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IFBD: New growth strategy leading to expanding customer base

By M. Marin NASDAQ:IFBD

Benzinga · 09/13/2022 13:04

By M. Marin

NASDAQ:IFBD

Founded in 2001, Infobird Co., Ltd (NASDAQ:IFBD) provides SaaS (software-as-a-service) AI-powered customer engagement solutions to corporate customers in China and recently began its expansion into other markets in Asia through a Singapore based channel partner. Infobird offers artificial intelligence (AI)-powered cloud-based customer engagement and sales force management software products. Infobird's software solutions are designed to help clients manage end-to-end customer engagement services, including customer support interaction, and drive revenue, lower expenses and boost customer stickiness through improved customer service. Infobird opened one of China's first cloud call centers and, with more than 10 years of experience offering solutions, particularly to the finance industry, believes it is a leading SaaS provider serving the financial services, retail and healthcare verticals. The company completed its IPO on April 22, 2021; the shares trade on the Nasdaq under the symbol IFBD.

In 2021, Infobird initiated measures to broaden the base of small and mid-size (SMB) customers it serves, reorganizing its corporate, sales and marketing operations, while simultaneously expanding its industry sales teams to grow its customer base. The company, utilizing its telemarketing capabilities, believes its SaaS solutions are easy-to-deploy and can enable SMBs to lower costs and shorten the time it takes to attain scale. With respect to larger corporations with more complex needs, the company can also provide standard solutions by integrating different standard products, without much customization efforts upfront, in a relatively short amount of time. The company's outreach appears to be successful thus far, as evidenced by a growing number of new contracts in industries such as retail, healthcare and new energy vehicle (NEV) (see below).

Targeting rapidly growing sectors…

The company's target verticals are experiencing strong growth. For instance, within the retail space, the global sportswear market revenue reached US$188.2 billion in 2020, according to iiMedia Research data, and is expected to grow to nearly US$201 billion by 2025, which represents a greater than 10% increase, with growth in China expected to outpace that of the general industry, according to market research firm Frost & Sullivan.

In the important food service distribution space, the company recently engaged with a global high-profile multinational customer to deploy Retail Rubik's Cube (see below) in order to enhance the customer's digital operational analysis of its operations. The multinational customer operates in more than ten sectors and operates a number of important projects in China. Infobird views this relationship as an important milestone, as it marks the company's entry into this industry vertical and underscores the functionality and versatility of the company's suite of digital tools for customer engagement and operational evaluation. The multinational customer intends to leverage Infobird tools principally to focus on three important areas of operation for restaurants, including 1) customer flow analysis, 2) customer engagement and 2) merchandising.

… reflecting rising EV adoption & increased focus in China on dental care, among other factors

The NEV vertical has also been characterized by growth. For instance, the improving performance of electric vehicles (EVs) and regulatory measures to boost sales is spurring growing EV adoption in China. The number of EV OEMs has proliferated as sales of EVs and hybrids grow. Nevertheless, despite significant increases in the number of EVs sold over the past decade, this segment of the automobile market remains relatively low, implying potential for upside. International Energy Agency (IEA) data indicates that EVs represented 2.6% of all new sales of cars worldwide in 2019 and comprise roughly 1% of the global car base. According to IEA data, China has about 45% of the world's EV fleet and generally ranks among the largest markets in terms of new EV sales per annum, followed by Europe and the U.S.

Importantly, in 2021, global EV sales appear to have accelerated in terms of volume and market share, according to Green Car Reports, citing a report from the International Energy Agency (IEA). Encouraging in terms of further consumer adoption is continued improvements in EV performance and regulatory restrictions on automobile emissions. On average, the minimum performance on electric range increased to 150 kilometers (km) in 2018, from 100 km the prior year, according to McKinsey. McKinsey also notes that "governments and cities have introduced regulations and incentives to accelerate the shift to sustainable mobility. Regulators worldwide are defining more stringent emissions targets… In line with EV uptake, the buildup of charging infrastructure needs to accelerate to avoid becoming a potential bottleneck and limiting consumer-driven EV adoption."

Within the healthcare sector, the dental industry is one of Infobird's targeted growth verticals. The company has accumulated contract wins with several leading domestic dental brands and expects to grow its market share within this vertical. According to research from the China Research Institute, the Chinese dental market is expected to reach 300 billion yuan by 2025, up from about 103.5 billion yuan in 2019.

The company believes that its focus on verticals that are experiencing strong growth bode well for its own growth, in success. Moreover, Infobird's various contract wins over the past several quarters have been with clients operating in a broad range of sectors, which also underscores the functionality of the tools it offers to help clients in a range of different sectors improve their end customer engagement and stickiness and better monitor and evaluate their internal operating efficiencies. The company believes its growing portfolio of product and service offerings can provide competitive advantages to its customers operating in a range of sectors and allow them to better evaluate the efficiency and profitability of their operations and thereby enhance operating performance. Moreover, by offering tools to enable clients to interact with their end customers enables them to boost their customer loyalty to facilitate transactions and enhance customer stickiness.

The company's analytical tools can enable Infobird clients to better understand how their operations are performing and to identify potential areas that could use improvement and even to develop predictive models to further boost growth and profitability. As competition in China and the general region continues to grow, these differentiating tools leveraging AI algorithms are expected to become even more important for IFBD's customers.

