Good afternoon, and welcome to the First Quarter 2021 Financial Results Conference Call for Verb Technology Company, Inc. [Operator Instructions] Please be advised, this call is being recorded at the company's request. Today, on our call are Rory J. Cutaia, CEO; and Jeff Clayborne, CFO. Before we begin, I'd like to remind everyone that statements made during this conference call will include forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially. Forward-looking statements speak only as of the date they are made, except as required by law as the underlying facts and circumstances may change. Verb Technology Company disclaims any obligations to update these forward-looking statements as well as those contained in the company's current and subsequent filings with the SEC. And now I'd like to turn the call over to Rory J. Cutaia, CEO. Please go ahead, sir.

Thank you, and I thank everyone for joining us today for our first quarter 2021 financial results conference call. As you know, our last earnings call for Q4 and the full year 2020 was just 6 weeks ago, on March 31. And in that call, a fairly lengthy call, the transcript for which is available in our filed Form 8-K, you can find it on our website, I provided a very detailed report on the business, our products and our plans for 2021. And since we were at the end of the Q1 2021 reporting period, I also provided forward-looking guidance on our expected results for Q1 2021. So on this call, I'm not going to take time reiterating much of what I shared last time. And instead, I'll update you as to how the business actually performed as compared to the guidance we provided on the March 31 call and the progress we've made on the hyper growth initiatives or at least those that I've shared so far and referenced in prior reports. So let me start by saying that I'm really pleased to announce that our actual Q1 results beat our projected Q1 results, which, look, we're widely seeing as somewhat bullish as they represented a fairly meaningful increase over Q4 2020. And look, as good as these results are, they do not yet include the results of any of the hyper growth initiatives that we've been working on but I am extremely pleased to report. In fact, I'm very proud of my team because, as promised and on time, we've completed development and testing of our Attribution feature from verbLIVE. And it's being released today to the Apple App Store and Google Play Store. We believe this is a real game changer. It takes the burgeoning livestream…

Thank you, Rory, and good afternoon, everyone. I'd like to review our financial performance as reported in our Form 10-Q filed today, Thursday, May 13, for the quarterly period ending March 31, 2021. The following period-over-period comparisons present the company's results of operations for Q1 2021 versus Q1 2020. Our total revenue for Q1 2021 was $2.5 million, a 7.3% increase from the $2.4 million reported in Q1 2020. Now simply looking at our top line revenue doesn't tell the whole story because it hides the actual growth we're enjoying in our digital business. As we reported each quarter, we began exiting the low-margin printing and fulfillment aspects of the legacy business long ago. So that revenue is going down as planned. In fact, it's down 19% from the same period last year. But this masks the growth we are seeing in our digital business, which is up nicely in Q1 2021 to $1.8 million for total digital, which is an increase of 24% from the $1.5 million reported in Q1 2020. And our total digital revenue growth was primarily driven by a 38% increase in our core SaaS recurring revenue, which totaled $1.5 million in Q1 2021 versus the $1.1 million in Q1 2020. In fact, for Q1 2021, our SaaS recurring revenue represents 81% of our total digital revenue compared with 73% for Q1 2020. Our total gross margin for the quarter ended March 31, 2021, remained essentially consistent compared to the quarter ended March 31, 2020. Research and development for Q1 2021 totaled $2.9 million, an increase of 126% from $1.3 million reported in Q1 2020, attributed to the development of verbLIVE, our Attribution feature Rory talked about as well as Microsoft Outlook integration and our new Marketplace platform you'll be hearing a lot more about. General…

[Operator Instructions] Our first question comes from the line of Brian Kinstlinger with Alliance Global Partners.

First, I want to start with Microsoft and the beta testing, 2-part question. First, when do you think -- when do you expect it'll be completed? It sounds like about 45 days. But more importantly, what is the next step? Is the next step you have to make changes based on the findings? And then there's another 90 days of testing? Or is it ready for sale? And then the second part of the question is, I believe last quarter you talked about a certain status for third-party technology vendors for Microsoft. And I'm -- that makes it much more seamless for Microsoft ISVs and obviously much more lucrative for companies like yourself. Can you update us on that status and when we might find out about that?

Sure. So with respect to the Microsoft Outlook integration, the ongoing public beta, so you're right. We're about halfway through it. There's about 45 days left. We may decide that it's not necessary to go the entire 45 days. We're currently looking at that. It is going really extremely well. Our intention is not as some companies do. They wait until the end of the beta period. They collect all the changes, and they go implement those changes. That's not what we're doing. We're iterating and making changes as we proceed so that at the end of the process, we've got all the feedback. All the changes are in, tweaks, whatever it might be, new features. So that's what's contemplated. We currently have a hard date now in June. But for you guys, I'm going to tell you, mid-June. And we're pretty confident that it will be done by then. I mean it's pretty good right now. I mean -- and I'm really underselling it. It's quite amazing actually. I think people are going to really like it. So the other part of your question was the Microsoft cell program that we are very eager to be a part of. So we have submitted our paperwork on it. It has to go through approval process there at Microsoft. We're extremely confident that we'll satisfy the parameters for that participation. And once in the cell program, Microsoft was talking about putting our application on their product catalog, making it available to their value-added resellers around the world, who can bundle it. They get all kinds of credits for doing that kind of thing. So there's a huge incentive inside Microsoft to help us market that product. And we're pretty optimistic about it.

