Truegem given the amount of people who have downloaded the app, I would assume so.
I believe a travel agent, website or other smaller reseller would purchase these packs in bulk 100's or 1,000's at a time. Then they would provide to their customers and collect the cash and activate via the app? Presumably, they would then receive an upfront commission & possibly ongoing one each time the customer recharges.
From the presentation there were some interesting numbers:
20,300 X Lite Kits ordered @ $5USD a pop = $135k AUD in revenue in April & May alone. I don't quite know how they receive or account for revenue. But I would assume the above is a subset of the 43% of revenue that isn't recurring. The other portion being the direct purchases made via the app's downloaded directly from the app store that result in the $29.99 USD X SIM that is purchased and shipped out via mail.
Also interesting to note is the 10,300 SIMs ordered by resellers in Europe & Central Asia. There are only 3 resellers, so one would logically deduce that someone has purchased 10,000 and the other probably 100 each. That's a lot of SIMs!!
I've been watching Priori data to see where this reseller might be. (Logically, one the SIM is purchased the app must be downloaded from an app store, so it will show up eventually. My guess is Pakistan or possibly UAE (but surely this would be Middle East?) Anyway keep watching for the clue. (Same goes for South Korea with the recent announcement)
This model is great because it allows the sticker to be applied at the point of sale, and it drastically lowers the cost of customer acquisition. Also, because they have such a small data inclusion (1ooMB) the customer really gets a low/no risk trial.
At the time of the presentation, only 12,000 packs had been distributed, and 728 activated. We must assume though, that there is a high likelihood the remainder will be converted to active users because a re seller has invested with a view to making a profit. (I'd refer to UNL recent preso for some rough guidelines we would expect).
At the time of the presentation FRX quote 125k 'subscribers' yet Priori data only indicated just a shade over 100k total downloads. I assume that the balance is made up of the 20k X-Lite kits that were ordered.
It is certainly getting harder to predict revenue, with 2 x distribution models in play and with a 3rd affiliate model arriving soon. Add to that, the destination bundles.
I wasn't going to make a prediction, but I'd say around $330k revenue for the quarter. I fear that the cash burn will be higher than last Q, but with every day that passes we rid ourselves of the accrued data of non-paying customer as they reach their service anniversary, and simultaneously gain revenue from those who are.
Download rates have held quite steady and as mentioned earlier continue to push toward Apple. I think these guys are going to make it. I just wonder what sort of valuation is reasonable for them assuming they do become cash flow +.
(20min delay)
