Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Right Space, Right Time: Industry in Rapid-Growth Cycle

Dave Jackson Dave Jackson, Stockhouse
2 Comments| September 4, 2020

{{labelSign}}  Favorites
{{errorMessage}}

Click to enlargeIn a recent Stockhouse article, we introduced reader and investors to a very different kind of ad-tech company with a very different kind of corporate vision.

Vancouver, BC-based DGTL Holdings Inc. (TSXV:DGTL, Forum) is a venture capital investment company designed to” acquire, fund, accelerate, and optimize a diversified portfolio of innovative and disruptive digital media and advertising technologies (ad-tech) companies, powered by Artificial Intelligence (AI).”

DGTL, which stands for “Digital Growth Technologies and Licensing”, has launched at an opportune time as the digital media sector booms alongside the new COVID-19 stay-at-home gig-economy and the adoption of AI technology.

The Company already boasts blue-chip customer partners which always bodes well for a small cap company.

Stockhouse Editorial caught up with DGTL’s Founder and Executive VP for Corporate Development, John Belfontaine – a serial entrepreneur and corporate development executive with 15-plus years experience working with private and publicly traded companies – to talk about the company’s accelerated business model, how the Company is changing the digital ad content and space landscape, and newsworthy topics that always keeps our technology investor audience tuned into.


SH: To start off, John, can you update our investor audience and your DGTL shareholders on any new company developments, especially in the wake of the COVID-19 pandemic?

JB: Management has accomplished a great deal since announcing the completion of our acquisition of Hashoff and the commencement of trading on August 4th, 2020. All this within just the last few months:

  1. We completed a $1.32M equity financing and completed our Qualifying Transaction and are now traded on the TSXV as a Tier II Tech issuer. We are now just 26M common shares outstanding, with nearly $1M in cash, no debt, and a strong initial revenue producing SaaS asset, with serious potential for growth.

  1. We completely rebranded the company, under the new name “DGTL Holdings Inc.” with a new website, videos, interviews, editorials and multimedia investor materials, available at www.dgtlinc.com.

  1. DGTL stands for “Digital Growth Technologies and Licensing” as we specialize in incubating fully commercialized enterprise SaaS (software as a service) companies via investment, M&A or licensing structures.

  1. We secured a low interest credit facility for USD$2M at 0.83%
    1. based on the strength of the Hashoff active customer base and account receivables, YOY revenue growth and three-year proforma projections.

  1. We built and trained a new Business Development to build market share and Account Services Department to better service key accounts as we scale
    1. Now have 14 full time sellers, account mangers and operational staff.

  1. We completed the integration of all Hashoff operations into DGTL’s incubation program, streamlined processes, activated the business development team, and completed a new three year revenue growth plan to grow sales revenue up to a USD$8M milestone target.

  1. We have effectively service core customers like AB-InBev, and others while bring on new customers accounts that we will be excited to announce in the near term.


SH: For our investor audience that might be new to DGTL, can you tell the history of the company and the team?

JB: We began DGTL Holdings in June of 2018, with a goal of building a digital media portfolio company focused on accelerating fully commercialized enterprise SaaS. We were excited about the disruptive nature of AI to the Adtech sector saw a gap in the public marketplace below the large cap companies like Trade Desk and Constellation software. We quickly built a cross border team that now includes a capital markets and corporate services team here in Canada and a team of operational executives located in our offices in New York City. Our executive includes former senior adtech executives from Yahoo!, Quantcast, Rocketfuel, Time-Warner among others. We calculated an estimated combined career adtech sales of over US $1 billion on our operations team.

DGTL began as an AI-Adtech portfolio concept and entered into the CPC program, to raise initial capital and seek prospects for a qualifying transaction. The combined management teams built a unique M&A model and a basket of accelerator services and resources that would attract and accelerate growing Adtech companies under the DGTL umbrella. Two years later we have executed on our first acquisition with a strong SaaS platform in Hashoff - and we are now very excited to begin the acceleration process and execute scalable growth by increasing revenue and profitability, while identifying new opportunities to add to our Adtech portfolio.


SH: And onto the big news, your business update report on recent in-market production from your wholly-owned subsidiary, Hashoff. Can you provide us some details and discuss your “three-year growth plan?”

JB: Beyond the success of activating DGTL itself, our flagship company Hashoff has also executed extremely well, under the COVID circumstances. Despite the COVID19 challenges, Hashoff continues to service a strong customer portfolio that includes large multinational corporations (MNCs), such as…Anheuser Busch-InBev, Nestle, Keurig-Dr. Pepper, etc. Dunkin Brands, The Container Store, TJ Maxx, Ulta Beauty, Pizza Hut, Live Nation, Syneos Health, Novartis, and others. For example, in 2020 alone – and during the COVID-19 pandemic, Hashoff serviced key account AB-Inbev with:
  • • 21 new brand activations
  • • +5M total content engagements
  • • +1500 new content artefacts (live)
  • • and, a 5.43% average user engagement rate.


