We live in a remarkable period in history. Everything that used to be the province of highly specialized experts locked behind corporate or government doors is gradually becoming open-sourced and accessible to the average bloke on the street.
This has become true for information access, live events, capital markets interaction, leading-edge technology, fundraising, marketing, computation, and a wide range of other formerly inaccessible experiences and specialized spheres of knowledge.
And now, at long last, this narrative has begun to apply for prospective inventors and innovators. With the advent of “crowdsourced invention” as a means of wide-net, highly democratic venture capitalism, the potential for extraordinary acts of human innovation is skyrocketing.
One of the most interesting such platforms enabling this new and remarkable trend is Edison Nation Inc. (NASDAQ:EDNT).
IP Development Platform Spotlight:
Have you ever seen an episode of the TV show “Shark Tank”?
The show features one small-time entrepreneur after another parading their latest ideas in front of a panel of several extremely wealthy venture capitalists who decide whether or not to invest a sum of capital for a piece of the idea’s future.
That show has given rise to support for some pretty interesting innovations. It’s somewhat similar to the notion that American Idol has given rise to some good performing artists over the years.
But you may have a great invention or idea and, yet, be unable to get on Shark Tank, or into a Sand Hill Road VC office in Palo Alto. What then?
Edison Nation Inc. (NASDAQ:EDNT) is built for exactly that process. You sign up and gain access to Edison’s resources, including its team of product designers and engineers. If the road ahead is promising, you gain access to a manufacturing and logistics pipeline as well as a marketing and distribution infrastructure.
You just have to have a great idea. Edison’s team will partner with you to take care of the rest.
That’s a great message for inventors. But it’s also a great message for investors because the company has positioned itself to get a piece of the action in a tsunami of great product ideas. The infrastructure is in place, the resources are set up, and a spectacular marketing plan is already in the process of being reborn (more on that in a minute).
How to Move a Great Idea into the Future
The Edison platform approach to crowdsourcing inventions and IP marketability is a rather extraordinary innovation. But we like to see a company that doesn’t rest on its laurels. EDNT is moving forward aggressively, and its results demonstrate a blossoming culture of success.
For example, the company recently expanded its core inventor platform. This step included the addition of two new features – “Edison’s Design Challenge” and its new “Entrepreneur Partnership”.
Both of these additions will continue to set a tone of engagement. The company has a thriving community of over 200,000 actively engaged users, and they see the value of continuing to roll out new tools to drive continued engagement.
The community, and its continued engagement, is precisely how this company can spark a revolution and return the type of growth potential we see in some Silicon Valley’s biggest winners – Facebook, Amazon, Google, Apple, LinkedIn, Netflix.
EDNT may have that type of incredible potential, so it clearly deserves a closer look.
And the Emmy Goes To…
Another reason to love this story is its marketing strategy. They have the TV show “Everyday Edisons” – you may have seen it on PBS a few years ago as an Emmy winner – and they are working to revive the show and get it back on the air with huge splash.
According to company materials, a mobile app will launch in December 2019 to facilitate increased platform engagement. That will lead up to the return of the Everyday Edisons show (produced by a six-time Emmy winner) on February 11, 2020 – which just happens to be Thomas Edison’s birthday.
That will serve as the perfect nexus for a multi-faceted and multi-dimensional marketing and awareness campaign that draws in fixed media, social media, internet media, and direct marketing to create a robust vehicle for drawing enormous attention to its invention platform.
That will drive a sea of great ideas under the company’s umbrella, and its shareholders will gain access to a very diversified and professionally vetted IP portfolio that has been constructed from the ground up to work as a platform production, marketing, and distribution model armed with a global logistics strategy.
In addition, content, as you know, is king. The company is a tried and true Emmy Award winning content producer, putting it in league with the likes of Hulu, Netflix, Disney, and a host of other major content production outfits.
The synergy here is unmistakable: An Emmy Award-winning TV show and social media ecology dedicated to driving more new ideas to its IP development and monetization platform. This is “crowdsourcing” at its best!
Product Traction Defines the Big Picture
At the end of the day, the big question prospective investors need to ask themselves about EDNT is this: How is the company’s IP actually doing?
The news has gone from “good” to “great” over the past two weeks.
Several trends are worth noting here, including the company’s licensing of the Ezy Dose Medi-Spout, a pill assisting bottle cap that utilizes patented technology to ease the swallowing of medication and vitamins, from Apothecary Products, a global leader in consumer wellness.
