SaaS Licensing Renewal Supports Client Diversification Across a Range of Global Markets and Customer Categories, Nasdaq Listed E-Sports and Gaming Client Now Top Producer of 12 Active Accounts
New York, New York--(Newsfile Corp. - November 29, 2021) - DGTL Holdings Inc. (TSXV: DGTL) ("DGTL" or the "Company") is pleased to announce that its wholly owned subsidiary Hashoff LLC has signed an annual SaaS (software-as-a-Service) licensing renewal agreement with its top revenue producing customer.
This latest software renewal agreement comes from a Nasdaq listed leader in the e-sports and gaming sector with a current market capital in-excess of $30 Billion. Hashoff's newest top producing client provides an online software that allows active users to place bets on fantasy sports contests within the top major professional sports leagues around the world (e.g. MLB, NHL, NFL, NBA, PGA, UEFA, MMA, etc.).
This Nasdaq listed gaming client is now Hashoff's top producer customer representing 28% of current and projected revenue (surpassing the previous two top accounts inherited in the Hashoff acquisition). Gross revenues from this top producing client are expected to grow in fiscal 2022 with several new activation campaign proposals surrounding major sport leagues, and events, currently in cue.
This major contract renewal reaffirms DGTL's commitment to diversifying Hashoff's active client mix as a long-term development strategy. In the first twelve months under DGTL management, Hashoff has diversified its active clients from three core active accounts to a current twelve active global brands and agency partners, spanning multiple sectors, across the North American, and APAC markets.
Hashoff's newly developed client mix also represents diversification across multiple categories, with new accounts that include top brands and agencies in the e-sports gaming, consumer products, health and beauty, financial services, travel, and electronics industries. The diversification of Hashoff's clients, categories, and global markets provides Hashoff with more consistent long-term revenue growth potential.
Upon acquiring Hashoff LLC in fiscal Q3 of 2020, the revenues of Hashoff's previous top producing customers were highly concentrated in retail and events-based sponsorships (two accounts represented approximately 67% of revenues in fiscal 2020). During the second half (2H) of fiscal 2021, with the introduction of COVID-19 vaccinations, lockdowns for indoor retail and events began to be lifted (i.e., "the great re-opening"). In response, these two top clients reassigned much of their 2021 marketing budgets from digital media to brick-and-mortar on-premises spending (e.g., retail stores, restaurants and major sport and entertainment venues).
The budget reassignment of these two inherited retail and consumer products accounts was done to re-launch an international chain of retail operations, and to support retail distribution partners, as well as honouring major events-based sponsorship contracts. The result was a dip in reported revenues for Hashoff and DGTL in the fiscal 2021 annual audited financials and interim Q1 2022 financial statements which further highlighted the need for client mix diversification.
The continued and ongoing diversification of Hashoff's active accounts, as evidenced by this major software licensing renewal, brings the revenue contributions from these previous two top clients down from 67% to approximately 21%. These inherited accounts are still active clients for Hashoff and DGTL expects a return of their respective contributions to Hashoff's gross revenues in the 2H of fiscal 2022.
Hashoff's Managing Director, Mr. Charlie Thomas, reports "We are thrilled to announce this major software licensing renewal agreement with a global leader in e-sports and gaming. Our clients requested that we develop our CMS platform for video applications and support their brand in key markets. This licensing renewal was won based on our completion of Hashoff 2.0 for TikTok and on the success of past campaigns surrounding the 2021 NCAA March Madness and PGA Masters tournaments, as well as initial results from an active a $400,000 campaign to boost social media marketing efforts for our client's NFT Sports Collectibles product line."
In Q4 of fiscal 2021, and upon the request from this key account, DGTL invested into the software development of a version 2.0 of the Hashoff CMS platform. This software development project is now complete and Hashoff 2.0 is fully enabled for top video based social applications (e.g. TikTok, etc.). In addition, via a strategic channel partnership, Hashoff 2.0 is also now the first CMS of its kind to enable and convert social publisher content into programmatic web advertisements for DSP distribution online and to any digital screen-based media format including Digital Out-Of-Home signage for retail locations and event-based venues. This new Social Media Advertising platform has now been launched with one of the two previous top customer accounts in key south-western regions of the USA. DGTL anticipates further revenue growth opportunities from the rollout of Hashoff 2.0 in fiscal 2022.
DGTL and Hashoff remain committed to renewing all current licensing agreements while signing more new major accounts to execute against a three-year business and corporate development plan to accelerate Hashoff's gross annual revenues to a benchmark of $10,000,000 per year (as per the terms of the definitive agreement).
Hashoff 2.0 combined with DGTL's prospective acquisition of Engagement Labs (and Engagement Lab's premiere social media analytics software - TotalSocial) and partnerships for DSP and digital signage distribution represents the completion of the social media software pillar within the DGTL software portfolio. This pillar will provide clients with full-service content, measurement, and distribution software solutions in the social media marketing category.
Post this prospective acquisition, DGTL will be positioned as full-service enterprise level social media solutions platform serving a total of eighteen active global brands and top digital advertising agency partners, presenting significant up and cross-selling opportunities within DGTL's growing software portfolio. DGTL's expanded platform will be instrumental in continuing to serve and grow key accounts while striving to diversify revenues from collective accounts of all of its subsidiaries.
Both DGTL Holdings Inc. and Engagement Labs remain fully committed to completing the merger and are in the process completing a concurrent financing to consummate the acquisition. Management from both companies will provide further updates on this prospective acquisition as they are completed. Both companies are anticipating a final closing within the first quarter of calendar 2022.
