DALLAS, TX / ACCESSWIRE / January 17, 2020 / nDivision Inc. (OTCQB:NDVN), the experts in increasing IT's value by replacing human labor with 'digital labor,' today announced that it has published a letter to shareholders from CEO, Alan Hixon, regarding the company's success during 2019. The full text of the letter will be published on the company's website, www.ndivision.com and follows.
January 17, 2020
Dear fellow shareholders,
On behalf of the nDivision management team, board of directors, employees, and members of our advisory board, I am pleased to report that 2019 was a watershed year. Our laser focus on growing the Company's recurring revenue has produced a strong foundation for the next phase of the company's growth, and we have generated significant momentum as we move into 2020.
When nDivision was founded in July 2011, the primary objective of the first phase of our business plan was to get the company to a point where all operating expenses, excluding sales & marketing costs which are investments for future business, were covered by recurring revenues. We predicted that when we achieved this level of financial success, nDivision would become a very stable business with a significant and growing, intrinsic value.
I am proud to say that through the hard work of the entire company, we achieved this objective during the fourth quarter of 2019.
Few Managed Services Providers ever achieve this objective. Consequently, they become dependent on unpredictable hardware and software sales, and one-off professional services projects to cover their costs and achieve profitability. Because of nDivision's unique structure and our focus on growing contracted recurring revenue, we eliminated our hardware and software sales business in early 2018. In addition, we now only offer professional services as a value-add to existing customers and, on occasion, to nurture relationships with potential Managed Services customers.
2020 - a Year of Continued Growth
As we enter 2020, nDivision is on strong financial footing and is a stable, growing business. Our Managed Services contracts generate approximately 50% to 60% gross profit, and with all operating costs covered by recurring revenues, new Managed Services contracts contribute significantly to operating profits.
Due to our past success in winning contracts with a number of Managed Services customers that are considered large enterprise accounts, we will invest a significant proportion of our incremental gross profits in sales and marketing efforts to grow our large enterprise revenues.
These large enterprise customers are increasingly looking to reduce the share of their IT budget spent on KTLO (keeping the lights on) by using advanced technologies, such as Autonomic Services and digital labor. nDivision is well positioned to help these companies. Our value proposition harnesses the latest technologies and makes them easy for customers to implement and consume by providing them ‘as a service'. Customers do not have to make substantial capital investments, nor do they have to hire resources and train them on the use of new technologies.
The typical net effect is a substantial and quick ROI for customers. The added benefit is that by redirecting resources, the IT function of these large enterprises can transform from a cost center to a strategic and competitive advantage for the company.
Growing our Technology Capabilities
nDivision's strategic partner, IPsoft and its IPcenter technology, has been a major contributor to nDivision's success in the large enterprise segment. During the fourth quarter of 2019, we celebrated the fifth anniversary of our partnership with IPsoft. In the preceding five years, nDivision had focused on maximizing the efficacy of the IPcenter platform and is viewed by IPsoft as one of its most advanced partners. Building on this strategic partnership, during 2019 nDivision extended its agreement with IPsoft. The resulting agreement will allow nDivision to transition and utilize IPsoft's latest technologies, 1Desk, Amelia, and 1RPA.
1Desk is the platform that replaces IPcenter - the core platform behind nDivision's Managed Services offerings. 1Desk's upgraded technology enables faster deployment and easier integration with other technologies. It will also provide more flexibility for automations and accommodate the advanced technologies large enterprise customers will be adopting. In short, this new technology will up level our offerings across the board.
Amelia is a ‘cognitive agent' which observes, learns, understands and grows 'her' skills over time. nDivision will be identifying opportunities to deploy Amelia to supplement human operators to provide IT End User Help Desk services. Our partner, IPsoft, is already successfully leveraging 'her' to handle 82% of all requests in Service Desk deployments.
nDivision intends to expand the use of Amelia beyond performing IT functions. In the future, we expect to use Amelia to complete a range of standard business processes across multiple industries as a Digital Customer Service Agent. Examples may include processing insurance claims, executing banking transactions, fulfilling local government transactions, etc. Amelia will be a key enabler in nDivision's push into deploying true AI solutions.
