Apivio Systems, Inc. (TSX-V: APV) is engaged in the design, development, marketing, and sale of Voice over Internet Protocol (“VoIP”) communications equipment and software. Apivio began as Moimstone Corporation in South Korea in 2003, which since then has sold more than 5 million enterprise VoIP and Wi-Fi phones to Korea’s largest telecommunications carriers.
Rob Bakshi, Apivio System’s CEO, is an entrepreneur who recognized the opportunity – and the pain – inherent with enterprise telephones that didn’t improve worker productivity. After selling his last company, Silent Witness Enterprises to Honeywell in 2003, he was involved with several other businesses before being introduced to Moimstone. Rob’s vision for innovation in the enterprise phone market enabled him to capitalize on Moimstone’s growing IP telephony business in Korea. “I recognized that most vendors in the enterprise telephony business were more focused on innovation on the back end, leaving a lot of room for improvement with the phones and other endpoints,” said Rob Bakshi. “My vision is that one day, every enterprise phone will be a smart phone, thereby shifting the value proposition from hardware to software.”
After becoming the CEO in 2013, he has focused the Company on several innovations that are redefining the enterprise phone market.
In May 2014, Moimstone changed its name to Apivio Systems, and management listed the company on the Toronto Venture Exchange under the ticker “APV”. In 2014 Apivio brought aboard David Pais, a seasoned CFO who was involved in the sale of Carmanah Design and Manufacturing Inc. to NYSE-listed Kadant Corp (KAI). Apivio has grown to a $60 million revenue business with over $2 million in adjusted EBITDA in 2015. The Company has now been EBITDA positive for the last eight quarters.
SMART DESKTOP PHONES
During 2014, management invested a portion of Apivio’s cash flow into R&D to create the Monet-series of VoIP, enterprise, desktop smartphones. The phones represent a paradigm shift from “dumb” to “smart” phones in enterprise telephony due to productivity apps and custom interfaces that benefit user workflow, increase revenues, and/or reduce enterprise costs. For example, hotels can generate new revenues by streaming advertisements to guestroom Monets to fill its restaurants or promote local shows and sightseeing tours. Monet apps can also reduce costs; hospitals, for example, can lend Monets to discharged patients to monitor their recoveries via video calls, rather than having patients return to hospitals for expensive visits.
Apivio’s vision for enterprise smartphones was shared by NEC Corporation of America, a subsidiary of NEC Corporation, the world’s third largest enterprise telephony provider. NEC America ordered 10,000 Monet-Series phones in 2015. Apivio delivered all 10,000 phones on schedule.
Order flow and integration of the Monet series from NEC America continues to progress through 2016: NEC America issued another 2,000 Monet purchase order to Apivio in March 2016, and announced the integration of the Monet with three of the NEC Univerge Private Branch Exchanges (PBXs). The largest of these PBXs can accommodate almost 200,000 users, illustrating the potential size of the market for Monet phones in larger NEC customer installations in the future. NEC Corporation in Japan and Apivio further solidified their relationship in June 2016, announcing a letter of intent to develop the next generation of Monet phones and expanding distribution to NEC’s customers globally.
FROM HARDWARE TO ENTERPRISE APPLICATIONS
While the cell phone industry has experienced tremendous innovation with the advent of apps on Android and iPhones, the enterprise phone market has remained stagnant. With the Monet phone, enterprises can now access a range of Android based applications. In addition, Apivio intends to develop a number of apps targeted at specific verticals. These enterprise applications are not offered at low price points of most consumer targeted apps. These apps are priced higher based on the utility and benefit to enterprises using them. Many can be sold on a subscription basis – with payments either monthly, quarterly or annually. And since the costs of developing these apps are expensed when incurred, gross margins are usually very good.
NEC and Apivio understand the potential of recurring revenue from enterprise applications, and they are part of each company’s respective vision to transition into an app-based recurring revenue model. To support this vision, in December 2015, NEC America launched its App Store, and for every Apivio app that is sold on a Monet, Apivio receives a percentage of the revenue. Apivio also receives a percentage of the revenue generated by third-party apps. Third party app developers are happy to have their apps distributed in an app store targeted at the enterprise market and are happy to share a part of the revenue with NEC and Apivio.
NEC has more than 3,000 dealers globally and over 700 dealers in North America alone. The dealers are the first line of contact with the customer. NEC trains and educates their dealers so that they have all the right tools to sell the NEC suite of products and services. With desktop smartphone applications, NEC dealers can leverage their existing customer base to sell new Monet phones and productivity tools and apps for recurring revenue streams. NEC communicates to Apivio, ideas and comments from customers who ask for customized apps to serve their specific needs. Apivio choses to build some apps, whereas the rest are built by the Android app development community.
THE LIBERTY SERIES Wi-Fi PHONE – ANOTHER GAME CHANGER
Beyond Apivio’s Monet hardware and associated applications, another leg of growth will likely come from its Liberty series Wi-Fi phone. Similar to how a cell phone works within the cellular coverage area, a Wi-Fi phone can work within any Wi-Fi coverage area. The Liberty™ allows enterprise workers to remain connected as long as they are within the range of any accessible Wi-Fi hotspot, essentially enabling workers to carry their deskphones around their workplace. This enables workers in any distributed workplace, such as warehouses, airports, factories, and even those traveling abroad, to use their deskphones while they are on the move - no more voicemail for hard-to-reach workers since they are always connected with a Wi-Fi enabled Liberty™ phone. Apivio has sold more than 100,000 Liberty™ phones in Korea and Apivio’s management is adapting the phone for North America before bringing it to the U.S. and Canadian markets.
“I want Apivio to be the leading innovator in the enterprise phone industry,” said Mr. Bakshi, “I see an industry that has tremendous room for change and improvement. We want to produce the best enterprise smartphones in the market and make them available on a number of platforms. The whole value proposition for enterprise phones will change when enterprise customers experience the benefit of a smartphone on their desk, running applications designed for their environment. Apivio intends to distribute enterprise specific apps to any vendor of Android smart phones through its Apivio app store. The whole premise of our business model is that hardware is an enabler whereas our software based products and solutions will bring more value to our customers and recurring revenue to the Company. I am excited about the growth opportunities and look forward to communicating more about our industry-leading products and solutions in the future.”
FOR MORE INFORMATION
Apivio Systems (APV:TSX-V) is a global VoIP telephony provider with an established and broadening Korean business, an expanding relationship with NEC America to deliver Monet, desktop smartphones and applications to enterprises, and a nascent Wi-Fi smartphone business. Apivio’s management team has demonstrated the ability to identify and convert business opportunities into products and establish partnerships with large enterprises for sales and marketing. For company information, please visit Apivio’s Website at apivio.com. For regulatory documents and financial filings, please visit www.sedar.com.
The company paid consideration to SNN or its affiliates for this article.
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