- Billion dollar industries springing up overnight
- The New Digital Gold
- Multi-decade Multi-Trillion dollar MegaTrend emerging
- Video is the New Voice and All Roads Lead to AR
- Apple is Going All in on AR
Find out the names you need to know
Recent news headlines anticipate the pandemic will last much longer than what we expected which translates into good news for the explosive multi-billion dollar “Stay-at-Home-Stocks” like Peloton ( PTON), Logitech ( LOGI), Zoom Video ( ZM), CrowdStrike ( CRWD), Chewy ( CHWY), Roku ( ROKU), Netflix ( NFLX), Slack ( WORK), and Fastly ( FSLY). There is one Stay-at-Home-Stock Nextech AR Solutions Corp. (OTCMKTS: NEXCF) that is flying way under the radar with a $350 million market cap considering the marketing revolution that they have inspired. Throughout the course of the pandemic, the migration of offline to online stores has been part of the digital transformation that has forever changed the traditional valuation models of the stocks in this sector.
At the nexus of this transformation is the consumer who now needs a better way to shop, make purchasing decisions, communicate at work, design and build projects, or watch entertainment. To make this all work online, people are going to need to experience the products before they buy them. NEXCF is the emerging player that’s behind most, if not all, of your AR experiences outside of the social networks that let you experience and interact with the product When is comes to AR, if its e-Commerce, e-Learning, or Virtual & Hybrid events, then it’s probably powered by an NEXCF platform technology. Augmented Reality (AR) has finally arrived!
The Augmented Reality Landscape
NEXCF is a pure play in the “augmented reality” (AR) market and an emerging leader in their niche. Their nearest competitor is Snap Inc. (NYSE: SNAP) worth over $90billion with its AR lenses and filters that allow the users to morph their face, swap their gender, face swap, apply beauty filters, or even age their face. Over 170 million Snapchat users use the AR function daily. These users are engaged and average about 30 uses a day. They coined a new market called “social commerce” whereby users can use AR to try on shoes, clothes, or glasses and see how their favorite brands look on themselves.
Established brands like Gucci rolled out filters that let Snapchat users virtually try on Gucci sneakers via the app. They can also purchase them right away via a “shop now” button. The innovation didn’t stop there. The pandemic also forced cosmetic makers to reinvent themselves as product testing as a sales aid vanished as an option. In December Google (NASDAQ: GOOG) and SNAP launched a AR makeup try on initiative with their beauty tech partners, Perfect Corp and L’Oréal Group-owned ModiFace. Kathleen Gambarelli, group product marketing manager at Snap Inc. said:
“What makes [AR] so compelling is this ability to bridge the online and offline world, and compensate for experiences that you may normally only get in-store. It’s not a complete replacement, but the ability to ‘try makeup on’ with L’Oréal or walk into a virtual Kohl’s store opens up possibilities for experiential shopping.”
Other partners include Sally Hansen, NYX, and Est Lauder for virtual try-on.
While SNAP is choosing to pursue the long game with respect to monetization of their AR platform, NEXCF has been producing revenue for the past 2 years and expected to close 2020 with over $20 million in revenues. Their business is thriving with key category wins in almost every facet of online retail and more. Speaking of more, the company has had 55+ press releases in the past 120 days. Investors in this sector need to realize that the clock is ticking with respect to Nextech AR Solutions. A pivotal transformation is taking place in one of the company’s emerging business segments and should be unveiled within the month. The head of the division is the techie version of Chuck Yeager in “The Right Stuff.”
There are other players in the marketplace like Apple (NASDAQ: AAPL) worth over $2 Trillion with their Apple glasses which will help the market evolve away from smartphone apps into wearable glasses. Apple CEO Tim Cook said
“I’m excited about AR, my view is it’s the next big thing, and it will pervade our entire lives.
Another hardware maker is Vuxi Corp (NASDAQ: VUZI) worth over $800million with their industrial grade optics embedded with high quality audio, head-tracking technology, and industrial apps designed to create greater efficiency. Their solutions revolve around warehouse and manufacturing solutions, field service solutions, and tele-medicine.
While the evolution of hardware is important, software provides the critical link that the users desire. This consumer demand is what drives the development of new applications. Hologram Cloud Inc. (NASDAQ: WIMI) worth over $700million is focused on holographic AR technologies that are as simple as computer vision, holographic advertising, and facial recognition. However they have a niche focus in the automotive market and specifically the heads up display. Despite all their cool features they were only able to manage 4% growth in revenues year to year and don’t seem to have a robust advertising platform. Rounding out the list of players is Verb Tech (NASDAQ: VERB) with their video for lead conversion technology. While they dont have any AR they have a similar advertising platform as NEXCF just less the AR.
