Ladies and gentlemen, I want you to take a seat. I want you to sit down and I want you to clench your buttocks because you’re about to hear a story that, for mine, will make you want to spring out of that seat and hit your Buy button.
I’m not telling you to buy anything because that’s not what I do, but I can tell you that when I heard this story, the first thing I did was go check the stock. And I’m glad I did because it has rocketed in the last week and I suspect it’s going to stay warm for a while. This train is leaving the station, and it is not waiting.
The company in question is Carl Data Solutions (CRL.C).
Carl isn’t exactly a name that lives in a lot of heads and, among those it does live in, it generally occupies part of the ‘blockchain was once a thing people spoke of and invested money in’ section, right next to the part that holds old Shamwow ads, remembers the filmed works of Pia Zadora, and still reels from the taste of Tang.
Carl knows this and is sorry, but has also done the work to redeem itself by evolving not overly far from its origins – just far enough – to now be a machine learning, data analysis and monitoring company that, I know this is going to sound weird.. makes some money.
It’s been a long road. Carl has slowly whittled down to a bare minimum of cold dead hands over the previous few years, even as it made interesting moves and, unlike many blockchain deals, didn’t die. But in the last two weeks the stock has suddenly taken the F off.
Why it’s taken off it’s not because they put big news out there, but because people are noticing this business as being important and sticky.
THE RAW STORY
Admittedly, data monitoring, visualization, and prediction doesn’t necessarily seem sexy in the way that ‘we’re gonna put psychedelics in your cereal’ sounds sexy, but this deal has managed to jack its revenues by between 50% and 100% annually for the last three years, so there’s something here.
Information is essential to all areas of business, from industrial to agricultural to government to medical to manufacturing. Knowing what is happening out in the wilderness, out in the distant corners of your organization, is essential to making sure that things run smoothly. If you’ve got mines in six different places, usually you’re sending guys in trucks with test tubes and meters and clipboards and almanacs, to make sure your dam walls aren’t about to burst and that the groundwater isn’t pooling and that there isn’t arsenic in the river and that gas isn’t building up in the shaft.
You want to make sure your equipment is properly maintained, and that you service your heavy machinery when it needs a service, not after it breaks down. You want to monitor your tailings pond, and know a monsoon is coming, and know what happened the last time a monsoon came.
And you want to see all sorts of analytics that don’t just highlight problems, but show you trendlines. You want to know that gas isn’t just built up in the shaft, but that it’s been building up a lot more often lately. And with that knowledge, you want to be able to project going forward that, maybe that happens under certain predictable circumstances that you can start planning for.
Now imagine you’re running not a mine, but an entire city water system, from sewage to reservoirs to stormwater to beaches.
The traditional way of doing that was to discover a leak because the road is flooded, then dig up the road in a panic and try to patch things on the fly. The old way of doing things was to notice a drain is blocked because it rained and an intersection became impassable, and hope that someone in city works remembers that happened a month ago, and a month before that, instead of it being lost to history as a bad day,.
Maybe it’d be good to be able to predict when the rainfall hits over a certain level in the fall, when the fallen leaves are blocking drains, that the same problem will repeat, so you can send out gutter cleaning trucks when the weather report looks hairy. Maybe you could plug into a system that gathers all the data you have, analyzes it, runs predictive analysis, and then presents you with information that doesn’t just tell you what did happen, or what could happen, but what will happen.
You want dashboards at your fingertips, not spreadsheets.
When we’re driving, we look at the screen on the dashboard of our Tesla, or the screen of our phone, and we see where we’re going, where the traffic is rough, where we might go to avoid that traffic, where we can stop for a donut, and that there’s a neat antique store a mile away that closes in 15 minutes.
But when our city works folks are interested in whether our beaches are covered in literal feces or not, we rely on someone in a truck going out to take a look, drop a test tube in the ocean, bring it back, run tests and get results a few days later. Then that guy sends those results to his boss who looks at them when he’s done on the Zoom call with accounting after lunch.
Meanwhile, your dog Tibbles is coming out of the water with dookies attached.
It doesn’t have to be this way!
What Carl data solutions does specifically, right now, is focuses on mining, water utilities, and the oil and gas industry, though it’d be a short step to plug into just about any business.
They monitor, set alarms, and provide predictive analytics for tailings ponds, and air quality, water quality, wastewater overflows, risk mitigation, they have advanced analytics and modeling, they can help you deal with risk assessment, capital project planning, remediation, infrastructure, capacity testing, and regulatory compliance.
Here’s what that means; if you go to mine, and it’s out there in the Yukon, and there’s six guys running the thing, and they’ve got a bunch of expensive equipment that you had to helicopter in and drop on the tundra, you don’t want to be relying on those guys to go out in the morning, sniff the air, and realize that there’s a gas buildup. You don’t want those guys to be watching the dials on their digger equipment, and realizing that something isn’t going quite right on the only dozer they’ve got for a hundred miles. You don’t want them to be out there having to sample your wastewater, and your tailings pond, or making sure that the structure of your dam is up to scratch, because if you’re relying on individuals to go out there in muddy work boots in the snow to start hacking around with test tubes and hammers and meters, you’re invariably trusting that nobody’s had a bad morning that nobody’s a little bit hungover that nobody thinks the weather is so bad that maybe they’ll just skip it.
