Nextech AR Solutions Corp. (OTCQB:NEXCF) Q3 2022 Earnings Conference Call November 17, 2022 5:00 PM ET
Company Participants
Lindsay Betts – IR
Evan Gappelberg – CEO
Andrew Chan – CFO
Conference Call Participants
Scott Buck – H.C. Wainwright
Lisa Thompson – Zacks Research
Chris Sakai – Singular Research
Operator
Good afternoon, ladies and gentlemen, and welcome to Nextech AR Solutions Corporation 2022 Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, there will be a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I’d like to remind everyone that this call is being recorded, today, November 17, 2022.
And I would now like to turn the call over to Lindsay Betts, Investor Relations at Nextech AR Solutions Corporation. Please go ahead.
Lindsay Betts
Hello and welcome to the Nextech Q3 2022 earnings call. With me on the call are Evan Gappelberg, Chief Executive Officer; and Andrew Chan, Chief Financial Officer.
Today, after market close, Nextech AR Solutions Corp. released its financial results for the third quarter ended September 30th, 2022. A copy of the earnings disclosure is available on our website and on SEDAR. Some of the information discussed on this call is based on information as of today, November 17th, 2022 and contains forward-looking statements that involve risks and uncertainties.
Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release as well as in our SEDAR filings.
During this call, we will discuss IFRS results and key performance indicators. A detailed description of our key performance indicators is available in our MD&A, which can be found on SEDAR. Neither this call nor the webcast archived may be recorded or otherwise reproduced or distributed without prior written permission from Nextech.
To begin our call, Evan Gappelberg, CEO, will discuss 2022 Q3 highlights as well as recent business development followed by Andrew Chan, CFO, who will review our financial results and outlook. Finally, Evan will provide closing remarks before opening up the lines for a question-and-answer period.
I’ll now turn the call over to CEO and Founder of Nextech AR Solutions, Evan Gappelberg.
Evan Gappelberg
Thank you, Lindsey. Hello everyone and thank you for joining us today. Q3 was a transformational quarter for Nextech AR as demand as production and as our revenue for 3D modeling has significantly ramped up. This is evident with our sequential production of 3D models up by over 110% and our sequential revenue in our 3D modeling business, up by over 192% sequentially over Q2.
Our Q3 figures are showing that our 3D modeling revenue is now growing exponentially. If you look at Q4, we did previously announced that we have a CAD700,000 3D model order to be delivered, which means we are quite confident that Q4 will be another record quarter for Nextech and demand and our production capabilities are only going to increase as we are just beginning this Q3 modeling journey.
In 2022, we have emphasized the rapidly growing global demand for 3D modeling services and our AR Solutions for Web3.0, especially in e-commerce. The new deal flow is continuing into Q4 and serves to reinforce the narrative, we have been quite vocally public about, which is the rapid acceleration, the rapid adoption, the surging demand for 3D models in e-commerce and across various other industries.
The product categories that we’re seeing 3D modeling demand for a quite broad, it could be sneakers, it could be clothing, furniture, sports equipment, accessories, artwork, appliances, lighting, auto parts, and much more, pretty much everything that has ever been made, everything that is being produced today and everything that will be produced in the future will have to have a 3D digital twin.
In Q3, we landed Amazon. They are going all-in on 3D models and Walmart or Target be far behind. We are seeing that the world has now pivoted towards 3D. Make no mistake about it, 3D is here to stay and is going to be part of a CAD1 trillion multi-decade megatrend now being called the Metaverse.
To compete in the next decade in e-commerce, in medicine, in education, in events, you will need a 3D model, and that is what Nextech makes, 3D models. We see nothing but blue sky opportunities in 3D from here. The demand for 3D models in e-commerce, we believe, will only accelerate throughout 2023 and beyond.
I believe that in 2023, we’re going to see demand shift into overdrive, similar to what happened with our virtual events business during the pandemic in 2020, which had a significant impact on our valuation. And I believe that, that can happen again, although this time, it will be sustainable.