NEXCF Total addressable market (TAM) is huge at $7 Trillion
A confluence of events has created a digital transformation in a very condensed period of time. It started out with the stay at home concept due to the pandemic. The pandemic also created a new set of rules that businesses were obliged to operate under. Many brands were forced to reinvent themselves or perish. Leading this transformation are the tech giants like Amazon.com Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG), Facebook (NYSE: FB), Alibaba Group Holding Ltd. (NYSE: BABA), Netflix Inc. (NASDAQ: NFLX), Zoom Video Communications Inc. (NASDAQ: ZM), Spotify Technology (NYSE: SPOT), who moved quickly to adopt the use of AR technology in their platform. However, all of this would have been for naught if 5G wasn’t a reality. It was the catalyst.
Adoption Rate Exploding & Ramping Revenue
In this day and age where a consumer really doesn’t have the choice of touching and feeling the product anymore, cutting edge AR solutions are needed to get the consumer off the proverbial fence and at the checkout counter. Megatrends like Artificial Intelligence (AI), Internet of Things (IoT), Edge Computing, Cloud Computing, 5G are all driving global adoption of AR solutions. There isn’t one key factor but a multitude of factors that are driving this convergence to use AR solutions. Businesses are almost forced to think differently and try something and that is where being a leader in the space is starting to pay huge dividends.
In 2019 NEXCF generated $6 million in revenue and is expected to close 2020 with $20 million in revenue. In 2021 estimates place revenues over $50 million from the existing business lines. It’s important to highlight the revenues from the new AR-3D ad platform are not considered in these estimates, which will leave considerable upside to the earnings target. This division is being run by Hareesh Achi who left his job as the President and global operation head for the $10billion ad operations of Microsoft. To put things in perspective, Hareesh left his secure 10 year job at Microsoft, a job with approximately $10 billion in annual revenues to join the NextechAR team because it represents the “future of advertising. He is fully invested as his compensation is tied to the stock with 3 year stock options which are priced above the market at $6.65/share”
Hareesh moves fast, he joined on January 4, 2021 and is working feverishly to turn on the ad network in 2021. This represents the largest upside in the company. Without any metrics released yet, it’s undefinable and not factored into projections and therein lies the opportunity. The company is now building a billion dollar advertising business segment with a top industry advertising veteran Hareesh Achi former President of Microsoft.
His plan is to make his division the “leader in the immersive technology space.” He intends on accomplishing this by rebranding the AR network with a combination of AR and VR advertising that creates a unique experience for the consumer. Investors who believe that this billion dollar producer is able to accomplish some small sliver of a percentage of that headline market share of $336 billion by 2024 will realize the math works out to billions as juxtaposed against the current $50 million estimate.
Assembling an AR Dream Team
When it comes to hiring the company has been able to attract top notch talent and a leadership team with deep pedigrees. The saying is “bet on the jockey not the horse,” but in the case of NEXCF it appears an investor will get both the best in breed an AR business platform, and a management team able to execute and drive growth.
4 Pillars of BusinessThe overall business in NEXCF breaks down into 4 distinct business units. It should come as no surprise that e-commerce represents the lion’s share of the overall business. They are in the business of selling products and services, which means high conversion ratios increase sales and ultimately profitability. The tools they use to achieve these means are AR Holograms in eShop, along with AR product launches, and 3D/AR digital advertising. In September 2020 they acquired Next Level Ninjas which is a SaaS platform keyword ranking tool for Amazon.com that accelerates the ranking of new products into their ecosystem. Not only did they grow this business and enter into cross selling with their other business units, but they also exploited using it as a testbed for new product launches of their own on Amazon.com. The AR e-learning platform is amazing, and excels when it comes to dealing with science labs. The pandemic has stopped all conferences and tradeshows which need to be done virtually. Since AR enhances the user experience which ultimately leads to better conversions it is the preferred choice amongst exhibitors. It’s known as the facebook for virtual events. The newest and final pillar of the business is the AR advertising network touched on earlier in the article.
Blue Chip Customer Base
There is a convergence of technology that was accelerated by the pandemic and facilitated by a large roll out of 5G. It is clear how companies are being forced to adapt and invest in 3D/AR technology. This forced evolution is going to result in an explosion of demand when retailers realize that only 3D AR ad networks can produce a 300% increase in conversion. To level the playing field companies will be forced to adopt the new technology.
The market is enormous and the company managed to recruit one of the most experienced Microsoft executives to scale the AR advertising business unit. The company is at an inflection point and the executives realize it. The CEO purchased a total of 1.2 million shares over the past couple of years which demonstrates his commitment to the vision. The company itself is on solid financial ground and has a number of blue chip customer wins with more in the coming months. The projected revenue is $50 million in 2021 but this doesn’t take into account the
Hareesh effect which could add multiples of revenue to the company. The primary thing holding it back is the lack of institutional shareholders buying the stock. The NASDAQ listing is going through growing pains and has taken much longer than expected to uplist due to SPAC’s, but it’s clear that this team of winners will succeed. The final thing for investors to consider is how valuable this disruptive tech would be in the hands of conglomerates like APPL, GOOG or BABA who are natural roll up players.
With a $350 mil market cap it’s apparent that the market needs to play catch up on this name. This is the ONLY active AR 3D/ad platform with revenue that isn’t valued in the multibillion dollar range.
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