Q1 2024 Rocketfuel Blockchain Inc Earnings Call

Participants

Bennett Jay Yankowitz; CFO, Secretary & Director; RocketFuel Blockchain, Inc.

Peter M. Jensen; CEO & Director; RocketFuel Blockchain, Inc.

Presentation

Peter M. Jensen

It is now 10:32 here in San Francisco. So I think we should just get started. Ben, do you agree? Are you good?

Bennett Jay Yankowitz

Yes. Go ahead.

Peter M. Jensen

So, welcome everyone to our financial update. As you all know we do this on a regular basis to update all our shareholders and investors on what is going on in the company and also allow all of you to ask any questions that you may have about the company, our products and anything else. In between these calls, you are always welcome to just reach out to us directly. We are happy to talk to you, answer questions and so on.
With me here today, I have Ben Yankowitz who is our CFO and I have Arvind Verma who is our head of products. This session is being recorded and will be available on our website later, I believe, today. And so if you want to go back and review it, you can.
The agenda is the same as all the others. We'll give you an update on the latest announcements. And we'll talk a little bit about the valuation. We did that last time. And then for those who have not attended I'll just remind everyone what we do. And it does change because we do add products on a regular basis. So the store is getting bigger and more complete and so on.
And then we have Q&A. If you have questions, the best way to do it is to type it in, in the QA chat, it is somewhere where you can put in questions, and Ben will read them and read them out to me. I also know some of you are just dialed in by the phone. So at the end, we will open up the phones for everyone so they can just ask questions directly from the phone. Any other added comments there, Ben?

Bennett Jay Yankowitz

No. I think we can move on.

Peter M. Jensen

Yes. So the -- I think Tuesday it was this week, we announced our fiscal Q1 2023 results. That's the period that goes from March 1 to June 30 this year, i.e., 2023. We announced revenue of $235,000, which was more than twice what we made the previous quarter. So we're growing -- at least we were doubling or more than doubling our revenue sequentially. The previous quarter was, if I believe correctly, $101,000, right? So it's more than doubling.
And then we also preannounced our fiscal second quarter this year, which runs from July 1 till the end of September. So it ended, what, 2, 3 weeks ago, 3 weeks ago. And we preannounced $765,000, which as you can see, is 3.3 or something. So we more than tripled the revenue compared to the previous quarter.
So we have now -- since we have been starting in operation 6 quarters ago, i.e., 18 months, we have just, on average, we've more than doubled our revenue every single quarter. And as you can see, the growth is accelerating because the last quarter, we've tripled it. Now whether we can keep tripling it, I don't know. We have a nice pipeline. I always update you on what's going on. And so far, I would say we have more than delivered what we have projected. I remember, half a year ago, I projected much lower numbers.
So what's driving this? It's our new products and it's several large new customers. We are true enterprise software payment company. And why do I say that? I say that because we have a lot of customers, but 5 of them have more than $1 billion in revenue. These are big corporations. And they have rigid requirements, not just to the product, but also to our compliance to a legal setup. I mean every time we go and we sign up with these customers, their legal and compliance team, they are scrutinizing us, and they should do, rightfully so, and we're okay with that. But I see that because it just proves that we are an enterprise software company. They wouldn't do business with us if we weren't legit and if we didn't do things the right way with the right processes.
Does that mean everything is perfect? No, we're a small company, and there's always small things we can improve. But overall, they're happy with how we do things from a sales perspective, support perspective, compliance and legal perspective.
Another metric, we did 273,000 payment transactions in the last quarter. That's in 3 months. 273,000 people use the RocketFuel platform to make a payment in 1 quarter, right? And if we look at this -- for those of you who have been following us, I just put in the numbers here, the 6 quarters we've been in operation. We started, what was it, in June last year, in 2022. It's not that long ago. And the first month was not really any revenue. It was really in July. But whatever. We did 60 transactions. We were super proud and happy. The product works. And it went from 520 transactions. And now we're doing 273,000 transactions.
And the same with the revenue, it's following. It's more than doubling on average. And now it's tripling.
So this is the way a young company with a disruptive technology that solves problems for customers should evolve, and we're doing that. Now one thing I do not quite understand is when we keep delivering results like this, that our stock price is not higher. Because we talked about valuation, I think our market cap is now $5 million, if you look at some of the other companies, and I have a slide on that and what they are being sold for and what they are being financed at, it's a lot higher. But that's a different thing.
What we are focused on now is building a business, building the right products, working with the right customers, and it shows in our results. And we'll continue doing that. Because at the end of the day, that's what creates a valuable company.
So this is just the same thing showing in the chart with the revenue here. You can see it, so -- oh, sorry about that. Yes. The growth is continuing up. We are currently processing about 3,000 transactions a day. It goes up and down a little bit depending on the day and so on. Our average annual run rate right now is $3.5 million, probably a little bit higher now. And some people use that metric for seeing -- it has grown quite a bit.
Just in September alone, we processed $7.4 million in volume. It's meaningful revenue. And now we are 6 months into our fiscal year '23. In these first 6 months, we're already 5x more than we did all last year. So it's going well.
We -- last time we did talk about what we are projecting. And we do still maintain that by the end of the year, if this growth continues, we will hit $8 million in annual run rate by the end of this fiscal year, which is in March in '24. We are also trying to hit $5 million in run rate by the end of this year, and that will generate profitability. So those are the numbers.
Other numbers, metrics that I have here, we have 4 products live. I'll talk a little bit more about them later. We have processed a total of 350,000 transactions. What else have I not? I've talked about most of these things. So let me move on and just talk a little bit about valuation.
As I mentioned, there are several companies that do, maybe not exactly the same, some do exactly the same, we have -- some products they don't have and vice versa. But look at these companies and look them up and see the valuation they have, see what they raise money at. It's typically a factor of 10 to 20 of their annual run rate. And so if you take that and apply to our run rate, we should have a similar valuation, we believe.
And you can also look at some of the companies that have been sold. [Coinify] for example, got sold to Pay.com. They definitely got sold at a much higher valuation per revenue dollar than our current valuation is. What it means is that, if they can sell their company too, at that price, that -- we should be able to do the same. It talks about what the value of the market is.
It's like an old car. If you think that your car is worth only $5,000 because it's from 1961 and it's a Corvette and you -- that's what you paid for it, no, that's not true. The real value is what the market wants to pay for it. And if other people can sell their companies for a certain price, we should be able to do the same, if we wanted to. I'm not saying we are going to sell, just saying that that's the value of the company.
Okay. So those are the financial numbers. I wanted to just talk a little bit about the technology as a reminder for everyone. Let me just do that. Yes. So as a reminder, we are in the business of moving money from A to B between companies to companies, businesses to businesses, businesses to consumers or any combinations of that. And we're using modern blockchain and digital asset technologies to do that. This is a technology play. Really what we're doing is just redesigning the existing business processes using smart new technology that does it faster, cheaper, better.
So we're infrastructure. We are the Visa and Mastercard for crypto. We're not an exchange. We don't hold any money. That's an important point here.
And so once we've created this technology platform that you can see here, it allows us to build multiple use cases. Every time there's a new technology that comes to market, whether it's the Internet or the mobile phone or AI, the question is, what's the low-hanging fruit? What is the problem in the market that we can solve with this technology the quickest and easiest? And that's what we're doing.
So we have an underlying platform that you see here. And then as those of you who have followed us for a while have seen, we started out with our e-commerce product, which allowed customers to pay -- it allowed merchants to accept payment in either crypto or ACH; that was the first one. Second one was our B2B cross-border payments product that allows larger companies to move large funds between countries. And then we came out with our Payout product. And that allows merchants to pay out money to partners and, yes, typically to partners. And then we have our Gift Card product that allows people to purchase gift cards and use it in the RocketFuel ecosystem. And we have more in the pipeline.
So what we have here is an integrated suite of products. And this is what the customers love about us. They start with one product and then we sell them more and more. What they like is that they have one vendor, one integrated dashboard to manage everything. Whether they receive money or pay money out, they can log in and they can see what's going on.
So that's really what we're doing. So with that, let me stop and ask Ben, what have I forgotten? And what should -- and then we can see if there are any questions. But yes, Ben, any comments?