If we look at Amazon, they are by far the biggest fish in the e-commerce ocean and represent anywhere from 70% to 90% of e-com sales for brands. That is how big Amazon is.
Signing a deal with Amazon demonstrates Nextech technical proficiency and leadership in 3D modeling for e-commerce. Believe me when I say it, Amazon only works with best in breed. Amazon has over 1.5 million registered active sellers worldwide, each of them have 100 — some of them have thousands of 3D models that are needed to turn into 3D. They are actually 2D that need to go 3D.
The Amazon platform has roughly 250 million product SKUs that need to go to 3D. This is a massive, massive, massive opportunity for Nextech. And it really just got started in Q3, just began. The new chapter for Nextech really is being written as we speak.
But Amazon is clearly not the only customer that we have, although they are significant in the potential revenue over the coming year as they open up the Seller Central platform to accept 3D models and as Nextech is going to be visible as a preferred 3D model supplier, there’s an enormous amount of pent-up demand within Amazon from their merchants to purchase 3D models directly from Nextech, and we think that will start to manifest itself in 2023 and beyond.
If we look ahead at future catalysts, as if Amazon wasn’t enough, more and more contracts that we’re signing with more and more of the major players really cements Nextech as the world’s leading supplier for 3D models and really starts to create a moat around our business as more and more companies will come to look to Nextech for the 3D model production.
The e-commerce industry is massive at CAD5.5 trillion is going to keep Nextech quite busy for an enormous amount of time. It’s just something that is absolutely massive. If we look at the 3D modeling business, it’s fundamentally transforming the massive CAD5.5 trillion e-com industry.
And if you look at e-commerce, it really is continuing to grow and continuing to expand, and so will the demand for 3D models. And the reason is that the ROI for 3D models are quite significant, a 40% reduction in returns, 93% higher click-through rate, and up to a 250% increase in conversions. Nothing else comes close in the e-com ecosystem in terms of ROI, not video, not direct messaging, not next-day delivery. They don’t come close to what 3D models and augmented reality represent for e-commerce.
With our 3D modeling technology, we are perfectly positioned to ride this CAD1 trillion megatrend for the foreseeable future. We believe we are the on-ramp for Web3.0 that we have achieved a perfect product market fit with 3D models in e-commerce.
Consumers and retailers all want 3D and AR experiences. 3D models also extend beyond just buying decisions, they extend into virtual photography, which will replace product photography for the web and e-commerce sites, saving companies millions and millions of dollars.
We offer all of these solutions in one integrated platform, which we believe is extremely valuable and really undervalued in the marketplace today. Nextech is creating a tremendous amount of value for the e-commerce industry, which is now just getting started again with this transformation to 3D.
In my view, it’s only a matter of time before everything goes 3D. If companies don’t adopt this technology, they will be left behind by their competitors. Everything is perfectly aligned to experience dramatic growth over the coming year. And that dramatic growth is going to be led by AI, artificial intelligence.
We are expanding our breakthrough AI to allow us to scale our production capabilities and grow our 3D modeling business, which will also grow our profit margins and ultimately, cement us as the leader in this industry.
If we look beyond just making the 3D models for e-commerce, we also have a technology called Toggle 3D. Toggle 3D is a 3D design studio and model creation factory for CAD files. Toggle 3D is perhaps the most undervalued asset that we own, the most undervalued piece of technology that Nextech has created.
And if you look at ARway, you kind of get an idea of what these undervalued assets can do as standalone public companies, which brings us to our portfolio of companies. Apart from our 3D modeling business, which is AR 3D, Nextech owns a portfolio, and we operate a portfolio of valuable companies that contain breakthrough technology and industry disrupting products. And we have always spoken about this unlocking of the value of these assets and businesses.
And if you look at ARway, we just spun that business out, our spatial computing platform made — it’s essentially the real-world Metaverse. It’s driving revenue with out-of-the-box augmented reality mapping solutions, specifically aimed at Wayfinding.