SH: Clearly DGTL is building strong visibility and investors have taken note. Now, institutional and retail investors are getting on board. How so?

JB: DGTL is still in its infancy put very well positioned to be a growing concern in our space. We are in a rapid growth cycle for AI-technologies and digital media companies. As noted, we are definitely in the right space at the right time. In fact, the US Department of Commerce data shows more than $1 in every $5 was spent online in Q2 2020 – the HIGHEST ECOMMERCE penetration of any quarter or year on record.[i]

Because of this, the overall sector has performed well in what has been a very challenging year for the economy. Strong performance among interactive digital media sector peers includes the success of Acuity Ads (T.AT) and IZEA Worldwide, who both doubled their respective market capital YOY from Sept 2019. That trend is consistent with large cap names in the space as well with the success of The Trade Desk (T.TTD) also doubling their market capital to now almost CDN$23B.

Venture capital investment in Canadian companies hit a record high in the second quarter of 2020, much to the surprise of industry leaders, according to Canadian Venture Capital and Private Equity Association’s full report for Q2 and H1 2020.The second quarter of 2020 saw $1.66 billion in venture capital invested across 145 deals, a 23% YOY increase and more than double the amount in the first quarter of 2020[ii].


SH: What makes DGTL’s technology so disruptive in the AI / ad-tech SaaS (software) space?

JB: Brands are seeking full service creative content solutions to act quickly and remotely, especially in this COVID-19 environment where large agencies are not built to service this new gig-economy of a work from home market. #Hashoff is an enterprise level advertising technology company with proprietary artificial intelligence and machine learning software that provides global brands with a full-service, turn-key NLP (Native Language Programming) platform, designed to empower global brands, and advertising agencies, by; identifying, optimizing, engaging, managing, and tracking, top ranked freelance social media content publishers, for hyper-localized brand influencer marketing campaigns. Hashoff’s flagship solutions; “IAM” and “Create Marketplace” allow brands to; scan, identify, profile, prequalify, geo-locate, connect and command, top ranked social media content creators, in real time, at a lower cost, with higher average performance and in-depth analytics to validate and quantify the ROI.


SH: What’s your long term corporate advantage and what makes your business model different from the competition?

JB: Acquiring growth companies through preferred shares means we can minimize dilution to the common shareholder and have the opportunity to acquire companies at a discount to retail value. In addition, cash earnouts are based the initial valuation but dependent on significant revenue growth milestones. In the case of the Hashoff, they received a CDN$6-7M valuation on their technology platform, but must achieve a +400% growth in revenue in order to receive 100% of their US $2M payouts. In addition, the USD$3M in preferred shares are convertible at a premium to the common share holder (i.e. a deemed value of $.47) and subject to a three year escrow release, giving common shareholders the significant opportunity for a return on investment as the asset grows as well as a smaller float of free trading shares. Lastly, DGTL retains a $.75 redemption on those preferred shares issued, giving DGTL the option to purchase those shares back at a small premium to the original issuance price. All in all, an accretive value based acquisition which protects the common shareholder, encourages top line revenue growth, and maintains a tight common share structure for future M&A prospects. Beyond the sound structure, we have an expert management team with a proven ability to execute.


SH: In your corporate deck you say the Company’s vision is “to grow DGTL to be a global leader in the incubation and acceleration of innovative and disruptive AI technologies, with a focus on digital media and advertising technologies.” How does the company position itself to achieve this ambitious goal?

JB: It really comes down to building a foundation for future success. This is achieved through bottom up value based development. First, we have a strong operational and capital markets management team with a track record of proven success. Secondly, we have a strong financial position with cash on hand and growing revenues from our first high margin enterprise SaaS acquisition. And thirdly, and most importantly, we are built on a sound capital structure allowing a solid platform for future acquisitions.


SH: And finally, John, what can you tell our investor audience regarding the current valuation of your stock and why it’s still such a good value buy right now?

JB: Our current EV of approximately CDN$5M is less than the CDN$6-7M independent valuation report based on the Hashoff technology and does not account for an industry standard multiple on sales revenue, and cashflow, the aggressive growth targets from the earnouts of our first asset, or the opportunity for future adtech acquisitions.

Rising tides tend to carry all ships and investors are looking for the next digital media growth story in the space, to get positioned early on a significant development curve.


For more information, visit dgtlinc.com


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.



Tags:

{{labelSign}}  Favorites
{{errorMessage}}

Comments

Fooked up so far.
(27)
October 13, 2020

It is true , but it wont happen in near future. I put half of my free money into it , kind of sucks have to watch it keeps going south. Hopefully in 3 or 4yrs, I can make it back.
(45)
September 7, 2020

Leave a Comment

You must be logged in to be able to post a comment.

Get the latest news and updates from Stockhouse on social media

Follow STOCKHOUSE Today