SoundView Research Update
on NXT-ID, Inc. (NASDAQ: $NXTD); THE #SECURITY #TECHNOLOGY INSIDE
New IV model
which supports a share price of $18
BOSTON - November 10, 2016 (Investorideas.com
Newswire) SoundView Technology Group (http://soundview.co) releases the following company update for NXT-ID, Inc. (NASDAQ:NXTD).
THE SECURITY TECHNOLOGY INSIDE
KRIS TUTTLE & STEVE WAITE:
Read the full report:
Excerpt:
Summary
Nxt-ID has grown and evolved into a security
technology company that uses partnerships and acquisitions to monetize their
innovations and reach into multiple end markets. The LogicMark business in
healthcare is already generating substantial revenue and the WorldVentures
business with the "Flye" smart card is about to enter a high volume
stage of deliveries and begin to generate revenue as well. We will see these
two areas expand and others added. Most recently Nxt-ID has joined the Cisco
Solution Partner program to provide biometric and encryption solutions in
conjunction with other ecosystem partners. [Investors should recall that in Q1
of this year Cisco paid $1.4B to acquire Jasper to leverage their IoT platform
in the enterprise market.]
We will be monitoring each area individually as it
grows and contributes to the overall business. From a positioning standpoint,
investors should consider Nxt-ID as a technology provider as shown in the
figure below. The company strategy is to grow the existing partnerships
aggressively in 2017 and add new ones that will drive growth in 2018 and
beyond.
The rest of this report goes into greater depth on
the newly-added LogicMark business in PERS and also the existing smart card
business - both the WorldVentures Flye card and the evolution of the original
Wocket card/wallet. We've also included a brief update regarding the third
quarter of 2016 along with a brand new IV model which supports a share price of
$18. We will get more details out after the company holds their full ER call in
mid-November.
Recent Q3 Developments & Financial Results
In our August research note we highlighted the
completion of an acquisition (LogicMark) which marked a big transition for
NXT-ID from an early stage, largely pre-revenue company to one with commercial
metrics of growing revenue and improving EBITDA.
After the stockholders meeting on September 1st the
company completed their reverse stock split and other matters pertaining to the
stock and balance sheet. The full details can be found in the SEC filings.
These actions have allowed NXT-ID to achieve compliance with NASDAQ and free
themselves to focus on growing the core businesses and extending their reach
into new markets.
A clear harbinger of better things came in the
release of preliminary Q3 results on October 10th. The company announced
(emphasis ours):
"Revenues were approximately $3M for the three
months ended September 30, 2016 compared to $418K for the same period in 2015.
Revenues from the recent LogicMark acquisition were included from July 25,
2016, and accounted for approximately 90% of the increase from the comparative
period in 2015. The operating loss for the three months ended September 30,
2016 narrowed to approximately $500K compared to an operating loss of $3M for
the same period in 2015. The net loss for the three months ended September 30,
2016 was approximately $1.5M after approximately $1,000,000 in interest expense
compared to a net loss of $3.543M for the three months ended September 30,
2015."
To summarize - $3M in revenue and a $500K operating
loss versus $418K in revenue and a $3M operating loss a year ago. To be fair,
interest charges were still substantial but we expect this to improve in the
next several quarters.
In the very short-term, Q4 should offer another
step-up in business results since we will see a full quarter of LogicMark in
the results and deliveries of the WorldVentures smart card will commence in Q4
as well.
In 2017 NXT-ID will no longer be a company with
regular reports of growing revenues and narrowing losses. For the next year we
are expecting total revenues of $37M with very easy YoY comparisons all year
long. The current market cap is less than 1x 2017 revenues and compares to our
IV of $18 /share. (See our updated IV model in the valuation section below.)
Longer-term we expect to see more developments:
·
NXT-ID has broad ambitions around their
competencies and IP in biometrics, security, sensors, miniaturization and
business development. That means they have quite a few "irons in the
fire" with a range of partners, large and small. NXT-ID is the tail on the
dog and often can't control the outcome or timing of these initiatives.
However, some of them are likely to come to fruition.
·
LogicMark is a major expansion for NXT-ID into a
new market that offers myriad possibilities. It's a solid business today with
some obvious near-term growth catalysts for the next year. But we see robust
activity and investment in what we'll call the convergence of the internet of
things (IoT) and healthcare. This is a market that will bring together two-way
communication, sensors, biometrics and security to make home and remote care
for chronic medical conditions, including "aging in place", a
reality.
Valuation
Now we have a revenue and earnings basis upon which
to build a new IV model for NXTD. We will get more details after the company
reports full Q3 results but based on what we already know, Nxt-ID will be
reporting consistent revenues against very easy YoY comparisons for the next
several quarters.
Our new model mostly reflects the additions of
LogicMark and WorldVentures. With respect to LogicMark, we believe new products
and expanded distribution will propel growth even faster as we get later in
2017 and into 2018. The Cisco arrangement is new, but as part of the Cisco IoT
ecosystem we expect Nxt-ID to generate some revenues from this channel in 2017
and for it to ramp in 2018. Additional technology integration deals could add
to our projections but none are "baked in."
One area we have been extra conservative in is the
WorldVentures Flye card. If the card takes off (sorry!) then the revenues could
be very materially beyond what we have modeled. But 1) we want to see the card
in the field and 2) we want to see how WorldVentures rolls it out to members -
existing ones and new ones. The second point is a big swing item regarding our
future estimates of their demand for more cards from Nxt-ID.
At the current price, the stock is trading well
under 1x 2017 sales and our IV suggests an $18 near-term price objective.
Read the full report:
ABOUT SOUNDVIEW RESEARCH
SoundView conducts independent research - mostly on
emerging technologies. We like thematic-driven companies where technology is
involved and use analysis to identify the most promising investment
opportunities.
Our business model is combination of subscription
fees along with some direct investments and advisory fees. We measure our
success by the quality of our analysis, accuracy of the conclusions and the
size and influence of our audience. We apply our own proven approach to
valuation that we call intrinsic value (IV) for informing investment decisions
and optimizing portfolio management.
Disclosures
SoundView serves as a strategic advisor to NXT-ID
and provides advisory and other services to the company including strategy
advice, company positioning, investor communication methods and ongoing
technology and market research. SoundView employees do not have positions or
other vested interest in NXT-ID stock. Additional disclosures at:
Contact:
Kris Tuttle
SoundView Technology Group
kris@soundview.co
+1-617-828-6462
SoundView Technology Group
kris@soundview.co
+1-617-828-6462
Forward-Looking Statements for NXT-ID: This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
reflect management's current expectations, as of the date of this press
release, and involve certain risks and uncertainties. Forward-looking
statements include statements herein with respect to the successful execution
of the Company's business strategy. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors. Such risks and uncertainties include, among other
things, our ability to establish and maintain the proprietary nature of our
technology through the patent process, as well as our ability to possibly
license from others patents and patent applications necessary to develop
products; the availability of financing; the Company's ability to implement its
long range business plan for various applications of its technology; the
Company's ability to enter into agreements with any necessary marketing and/or
distribution partners; the impact of competition, the obtaining and maintenance
of any necessary regulatory clearances applicable to applications of the
Company's technology; and management of growth and other risks and
uncertainties that may be detailed from time to time in the Company's reports
filed with the Securities and Exchange Commission.
NXT- ID Inc Contact:
Media:
SOURCE NXT-ID, Inc.
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