NXT-ID (NXTD $2.62)
Kris Tuttle, February 1, 2017
Nxt-ID reported preliminary Q4 results that were up strongly (as expected) both sequentially and YoY. The headline number of $4.5M in revenue compares with $3.2M in Q3 and nominal revenues a year ago. Revenues for the full year 2016 were $7.7M compared with less than $1M in 2015. Our estimate for 2017 revenues remains $37.5M.
Here is an update on the two major business segments:
- LogicMark - Most of the growth in Q4 was driven by LogicMark which continues to be a consistent and strong performer. We are expecting (and modeling) continued linear growth for LogicMark in Q1 and Q2. We could see a step up in LogicMark revenues beginning in Q3 with expanded distribution and strong one-time purchase products for PERS.
- WorldVentures - An initial shipment of cards was delivered in Q4 for WorldVentures to complete their testing. The exact timing of the major release of the WV flye card will depend on the completion of tests. Nxt-ID plans to ship a larger number of cards during Q1 so that WorldVentures can build inventory and prepare for their launch.
In short, LogicMark is steady and growing with WorldVentures beginning to kick in with some volume shipments.
Beyond the current business there are some meaningful market development activities. The first builds on their announced partnership with Cisco around secure wireless connectivity for the 'Internet of Things (IoT).' We're not modeling any revenue from this arrangement, but Nxt-ID continues to work with Cisco on a software/hardware combination that will provide simplified, lower-cost and more versatile communications.
In developed markets the smartphone business has consolidated around Apple, Samsung and Google. However, there is much more market diversity globally. Nxt-ID continues to work to leverage their "Samsung like" wireless magnetic payment technology with smartphone makers large and small. In addition to the household names there are high-volume smartphone makers in China that are open to incorporating third-party technology for authentication and payments in which Nxt-ID specializes and has a competitive advantage.
LogicMark and the WorldVentures flye card remain the dominating factors this year in terms of the business and our IV model.
We will get more details when the company reports full results in late March with a management call expected in early April. The results are consistent with our existing model so there are currently no changes.
At the current price, the stock is trading well under 1x 2017 sales and our IV suggests an $18 price objective.
SoundView serves as a strategic advisor to NXT-ID and provides advisory and other services to the company including strategy advice, company positioning, investor communication methods and ongoing technology and market research. SoundView employees do not have positions or other vested interest in NXT-ID stock at the time this report was published. (see back page for more general disclosures.)
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