The landscape in China over the last 6 months has certainly been evolving. Since the start of 2022 the country has dealt with one of the largest outbreaks of COVID-19 since the pandemic began. Yet, for technology company Infobird (IFBD), 2022 is expected to be marked by steady improvement as it transitions to a standardized SaaS offering and wins new customers.
For those who don’t remember, Infobird is developing and providing customer engagement cloud-based services. More specifically, they are a software-as-a-service (SaaS) provider of innovative artificial intelligence customer engagement solutions, offering their services throughout China. They primarily provide holistic software solutions to help customers proactively deliver and manage end-to-end customer engagement activities at all stages of the sales process, including pre-sales, sales activities, and post-sales customer support. They also offer AI-powered cloud-based sales force management capabilities including intelligent quality inspection and intelligent training software to help clients monitor, benchmark, and improve the performances of sales agents.
Infobird is off to a good start in 2022 with some notable new global customer wins, as the company is transitioning their business model to a more sustainable and profitable strategy.
Infobird Continues Their Transition to Standardized SaaS Services
Originally, Infobird’s business model was centered around providing customized solutions to clients based on their specific needs. And although this allowed the company to accelerate revenue and gain strong industry contacts, initial implementation costs were high. Now, Infobird is transitioning to a standardized model which allows them to onboard new customers more quickly and implement their software solutions through an accelerated process. All this supports a faster growing client base and the ability for the company to provide the same high-quality service as before at a much faster rate.
This transition in their business model, in the short-term, will lead to a brief slowdown in growth and suppressed margins as Infobird experiences increased transition costs. However, long-term, this switch to standardized services should present opportunities for further growth, as well as superior margins by allowing their services to be implemented more efficiently.
Continued Innovative Products Provide Catalysts for Business Expansion
Infobird has established themselves as a major provider of AI-powered software services through their continued innovation and ability to empower clients with cost effective and intelligent customer engagement solutions. Looking further into 2022 and forward, the company expects to drive its growth from innovative and intelligent products like their AI-based chatbots. As well, they are continuing to improve the functionality and user interface of their existing intelligent interactive training, and intelligent quality inspection services.
Furthermore, Infobird has selected several strategic industries such as retail, healthcare, and new energy vehicles, to drive future growth, as well as expand their current service offerings to current customers.
Infobird Acquires 51% Interest in Shanghai Qishuo Network Technology
Qishuo is a provider of consumer product and retail store digitalization solutions in the retail footwear and clothing industry. This acquisition is significant, as the synergies between the two companies should further accelerate Infobird’s transition to standardized software services. More specifically, the combined company aims to support new growth initiatives of consumer product and retail enterprises by strengthening omnichannel customer engagement, including customer marketing, customer acquisition, customer retention, and by enhancing and optimizing physical store operations.
Where Infobird shines, is the optionality their services provide, as well as the comprehensiveness of what they offer clients. They have successfully become a one-stop-shop SaaS provider for a wide array of companies within China in the area for customer engagement. And acquiring Qishuo will provide further optionality, adding another layer of innovative products, and provide new sales verticals to penetrate.
As the company continues to build out their service offerings, it opens the door for Infobird to attract new customers and encourage existing customers to spend more. This equates to a powerful and scalable business model which supports increasing margins and sustained growth.
Thoughts on Valuation
Infobird is currently well off their 52-week high of $6.10 a share, currently trading at $0.60. The chart below shows the sharp decrease in the company’s price-to-sales ratio over the last year. Yet despite this decline in share price, Infobird has put themselves on track to have a record-breaking year. Currently, Infobird has a PS ratio of only 1.28, signalling the company is significantly undervalued considering their revenue is returning to pre-pandemic levels, and more importantly, the strong position Infobird is in moving forward to post new highs in revenue growth.
Key Takeaway
Infobird has served over 70,000 clients from their beginning in 2001. Originally Infobird was mainly focusing on customized solutions to clients which needed software solutions to support their customer service operations and sales life cycle. Now, the company is transitioning into the more scalable and more favourable margins of standardized software services, effectively allowing the company to accelerate growth by serving a wider audience base.
Infobird is continuing to develop innovative services and their recent acquisition of Qishuo provides further sales verticals, as well as improved optionality and ability to better serve customers. The company is a leader in leveraging artificial intelligence and is continuing to build out their functionality through improved AI chatbots and a constantly improving user-interface.
In terms of valuation, Infobird has seen their share price decline by 85%, as the company has been a part of the broader market sell-off. This reduced price point has unlocked immense potential value for new shareholders as their growth prospects are looking stronger than ever. With a PS ratio of only 1.28 means Infobird is trading far below their fair value.
All told, Infobird has done a major remake of their business model, which although has reduced the company’s profit margins in the short-term, ultimately is placing them in a strong position to gain further market share and enjoy increased margins. This, combined with the recent reduction in share price, is providing an attractive potential entry point for investors, as Infobird is proving they have the vision to continue to be an industry leader in the SaaS industry within one of the largest markets