NetworkNewsWire
Editorial Coverage: The innovation from artificial intelligence
has high-growth software companies taking on multi-billion digital
media giants such as Google and Facebook. New digital media and
martech technologies continue to see accelerated growth with a
global pandemic and soaring media consumption and ecommerce
activity trends.
The sector has seen parabolic increases in the large technology
markets, with the Nasdaq composite
also reflecting a massive spike in new-technology Special Purpose
Acquisition Funds (SPACs). In 2020, 250 SPACs raised more than $83
billion — with SaaS (software as a service) as a leading category.
A rising tide carries all ships, as seen in a boom of AI software
small caps.
DGTL Holdings Inc. (TSX.V: DGTL)
(OTCQB: DGTHF) (Profile) is an AI accelerator company
that operates much like a mini technology SPAC. DGTL is building a
portfolio of fully commercialized enterprise SaaS in the digital
media and martech software sectors. DGTL is quickly making a name
for itself with an average of 75% YoY revenue growth for the past
two quarters and Tier-one global brand clients, including
impressive licensing deals with companies such as Quaker Oats,
Budweiser, Dunkin’ Brands, Mitsubishi Motors, DoorDash, Stella
Artois, Nestle, Keurig-Dr. Pepper, Pizza Hut, Patagonia, and most
recently DraftKings — all leveraging the AI-powered social
media content management platform of DGTL subsidiary Hashoff.
Usually categorized under the broader umbrellas of SaaS
(Software-as-a-Service) or CaaS (Content-as-a-Service), the martech
and adtech markets are thriving, leading to rising valuations,
acquisitions and initial public offerings as evidenced through
market leaders such as Digital Turbine
Inc. (NASDAQ: APPS), Viant Technology
Inc. (NASDAQ: DSP), IZEA
Worldwide Inc. (NASDAQ: IZEA), and PubMatic
Inc. (NASDAQ: PUBM).
- DGTL Holdings Inc. reported year-over-year revenue growth of
more than 83% in Q1, 70% in Q2.
- DraftKings has followed its NCAA March Madness campaign with
Hashoff with a new campaign running during coverage of the PGA
Masters, the world’s most popular golf tournament.
- DGTL’s client portfolio includes DraftKings, DoorDash,
Shein.com, Anheuser Busch, Quaker Oats, Dunkin’ Brands, Mitsubishi,
Stella Artois, Vertone, Syneos Health, Nestle, Keurig-Dr. Pepper,
Pizza Hut, and Patagonia, to name a few.
- DGTL’s deal to acquire 100% of Hashoff requires the AI startup
to meet or exceed annual sales revenue of up to $8 million, which
is a +400% revenue growth from the date of acquisition, in order to
receive 100% of cash payments.
Click link to view
the custom infographic of the DGTL Holdings Inc.
editorial.
Revenue Growth
DGTL
Holdings Inc. (TSX.V: DGTL) (OTCQB: DGTHF) has clearly
amassed an impressive portfolio, one that features a growing list
of some of the world’s most recognizable brands that have chosen
Hashoff for their marketing needs. Among others, the client
portfolio includes Budweiser, Dunkin’ Brands, Mitsubishi Motors,
DoorDash, Stella Artois, Nestle, Keurig-Dr. Pepper, Pizza Hut,
Patagonia and DraftKings.
Revenues are mounting at DGTL. During Q1 FY2021, ended August
31, 2020, the company’s revenue rose 83% year over year to $1.16
million. In Q2, revenue increased to $1.25
million, up 70% from the year prior quarter. The company has a
potential catalyst in the coming weeks when it discloses financial
results for the latest quarter.
Tier-One Clients
If the value of the Hashoff technology can be measured by the
quality of companies employing it, then DGTL is in a prime
situation by combining top trends and tech under one roof. Tier 1
clients have signed on in spades, including DGTL activating a
recent campaign for a client described as
“a Nasdaq-listed Digital Sports Gaming and Entertainment brand”
during 2021 PGA Masters tournament. Disclosure policies don’t allow
DGTL to flat-out state its client’s name, but a quick examination
of the description (global leader in “fantasy sports and mobile
sports betting applications,” $25-plus billion market cap) points
squarely to DraftKings.
The new deal comes on the heels of completing a NCAA March
Madness basketball tournament campaign with DraftKings. DraftKings
fantasy and online betting platform covers essentially every major
sport worldwide from college through pros, which speaks to the
opportunity for continuous campaigns across multiple verticals
going forward. In March, a DGTL campaign was activated for “a
globally recognized CPG brand company.” Having to be opaque, DGTL
also called the
client, which looks to be Quaker Oats, “150 years old. . . an
American food conglomerate based in Chicago. . . owned and operated
as a subsidiary of PepsiCo.”
Where Consumers Go, So Do Ad Dollars
For more than a decade, there has been a steady erosion of time
spent on traditional media in the United States, with a changing of
the guard to digital dominance in 2018. Since 2011, people’s
average daily time with traditional media (TV, print, terrestrial
radio, billboards) has fallen about 20% to approximately 360
minutes. At the same time, usage of digital media has more than
doubled from about 210 minutes to 450 minutes. The COVID-19
pandemic only accelerated the trend towards digital.