And when would you find out about that? Once the beta is complete? Or could it happen way after? I mean I'm just trying to understand the timing of when you'd find out if you were part of that program.

We don't really know exactly the date they're going to do that. It could happen before the beta is complete. I would expect that it's going to happen either at completion or sometime thereafter. But to be perfectly honest with you, I just don't know. It's -- but I do know that it's not a year away and it's not 6 months away, something like that.

Yes. And then last quarter, you mentioned onboarding had gone slower than expected during the December quarter. Your SaaS recurring revenue, the sequential increase suggests that that's at least easing a bit. I'm wondering -- and I think we're talking about verbCRM. So are you able to -- right now, are you able to onboard as fast as you would like? Or are there still challenges, and so it's not going as fast as it possibly can?

So just I want to create some clarity around that. So yes, we did not onboard as many clients that were -- at least on our end, were ready for onboarding in December for a variety of reasons that related to their business and their decisions around how they would release products in their process due to the pandemic. So the delayed release schedule had nothing whatsoever to do with us or our internal processes or procedures. We're ready to onboard as rapidly as possible. And our systems and processes now accommodate many, many simultaneous onboards, even at the largest scale. So I could tell you that I think we left off in -- at the end of Q4. We had about 14 clients that were -- we had already teed up to onboard but were delayed by the clients for the reasons I've just said. I think in Q1, we had somewhere around 1/3 of them, perhaps. Maybe a little more than 1/3 have launched and onboarded. And I think, at the moment, we've got 15 that are teed up for launch. I'm hopeful we're going to see those come in, in Q2. On top of everything else, I think, it would be a nice quarter for us.

Great. Two more questions. The first one is, again, it's only been 6 weeks, to be fair. But you talked about, I think, 4 other customers with the same potential contract size of that $1 million deal. Has anything happened in 6 weeks that you can update us on? Are you in advanced discussions with any of those 4? Just maybe where are you with those?

Yes. In fact, I could tell you, as we speak right now, demos of Attribution are going on for all of those. And I can't overstate the excitement around Attribution, what that's going to mean for their businesses and anyone else that's going to use that new technology. As it relates to verbLIVE, it truly is a game changer. So yes, we're in advanced stages, and we're feeling very confident about that.

And then both you and Jeff talked about the cash burn. Obviously, there's 2 ways to address the cash burn. One is to improve revenues, and one is cutting expenses in your OpEx. And you've highlighted that, and the reasons are up substantially over the last few quarters. A lot of it has to do with initiatives and development of some of these new products. Are you suggesting that the burn will come down only because of revenue? Or do we expect -- or do you expect, sorry, OpEx to pull back some at some point in this year?

OpEx is going to pull back considerably this year. And the plans that we're developing around reducing cash burn do not rely on increased revenues. Now obviously, we're expecting revenue will increase rather dramatically. But as CEO of the company, it's my responsibility to reduce our reliance on outside capital as rapidly as we can. And as we continue to innovate, implement new processes and procedures around the development on our product, some of the things that we've already done, even just over the past couple of months, have made a massive difference. So I feel very confident in sharing with you that our cost structure should come down rather dramatically this year. And then layer on top of that, what we're anticipating, even on the lowest end of our estimates in terms of revenue growth. We could very well get to where we want to be faster than people expect.

[Operator Instructions] Our next question comes from the line of Martin Saltzman with AFM Investments.

Rory. Great job this quarter, and congrats to your team. Yes, I wanted to just touch base on the Attribution program. And you mentioned it's actually being launched today, right?

It's being submitted to the App Stores today.

Being submitted. And when can you officially make -- maybe this is it, maybe your first public announcement of it because granted today was supposed to be an earnings call, it would seem to me that to really capitalize on global enterprise, you'd want to get that out as a separate announcement to people to let them know this program is alive and going and operating.

