** FTCH Evaluation (7/13) **
Links to CGP:
http://www.cgpnewsletters.com/id104.html
http://www.cgpnewsletters.com/index.html
Links to Paymenting, LLC
http://www.paymenting.com/
http://blog.paymenting.com/
June 29, 2009
Casey Clark, CEO of Paymenting, LLC, states, "We've been working in the Community Management industry for a few years, and we haven't seen an online management tool nearly as robust as InteractionCS. No other product on the market offers such an extensive networking application, management tools, and a full accounting suite. By adding our payment solutions, InteractionCS is now that much further ahead of the competition."
==========================
7/9/09 PR: Paul Campbell has joined the company as Executive Vice President and National Sales Manager.
Paul Campbell commented, "When I first heard about how the Ascend product line seeks to reshape the small businesses market, my first comment was this solution really focuses on solving the key needs of the business customer. Leveraging my experience in delivering solutions to more than 250,000 business customers, I am truly excited about joining F3 Technologies team."
Paul Campbell
Current Co-Founder at eHealthRec.com
Past VP Commercial Banking Solutions Group at Digital Insight an Intuit Company
Senior Vice President at FUNDtech Corporation
First Vice President at Republic National Bank of New York
Education BAI Graduate School - Vanderbilt University
New York Institute of Credit
East Tennessee State University
EXECUTIVE LEADERSHIP – FINANCE AND BANKING
Consummate senior executive, change agent and entrepreneur. Acknowledged leader that drives cultural change to build organizational effectiveness that propels revenue growth. Experience spans organizational start-ups, mature companies, mergers and acquisitions, and business turnarounds. Goal-oriented, hands-on leader with expertise in the following areas:
•Strategic Planning
•Revenue Enhancement
•Corporate Development
•Organizational Change
•Methodology Development
•Business Process Reengineering
•Mergers & Acquisitions
•Entrepreneurial Leadership
•Strategic Partnerships
----------------
Paul Campbell’s Experience
Co-Founder
eHealthRec.com
(Computer Software industry)
February 2009 — Present (6 months)
A company focused on the development of an interoperable software system to facilitate the conversion of paper medical records to a digital health record and to incorporate a practice management system to integrate the physician's practice into the emerging totally digital and networked Healthcare system. Our primary focus is providing a software solution to the Orthopedic Surgery practice.
VP Commercial Banking Solutions Group
Digital Insight an Intuit Company
(Public Company; Computer Software industry)
June 2005 — August 2008 (3 years 3 months)
Led a $30 Million Commercial Banking Business Segment that specializes in delivering software as a service to financial institutions ranging in size from $50 Million to $1.2 Trillion.
Senior Vice President
FUNDtech Corporation
(Public Company; FNDT; Computer Software industry)
June 1999 — May 2005 (6 years)
Led a $12 Million Cash Management Business Unit through a high growth period. Orchestrated the expansion of the data center to serve as the primary U.S. hub for FUNDtech’s ASP business.
First Vice President
Republic National Bank of New York
(Public Company; 1001-5000 employees; Banking industry)
September 1987 — June 1999 (11 years 10 months)
During the 12 years at Republic I held various positions at the bank including;
Business Continuity Planning - established disaster recovery plans for all departments within the bank, work with each group on business continuity planning and participated in regular tests of the DR plans.
Letter of Credit / Trade Finance - worked within the Letter of Credit group to expand the use of the LC system to various branches around the world as well as launched the first PC based Trade Finance program for the business customer.
Cash Management - created the first cash management department for the bank and worked with a tremendous team to develop more than 20 product offerings for the business customer.
-----------------------------------
Paul Campbell’s Education
BAI Graduate School - Vanderbilt University
Bank Operations & Technology 1997 — 1998
New York Institute of Credit
Certificate in Bank Lending 1991 — 1991
East Tennessee State University
Bachelor Business Administration , Finance , 1985 — 1987
========================
Just something I put together earlier, I am sure there are some useful information here that could help put things in perspective when come to valuate FTCH's potential value. We are in the segment in IT that is one of the fastest growing: Saas - Software-as-a-Service.
CRM (Salesforce.com) is to be used to come up with what FTCH's value should be. From my understanding, Salesforce.com is focus mostly on business segment. FTCH is focusing on local communities (CS - Interactive Community System) and business side as well (GBS - Global Business System). Also another product is soon to come, Fargo Tube.
