Telehealth And Livestream Shopping Will Diversify Revenue Streams

Key Takeaways

• The strategic shift to a diversified revenue model, including ventures in telehealth and livestream shopping, is expected to drive significant revenue growth.
  
• The restructuring of the balance sheet and new financing approach aim to improve earnings stability and support growth initiatives through 2028.
  
• Verb Technology faces risks from past customer attrition, financial vulnerabilities, and uncertain new ventures, impacting revenue growth, stability, and shareholder value.

Catalysts

Through its subsidiaries, develops Software-as-a-Service applications platform.

• The transition from a direct sales SaaS business to a diversified revenue model, including ventures in telehealth and livestream shopping (MARKET.live), is expected to drive substantial revenue growth. This strategic shift aims to leverage complementary streams, potentially enhancing revenues significantly.
  
• The integration and expected acquisition of the AI company LyveCom are anticipated to reduce operational costs by approximately $1 million per year, potentially increasing net margins by streamlining processes and enhancing platform capabilities.
  
• The restructuring of the balance sheet, eliminating debt, and reorganizing financing to avoid predatory terms is likely to improve earnings stability and provide a cash runway well into 2028. This financial health improvement is geared towards supporting future growth initiatives.
  
• The strong growth trajectory seen with products like GoFundYourself indicates potential for massive revenue increases if similar growth continues or accelerates, impacting overall earnings positively.
  
• With cash reserves and liquid securities of over $13 million, along with a tight share structure post-reverse split, Verb's capital structure is well-positioned to support growth initiatives and protect shareholder value. This reinforces a potential upward revision in net earnings as these initiatives mature.

Verb Technology Company Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Verb Technology Company's revenue will grow by 94.6% annually over the next 3 years.
• Analysts are not forecasting that Verb Technology Company will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Verb Technology Company's profit margin will increase from -479.5% to the average US Software industry of 13.2% in 3 years.
• If Verb Technology Company's profit margin were to converge on the industry average, you could expect earnings to reach $2.1 million (and earnings per share of $2.14) by about July 2028, up from $-10.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 36.5x on those 2028 earnings, up from -1.2x today. This future PE is lower than the current PE for the US Software industry at 42.7x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.94%, as per the Simply Wall St company report.

Verb Technology Company Future Earnings Per Share Growth

Risks

• Verb Technology's historical reliance on a high-attrition customer base and outdated communication policies led to costly challenges in revenue growth, affecting overall earnings stability.
  
• The transition to the MARKET.live business, while showing initial growth potential, has not yet reached a consistent revenue-generating phase, posing a risk to ongoing revenue and margin stability.
  
• The company’s past challenges with predatory financing and market conditions, including stock dilution and short selling, highlight financial vulnerabilities that could impact future shareholder value and net margins.
  
• The new ventures like VANITYPrescribed and GoFundYourself, while innovative, are still in early stages or limited by modest initial revenue, which can strain overall earnings and profit margins if the expected rapid growth does not materialize.
  
• The LyveCom acquisition is expected to reduce operational costs, but the success of integration and future profitability remains uncertain, bearing risks to revenue forecasts and net earnings if synergies are not realized as planned.

Valuation

• The analysts have a consensus price target of $62.0 for Verb Technology Company based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $16.2 million, earnings will come to $2.1 million, and it would be trading on a PE ratio of 36.5x, assuming you use a discount rate of 7.9%.
• Given the current share price of $8.97, the analyst price target of $62.0 is 85.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.