VANCOUVER, BC--(Marketwired - August 30, 2016) - 3tl Technologies Corp. (TSX VENTURE: TTM) (OTCQB: TTMZF) (the "Company" or "3tl") announced its financial results for the second quarter ended June 30, 2016. The financial statements and management discussion and analysis for the quarter ended June 30, 2016 are available on SEDAR.
OVERVIEW AND UPDATE
The Company's overall performance for the three months and six months ended June 30, 2016:
- Revenues increased by 28% to $193,597 and by 45% to $342,434, respectively, for the three and six months ended June 30, 2016 compared to the same periods in 2015.
- Gross margin as a percentage of sales increased to 83% and 82%, respectively, for the three and six months ended June 30, 2016 compared to 66% and 61% for the same periods in 2015.
- Signed multi-year Software as a Service ("SaaS") license agreement with Fandango Rewards, a NBCUniversal owned company (see Press Release dated June 22, 2016).
- Began development of new modules for PLATFORM3 based on market experience and feedback.
Year-to-date, including subsequent to the quarter ended June 30th, 3tl has signed license agreements to provide PLATFORM3 for 25 shopper marketing promotions with leading U.S. based consumer packaged goods ("CPG") brands, with a trend towards increasing the revenue size and time period of the license agreements.
"In the first half of 2016 we have recognized more revenues than for the entire year of 2015. We are encouraged that our team has been able to grow revenues and gross profits while reducing operating expenses. The increasing size and term of our SaaS agreements validates our value proposition to leading CPG brands. Repeat business from leading brands and advertising agencies that have used PLATFORM3 is the most effective form of marketing," said Rob Craig, CEO of 3tl Technologies Corp. "We expect strong growth in 2016 and into 2017, driven by longer term SaaS license agreements."
In the second half of 2015 3tl focused its sales and marketing resources on selling its SaaS shopper marketing solution to leading CPG brands in the U.S. The sales strategy combines direct sales and sales through advertising agencies that manage and develop shopper marketing programs for CPG brands. 3tl's PLATFORM3 was used to facilitate a number of short-term shopper marketing promotions in which leading CPG brands connected directly with consumers through mobile devices in retail stores. The Purchase Receipt Scanning module was used in these promotions enabling consumers to engage with CPG brands while they are in the store aisle, provide proof of purchase with their mobile devices and receive valuable rewards from the brand. The CPG brands also used PLATFORM3 to influence consumer's purchase decision and collect data about consumers who purchased their products. This data is used to deliver targeted rewards and coupons as an incentive for further purchases and to incent consumers for sharing brand friendly content through their social media networks.
These promotions established a track record for 3tl of delivering results for leading CPG brands. In 2016 the sales team has been building a sales pipeline using the 2015 promotions as reference accounts at trade shows and in partnership with a growing number of advertising agencies. The success of the promotions to date has led to repeat business, and to larger and longer term license agreements.
3tl has made progress towards its goal of being a SaaS platform for advertising agencies and CPG brands looking for a way to connect directly with consumers through mobile devices to influence purchasing decisions at the point-of-sale, reward consumers for sharing brand friendly content with their social media networks and collect big consumer data for ongoing targeted marketing.
The investment we have made in building a software platform that delivers a compelling value proposition to major consumer packaged goods brands has positioned 3tl to grow high margin recurring revenues and drive profitable growth as a leading SaaS digital marketing company.
RESULTS OF OPERATIONS
Revenue for the three months ended June 30, 2016 increased by 28% to $193,597 and revenue for the six months ended June 30, 2016 increased by 45% to $342,434, compared to the same periods last year. The Company's revenue increase in the three and six months ended June 30, 2016 was due to a larger number of license agreements delivered compared to the same periods ended June 30, 2015.
3tl believes that the trend of increasing revenues will continue based on our results during the first half of 2016 and subsequent to the quarter ended June 30, 2016. The Company started 2016 with over 20 short-term licenses averaging approximately $15,000. These license agreements were with major brands and agencies, many of which are coming back for repeat business. The last three license agreements have been larger revenue and longer-term, including the multi-year agreement with Fandango Rewards (a NBCUniversal company) signed in the quarter ended June 30, 2016, and two agreements signed subsequent to the quarter for $108,000 over ten weeks and for $86,000 over two months. The revenues from the Fandango Rewards agreement will be recognized over the two-year period, while the other two projects are expected to be completed and recognized in 2016.
Gross margin as a percentage of sales increased to 83% and 82%, respectively, for the three and six months ended June 30, 2016 compared to 66% and 61% for the three and six months ended June 30, 2015 due to the growth of high margin SaaS revenues from PLATFORM3 and Purchase Receipt Scanning and by attaining efficiencies through economies of scale.
As the size and term of 3tl's agreements increase it is expected that some agreements will include a Software as a Service (SaaS) component with gross profit margins estimated at over 80%, and a lower margin managed services component. Our sales team is focused on maximizing high-margin SaaS revenues, but some of the major brands and agencies need some additional support to implement their digital marketing plans.
Gross profit for the three and six months ended June 30, 2016 increased to $160,781 and $279,185, respectively, compared to $100,477 and $144,984 for the three and six months ended June 30, 2015.
Total operating expenses decreased to $643,402 and $1,150,265, respectively for the three months and six months ended June 30, 2016 compared to $768,328 and $1,735,000 for the same periods in 2015. In the first half of 2016, the Company focused its limited resources on activities that will increase revenues in 2016, such that general and administrative and research and development expenses were reduced by 41% and 58%, respectively, compared to the same periods in 2015, while sales and marketing expense was reduced by 16% compared to same periods in 2015.
After more than four years of investment in R&D in PLATFORM3, 3tl is positioned to provide a digital marketing platform on a SaaS basis that provides a compelling value proposition to CPG brands while generating high-margin recurring revenues to the Company. In 2016, 3tl plans to launch additional modules and make improvements to PLATFORM3 based on customer needs, but will focus resources on sales, implementation and customer service. 3tl expects that it will increase investments in R&D in 2017 to maintain and improve its product and enhance its competitive advantage, subject to available resources.
Net and comprehensive loss decreased to $480,607 and $867,752, respectively, for the three months and six months ended June 30, 2016, compared to $671,858 and 1,580,188 for the same periods in 2015, mainly due to increased gross profit and reduction of operating expenses.
About 3tl Technologies Corp.
PLATFORM3 is a Software as a Service (SaaS) consumer marketing platform. It enables CPG companies and consumer brands to engage shoppers through their mobile device and influence their purchasing decisions. PLATFORM3 encompasses proprietary consumer engagement strategies and technology modules including optical character recognition (purchase receipt scanning), digital promotions, purchase data mining, loyalty and rewards. CPG companies and major retail brands use PLATFORM3 to influence and incentivize shoppers to interact with their brand and make purchases in-store and online.
For more information, visit 3tltechcorp.com.
For additional information about the company please visit www.sedar.com. The TSX Venture Exchange Inc. has in no way passed upon the merits of the transaction and has neither approved nor disapproved the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release contains forward-looking information, which involves known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from current expectation. Important factors -- including the availability of funds and the results of financing efforts -- that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time on SEDAR (see www.sedar.com). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.