Good Life Networks Inc (CVE:GOOD) Programmatic Advertising Platform with Soaring Revenue

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Good Life Networks Inc (CVE:GOOD) (OTCMKTS:GOOLF) (FRA:4G5) CEO Jesse Dylan describes the company’s crucial decision to pivot to advertising technology in 2016. The company generated $2.5 million in revenue in 2016, and as a result of the pivot, saw its earnings grow to $40 million in 2018. Good Life Networks specializes in programmatic advertising, which rapidly connects publishers and advertisers through the Good Life Networks platform. The company counts Roku, Google, and Verizon as clients and is projecting revenue surpassing $60 million in 2019. Good Life Networks is expanding its focus to include connected TV and it recently concluded the acquisition of Impression X as part of this mandate. Dylan believes Good Life Networks is significantly undervalued, as it is trading at 2 times EBITDA while many of its competitors are trading at 10 times EBITDA.

Transcript:

James West:   Live from the capital of Canada – at least the economic capital, is Jesse Dylan, CEO of Good Life Networks.

Jesse Dylan:  I’m home, James!

James West:   It’s been a while, Jesse.

Jesse Dylan:  I have been on Bowen Island searching every night for you, and I can’t find you.

James West:   High and low?

Jesse Dylan:  And here you are in Toronto.

James West:   I’ve not been on Bowen Island in three years.

Jesse Dylan:  It misses you.

James West:   I’m sure it does. [laughter]

Jesse Dylan:  There’s a beacon somewhere on a hill of Bowen on any night, you could hear, James.

James West:   You probably could have, back in 2013, 12, but I moved here four years ago, actually.

Jesse Dylan:  You loving it?

James West:   No, I pretty much tolerate it, you know. The weather, just one great example. The shootings, the killings, the knifings, the stabbings, the ODs –

Jesse Dylan:  There’s a song in there.

James West:   Sure is.

Jesse Dylan:  Shootings, and killings, and knifings, and stabbings. You gotta –

James West:   I’m with ya.

Jesse Dylan:  Dusty Springfield.

James West:   Okay, I was thinking Snoop Dogg.

Jesse Dylan:  Snoop Dogg’s good.

James West:   [laughter] We see a lot of him lately; he’s whoring his ass out all over the Canopy space.

Jesse Dylan:  I lived here in Toronto, for many years.

James West:   Did you?

Jesse Dylan:  I did a morning radio show here, Q107: Jesse and Gene.

James West:   Jesse and Gene in the morning! I listened to it as a child!

Jesse Dylan:  Oh, thank you.

James West:   Well, I was a child.

Jesse Dylan:  I’m not your dad.

James West:   I felt like a child up until I was about 28. So that was great.

Jesse Dylan:  Congratulations on your success. This is a great show.

James West:   Thank you. Tell us about Good Life Networks. Now, this is a company that has evolved so quickly and so forcefully from where I first became aware of it a few years ago, that when somebody sent me the deck, I was like, if I hadn’t seen your name attached to it, I would have thought, this can’t be the same Good Life Networks.

Jesse Dylan:  Well, you know, years ago, when I did the morning show in Toronto, I would get up here at 9:00 a.m., there was no one to play with, so I started negotiating deals, and building companies, and built a few companies, sold a few companies, and taken a couple of companies public.

A friend of mine told me that the future of advertising and what I used to do in broadcasting for years, was all tied to advertising. A pal told me that the future of advertising was ad tech; we made a pivot with Good Life Networks. We were a different company when you saw us four or five years ago.

James West:   Yep.

Jesse Dylan:  We were a digital advertising agency. We pivoted into ad tech in 2016; I bought a technology platform from London, England, very sophisticated, video exchange. We did 2.5 million in 2016, 10 million in 2017, our trailing Q3 revenues from 2018, James, 40.2 million on 7.7 million EBITDA. We just received Scotiabank financing at prime plus 1.25, and I would suggest we’re probably the only microcap company in all of last year that received bank financing at prime plus 1.25.

James West:   Yeah, no doubt.

Jesse Dylan:  And they do an awful lot of due diligence.

James West:   Sure.

Jesse Dylan:  They like the story.

James West:   So tell me, how do you make money in programmatic advertising?

Jesse Dylan:  Well, we’re a matchmaker. So there’s thousands of companies in digital advertising; it’s a big business. $750 billion that floats around the planet every year. We’re specifically in programmatic, so some genius some years ago took program and automatic and said ‘let’s call it programmatic’. You and I would have done better.

James West:   [laughter] That’s right! Shorten it up a little. But whatever, this is what we’ve got.

Jesse Dylan:  So instead of being a demand side platform or a supply side platform, publishers and advertisers, we’re actually the exchange that sits in the middle and connects them. RTB, real time bidding – so Ford might come into our system and say I’m looking for men 18 to 49 in the GTA area. We might say we have them here, and it might be ESPN or Fox or TSN; we connect them, we set our margins for the day at 40 percent, if they meet our margins, we take the bid, shake hands, and if you’re opening up your iPad that night to get the scores or the stock report and there’s a little video commercial that plays before your program starts, that’s probably us putting the video commercial in front of you.

James West:   All this happens automatically?

Jesse Dylan:  In ten milliseconds.

James West:   Wow.

Jesse Dylan:  It takes 300 milliseconds to blink your eye.

James West:   And I saw that you were projecting 2019 revenue of 67 million?

Jesse Dylan:  Yeah, north of 60 million.

