job of before, and we'll continue that work. We're very much focused though on the Tier 1 agencies now because as we're going to the larger brands, you have to be able to participate on both sides of the spectrum. So definitely, the brand direct people are focusing on the brands, but they are associated with, shall we say, the large top 5 agencies because they usually run those larger transactions.

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Scott Ozer, [41]

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Okay. And how about the going concern comment?

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William A. Seagrave, SITO Mobile, Ltd. - COO & Interim Co-CFO [42]

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Yes, happy to answer any of that. Basically, as I was explaining, the success of our growth plan actually creates a cash shortage due to cash in arrears between the time we pay for the inventory and the time that we collect from the committed customer. And there's about a 90-day period in there between cash out for placing the ad and cash in for paying for the placing of the ad. Now what's fascinating is at the same time we create the payable commitment for placing the ad to our inventory suppliers, we also create the receivable for the AR side of the house since we're paid on delivery of services. But as the world goes, you plan for a 60- to 90-day cash in arrears between the time that we create that AR and the time that we're actually paid. So as we step our business up based on this enterprise success or just growth success in general, we need to tap into some capital in order to build that growth ramp. But it's always based on accounts receivable. So it's like a first world problem of success. Now the way we want to deal with that is simply we have no debt of any kind, nothing, other than trade payables obviously. But what we want to do is just take out a line of credit that is targeted off of the accounts receivables and just have a revolver. And as we need it, we'll tap into it. And as we're paid, we'll pay it down or pay it off and wait for the next step-up function. So that will -- within our strategies, if we do the growth, if we get it in place, I mean, we're very -- we're set. Now not having that in place yet, proper auditor sits there and says, "Okay. Well, I see that you can balance your business if you take away all growth strategies, but that's obviously not what you're going to do." So in order to have that growth strategy and look at that forecast, it says, yes, sometime in 2019. If you have no more -- or if you have no access to a revolver or that type of -- or some type of capital, then there are time periods where between that cash in arrears basis, you will go negative on cash. So we're just going to take care of it very quickly.

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Operator [43]

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Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Tom Pallack for closing remarks.

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Thomas J. Pallack, SITO Mobile, Ltd. - CEO & Director [44]

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Hey, I want to thank everybody for being on the call and looking forward to a important holiday period here for us as a business, and hopefully, everybody enjoys themselves and eat lots of turkey this next week. Thank you.

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Operator [45]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.