The ARway offering consists of a no-code web creator platform as well as the ARway mobile app and the ARway SDK. Those three things combined really separate us from the competition.
Creators can map, author, and publish various Metaverse experiences ranging from AR Wayfinding to an array of AR experiences for exclusive branded activations. With value props, spanning multiple industries and use cases, ARway opens Nextech 3D AR technology solutions to new and substantial markets for creators, brands, and companies and we’re seeing a tremendous amount of interest in the ARway technology that we incubated and then spun out. We did spin it out. We announced we were going to spin out in June and the spin-out happened October 26. The stock of ARway currently trades at approximately CAD2 a share. Nextech owns 13 million shares or almost 50%. It’s worth roughly CAD26 million today, sits on Nextech’s balance sheet.
Prior to the spinout, it was worth zero. As a result of the spinout, I believe the true value of ARway and ARway’s business and technology is now getting the recognition it deserves, and seeing a positive revaluation, thereby benefiting Nextech shareholders through their continued indirect ownership in the technology and also through the stock dividend that everybody received.
I’m confident that ARway and the spatial computing technology that sits under the ARway umbrella is the next big breakthrough. I am confident that spatial computing is going to be an extremely, maybe even the cornerstone technology of the 21st century. This is because spatial computing merges many disruptive technologies, including our 3D modeling business, augmented reality, virtual reality, artificial intelligence, and Web3.0. It’s all wrapped up in ARway.
Spatial computing really expands the concepts of traditional computing by adding a 3D objects location in spaces in relation to other objects or locations. During the first half of 2022, we developed an integrated solution combining all of our technologies into one platform, which allows us to leverage our tech, keep pushing the boundaries of what’s possible in spatial computing.
If you look at what we’ve done to-date, we’ve created an integrated solution and when you look at our spatial mapping with 3D models, it really is quite exciting. And I have nothing but extreme confidence in that platform and the team that’s working to develop that business.
We currently have not just the spatial computing platform, but the ability to capture and provide analytical data on that platform for brands and properties, much like Facebook does or Instagram or TikTok.
If you look at our location intelligence for spatial maps, we can provide deep insights into customer behavior and comprehensive location-based analytics. This is going to allow our clients to optimize their spatial maps to improve traffic, engagement, and revenue, which is extremely valuable for enterprise customers who are now lining up for the full release of ARway.
ARway is just getting started. It does have unlimited potential and use cases; healthcare, education, sports venues, airports, hospitals, campuses, trade shows, theme parks, they are all contacting us and all looking to do pilots.
If we look ARway, ARway is only one of the many assets that Nextech has incubated with the potential for development into a commercial stage business that can become a standalone pure-play spin out in the future.
With the success of ARway being spun out, we do plan to repeat this success with additional spinouts of our other assets, continuously increasing shareholder value for Nextech into the years 2023 and beyond.
If we look at Map D, which is also one of our portfolio companies, it’s a steadily growing self-serve event management software solution. Map D is now being run by a new team, which we announced. We are now merging our technology with Map D to create a new orphan called Nextech Event Solutions, which is going to disrupt the CAD50 billion live event industry. Nextech Event Solutions encompasses Map D, ARway, AR size 3D and even Toggle 3D, the integration of these technologies under one umbrella company is a game-changer for the events industry and is going to lead through a transformation as we unveil and as we penetrate the CAD50 billion events industry.
AR Wayfinding is a natural fit between ARway and Map D Events, which, as we’ve mentioned previously, managed is almost 1,000 events annually. AR Wayfinding is suited for expos, trade shows, conferences, and festivals. Basically, anywhere large groups of people come together in a concentrated space. So, it adds big value to event management software, it’s engaging, spatial and has the location intelligence.
If you look at ARway, if you look at Map D, if you look at ARitize 3D and Toggle 3D, you might look at them as standalone individual businesses, but that is simply not the case. They’re all intertwined and interconnected and they’re all additive to each other. Our aim is to have platforms that are integrated. Our aim is to upsell to cross-sell and create an ecosystem.