IFBD continues to innovate the products & service offerings

At the same time, the company continues to innovate its tools and expand its products and service offerings organically and through partnerships and M&A. By continuing to innovate its suite of products and service offerings and through more aggressive outreach to prospective clients, the company seeks to diversify and expand its customer base, while concurrently gaining market share in core verticals such as the financial services, retail and healthcare industries noted above. Reflecting the AI and machine learning capabilities of its offerings, Infobird's customer engagement SaaS solutions are customizable and can be tailored to meet the needs of corporate clients in a range of verticals. Infobird has focused primarily on the finance, retail and consumer products sectors, where it believes it has developed expertise to help customers streamline their internal operations and maximize profits by leveraging its SaaS offerings.

Several new contract wins support the early success of IFBD's diversification efforts. For instance, Hong Kong-based SaSa operates a chain of retail stores that sell cosmetics, skincare, and fragrance. Zulijian produces and sells footwear, operating more than 2,000 specialty stores across China. Taikang Healthcare Industry Investment Holdings and another recent contract with the subsidiary of what IFBD notes is an undisclosed global top 10 pharmaceutical company represent wins in the healthcare industry. The company believes these awards illustrate its progress within that sector. HYCAN is a new energy vehicle (NEV) company and the company's recent contract win with Shanghai Ximalaya Technology Co. represents the company's entry into the emerging online audio space in China. Ximalaya operates China's premier online audio platform, according to Infobird. The company anticipates growing brand awareness of the Infobird brand as it maintains its promotional efforts and reflecting growing new customer wins across several industry verticals.

Inforbird's recent contract wins

▪ Nippi Japan Subsidiary

▪ Changchun Rural Commercial Bank

▪ Taikang Healthcare Industry Investment Holdings

▪ SaSa

▪ Zulijian

▪ HYCAN

▪ Undisclosed global footwear brand

▪ Subsidiary of an undisclosed global top 10 pharmaceutical

▪ Shanghai Ximalaya Technology Co.

▪ Global food service multinational

Acquisition of Shanghai Qishuo

To further its diversification efforts, in December 2021 Infobird Beijing took a 51% stake in Shanghai Qishuo Technology, a PRC-based SaaS provider of big data and big data analytical services for about US$1.3 million (RMB 8.6 million). Shanghai Qishuo provides cloud-based digitalized and smart retail store solutions, with a focus on the retail footwear industry and leading apparel brands. Qishuo's big data analysis is designed to improve per unit store management and overall chain efficiency for retail and apparel clients.

Reflecting the expected potential of the sports and footwear sector in China and likelihood that competition will increase, leveraging digital tools such as Retail Rubik's Cube, the main product Qishuo develops to empower clients with intelligent retail store operational improvement solutions, is expected to generate opportunities for Infobird and Qishuo. Specifically, Retail Cube provides customer intelligent hardware, an AI algorithm and other tools to help brands integrate and analyze data around store traffic, operations and inventory management.

Company believes new contract win with major global sportswear brand augurs well for further growth

The Shanghai Qishuo acquisition expands Infobird's product offerings significantly and is therefore expected to facilitate Infobird's strategy to broaden its customer base with both online and offline customer engagement solutions. In fact, the company attributes the recent contract win with the Chinese subsidiary of a leading U.S.-headquartered global sports footwear brand to Shanghai Qishuo's Big Data analysis capabilities. Shanghai Qishuo's core product, branded Retail Rubik's Cube (noted above), is expected to enable the sports brand to improve its analysis of various aspects of its store operations in China, including its stores located throughout the country, by analyzing the data generated by its brand and store operations.

The company views this contract as a milestone for Infobird and Shanghai Qishuo as the company continues to pursue its diversification efforts and drive expansion within the footwear and apparel sector. The tools that Infobird and Shanghai Qishuo provide can help the client improve store performance and efficiencies, based on the collection of analysis of data. In turn, this is expected to contribute to boosting the stores' performance and growth. In addition, based on historical data collection and analysis, Shanghai Qishuo can also develop a predictive analysis, generating a range of possible scenarios for the brand and its stores, so that the client can deploy resources in a more efficient and productive way and also conduct its marketing campaigns with greater precision to enhance sales and revenue.

Initiatives aimed at geographic expansion

Infobird also recently signed a channel partner agreement with Harbor Private Limited, a Singapore-based company focused on providing software services to enterprises. Harbor Private Limited will take the lead on marketing and selling Infobird's SaaS products in Singapore. This represents Infobird's initial entry into the international market. If the Harbor Private Limited partnership is successful, Infobird anticipates additional expansion outside of its home market over time.

Infobird anticipates future development

The company believes that delays and constraints as a result of the COVID-19 pandemic mask the benefits of its recent actions. Moreover, 2021 was also the first stage of the new strategy and the business is expected to develop further in the future, reflecting the many new contract wins formed in recent months. Revenue in 2021 fell roughly 33.7% year-over-year to about US$9.6 million, primarily reflecting COVID-19 disruptions and the expiration of a major contract with China Guangfa Bank on June 30, 2020.

On a positive note, Infobird's cloud-based services revenue advanced roughly 41.5% in 2021 compared to 2020 and represented about 20.6% of total revenue, up from just under 10% in 2020. The company believes that 2021 was transformational as it transitioned its organization, including expanding marketing and outreach, and anticipates future development.

Separately, Infobird received a delinquency notification from the Nasdaq in March of 2022, as the company was not in compliance with the minimum bid price requirement. However, the company implemented a 1-for-5 reverse stock split effective September 9, 2022, that brought the shares back into compliance with the Nasdaq requirement. Nevertheless, if the share price falls below the minimum requirement again, the company faces this and other risks as it advances its growth strategy.

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