TrueContext Mobile Solutions Corp. (TSXV:TMN) is finally seeing success after many years of slow growth and increasing expenses.
CFO Dave Croucher attributes this change of pace to the company learning more about its customer base through research done with operative partners.
“It’s a way for me to streamline and become paperless. It has eliminated a lot of the duplicity we were seeing in paperwork and keeps my men more productive in the field.”
One of these partners is AT&T, an American cell phone service provider. The two companies partnered in 2010 to make mobile applications more accessible to small businesses.
The Kanata-based company is the creator of ProntoForms, a mobile device application that allows-data entry forms to be submitted from a smartphone or tablet to a database in TrueContext’s server. This data is then accessible to users through any internet-connected computer, eliminating a large amount of paperwork.
The partnership with AT&T has generated a number of new initiatives for TrueContext, including a national ad campaign in the United States promoting ProntoForms and a number of case studies that illustrate how small businesses are able to use the application.
Guy Clermont Heating and Plumbing Inc. is a Rhode Island company used in an American case study because of the success the owner, Guy Clermont, found with ProntoForms. AT&T used the case study to promote the app to potential clients.
“It’s a way for me to streamline and become paperless,” he says. “It has eliminated a lot of the duplicity we were seeing in paperwork and keeps my men more productive in the field.”
His only problem with the product is that it isn’t compatible with his database, leaving some duplicity inevitable.
Conducting these case studies and working with customers has allowed TrueContext to develop and adapt ProntoForms to better suit the needs and wants of the client, says Croucher.
A CHALLENGING BUSINESS STRUCTURE
“The product technology was a bit ahead of itself a few years back,” says Mark Scott, TrueContext’s VP of Marketing.
The company will see a profit eventually, but the company needs more subscriptions for this to occur.
When ProntoForms was launched in 2001, the majority of people weren’t using cell phones capable of running the product, says Scott.
With a product ahead of its time, it’s not a surprise TrueContext had trouble turning a profit. The decade-old company has had to engage in two private placements to raise funds since it became public in 2009.
However, this consistent lack of profit is all part of TrueContext’s business model, says Croucher. He says the company will see a profit eventually, but the company needs more subscriptions for this to occur.
“We need a certain volume of subscriptions to be able to break even. Our [operating expense] rate is a little over a million dollars a quarter,” he says. The smartphone application business is a tough market, because there are so many options and many customers have a limited spending budget when it comes to apps, says Gary Schultz, president of Multimedia Research Group.
“We’re not seeing any app developers getting rich,” says Schultz.
This means that unfortunately TrueContext, is now operating in a competitive marketplace where many app developers, such as Canvas Solutions, can offer a similar product for a better price.
A CHANGING MARKETPLACE
After many uncertain years, the market appears to slowly be turning around for TrueContext.
“From a channel and partner perspective, how we grow is by launching other carrier products.”
In October 2011, TrueContext announced it’s 10,000th subscriber.
“The incredible emergence of very sophisticated smartphones and tablets to essentially be a platform for this product has been amazing,” says Scott.
When the company first began, people weren’t as reliant on smartphones as they are now, says Scott.
According to a comScore report released in August 2011, 35 per cent of American cell phone users had a smartphone as of July 31, 2011. This is a market of approximately 82.2 million people, which Scott says is much larger than the smartphone market in 2001. Scott says he also attributes the growth in subscriber numbers to the marketing dollars TrueContext has spent to bring quality traffic to ProntoForm’s website.
“From a channel and partner perspective, how we grow is by launching other carrier products,” says Scott. “We are, today, organizing to launch the product in Q4 2011 and Q1 2012 with other carrier partners.”
OPTIMISM FOR THE FUTURE
In the third quarter of 2011 ending September 30, TrueContext saw its revenue increase 149 per cent year-over-year to $423,593.
“As long as the business is performing, we can trust our loyal following.”
However, this large increase was not enough to cover the increasing expenses for a growing company and TrueContext ended the quarter with a net loss of $747,157.
Croucher says he is not worried the company is unable to run at a profit. He is confident that that the next 10,000 subscribers will come more quickly than the first, which will ideally bring the company out of the red. “Our expenses have increased over the years because we have been working with the product to add features that we think will lead to more subscribers and thus, more revenue,” he says.
Despite the uncertainty of the viability of the company, Croucher remains positive of investors’ confidence in TrueContext.
“We have a pretty strong following of investors. They are people that tend to know a lot about our company,” he says. “As long as the business is performing, we can trust our loyal following.”
As of Nov. 30, 2011, shares of TrueContext could be bought for $0.08 on the Toronto Stock Exchange, the lowest the company’s stock has ever been. TrueContext’s shares have traded between $0.30 and $0.08.