Automation brings the ability for someone in Vancouver to monitor a dashboard and know everything is where it should be, and that everyone is working on the tasks that bring their highest value, and that nobody is confusion an 8 for an 0.
CLIENTS THAT PAY
Carl Data Solutions isn’t a household name amongst investor circles, granted, but it is increasingly a recognized name amongst municipalities and cities and technology partners and engineering companies. They aren’t a company that’s ‘got an idea’ and ‘might do business one day’; this is a company that is finding sales coming to them because of what they provide.
This is important stuff for a number of reasons. One of those is, if you can plug yourself into a municipal workflow, and become invaluable to the operation of that city, making sure it is operating properly and avoiding just one catastrophic failure, you’ve repaid your costs tenfold.
Do you know what it costs to deal with a burst dam, or an hour added to a morning commute, or arsenic in the groundwater? You’re not saving ten bucks by spending five bucks here, you’re saving literal millions by spending five digits. and when your clients are government bodies, you will never not get paid. Government pays its invoices as a standard way of doing business. If you have government-based monthly recurring revenue, you are making money, not chasing money.
And if you’re plugged into these systems in a way that makes those cities better, you will never lose a client. Indeed, Carl retains 97.5% of its clients annually.
Worth noting – these municipal clients take time to win. You don’t just send an invoice with a discount and get their business, they need to know you’re reliable, that you’re going to be around for a while, and that you’ll do what you promise because if a city relies on you, you CANNOT FAIL THEM.
That Carl has penetrated this market is commendable and worth noting.
They’re also building revenue, from 2017’s $1.2 million to $1.6 million in 2018, $3.2 million in 2019, a whopping $5.5 million during a pandemic!
That means we’re looking at 50% growth, if not 100% growth, year over year, even in the most trying of times. That’s outstanding.
Currently 76% of Carl Data Solutions clients are engaged in recurring monthly revenue deals, which means Carl has predictable income every month, can properly budget and plan, and knows exactly how hard they can grow without worrying that it’s going to suddenly hit a slow month and run out of money. In fact, when it came to the COVID pandemic, what they found was, the general business slowdown most companies felt didn’t have any impact on their business.
In fact, it’s probably improved their business, because staffing problems and having people work from home means there are a lot less people going out into the wild and hand checking systems at the pointy end. Being able to log in from home or the office and see real time dynamic models on a real time dashboard that covers everything that needs to be covered – is a godsend. It takes what used to take a whole team to do poorly and turns it into something that one man can monitor easily, inexpensively, and more efficiently.
PREDICTABILTY THROUGH MACHINE LEARNING
But what really takes Carl to the next level and, in my opinion, will make it a real big deal over time is turning this whole system into a predictive analytic game. By using machine learning and artificial intelligence – two terms often used but rarely accurately – to monitor data and start finding trends, and then let the system learn from those trends to see whether things can be done better, is a game changer.
What happens when multiple things occur to provide a given outcome, something that maybe your clipboard doesn’t show, but that the Carl system will learn. Maybe this thing only happens on a Sunday, between the hours of midnight and dawn. Maybe it only happens when the temperature is 32 or higher, and the wind is blowing in a certain way.
A lot of companies claim they’re in the machine learning game, but they’re really bullshitting you that some off the shelf software they bought that runs some pretty analysis and gives you graphs is actually ‘artificial intelligence.’
Carl is the real stuff.
Recently, the company announced a new board and new CEO, and that CEO is not the kind of guy who will be writing code at 3AM. He’s a markets guy with a long history in mergers and acquisitions, and to me that’s Carl calling its shot. We’re going to see ongoing ongoing growth and product expansion by purchasing market share and IP through acquisitions, which will make everything CRL offers to clients worth more – and cost more – as we go.
Now admittedly, there has been a big spike in the share price of this company over the last month. The share price started 2021 at 10 cents, and is now at 40 cents a couple of days into February. That sort of radical upwards jump is not something that you would expect to continue, week after week, but it hasn’t yet shown sign of slowing down and neither does the trading volume. This is an increase that has come because people are finding this story, they’re interested in it, and they think it makes sense… It’s not a rise that has come on the back of news.
The company recently raised $3 million in a private placement priced at 15 cents, which means those people who bought in are already on a triple, and their warrants are going to come in as quickly as people can execute them, which means more money for the company.
In terms of growth, 50 to 100% growth every year for the last four is pretty astonishing in a software as a service (SaaS) business. They’re calling it the Industrial Internet of Things. That’s a nice catchy phrase. I like to think of it as the sort of business you’re pretty sure he’s going to be around in five to ten, and will be adding digits every year from this point forward.
I’m in, I love it. This is where I want to be.
FULL DISCLOSURE: Carl Data Solutions is an Equity.Guru marketing client.