Jesse Dylan:  Correct.

James West:   That’s a really rapid growth trajectory.

Jesse Dylan:  It is.

James West:   So the pivot to programmatic advertising was clearly the right one.

Jesse Dylan:  Yes.

James West:   Right. Interesting. So who are your clients?

Jesse Dylan:  Roku, Google, Verizon, AOL…

James West:   Big names.

Jesse Dylan:  Yeah, big companies.

James West:   Wow, incredible. So who are your competitors?

Jesse Dylan:  You know, I would say Acuity Ads is a competitor, but they’re more of a demand-side platform; we’re the actual exchange that sits in the middle. AppNexus was one of our competitors, they were an exchange, they were doing about 130 million USD a year; two months ago, AT&T bought them for 1.6 billion. Trade Desk would be one of our competitors; I think their market cap is 7 billion. Their share price has gone up from $74 a share a year ago to $130 a share, they’re trading at 85 times EBITDA based on the strength and growth of CTV connected television.

We just bought a company in Los Angles that specializes in connected television; that’s a new lane for us to be in. by the way, we’re trading at 2 times EBITDA on 40 million Q3 trailing, 7.7 million EBITDA, we’re trading at 2 times. Anybody – any mean company in our peers is trading at least 10 x EBITDA. We think we’re highly undervalued, and we’re starting to get some visibility.

Our goal, James, was just to execute, execute, execute. Get the numbers up, and eventually, the share price would start to respond. Makes sense?

James West:   Yeah, it makes total sense to me. It strikes me that the market has probably not, because, I mean, you don’t hear about this kind of a story everyday in the Canadian context; it’s usually big ad companies, big technology, all in the US. So this is intriguing and it sounds like the market just hasn’t caught up to what the potential possibility might be.

Jesse Dylan:  Well, you know, we’ve been on the road for a couple of conferences; we were at Alfred North in the Bahamas recently, and here at Cantech, and we think we’re starting to see some visibility. We’re starting to get some research. Yesterday, we had 4.2 million shares trade; we were up 17 percent, so volumes are picking up. We’ve actually had, on average, about 500,000 shares trade a day, GMP took us public a year ago, we did just about a $10 million financing, and I think it’s taken us four quarters of reporting to finally start seeing some respect, and I think we’re starting to notice that.

James West:   Sure. What are the catalysts that are going to occur in 2019 to get you over that $60 million revenue?

Jesse Dylan:  That $60 million revenue at this point in time, the catalysts for that were the last two acquisitions we did; our own organic growth, which is strong, and two very key acquisitions, both from California, hence we didn’t want to go to the market and do an equity raise; it would have been too dilutive to shareholders, and not fair. So we took bank financing at prime plus 1.25; great group, Scotiabank. Those two acquisitions will go onto our platform; our proprietary, patent-pending video exchange will ramp their margins much higher than they could on their own. They’ve been outsourcing and writing other people’s platforms, now they have their own GLNs. Those companies are impression exit 495.

Their growth and our growth organically will equal 60 million-plus; I may, if one floats by our window and we’re looking at a few, and have been for a year, another acquisition, we may bring onboard a big chunk of revenue from another strategic acquisition.

James West:   So that’s your growth strategy: growth through acquisition?

Jesse Dylan:  Growth through organic growth, which has been strong; those numbers I gave you before were mostly organic, and then recently, acquisitions. We have a certain level of acquisition in the marketplace. We’re seeing some very good deal flow, and the terms that we acquire a company, I think you would find attractive.

James West:   Yeah.

Jesse Dylan:  For instance, would you like to hear one?

James West:   Sure.

Jesse Dylan:  Okay.

James West:   [laughter] Let’s hear it. Say it, man?

Jesse Dylan:  It’s been a long time.

James West:   It has!

Jesse Dylan:  Impression X, it’s a connected television company.

James West:   Right.

Jesse Dylan:  So just to reiterate, people all over the world are buying Smart TVs and unplugging from cable.

James West:   I’ve got one myself in my living room.

Jesse Dylan:  They can listen to you, as well.

James West:   Well, that I’m not too comfortable with that –

Jesse Dylan:  Everything can listen to you. That’s another thing that we don’t do – personally identifiable information. The Cambridge Analytica scandal, Facebook just voted one of the most hated companies in North America; we don’t do PII. Our artificial intelligence doesn’t use personal information.

The metrics that we acquired Impression X by were, they will do $6 million to $10 million min/max this year, Impression X, connected TV. We gave them a $4.5 million valuation, a third, a third, and a third. I gave them $500,000 cash; they can earn another million for hitting performance benchmarks over a year. So in essence we’re paying them with their own cash, and they can earn up to $3 million in warrants that can’t be exercised for two years, for hitting performance benchmarks on a quarterly basis. In any quarter when they don’t hit their metrics, they don’t get the warrants or the cash.

James West:   There’s incentive.

Jesse Dylan:  And it’s relatively non-dilutive; 495 was a bigger acquisition, but the same metrics.

James West:   You bet. All right, Jesse, that’s a great introduction to the company; the company trades on the TSX, the CSE?

Jesse Dylan:  TSXV.

James West:   TSXV.

Jesse Dylan:  Under the symbol GOOD.

James West:   GOOD – oh that’s –

Jesse Dylan:  And we’re in Frankfurt as well.

James West:   Okay, cool. We’re going to come back to you in the near future and get more on that story. We’re going to follow it closely.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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