If we look at our transformation, we do need to talk for a moment about the winding down of our legacy business because the first couple of years of Nextech existence was our legacy business, which was essentially the e-commerce business and for a short amount of time of virtual events business.
In June, we announced our plans to position the company for the next phase of growth, transforming our operations with a laser focus on Web3.0 and the SaaS business and winding down our legacy e-com business. And that transformation is almost complete. The reorg so that Nextech is a pure-play technology company is going to be essentially complete in Q4 2022. So, this is the last year that we will have any revenue related to our legacy business.
As we move into 2023 and we have all this new business gaining traction in the 3D technology space. We believe that we are just perfectly, perfectly positioned to be the pure-play 3D tech company for the future.
In closing, 2022 has been challenging as a shareholder. As we all watched the small cap stocks get crushed in the first half of the year, some of them down as much as 70% or 80%, Nextech was included.
But the strong companies, they always bounce back and I think we are only seeing the beginning of our bounce back in our share price. 2022 is proving to be a substantial year of growth for our key growth driver of 3D models and AR.
Nextech is fully focused on obtaining greater industry leadership and becoming the world’s leading 3D modeling company. To do this, we’ve made critical business decisions as mentioned, coming to pure-play tech company, winding down our legacy businesses. It’s all part of a plan. It does require us to have a short-term reduction in our company’s revenue, which was, again, planned and anticipated since the e-commerce business is going away. We’re going to replace that business with pure 3D AR revenue, which we expect to eclipse our e-com business revenue in 2023.
We continue to integrate ARitize 3D with third-party platforms, roll out our SaaS business, Toggle 3D. I believe all these decisions will pay dramatic dividends as the market is finally aligning and soon we’ll recognize the value of Nextech’s breakthrough AI technology and Web3.0 solutions.
The company and I are doing everything we can to bring shareholder value into the market. This is the reason why we did the ARway spin out were built similar to some of the bigger tech companies where we have a diversified portfolio of businesses, but among the big technology companies that have billions of dollars to invest, Nextech does not have that deep pocket, that deeper well of capital, which is why these spin-outs are so positive for our shareholders.
Web3 and the nerves are multi-decade, multi-trillion-dollar megatrends. And our technology, which includes 3D models, augmented reality, and spatial mapping are really the gateway technologies into the Metaverse.
Nextech’s capture of market share within this new industry is just getting started I’ve never been more confident about our position that our company is in and the opportunity we have in front of us.
Before turning the call over, I’d like to thank our experienced executive leadership team and all of our employees for their hard work and dedication. They work day in, they work day out, striving for success to achieve our company’s goals, and they are ambitious. I have full confidence in our company’s direction, and I’m looking forward to our continued growth in 2022 and beyond.
With that, I’m going to turn the call over to Nextech AR’s Chief Financial Officer, Andrew Chan, who will provide further commentary on the quarterly financials.
Andrew Chan
Thank you, Evan, and good afternoon. As a reminder, unless otherwise noted, all figures reported on today’s call are in Canadian dollars and under IFRS. All the preceding financial information is now available on our website and have been filed on SEDAR at the close of market today for your reference.
ZZZZZZZZZZ
Total revenue in the third quarter was CAD3 million compared to CAD5.5 million for the same quarter last year. These revenues continue to reflect the transition of our business from our legacy e-commerce and virtual events to 3D AR, the Metaverse and Web3.0.
Our product sales revenue for the quarter was CAD2.1 million compared to CAD4.4 million for the same quarter last year and compared to CAD2.7 million in the immediate preceding year and represents the last quarter that we will see significant revenue from our e-commerce platform as our inventory has declined to nominal values.
Renewable software license revenue was up 286% and to CAD920,000 this quarter compared to the same quarter last year, we saw a 192% increase in 3D recognized subscription revenue and a 1% increase in revenues related to our hybrid events Map D platform compared to Q2 2022.
The majority of the growth from our 3D model creation contract with Amazon, which is on a transactional basis, does not factor into our ARR. However, our ARR still experienced a 9% growth this quarter to now over CAD1.1 million.
