Q&A with Magor Corporation (V.MCC) President and CEO Mike Pascoe.
Tell me about Magor?
, Stock Forum
) has developed software that allows companies to communicate using High Definition video while collaborating with one another by sharing, editing, viewing documents and other related materials from group meeting rooms and desktops, laptops, tablets, smartphone applications, whiteboards and other devices. And we do all of that for a fraction of the cost of other competitive products in the market.
Why should an investor be interested in Magor
There are many reasons why investors should be interested in Magor. First of all, we are one of two companies in the world that is changing the landscape of video conferencing and collaboration. Without getting too technical, what we have done through our software, which is fully patented, is to eliminate the expensive infrastructure that is currently used by many of our competitors.
We also eliminate the need for expensive bandwidth typically needed to support HD video interactions. These are two key reasons why we can provide our services for a fraction of the cost to our clients, without jeopardizing quality and natural workflow. As examples of the importance of this, we have established customers globally including some large enterprise accounts and government agencies.
Our revenue growth is gaining momentum and we are also in the middle of transitioning into a recurring revenue model through our cloud-based services called AerusTM
, which will drive both a growing and recurring revenue stream. We also have a phenomenal team, starting with our founder and Chairman, Sir Terry Matthews who is very well known for his success in developing technology firms and taking them through strong exits for investors.
Similarly, my own success as the President of Newbridge Networks, which we sold to Alcatel for $10 billion, and CEO of PairGain Technologies in California, which we sold to ADC for $3.2 billion. And of course other members of our team, who are highly experienced in this space, and that is exactly what we need to ensure a successful high growth company.
What do you mean by a visual collaboration company and how do you differ from companies like Skype, GoToMeeting.com or other video conferencing companies?
Visual collaboration is a term used commonly to describe the next generation of video conferencing combined with stronger support for collaboration as an integral part of the video interaction.
Magor combines its strong HD video heritage with integral support for multiple collaboration sources, including desktop applications, whiteboard sessions, smartphone and table applications and a variety of video sources.
So, for instance you could have one person in Toronto, the other in New York and another in London, and they could all interact with one another using our HD video conferencing, while all three can work and edit a Word document for example that is being shared by one user.
At any time, they could call an additional person(s) to bring into the discussion. Or another person may want to share what he’s looking at on his smartphone or tablet, and he or she can easily bring that into the interaction. So we have really created an environment for our users to feel that they’re communicating and working as if they were sitting beside each other in the same room, even though they are in different cities or countries. Traditional video conferencing with its reliance on a bridge to connect multiple sites, is unable to provide this level of interaction.
To move to a better collaboration capability, traditional video conferencing users must leave the conference and shift to a separate system such as GoToMeeting or Webex. These systems provide good collaborative environments but weak video conferencing.
Similarly Skype provides a useful video source for Magor calls given its ubiquity, but the quality and consistency of a Skype interaction is not considered acceptable for most enterprise video interactions. To enable this Skype call, our software directly interoperates with Skype and for that matter, other traditional video conferencing products. This is a very important feature of what we provide, as our software natively speaks to other sites we connect to without the need for highly complex and expensive transcoding that is required by other players in this space.
This coding framework is unique in the industry and allows companies to deploy Magor without having to throw out existing equipment. It also supports the growing Business-to-Business environment as it allows different suppliers equipment to connect directly without the need for expensive gateway connections.
Who are some of your clients?
We have a broad and global presence with a variety of different clients in various different industries including technology, oil and gas, government agencies, finance, electrical power, manufacturing and retail to name a few.
Companies such as Sony and Christie Digital, Discovery Air, EBX an oil and gas company headquartered in Brazil and the Ivey Business School out of London Ontario. Government accounts include the Saudi Arabian Government, Canadian Shared Services and the RCMP.
What makes Magor useful to these companies?
It varies. Typically the more important visual interaction and collaboration is to a company, the more important our capabilities are to them. Support for HD video over the Internet allows companies to connect their offices with high resolution video, anywhere in the world without concern for expensive dedicated bandwidth. Previous video, conducted in standard definition, was very expensive and it did not support a level of interaction needed to interact effectively, resulting in sporadic use.
Our collaboration is shared in native resolution, which helps companies to examine photos, videos, images etc in the resolution needed for the task – a key in many industries for productive interactions. In some cases, our ability to support interoperability with most other video sources allows Business-to- Business interactions where it was not previously possible.
What is the process for companies to use your services? Are there any hardware or software requirements and what are the capital costs associated?
Magor’s software currently runs on the linux operating system. This can run on most commercially available servers. Later this year we will offer this software on Windows and Android platforms, further expanding the hardware we can work on.
The monitors, cameras and audio equipment are standard off the shelf components. This use of commercially available hardware eliminates the lock-in traditional video conferencing forces on their customers. Similarly, our elimination of the bridging and transcoding infrastructure also removes this on-going commitment for customers.
Another very important point to note is customers with traditional video conferencing products are required to pay significant annual maintenance fees for the MCU or bridge, not to mention high costs for port expansion to capture new sites including desktops. Magor’s products can allow these companies to cap this purchase and eliminate it over time as they replace the old video conferencing products. This is a major selling feature of what we provide.
Where does your revenue stream come from?
We have various revenue options including device licences, concurrent licenses and site licenses. This provides a monthly recurring revenue stream that grows with every site or device added.
We also sell hardware to many of our customers, although not all as some source these themselves, and license the software on a one-time right to use basis with an annual software accrual.
Was the Company profitable last year?
Magor has invested heavily, approximately $20M, in the R&D necessary to achieve this disruptive software. We continue to invest in this but have more recently accelerated our investments into sales, marketing and support as our commercial business grows. We are targeting profitability in calendar year 2014.
Disclosure: Magor Corporation is a Stockhouse client.