1RPA is the third component of the framework that 1Desk and Amelia operate within. RPA (Robotic Process Automation) solutions are productivity tools that comprise one or more scripts (sometimes referred to as 'bots') to emulate keystrokes that a human would normally carry out, allowing a business or IT process to be executed less expensively, faster and more accurately. nDivision already executes RPA functions within IT operations using IPsoft's IPcenter platform combined with other technologies; however, the main difference when compared to other stand-alone RPA solutions is that 1RPA is tightly integrated with back-end IT operational processes, as well as Amelia to provide cognitive, human-like functionality.
nDivision expects that its evolution into 1Desk, Amelia and 1RPA will allow it to expand service offerings within existing Managed Services customers and provide additional value propositions to attract new customers.
Providing you - our fellow shareholders - with the most valuable metrics by which to measure our growth is of utmost importance. Toward that end, our quarterly and annual financial reporting will include a non-GAAP metric called ‘Adjusted Run Rate EBITDA'. We believe this is a representative metric that will enable you to monitor and measure the growth and strength of our business as we continue to execute our business plan.
Adjusted Run Rate EBITDA comprises EBITDA adjusted to exclude stock compensation expenses, sales and marketing costs (because these costs are not required to maintain existing recurring revenues), professional services (because these are not recurring revenues), and revenue from any recurring contracts with a customer intending not to renew. Effectively, this metric demonstrates the amount of EBITDA that would be generated purely through recurring revenues. We believe Adjusted Run Rate EBITDA is an excellent way of demonstrating the underlying strength of any business that has substantial recurring revenues.
2020 will be a year of building on nDivision's historical growth and financial success. Having all operating expenses, excluding sales & marketing costs, covered by recurring revenues will allow us to invest incremental gross profits from new Managed Services contracts in sales and marketing and continued growth initiatives. I, along with the rest of nDivision's management team, board of directors, and advisory board are optimistic that we will continue to be a disruptive force in the large enterprise market and medium business segments, and will continue to grow recurring revenues during 2020 and beyond.
Thank you to all our employees, shareholders, and partners for your ongoing support.
Chief Executive Officer
About nDivision Inc.
nDivision Inc. provides Autonomic Managed Services and End User Help Desk services to private and public entities, ranging from small businesses to global enterprises. nDivision's services are valuable for any industry and are being provided to customers in multiple segments. The company supports over 100 customers across 45 countries, 24 hours a day, 365 days a year. nDivision leverages advanced automation technologies to replace human labor with digital labor. By the end of the first year of the service, nDivision typically automates between 60% and 80% of all incidents, across the datacenter and network. More information can be found at www.ndivision.com.
Forward Looking Statements
This press release includes 'forward-looking statements' within the meaning of the U.S. federal securities laws, which statements may include information regarding the plans, intentions, expectations, future financial performance, or future operating performance of nDivision Inc. ('nDivision' or the 'Company'). Forward-looking statements are based on the expectations, estimates, or projections of the Company's management as of the date of this press release. Although nDivision's management believes these expectations, estimates, or projections to be reasonable as of the date of this presentation, forward-looking statements are inherently subject to significant business risks, economic and competitive uncertainties, or other contingencies, which could cause the Company's actual results or performance to differ materially from what may be expressed or implied in the forward-looking statements. Important factors that could cause nDivision's actual results or performance to differ materially from the forward-looking statements include those set forth in the 'Risk Factors' sections in the Company's filings with the Securities and Exchange Commission, which are available for viewing on the SEC's EDGAR website. These forward-looking statements speak only as of the date of this press release and, except as required by law, nDivision specifically disclaims any obligation to update these forward-looking statements, even if new information becomes available in the future.
SOURCE: nDivision Inc.
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