Gross profit came in at CAD1.3 million compared to CAD1.6 million for the same period last year, but with higher margins at a 45% gross profit margin compared to 29% in the comparative quarter.
Product sales gross margin was healthy at 38% as we sell through our remaining inventory. Technology services gross profit margins increased to 60%, up from 37% from Q2 2022 as we continue to gain scale in our 3D production model capabilities.
We anticipate gross profit margins to increase even more as we continue to implement technologies in our 3D model production process to allow for our increased model creation capacity at scale.
Operating expenses for Q3 was CAD5.4 million, down CAD4.3 million from the same period last year and down CAD1.8 million from Q2 2022. Sales and marketing expense continues to decline each sequential quarter as a result of the spend reduction in our e-commerce business during the wind down.
Sales and marketing expense continues to be at a consistent level in our technology business in sequential quarters with a slight increase in corporate marketing and as it relates to Investor Relations and the spinout of ARway.
General and administrative expenses have also seen a decline in each sequential quarter due to less expenses from the e-commerce business and certain one-time charges in Q2 that were not present in Q3. These declines were offset by additional legal and compliance expenses related to the ARway spinout.
Research and development expenditures remain consistent in sequential quarters at around CAD1 million as we continue to take the measured approach to our technology development.
To help offset the cash outlay for these expenditures, our previously announced employee shares for services compensation plan contributed CAD1.5 million this quarter, reducing our cash use this quarter to CAD1.8 million.
We continue to improve our bottom-line with a net loss in Q3 of CAD4.4 million and which has been the lowest in most recent eight quarters, resulting in a net loss per share of CAD0.05, another record in recent quarters.
As of September 30th, 2022, we had cash of CAD5.3 million, inventory of CAD600,000, and a positive working capital of CAD5 million. With the employee shares for services compensation plan, our current projection of sales and cost reductions, we feel that this is sufficient capital to finance our business over the next 12 months.
In addition, with the spin out of ARway in October, we now hold 13 million shares of ARway valued at approximately CAD26 million. This quarter is a continuation of the previous quarter, reflecting months of hard work from Nextech employees related to cost management, refocus of our business, and onboarding large customers, and the launch of ARway.
Similar to Evan, I would like to thank each Nextech employee for their hard work, dedication, and I look forward to working with them in the next phase of our exciting journey.
With that, I turn the call back to Evan.
Evan Gappelberg
Thank you, Andrew. Is it question time? I think we should open it up.
Question-and-Answer Session
Operator
[Operator Instructions]
Our first question will come from Scott Buck. Please go ahead.
Scott Buck
Hi, good afternoon guys. Congrats on all the progress.
Evan Gappelberg
Thanks Scott.
Scott Buck
My first question, Evan, if you could give us a little bit more color on the current modeling capacity constraints and how the AI announcement made earlier this week really alleviates that pressure?
Evan Gappelberg
Sure, Scott. So globally, not just Nextech, there’s a bottleneck in the production of 3D model. And the AI that we released is allowing us to break that bottleneck. It’s still in the early stage, meaning we can’t give exact numbers, but I could give you kind of approximation of what it means.
If you look at our AI today, it can produce roughly 500 3D models in, let’s say, an hour, roughly. And those are simple models like carpet, let’s say, or painting or a mirror, some kind of wall art. When you talk about couches or chairs it could take an hour or two. So when you think about the AI piece where you could do 500 in an hour versus a single model in an hour, it’s a quantum leap in terms of our ability to produce, it’s still limited to certain product categories, although we are going to be expanding those product categories in 2023 and beyond.
Scott Buck
Great. That’s really helpful. That’s really helpful, Evan.
Evan Gappelberg
Yeah.
Scott Buck
On the modeling or I guess on gross margin, we had a sequential decline. I’m just curious, are you guys doing a lot of discounting to kind of rid yourself of the legacy inventory?