You're absolutely right. I wanted to share it with the investment community and our investors today on the call because we had promised that we're going to deliver that. And indeed, I wanted to make sure I share that. It's a major milestone for us. I really believe that this is going to be a gigantic driver for our live product. As you know -- as anyone who knows, it's been following us for the past couple of years. I've been a big proponent of verbLIVE and livestream e-commerce and what that means. And indeed, now we're seeing other companies coming into the space with their own versions of it, which, obviously, we're very excited about because we're intending to create a fairly massive shift in consumer behavior, and we can't do that alone. So we're very happy to see that. But Attribution is going to take it to a whole new level. And so I wanted to make sure I shared that today because it is indeed being submitted. It generally takes as quickly as 12 hours or up to 36 hours to get approval through the App Store. It will be in our clients' hands next week. They will be using it. They are really excited about it. And I mentioned during the call that we're going to host a big, highly produced Apple-like product release event. And during that, we're going to provide a lot of insights into the products, demos of the products, introducing you to people that have been behind the scenes working on these products and why they're proud of it and what it does. But the other thing that I think will come out of that is that we will have had some history. Now albeit we're not talking about years of history, maybe a couple of months of history of clients actually using it and the results. And I think that's when we really want to go big because then it's not just talking about a home technology that Rory is all excited about. These are the results, and I think that's what's going to play big to the market when we make a big [indiscernible].

So would you say a separate announcement of this is coming, and then you're going to do some type of web event, virtual event outside of that, like you just said?

Yes. You said it much more succinctly than I just did.

Okay. Well, I'm trying to use an economy of words. Let me ask this, Rory, because I'm trying to understand how VERB makes money off of the Attribution. I get verbLIVE, and I understand how a game changer that can be. But how do you capitalize? How does VERB capitalize income-wise on Attribution? Can you explain that a little bit?

Yes. We charge per user, per month. And depending upon what package our clients might be on with that, we're looking at somewhere, I think, on the low end of about $4.95 per month per user. We think everybody is going to want that, right? And that increases our ARPU, our average revenue per user, handsomely. And we hope that as adoption rates grow on this, we'll see a corresponding increase in our revenue. Actually, we're expecting a pretty meaningful increase in our revenue. But one of the things that I mentioned ever so briefly and perhaps in a lot more detail in our last earnings call 6 weeks ago was this new platform, Marketplace. Marketplace has a different revenue model. And Marketplace is where we participate in a percentage of the sales being run through the platform, which, given the ongoing shows that are running every day right now, we got a good sense of what that's shaping up to be. That could be enormous. It could very well be bigger than anything else that we're doing. So we will be participating in a percentage of the sales there. And Attribution, that feature drives a tremendous amount of users and viewers to the platform because think about it. I mean you might want to send everyone on your contact list to go watch somebody's livestream, knowing that anyone who purchases a product, you're going to get paid on it. You don't have to do anything. So think about the volume that that's going to produce for that platform. And again, there, we're participating in the percentage of the sales that are done through the platform.

Yes. I think I'm understanding it. And I'm looking selfishly at VERB and how VERB is going to capitalize. So let me just try to run this by you. If I have some new skin product, okay, that's going to make me 10 years younger. And I have my list of contacts. And I have a video that I put together, and I send that out. And I get people saying, "Oh, great. Buy now, buy now." Then all of a sudden, I contact a friend of mine who has 5x the amount of contacts that might be interested in the skin care line like that. Are you saying, well, not only do I get compensated for people who buy off of someone else's database, that person gets compensated because it's their clients? How does VERB capitalize on all those people connected to me? Or am I looking at that wrong?

No. You're not looking at it wrong at all. Think about it like this. I'm going to host a verbLIVE event to promote that skincare product that you just referenced. And I might have the universe of 10,000 people, right? And let's say everyone -- just for the sake of the explanation, all of them are going to buy. You've got 30,000 people that you're connected to. But you're not good in front of the camera and you're never going to go promote a product. But you're going to send those 30,000 people to watch my livestream. And again, to make it simple, all of them buy. So now instead of having just 10,000 people purchased, now 40,000 people purchased. And VERB gets a percentage of the sales of everything done through the platform.

That's wonderful. That's a game changer because I didn't realize that every buyer, you could get some type of compensation. I just thought it was the initial user and perhaps the secondary user of one's database. I had no idea that it was like that. That's tremendous.

Yes, indeed. And when I said earlier in my comments that this is how we all win, that's what I mean. We all win. You win by referring your people, but you don't have to do anything except refer. The host of the event wins because his sales go up. And VERB and our shareholders win big time because we're getting a percentage of all of it.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Cutaia for any final comments.

So again, thank you all for taking the time to listen to all things happening here at VERB. It's been an exciting time. I realized it's only 6 weeks after our last call. But we have indeed made really extraordinary progress over the past 6 weeks. And look, you have a pretty good sense of where we're going, where the business is going. You're starting to see the livestream e-commerce, articles pop up, new companies pop up. I still believe that our technology is still far superior to everyone else's livestream e-commerce because we're placing those buttons right in the video, not along the bottom, not along the edge, right in the video. That's our proprietary technology, which we think is far more engaging because we're pointing to it, referring to it. So look, we've got really a tiger by the tail here. And I think we've got a real good handle on it. We know where we are. We know where we're going. We're super excited about it. It's going to be a great year. And I really just look forward to sharing it with all of you. And again, we're doing it together, we couldn't do it by ourselves. And I appreciate your time today. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.