Let’s take a look at Futura's Q4 earnings:
“Total revenue from continuing operations for the year ended December 31, 2010 was up 34% to $1,654,326, from $1,237,770 in 2009. Excluding breakage, revenue for 2010 and 2009 was $1,369,626 and $745,725 respectively, an 84% annual increase. The increase in revenue in 2010 was largely the result of increased branded loyalty reward currency revenues which rose to $1,287,019 in 2010, compared to $574,742 in 2009, a 124% annual increase.”
That last sentence is important. The vast majority of their revenue and all of their growth is from their loyalty reward currency revenues.
If we review Intertainment Media's SEDAR filings and scroll down past all the news releases, we eventually get to their MD&A for 2010. The New Media division is key as that is the division with itiBiti, Ad Taffy, and of course, Ortsbo. An excerpt from their MD&A is here:
"Revenue for the quarter ended December 31, 2010 was $1,402,890 compared to $1,465,610 the quarter ended December 31, 2009, representing a decrease of 4%. This decrease was almost entirely due to significant one-time order in the Graphic Services division in fiscal 2010 not repeated in fiscal 2011. Graphic Services division revenue for the quarter ended December 31, 2010 was $1,370,804 compared to $1,465,434 for the quarter ended December 31, 2009, representing a 6% decrease. Revenue from the New Media division for the quarter ended December 31, 2010 was $32,086 compared to $176 for the quarter ended December 31, 2009, representing 18131% increase. The increase was due to the launch of itiBiti players during fiscal 2010, the NBC Communicator, sponsored by NBC.com and The LaunchPad, sponsored by McDonald’s Canada."
Although their total revenue is higher than Futura's, the vast majority of that revenue is from their printing business. Not exactly the driver of INT's stock price. They only achieved $32K in revenue from their new media in the quarter. While the math trick of a 18,131% increase looks nice, next to Futura's full year loyalty points revenue of $1.3M or $461K for the 4th quarter and $32K is miniscule by comparison.
Here is Futura's revenue profile for their Aeroplan Miles loyalty currency revenues by quarter. Note that this is Aeroplan Miles only, excluding the small portion of their own rewards program that is included in the loyalty figures above.
| Q1 | Q2 | Q3 | Q4 | Year | |
| 2009 | 14,777 | 44,010 | 101,691 | 322,310 | 482,788 |
| 2010 | 201,408 | 323,936 | 273,820 | 461,687 | 1,260,851 |
While FUT’s loyalty revenue has a nice growth profile, it is really 2011 revenue that you should be getting excited about as they have signed a contract with CARP late in 2010 and with TADA early in 2011.
From CARP release:
"TORONTO, ONTARIO, Nov. 10, 2010 (Marketwire) -- CARP, A New Vision of Aging for Canada, and The Futura Loyalty Group Inc. ("Futura") (TSX VENTURE:FUT), a provider of customer loyalty and technology solutions, today announced that Futura Rewards will become the official loyalty currency for CARP's 300,000 members, automating CARP's benefits program.
Futura Rewards (www.FuturaRewards.ca) is a free national rewards program, enabling members to earn cash rewards from hundreds of participating merchants in communities across the country. The program also offers members access to a robust on-line shopping mall, where they can earn rewards from over 50 leading retailers. Futura will work with CARP and its national network of chapters and ambassadors to actively recruit more merchants to the program in each CARP chapter community, enhancing CARP/Futura members' ability to earn cash rewards with local shopping, keeping spending in their immediate area."
From the TADA release:
"TORONTO, ONTARIO -- The Futura Loyalty Group Inc. (TSX VENTURE:FUT) (the "Company") today announced that since completing its partnership with The Toronto Automobile Dealers Association (TADA), the Company has executed 23 agreements with member dealers. The first group of dealers has now launched and is actively promoting and issuing Aeroplan Miles to customers. Working closely with the Company, individual dealers have the flexibility to customize their program to suit their business needs and seasonality.
About TADA
SINCE 1908, TADA serves over 340 new car dealers in the Greater Toronto Area and represents every manufacturer's brand and franchise."
Reading the underlined content shows that Futura greatly expanded their client base with 300,000 CARP members now a part of Futura's benefits program. They have signed up 23 car dealerships associated with TADA and have the opportunity to increase that base much further as there are still over 300 additional dealerships that have great incentive to follow the other 23 dealers so they are not at a competitive disadvantage to them.
INT has had a wonderful PR campaign going. There are multiple press releases stating its millions of users and multimillions of page views all over the world for Ortsbo. However, each of these users earns INT pennies of revenue each through advertising revenue. When you ask yourself as an investor or as a business owner, would you rather have millions of users that earn you a little bit of revenue each, or a few hundred users that earn you thousands or millions of dollars in revenue each?
INT has the former structure. FUT has the latter. Not to say one business plan is superior to another, but I believe the former plan sets up for easy press releases and word of mouth on the stock price, leading to the events that saw INT rise to $3 and crash to less than $1 in a very short time frame. I believe the latter business plan just earns you revenue growth and a long-term, consistent stock price increase.
See here for a complete list of Futura's clients. There is a variety of Aeroplan Partners that Futura supports but their most complete industry coverage is automobiles. In addition to the TADA clients above, they have brought loyalty rewards programs to well-known repair, maintenance and tire shops. At the rate of Futura's growth, everybody who drives a car in Toronto and soon in all of Canada will be earning revenue for Futura for every mile they drive in some fashion as they collect reward benefits. Whether that's through a new car purchase or repair at their dealer, body shop work or tire replacement.
When choosing an investment, you have to ask yourself this question. What do you spend more time doing? Driving? Or talking online with a Chinese, Indian or Russian person or Gene Simmons using an online translation program? If it’s the former task, then you should certainly consider FUT as an investment.
Click here to see the full Futura Story
Click here to see how Futura compares to SelectCore
really nice ! i would really like if it had the windows media center thing...i was thinking of buying a mac but they are to expensive . but can you people tell me what computer to buy. i want computer to be like an entertainment center.
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