Bennett Jay Yankowitz

Yes. No, I think you've done a good job in covering where we are and where we're going. Just a few more financial details. people always want to know what our burn is and when we're going to be cash flow positive. Our burn has been coming down, but we're probably another 2 to 3 months from being cash flow positive. So we are still looking to raise a little bit more money privately.
I'm looking at our cash flow statement in our 10-Q that we just filed. So in the last quarter, we burned about $415,000, which was down from $975,000 in the corresponding quarter a year ago. So our spend is going down. Obviously, our revenues are going up. And we're getting pretty close to that crossover point, which I think will be a major milestone for our company.

Peter M. Jensen

Cool. Thank you. Were there any written questions, Ben?

Bennett Jay Yankowitz

I don't see any.

Peter M. Jensen

Okay. So if you have questions, feel free to type them in the chat forum. Is that where they do it? Or in Q&A or wherever it is?

Bennett Jay Yankowitz

There should be a Q&A button at the bottom of the screen.

Peter M. Jensen

Q&A button, you can see, but otherwise, I also see a lot of people who have dialed in. Is there a way we can just open up all the microphones and then have them ask questions?

Bennett Jay Yankowitz

Yes. Yes, should be able to do that right now.

Peter M. Jensen

All right. So if anyone on the phone has a question, feel free to ask.
All right. So do we know some of the people on the phone? Well, it's coming in now, I think. Opening out. They're muted for some reason. Is that us who have muted that, Ben? It looked like they're muted.

Bennett Jay Yankowitz

I think they need to unmute on their side if they want to talk.

Peter M. Jensen

Yes. So if you have a question, see if you can unmute your phone and ask a question.

Bennett Jay Yankowitz

I guess, no.

Peter M. Jensen

No questions? Or I just want to make sure we're doing it right, Ben.

Bennett Jay Yankowitz

Yes. Everybody should be available. So I guess we just don't have any questions.

Peter M. Jensen

Well, as we're always saying here in these updates, we provide you as much information as we can, but you can always just reach out to us directly with detailed questions via e-mail, on the phone. We're usually available in the early morning till the late evenings. So if you are in a different country, we'd be happy to talk to you at whatever time works for you.
So if there are no questions, I will end this call. Right, Ben?

Bennett Jay Yankowitz

Yes, I think so.

Peter M. Jensen

Thank you, everyone, for your time, for your support and your interest in RocketFuel. We're working hard to make this an even more valuable company. And I think, as you can see, more and more customers are putting faith in us. They're not -- they are not just signing up, they are putting real transactions through the system. 273,000 payment transactions in 3 months; it's meaningful for a fairly young company. We're not quite where Visa is yet. We'll get there, but it might take a few years.
Thank you so much. Have a good day. Bye-bye.

Bennett Jay Yankowitz

Thank you.