As an app, Calgary-based Poynt has been an unqualified success. The GPS enabled location-based search application has nearly twelve-million users, and has grown 158% in the past year alone.
Poynt got a foothold in the market through its popularity on BlackBerry devices. When the company made the app available for the iPhone, in March of 2010, it had two-million users on the Blackberry platform. The subsequent growth has come from Android, iPhone users (Poynt is consistently ranked as a top search app in various app stores) and because the company worked hard to shed the potential one-trick-platform label and make itself available across other devices and platforms.
Shareholders would no doubt love to see a resurgence in the fortunes of Poynt the stock, which slipped to as low as a dime after trading as high as $.85 cents before the 2008 meltdown. Poynt the app? Well as the song goes, it has been towering over its competition for years. CEO Andrew Osis, however, thinks several recent moves signal the beginning of a new era in the company’s history, one that will more closely align the fortunes of the stock with the fortunes of the app.
In November, Poynt brought on former Intuit Canada executive Yves Millette in the role of President. The company then added David Lucatch, CEO of Canada’s most heavily traded stock, Intertainment Media, to its board.
Then, on December 1st, the company announced what Osis thinks is its seminal deal; Poynt will come preloaded on all Samsung Galaxy devices, a move that will increase the exposure of the application by a factor of nearly five. Cantech Letter’s Nick Waddell talked to Osis about recent developments at Poynt.
Andrew, you’ve had a bit of an infusion a new talent into the company. Can you talk a bit about the influence you think Yves Millette will have and what you think David Lucatch will bring to the board?
Sure, Nick. The key thing that we have been struggling with is simply the number of bodies to get things done. We needed to clone me, basically. To have someone to focus internally. Yves Millette has fantastic experience at Intuit. He provides a whole new dimension to the company. He has tremendous international experience and really was an operationally focused guy when he was at Inuit. So he really brings a great dimension to the internal management team. That allows me to focus on strategic things and allows me to focus on focus on investors and partners and really do what a CEO should do.
I talked to Yves briefly by email recently and I was surprised by the relevance of his work at Intuit to what Poynt is doing…
Yeah. His role there was very much about building software and operationalizing certain aspects of their business, so it has been a great add both to the senior management team and to the group as a whole. Just to bring some of his operational expertise and the scar tissue that comes with working with a a large company that has international scope.
When I spoke to him we talked about his plans for Poynt. Specifically, I asked him whether the land grab aspect of your business was important enough to continue to lose money or whether he should focus on profitability. It didn’t seem to me that he was of the opinion that the two had to be mutually exclusive..
Absolutely. And things like our new Samsung deal allow us to grab land while we’re driving revenue. Each user is generating revenue for us. We can get better and better at generating revenue from each user, so as you go after the land grab you’re actually generating more revenue. So they aren’t mutually exclusive, they go hand in hand. I think the Samsung deal is huge. We capture forty million devices to start. With that kind of initial device offering of forty million, which could grow to fifty million in three years, we have some certainty. Now each one of those devices can generate ten cents, or fifty cents or a dollar over time, that’s a tremendous land grab as well as a tremendous revenue driver.
Can you see a clear path between users and revenues? You mentioned ten cents per user. Are you comfortable that you now how much each new Poynt user means to your bottom line?
It’s not crystal-clear yet, but it’s getting to a point where it is becoming more clear. We know that through each user that we get through a preload, we keep four out of ten of them. They end up doing thirty to thirty-five queries per month. Those queries generate two or three page views, and it’s those page views that we monetize. If you are talking about Samsung, where there is the potential for fifty-million users, you are talking about hundreds and hundreds of millions of page views each and every month. Getting to a point where we can say “OK, an active user is worth X”, well, we’re getting there. I think in the next six months we will see a very clear relationship between users and dollars. And we’re getting smarter every day. But every additional user means additional revenue. What kind of revenue? That’s coming with time.
Lets get into the Samsung deal a bit. What is the value of preloads versus being in an app store?
Preload deals are very valuable. Particularly with handset manufacturers. Samsung is the largest smart phone manufacturer in the world. They are going to have the Poynt mobile platform on their galaxy devices in a manner similar to the other preload agreements we have announced.
If we extrapolate what will happen with Samsung from those other relationships, it becomes clear that the deal has the potential to dramatically transform the company. For example, in our other preload deals, we know that we retain up to 40% of those users who try Poynt through a preload. In Samsung’s case, since they shipped 28 million smart phones last quarter and are on pace to ship about 100 million phones in the next 12 months. We can expect a dramatic increase in our user base. Potentially adding 50 million users over the next 12-18 months. Each user is very valuable to Poynt, as they drive e-commerce as well as advertising dollars. Right now, each user generates an average of $0.22 dollars of revenue per year. So if we add 50 million new users as a result of the Samsung deal, it could generate an additional $10 million of high-margin revenue as the traction among Samsung’s customers grows.
