Poynt User Base Growing Tremendously But at What Cost?

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poynt update

Poynt is easily one of the best BlackBerry apps ever built and we love writing about it. What we also love about Poynt is that it’s a public corporation so their financials are available to anyone who cares to do a little digging. The mobile industry is hot right now and Poynt serves as an interesting case study about what it takes to grow a large mobile company and how profitable a free app with purely advertising-based revenues can be.

Today marks a pretty big news day for Poynt as the app/company has surpassed more than 8.5 million unique users at the end of June 2011 across North America, Western Europe and Australia, after reaching 3.2 million at the end of June 2010. Of the over 700,000+ new users added in June 2011, 500,000+ were on the Android platform. Existing preloads contributed to over 300,000+ of these Android users in the month of June. So far in July, the average number of new daily users added has exceeded 25,000, putting the Company on track for another record month. Currently, Poynt has over 9.0 million unique users.

Here are the numbers Poynt would like us to focus on:

poynt numbers

The last financials posted on Poynt’s site were the Q3 2010 Financial Statements. We should be seeing new filings coming soon but we can see the sort of cost it takes to get to almost 10 million users and the revenue one might expect.

Obviously as Poynt grows its user base, it’s also growing as a company. Traditionally, mobile companies are pretty lean but Poynt seems to be fairly heavy in terms of management and operating costs. Salary and consulting fees increased by $619,702 or 132% in 2010 compared to the same period in 2009. Another area where Poynt differs from a typical mobile company is in advertising. Most app companies will rely on the app stores and manufacturers for promotion, with some blog and inexpensive community outreach. Poynt on the other hand, has advertising and promotion expenses that increased by $692,932 (789%). Overall, a company like Poynt is cash intensive to operate. For the three months ended September 30, 2010, the Company used $1,388,590 (2009 – $2,594,534) cash in operating activities.

Revenue for Poynt has increased but it doesn’t come close to covering their expenses. Sales and licensing revenues for the nine months ended September 30, 2010 increased by 172% to $605,092 from $222,760 for the same period in 2009.

It should be interesting to see what the latest financials for Poynt bring but it would be surprising if revenues ever come close to covering expenses. Perhaps the lean, startup-style mobile company is the only way to truly be profitable in this industry.

  • http://caspan.com Caspan

    I don’t know if I trust Poynt anymore. I was in Brantford Ontario the other day and I had a GPS lock and I searched for restaurant called “Burger King” and it showed none in the town. Then i did a Google maps search for it and showed 3 in the city? I even then changed my search from GPS to Location I typed in and still none showed up. I find I cannot trust when it tells me sometimes as the truth.

  • http://appworld.blackberry.com/webstore/vendor/1111 Eric at Ebscer

    Those are very ugly numbers on the financial side.

    Costs for “Property and Equipment” (mostly computer hardware and furniture) for the last 9 months was $604,499, while revenue for the last 9 months was $607,611. That leaves only $3k in profits even if there were no other expenses. But instead of no other expenses they spent $3.5Million on Salary and another $1.4Million on Advertising.

    Those are some very heavy losses…

  • Vangorilla

    You left out two key points.
    1. Their patent portfolio
    2. Recent partnership with WiLAN, a proven player in monetizing patents.

    IP will be key in the space and valuations of IDCC, VHC etc are examples of what market is willing to pay for enabling patents.

     

  • Tlowe

    You have also left out their last financial report for the first quarter of 2011 posted on their
    company website under news releases also available via marketwire. Not very professional journalism if you ask me. By the way I also posted this fact earlier but I guess the moderator has not gotten around to it yet.