Corporate risks associated with alcohol use among workers are a particularly large addressable market. Each year, employers and insurers in the U.S. spend close to $63 billion on alcohol-related injuries, deaths, and lost productivity. Alcohol is involved in half of all industrial accidents, and commercial fleets experience over 11,000 alcohol-related accidents each year. Given this background, corporations should be more than willing to subscribe to any form of technological offering that could help mitigate and minimize these intoxication-related risks. Our small-cap pick for the day is one such company that has evolved to align with these market opportunities, recently launching the world’s leading touch-based, preventive alcohol detection platform– SOBR Safe, Inc. (SOBRsafe™) (NASDAQ: SOBR).
Now in revenue, SOBRsafe is an emerging player dedicated to creating a culture of prevention, helping eliminate alcohol from our workplaces and roadways. The company has created the SOBRsafe technology platform for non-invasive alcohol detection and identity verification, which can be used to improve safety for last-mile service and delivery fleets, warehousing/logistics, manufacturing, youth drivers, addiction treatment and more. Their alcohol detection device measures the ethanol content in a person’s perspiration to detect alcohol in their system. It plans to use SOBRsafe technology in two first products: The SOBRcheck™ system and the SOBRsure™ wearable band. SOBRcheck is the company’s centralized access control product. When installed in fleet depots, manufacturing facilities, warehouses, and other locations, SOBRcheck enables finger scanning, with real-time results delivered to the employer for any necessary corrective action. SOBRsure is an alcohol-detecting, transdermal wearable band with SOBRSafe technology for real-time alcohol monitoring. The primary intended application for this band is for young individual drivers and commercial fleet management, with an additional potential application in managed care/alcohol rehabilitation. The company plans for the wearable band to be commercially available in the third quarter of 2022. SOBRsafe is based out of Denver, CO. The company was established on March 9, 2020 and has raised $17.5 million to date.
Large Addressable Market
SOBRsafe has evolved significantly from its laboratory roots, where it began as a detection technology development firm called TransBiotec Inc. The company’s focus on alcohol detection and monitoring as well as non-invasive identity verification systems is directed towards addressing a large market. The cost of alcohol abuse in the United States is $249 billion per year. Alcohol is involved in nearly half of all industrial accidents that result in injuries, and 13% of U.S. commercial drivers test positive for alcohol – the highest rate wordwide. As an attempt to address this market, SOBRsafe has developed a proprietary touch-based identity verification, alcohol detection and cloud-based reporting system. The technology can be used in a variety of applications, such as personal wearables, stationary access control, and telematics integration. It is currently being deployed for last-mile service and delivery fleets, warehousing/logistics andmanufacturing, with a mobile form factor for fleet drivers, youth drivers, addiction treatment and more expected to launch in the third quarter of 2022. This patent-pending alcohol detection solution helps keep intoxicated workers off the factory floor and drivers off the road in such a way that an offender is immediately identified, and the employer is given the data to take appropriate action.
Product Offerings & Business Model
In the U.S., SOBRcheck is the first preventative, user-friendly alcohol detection and identification system. For real-time safety verification, this discrete device and powerful reporting app integrate seamlessly into an employers facility entry or vehicle release protocols. SOBRsafe’s centralized product SOBRcheck is a new method for ensuring worker safety that gives employers immediate peace of mind at the touch of a finger. With its touch-based desktop device and online reporting, SOBRcheck’s frontline safety screening effectively supports an employers substance policy. SOBRcheck is the solution for a variety of safety management applications, such as advanced spot testing, high-risk functions, and consistent daily screening. Daily, uniform screening results in quantifiable risk reduction, and SOBRcheck integration is already driving significant insurances savings for customers. This cost-effective device also helps in the hiring and retention of qualified drivers and helps improve employee health and wellness. The company operates using a SaaS, recurring revenue model and it has begun commercial sales using a B2B model with fleets and logistics companies, and has a flat price $30 per month per worker – or just $1.00 a day. Based on the customer pipeline and expected launch of SOBRsafe’s product portfolio, the company is expected to report increasing revenues in the second half of 2022 and throughout 2023.
Value Proposition & Strategy
SOBRsafe has a unique value proposition that not only addresses alcohol-related risks but also helps corporations provide evidence to their insurance providers regarding reasonable safety measures undertaken by them to mitigate these risks. The patent-pending, proprietary SOBRcheck device solution is the world’s leading preventative transdermal alcohol detection system, and it comes with a biometric identity sensor that links detection results to a specific person. Data is delivered instantaneously to human resources or occupational safety officers via SOBRsafe’s cloud-based SaaS interface, allowing them to implement their existing substance policies. In addition, the company is launching soon SOBRsure, a transdermal, alcohol-spotting consumer wearable band for young drivers and rehab managed care, which is expected to be the next big strategic expansion move for the company. Its customers are bound to be sticky given insurance incentives and liability avoidance. The management team has nearly 120 years of combined leadership experience, across several product rollouts and multiple successful exits.
While maintaining 100% public company compliance, SOBRsafe made the strategic decision to operate in relative “stealth mode” as it focused on commercializing its technology and prior to its NASDAQ uplist. That is changing with the company starting to announce new customer engagements and report revenues in the second half of 2022. It is worth noting that the primary demand for its product stems from insurance as it has been certified as a valid ‘safety measure’ by a number of national insurers, resulting in significant customer savings. The insurance acceptance coupled with a cheap price point and a unique value proposition are bound to attract a large number of corporate customers to its subscription-based offering. The recurring revenue-based business model is also likely to attract a valuation premium as well. Overall, we are highly bullish on SOBRsafe and we believe that the company is an excellent emerging player in a unique domain that could become a multi-bagger in the coming years.