So, the deal with Samsung gives you access to the Samsung Galaxy series of devices?
Yes, the Galaxy series, the phones and the tablets. We cover all of those devices on a global basis.
Why do you think you are seeing such growth on the Android platform? And do you think you can replicate that success across other platforms?
There’s two things there. Android growth has been just tremendous over the past eighteen to twenty-four months. They now have fifty per cent market share of smart devices. So obviously that is going to drive a lot of growth. But our development team has just done tremendous job of developing for that platform. We really make an effort to leverage every aspects of the operating systems and the deceive, we replicate that on every iPhone, Blackberry and Windows device. I think Windows Phone 7 will provide an equal or even better experience. That Windows phone platform is really an exceptional platform and is widely regarded to move into that number two spot behind Android. And we have deals with manufacturers to preload on that device that we’ll be able to talk about in the near future. But really, its going to be a tremendous platform for us.
The Black Friday-Cyber Monday online shopping numbers were off the charts this year. How does Poynt figure in this?
We’re square in the middle of it. When people use Poynt they are about to spend money. They are trying to find a place to spend that money, whether it’s a coffee shop, restaurant or a movie or a Wal-Mart. That’s the really compelling thing for advertisers. If the advertiser can get in front of people in that particular window they are using Poynt, they will benefit. That’s what we are trying to do every day with every user. We’re trying to provide an ad that influences their buying decision for the better. One that takes them to a great deal, a great location, or the right solution for what they are looking for.
Have you put any thought into integrating proximity marketing into Poynt?
We spend a lot of time thinking about the user experience. It’s one of the reasons we are as sticky as we are as a application. We generally keep users. As we get new users they stay on the system. And that’s because we focus on the user experience. Because if you don’t have the user you don’t have the advertiser. Proximity marketing is a good thing if it isn’t spooky, or intrusive, or too much like spam. There’s a fine line there. We’re trying to walk it in a way that the user pulls, or at least thinks that they are pulling, the information. They query for a hotel and they get a Day’s Inn ad. They query for gas prices and they get a vehicle ad. The user doesn’t mind you delivering something to them if its a fair trade. They’ll give up their location if you give them a great solution. They’ll give you personal information if you give them better context. When you start pushing or actively broadcasting an ad and you are intruding into a users life while they are walking around it’s bordering on spam. And generally speaking users turn that off. You have to walk a fine line where you are delivering value that is in context and relevant without being intrusive.
I wanted to just talk about your being listed in Canada. Based on your numbers, your peers seem to be companies like Yelp or Foursquare . Would this be a better story on a US market?
Unless you’re talking barrels per day or the grade of your core sample its hard to argue that your listing would be better off in Canada. We are a proud Canadian company. But being listed in Canada has been a hindrance, frankly. Canadian investors tend to not invest in tech stories and they tend to invest in stories that have cash flow and earnings, that’s what they gravitate to. And that’s not good or bad, that’s just the way it is. It’s unfortunate because there are great technologies that have been developed here that don’t get recognized. And if Canada wants to remain competitive in the world we have to invest in ourselves and have confidence in ourselves. Having said all that, you can only push water up a hill so long. Certainly, the US market in general pays for growth rather than for cash flow. We are absolutely a growth story. We are competitive with Foursquare and Yelp. We are about the same size as Foursquare in terms of mobile users, and I believe we are slightly larger than Yelp. You can’t do that and not be tremendously good at what you do. So we’re looking at a dual listing. Almost immediately we’ll have an OTCQX listing in the US. And we are looking at, probably in the first half of next year, being listed on Nasdaq or Amex and having a real formal listing.
So let’s circle back and talk about David Lucatch coming onto the Poynt board, what do you hope he will bring to the table?
Well David has done a tremendous job of raising the profile of Intertainment Media and building a following. And as a result, he has gotten his company an attractive share price and therefore a low cost of capital. So we’re hopeful that we can capture a bit of that experience and do better when it comes to share price. His ability to attract attention and a following will be a tremendous asset.
You got a lot of attention out of the gate, the share price did really well for a while before falling back. Do you feel these changes you have made in personnel and the Samsung deal signal a turning point for Poynt?
Absolutely. I don’t think people understood the value of the Samsung deal when we put it out. It attracted a bit of attention, but not as much as it should have. For a handset manufacturer to select an application and put it on the device that way, pushing it to forty-million users now and all of their devices over the next three years, well it’s such as tremendous deal, and such a tremendous asset to us. We really think the next six to twelve months will provide a lot of growth for us, and we’re really looking forward to that.
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