That has been accompanied by the launch of a new product line targeting the company’s theme park and entertainment customers – a list that includes the likes of Disney and Universal Studios, among others.
In addition, we have also recently seen the launch of The launch of the “911 Help Now” pendant in March, which drove $800K in initial purchase orders from Audio America, a leading consumer electronics distributor, in conjunction with a strategic sales and marketing association with Stealth Technologies.
But that’s not all. In addition, to that list, one can add:
• Expanded sales for its Goodie Gusher party product line in the North American marketplace, driving growth in footprint to nearly 650 retail locations across the region;
• The introduction of two new products in the toy and infant-sleep category – Lullaplayer and My Buddy Bernie, a children’s MP3 player designed to look and feel like a classic portable record player, and a voice-activated, interactive playmate for kids that requires no set-up and works right out of the box, respectively;
• Successful entrance into the eyewear market in January with Smarter Specs, the first patented glasses with concave lenses, enabling consumers to wear the glasses higher up on the nose bridge, allowing them to look over the glasses without having to tilt their head down, easing neck strain;
The list of the company’s recent successes goes on and on.
The Proof is Where it Usually Is
While we can drone on and on about an innovative set of ideas and some clear market potential going forward, the proof, as they say, is firmly situated in the pudding.
On that note, the company just reported a very clear acceleration in Q2 top line growth, generating 36% sales growth on a year-over-year basis, to book nearly $6 million in revenues (compared to $4.39 million in the same period in 2018).
The company noted in its review of the quarter that the jump in growth was driven by the product launches we noted above, along with further scaling of the company’s 2018 acquisitions.
The other big jump was on the gross profit side of the equation. In all, gross profit increased 61.8% to $2.04 million in the second quarter of 2019, compared to $1.26 million in the second quarter of 2018. Gross profit margin was 34.2% in the second quarter of 2019, compared to 28.8%, in the same period in 2018. The increase is primarily a result of a favorable product mix of goods sold to customers.
In other words, they are getting the recipe down pat – something the management team appears to understand quite well.
EDNT: Investment Profile
Edison Nation Inc. (NASDAQ:EDNT) has, since inception, invested ~$11M to create a propriety open innovation platform, allowing inventors to safely and securely submit their ideas to be evaluated for various commercialization paths from licensing to, most recently, crowd funding.
For inventors with a great idea, EDNT is a powerful ally. The company offers a platform covering fundraising, product development, manufacturing, marketing, and launch.
Understanding the typical crowd funding product development cycle is important for grasping the investment opportunity potential in EDNT: Edison Nation’s team of product designers and engineers work to produce a ready for production prototype, and produce media in-house to launch a crowd funding campaign. If a campaign is successful they will market the product in the “aftermarket” on sites such as Amazon & Jet. Products are generally manufactured in China with factories (“we have 10+ year relationships, generally shipping within 4-6 weeks from order”).
So, the next time you are sitting around, dreaming up the next better mousetrap, you will know where to turn to make it a reality. It’s plug-and-play capitalism for innovators and inventors.
And it’s also a fledging and possibly flourishing content and media company, with huge synergies between its media (the “Everyday Edisons” TV show) and its larger shareholder value and growth premise (an inventor-friendly plug-and-play route to monetizing strong ideas).
· EDNT is a uniquely positioned business forging a new path to capitalize on the crowdfunding, start-up, and democratization-of-invention trends, with a first-rate media asset already in place to drive its marketing strategy.
· EDNT has a small trading float of just 3M, which suggests the stock could launch higher on any additional influx of interest.
· EDNT is making real money, with trailing revs already coming in at $20.4M.
· EDNT is starting to see major topline growth, with quarterly y/y revs increasing at 36%.
· EDNT is coming off an RSI trough under 40, pointing to a massively oversold stock now heading back the other way.
· EDNT just recorded a MACD Bullish reversal, suggesting a technical change in trend.
· EDNT is executing well, and has a stable of Fortune 500 partnerships to draw from as it pushes for new and accelerating growth.
The opportunity in what we might call “crowdsourced innovation” is ripe and remarkable. And EDNT may well be the only listed pure-play to move directly on this opportunity as a powerful model for shareholder value.
The fact that the company is already lining up a truly perfect marketing vehicle for this platform – its “Everyday Edisons” TV show – just adds fuel to the fire. With a number of key product lines all seeing growth, a stable of powerful strategic partners, and a very compelling technical pattern in play to go along with a tiny 2.9 million share float, the upside potential for this story after its strong financial report suggests EDNT bears close attention.