Ivrnet Publishes 2018 President's Letter to Shareholders

(Published Tuesday, June 26, 2018)
by David Snell

To our shareholders,

 

The last five years of our journey have been exciting and productive. We have served millions of users through hundreds of organizations across Canada and the United States. Our clients include multiple government entities and some of the largest corporations in Canada. I am optimistic about the future of the company and would like to share that vision with you, along with an overview of the milestones we’ve reached during the past few years.

Our goal has been to evolve Ivrnet from mostly custom software development to a product focus, to improve the scalability of our company by exiting labor-intensive businesses such as hardware sales and support, and to engage in rapidly growing vertical markets. Our work to productize years of intellectual property has resulted in highly scalable applications and solutions for our clients, acquisitions and the launch of new products, along with significant cost savings through improved operations and the migration of our data center to the cloud.

In the past, the capability to combine over 1,500 phone lines, multiple SIP trunks, fax capability, direct access to long-distance networks, text delivery, and other communications services with dozens of custom applications required our own data center. As cloud capabilities progressed, we knew we would no longer need to host our own data center. Our decision to invest in moving the data center to the cloud has been very cost effective. Completing the move will continue this positive cost-savings trend.

In addition, we have focused on replacing old, non-recurring revenue streams with newer, more scalable recurring revenue streams. We have dropped low margin products and developed higher margin products. Our team has sped up delivery and decreased customization requirements—all while maintaining the adaptability and flexibility we are known for. As a result, we see strong, positive EBITDA off our recurring revenues, which we will continue to grow.  In fact, this year’s EBITDA is the best we have seen since embarking on our journey to turn Ivrnet from a primarily custom application developer into a product focussed company that we feel will grow much quicker.

Summary of 2013 to 2017:

  • Long-Term Recurring Revenue now accounts for 80% of Ivrnet revenues.

  • Posted five straight years of positive EBITDA, even through the change of course, including our best ever year of EBITDA.

  • Engaged in rapidly growing vertical markets such as Financial Processing, Advertising and Communications, and People Management.

  • Gross Margin is increasing. Operating costs are decreasing as a percentage of revenue. Sales and other growth-related expenditures are increasing in proportion to other expenses.

  • Moved away from relying on external sales management for NexText/AdCentral, and are building a new team around a 25-year industry veteran. Sales have begun to increase after just 12 weeks.

  • Adopted new processes and automation that have doubled the output per person.  

  • Client base now includes multiple government agencies and Canadian Fortune 100 companies.  

  • Purchased companies such as ITSportsNet and TxtMeNow, and with this intellectual property built Ivrnet Central, Safepay, and NexText.

  • Borrowed $2M to develop these applications, and to move our data center, once the key component of our success, into the cloud.

  • Costs saved from moving our data center into the cloud have already equaled the cost to service the debt. Completing the move will improve that trend.

  • Developed highly scalable new products Ivrnet Central, Safepay, and NexText.

  • Established our company as the go-to service provider to multiple government entities and some of the largest corporations in Canada.

  • Engaged a US marketing company (SpinWeb) to increase our reach, create and implement a digital marketing strategy, and build a presence across Canada and abroad. We have seen success from leads starting to come in throughout Canada and the United States. Ivrnet is actively broadcasting news and content through social media. We encourage our shareholders and the broader community to follow us and stay updated.

  • Replaced old, non-recurring revenue streams with newer, more scalable recurring revenue streams; dropped low margin products; developed higher margin products; sped up delivery; decreased customization requirements. All while maintaining the adaptability and flexibility we are known for.

  • Resulted in strong, positive EBITDA off our recurring revenues. We will continue to grow this as we progress.


Alongside these milestones, we have established a strong corporate culture and strive as a team to embody our five core values:


  • Drive
  • Elegance
  • Clarity
  • Unity
  • Adaptability


Our desire to innovate and improve led us to adopt a new management structure, and hire and retain talent that embrace our core ideals. I believe we have a team of extraordinary people ready to take Ivrnet to the next level. We now develop our products both in Canada and offshore, yet have the tightest and most coherent team we have ever had. The output of this team has nearly doubled per person.

We are committed to unity and transparency with our shareholders and partners. We have begun two new blogs to highlight our industry, our company, and our products. These blogs can be found on www.ivrnet.com, a site that will receive much attention over the next year to provide more and timely information. I encourage you to follow the Blog and News sections of the website to get a feel for where your company is going. We regularly post on LinkedIn and Facebook, and I encourage you to connect with us through one of these channels, as well. Our shareholders are our greatest partner and have often been a source of fantastic information for our company. It has become a symbiotic relationship. Ivrnet is evolving from a company of passionate technologists to a passionate community. I wish to grow that community, and I would like you to be a part of it.  

In the coming months, while there can be no guarantee of future financing options, we will endeavor to replace the expensive debt that helped us achieve our goals with equity and lower priced debt so that we can increase cash flow and keep the savings generated by these changes for our shareholders and our company. This is the final step in a multi-year plan to shift from a custom developer and IT service company to a highly scalable cloud computing company. We’re excited about the possibilities this presents for the future. Completing this change of course will make Ivrnet a healthy, vibrant, and more rapidly growing company for years to come.

Thank you for your partnership and investment in Ivrnet Inc.

 

Sincerely,

 

David Snell

President and CEO, Ivrnet Inc.