Earlier this week,
James Bayardelle, CEO of Nexus Enterprise Holdings, provided the following
corporate update to investors.
Dear shareholders,
Nexus Enterprise
Solutions filed its third quarter results with the SEC in November which showed
a continued strong revenue growth trend for the company. With third quarter
revenues of $832,504 we achieved a 34% increase in sales over the preceding
second quarter’s $621,017 in revenues. Further, our third quarter in 2013
represented a significant gain of 472% compared to revenues of $145,504 in
third quarter 2012.
With successive
quarters and confirming a sustainable growth trend, this is a good time in the
history of our company to begin a dialogue with our current and potential
shareholders, to discuss the journey our company has taken to get to where we
are today and where we aim to go in the future.
First and foremost,
we are a technology company. The majority of our employees are skilled
programmers who work every single day managing large database sets, refining
the code of our proprietary NexChange Marketplace℠ platform, implementing modifications
necessary to meet strict federal compliance standards and integrating the
legacy code of our growing client base into our systems.
Like many successful
start-ups that survive the rigors of their first years in a competitive market
space, we had to pivot and adapt our original business plan. The defining move
in our early history was the acquisition of our core technology and its
development team, including our Chief Technical Officer, Jason Foster.
Our initial SaaS
business model sought to license our code to companies processing large volumes
of consumer leads. We quickly learned most enterprise scale companies won’t
make the commitment to developing or even integrating licensed lead generation
solutions into their legacy systems. The larger enterprises want the data
processing of incoming leads handled for them by a trusted intermediary
instead.
The greater
opportunity was to become a hub that operated between the networks of
affiliates that capture and sell leads and the large national brands that
purchase this data. As the lead generation industry matured, intermediaries
were needed to police and verify the exchange of data between lead sellers and
buyers.
Data quality across
the industry had dropped as unqualified lead providers sold marginal and even
fraudulent data and there were few mechanisms in place to validate this
information for the lead buyers. National carriers in industry verticals like
auto insurance put their foot down and today sellers must broker their lead
data through intermediaries such as Nexus to transact lead sales to the biggest
clients.
Nexus deployed its
NexChange Marketplace℠ platform to serve this market need starting with the largest sector
actively purchasing generated lead data, auto insurance. This shift in strategy
allowed us to survive a massive industry consolidation that put hundreds of
affiliate networks out of business and successfully placed us at the heart of
the supply chain of the still expanding lead generation business.
We continue to work
on growing our client list of national auto insurance carriers, some of whom
we’ve worked with for over a year and some that have come on board in just
these past two months. Industry practices require discretion both on behalf of
our clients and due to competitive considerations, but we will go on record
that Nexus most definitely transacts and sells lead data to multiple national
insurance carriers with major brand recognition.
While the focus of
the past two years has been to establish a strong presence in the auto
insurance sector as a technology intermediary, Nexus has already begun to
execute lead transactions in the life insurance sector this past quarter and we
are now focusing on expansion into additional verticals in 2014.
Our confidence in
our ability to continue producing a significant annual growth rate over the next
several years is founded on more than having a superior marketplace solution in
the lead generation space. It is also based on our capacity to spot untapped
opportunities for lead generation others have yet to identify and our ability
to rapidly move into those areas.
Compared to areas
like auto or life insurance where a core group of companies dominate the
consumer marketplace, there are other more decentralized sectors where the
supply of quality leads is not meeting demand and the premiums paid for leads
and the profit margins from their sale are significantly higher.
In the past month,
Nexus has added personnel and increased our sales force and they are already at
work on our move into a completely new vertical with these higher rates and
margins. We have already secured lead buyers and begun the process of acquiring
leads to serve these clients. We believe this initiative will accelerate our
growth beyond expectations we held even one quarter ago and we look forward to
soon revealing more about this growing arm of our business.
Having accomplished
our original goal of creating a competitive technological advantage and
securing a client list of nationally branded companies, we are capitalizing on
our management team’s deep expertise in marketing methodologies to capture a
greater number of leads acquired directly from consumers.
Between a growing
direct media buying campaign and building out our own company owed network of
lead generating affiliates, we are increasing our internally generated leads
thus lowering our acquisition costs AND further improving our lead quality.
This results in a
two-pronged improvement towards greater profit margins per transaction as we
save money on the front-end of the lead acquisition process and merit a higher
sale price to the lead buyer due to the higher quality of data.
Nexus has positioned
itself well in terms of a sustainable and scalable business model. Even when
accounting for seasonal fluctuations in client spending allocations, Nexus has
demonstrated its ability to sustain robust annualized revenue growth. We have a
reasonable expectation we will be able to continue producing significant annual
sales growth as our client base of lead buyers continues to expand every month.
Nexus is poised to
now capitalize on our relatively fixed infrastructure costs to grow our profit
margins as we expand into additional verticals and our revenues increase.
Offsetting expenses
that presently appear as liabilities on our balance sheets are expected to
continue improving in upcoming quarters as numerous items such as our final
acquisition payments come off the books. With these expected line item
improvements and continued revenue growth, we have reasonable expectations this
will translate quite positively to our earnings per share in 2014. As of the
third quarter, Nexus is cash-flow positive.
Among comparable
companies, we are the only publicly traded microcap company poised to reap the
benefits of success and growth in this dynamic industry. Companies with similar
business strategies that preceded us by 3-5 years and exhibited similar growth
patterns are now producing revenues of $50-100M so there are clear precedents
and realistic benchmarks Nexus is working hard to attain.
We are committed to
shareholders and to rewarding them for their investment in a true growth
company deserving of a higher valuation.
Sincerely yours,
James Bayardelle
CEO, Nexus
Enterprise Solutions
For more
information, visit the website at www.nexusenterprisesolutions.com
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