Companies devote much more advertising and marketing capital to
social media and influencer spending than traditional broadcast and
print media, etc. To that end, out of an estimated $572 billion in
total global ad spend in 2020, $291.7 billion was allocated to
digital ads. Social ad spending rose 20% year over year to $43
billion, while social media influencer/content marketing — a hot
new trend — jumped 50% to $9.7 billion last year and is expected to
double again in the coming 12 to 18 months.
These trends play to the strengths of tech accelerator DGTL, as
the company builds a portfolio of B2B enterprise SaaS in the
digital media, martech, adtech and e-commerce sectors. Last year,
DGTL (an acronym for Digital Growth Technologies and Licensing)
acquired Hashoff, an enterprise-level, self-service CaaS built on
artificial intelligence and machine learning (AI/ML) technology.
DGTL’s deal to acquire
100% of Hashoff requires the AI startup to meet or exceed
annual sales revenue of up to $8 million, which is a +400% revenue
growth from the date of acquisition, in order to receive 100% of
cash payments.
From the outset, Hashoff has been in front of the technical and
consumer trends —including social, influencer, AI/ML, and the gig
economy — to level the playing field with larger peers and even
tilt it to their favor. The company excels in operational
efficiencies, which contains costs, resulting in savings passed on
to clients while simultaneously improving margins. The company
offers a full-service platform that includes more than 150 million
freelance content creators. Using cutting-edge AI/ML tech, global
brands have the ability to identify the top-ranked digital content
publishers for their specific needs, subsequently engaging them,
managing marketing campaigns and tracking the performance all
within the Hashoff architecture.
A Trend Towards Profitability
Investors will also be listening for rumblings of any additional
M&A activity from DGTL. Management, which includes former
senior executives from companies including Hearst, Yahoo, AOL-Time
Warner, RocketFuel, Facebook, Google, Microsoft, RBC, and IPG, have
made it clear that the intent is to grow the company both
organically and inorganically. The expedited growth of Hashoff puts
the company’s ability on full display – with the first martech SaaS
acquisition within its portfolio-based development model.
Importantly, the leadership team has kept the cap structure
tight with only 36 million shares outstanding, with approximately
$1.5 million in cash and no debt.
Demand Abounds
With traditional media fleeting, the ethos of the marketing
community is next-generation digital processes. Even traditional
digital methods, such as pop-up ads and auto-play videos, are
becoming quickly archaic. Targeted marketing that feels native,
such as with a social media influencer, using AI and ML to most
effectively inform both market and strategy are the technologies
that will drive the market for decades.
Digital
Turbine Inc. (NASDAQ: APPS) operates an on-demand
platform for app and content discovery, user acquisition and
engagement, operational efficiency and monetization opportunities
that has been adopted by more than 40 mobile operators an original
equipment manufacturers (OEMs) worldwide. With the technology,
Digital Turbine is responsible for the delivery of more than 3
billion app preloads for tens of thousands of advertising
campaigns. Late in March, the company agreed to
buy Frankfurt-listed Fyber N.V. for $600 million, adding
expertise in mediation and real-time bidding technology to its
portfolio.
Viant
Technology Inc. (NASDAQ: DSP) had a successful
initial public offering, pricing its IPO at $25 per share only
to open at $44 and close the first day of trading at $47.72. Viant
operates a demand side platform, or DSP, branded Adelphic that uses
people-based data to assist marketers in planning, executing and
measuring omni-channel campaign impact. Customers have the option
to work through a self-service portal or to seek the assistance of
the Viant services team for their advertising initiatives.
IZEA
Worldwide Inc. (NASDAQ: IZEA) is a pioneer in the
modern influencer marketing industry. In 2006, the company was the
first to launch a technology platform that pays bloggers to create
content for brands, growing from essentially a one-man show to a
team of over 100 staffers providing influencer marketing
technology, data and services. Utilizing data from its proprietary
social intelligence platform dubbed BrandGraph, IZEA recently
estimated
that the global impact on travel and tourism brands is $5.2B in
lost earned media per month, which will create a race to capture
the “travel consumer wallet.”
PubMatic
Inc. (NASDAQ: PUBM) completed its
IPO in December after 14 years as a privately held adtech
company. The California-based company, which operates a sell-side
advertising platform the runs programmatic ad transactions in real
time, priced its offering at $20 per shares. In yet another
demonstration of investor appetite for the space, shares closed at
$33.16 and subsequently went on to reach a high of almost $77 in
February. The company truly has a global presence, running 14
offices and eight data centers worldwide.
There are some similarities and a lot of subtle differences
between companies in the space, but there is one common thread in
maximizing return on investment for advertisers. Brands are going
to increasingly earmark capital for digital efforts, especially
with economies re-opening worldwide as the fight for consumer
attention continues. As for tech companies, it’s a matter of which
can deliver the most efficient, quantifiable results in a timely
manner and at the lowest cost. Those that can deliver on that model
are in a position to make the most of the industry opportunity.
For more information about DGTL Holdings Inc. (TSX.V:
DGTL) (OTCQB: DGTHF), please visit DGTL Holdings
Inc.
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