Currently (June 28, 2009):
CRM: market cap: $4.8 B, O/S: 123.5 M, Trailing P/E: 93, Forward P/E: 49, Revenue 1.13 B, Qtrly Earning Growth: 92.9%, Profit Margin(1 qtr 2009): 79.9%, PPS: $39
FTCH: market cap: $4.34 M, O/S: 62 M, Expected Revenue for 2009: $2 M, PPS: $.07
What do we know?
1) Massive marketing campaign will start on July 1. So far they have just started a soft marketing campaign and they seem to have a huge success. They are now in 5 states.
2) They expect to have 100,000 user by the end of 2009 with revenue of $2 million
3) The burn rate is around $10K a month. They have raised $100K earlier this month. It's said that they will have enough cash to last for the rest of the year.
4) They expect to turn profit this year
5) A contract was signed for Dade county, FL. Expected income from advertising is $75K a month when it's up and runing.
6) Net Profit margin is likely to be well over 70% of revenue because of the way the outsourcing/contracts with distributors. Notice, they don't have their own saleforce on salary from what I can tell. Marketing cost is low this is why cash burn rate is around $10K a month. It seems that distributors bare the selling expenses. I like this very much.
7) They have no debt, no preferred shares, no need to raise more fund via selling stock.
What will they do with extra money since the burn rate is so low and current contracts are already making them money? 1) If they become cash cow, they will be bought out, 2) if the company products are a hit, they will be bought out, 3) they could do BUY BACK shares, 4) give out DIVIDEN. Anyone of those 4 choices are fine with me. I believe the management have or nearly have control of majority of the shares. I am very certain they will do everything they can for the interest of shareholders and the company.
Calculations:
Net Profit of: $1.4 million (based on $2 million revenue for 2009 and 70% net profit. Notice that this sales figure is basically for 6 months revenue since the main product lunching is on July 1, 2009).
$1.4 m/62 m = .0225 per share.
P/E of 20 = .45 a share
P/E of 49 = 1.10 a share
P/E of 93 = 2.09 a share
Do we deserve P/E of 93? YES and YES. F3 is a small company and there are a lot of rooms to grow and fast growing. It doesn't have a mature coroperate structure yet which means there are more room to fastly adapt to marketing environment. Hint, there are a lot of red tapes in big companies and can't adapt to changes as fast, their stock price is also not moving up or down as much.
I see that F3 could blow that $2 million target away. If they manage to reach $2 million target a month or two before the year is over, this one will explode big time.
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Now let assume that we double our business every quarter after 4th qtr of 2009. Yes this is probably a conservative number since we are a small and fast growing company with amazing products and have more products in the pipeline. If you don't think double business every qrt is possible, look at CRM's quarterly earning growth.
What will the end of year 2010's revenue projection look like?
$2 x 2 x 2 x 2 x 2 = $32 million.
$32 m x 70% = $22.4 / 62 m shares = $.3612 net income per share.
P/E of 20 = 7.22 a share
P/E of 49 = 17.69 a share
P/E of 93 = 33.59 a share
According to this projection, FTCH's PPS should be in that range by the end of 2010. Hopefully we will be on Nasdaq or NYSE by then. This could come as early as 1 qtr of 2010.
Other Consideration:
The company's ultimate goal is to capture at least .25% of IT business. That translate to nearly $300 million a year. What will PPS be if they can reach that objective?
$300 M x .70 = $210
$210 million/62 million shares = $3.38 in net profit per share.
P/E of 20 = 67 a share
P/E of 49 = 165 a share
P/E of 93 = 314 a share
If we apply P/E of 93 to our F3's projection, our share price will be at $314 a share. Personally that will put our market cap at $19.48 billion which is unlikely. But a market cap of $1 to $1.5 billion is highly possible giving a revenue of $300 million a year. Of course, our market cap can be at much higher, it's depending on if we get too big and become dinosaur or not. Because if we are growing and become a mature company, our margin will be reduced greatly. If we are then $1 billion to $1.5 billion market cap seems likely. If we are don't become a slow and large dinosaur with huge administrative expenses, 8X to 10X of Revenue is surely achievable.
$1.0 billion/62 million shares = $16 a share.
$1.5 billion/62 million shares = $24 a share.
$2.4 billion/62 million shares = $38 a share.
$3.0 billion/62 million shares = $48 a share.
If there is a buyback program taking place, PPS will sure zoom higher accordingly.
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