Evan Gappelberg
Yeah. I think — I mean, we reported 38% for the e-commerce side. I don’t think we’re doing aggressive discounting. But at some point, we do have to make the decision of kind of what to do with the next piece of inventory that’s left, and there’s obviously kind of a cost benefit discussion there, how quickly we want exit versus what kind of margins we’re getting for what we’re being offered. But I don’t think you’ll see kind of anything near these volumes in terms of revenue for this business in Q4?
Scott Buck
Yeah. Okay. That makes sense. And then last one for me, Evan, I’m just curious, what’s the long-term plan with your ARway shares? I mean what’s — are you intent to hold on to those for an extended period of time? Or does the market just kind of dictate what you’ll do?
Evan Gappelberg
It’s a good question, Scott. So sitting on CAD 26 million worth of stock certainly doesn’t make me feel bad. If it’s balloons to CAD 260 million let’s say. Then of course, Nextech is going to look at that just like any other investor would and likely take some money off the table and refill our coffers. So there is the potential, if that’s substantially higher to sell some shares to friendly shareholders that might want to — institutions that might want to get in, we might [Technical Difficulty] but at the current time Scott, we’re holders.
Scott Buck
Great. That’s helpful. I appreciate the time, guys, and the extra color. Have a good day.
Evan Gappelberg
Thanks, Scott.
Operator
Our next question will come from Lisa Thompson with Zacks Research. Please go ahead.
Lisa Thompson
Hi, guys. Nice to see the great progress being made.
Evan Gappelberg
Thanks, Lisa.
Lisa Thompson
Just to follow-up on the ARway stock. Do you have a lock up on that of the years that the company owns?
Evan Gappelberg
We do have a three-year lockup. 10% of the shares are free trading for Nextech today, 10% of the CAD 13 million and every six months, 15% of the shares get unlocked.
Lisa Thompson
Okay. And when you say that you have enough cash for the next 12 months, does that include the possibility of selling some of that stock? Or is that external to that?
Evan Gappelberg
No, that’s external to that.
Lisa Thompson
Good. Glad to hear it.
Evan Gappelberg
Yeah.
Lisa Thompson
I’m curious if you’ve ever — have you gone through the Amazon relationship and kind of how it’s working? Do they — are they only using it for Amazon branded products? Have they started with certain product categories? How does it — how is the whole thing kind of being approached?
Evan Gappelberg
Yes. So it’s not just Amazon-branded products. It’s across their entire ecosystem. They basically send us models. We send in a request for, let’s say, 1,000 models, and then they literally send us 1,000 of the models that they’ve chosen for us for them. And that’s basically how it goes. It’s across a wide spectrum. We’ve made TVs, bar stools, couches, mirrors, rugs, I mean, you name it, and we’ve made it for Amazon. And as of now, I think their focus is home goods. But that’s not – it’s not their only category, but I think it’s the majority of where they’re asking us to produce 3D models for.
And I think we’ve mentioned previously that in 2023, Amazon is going to open their platform up so that all their merchants can bring 3D models onto the Amazon platform and Nextech is a preferred 3D model supplier that they will be recommending to their merchants.
Lisa Thompson
Okay. That’s interesting. So they haven’t even hit apparel or any of that stuff there?
Evan Gappelberg
They haven’t what?
Lisa Thompson
They haven’t started on apparel or closing anything like that. It’s just been home so far.
Evan Gappelberg
No. Yes. No apparel yet. Yeah.
Lisa Thompson
Interesting. When are we going to see ROA revenues? Are you going to have any in this quarter?
Evan Gappelberg
ROA is primarily in pilot mode. So if you recall with Nextech, we started out with 3D modeling business, everything was about testing, testing, testing by our customers and then the floodgates open. It’s very similar with ARway there’s a number of pilot flow programs that we’re starting. And so there will be some small revenue from those pilot programs in Q4, but the real revenue is actually going to show up in Q3 – in 2023.
Lisa Thompson
All right. Good to know. Andrew, are we having any more reduction in expenses and operating expenses. Do you still got a ways to go or not?
Evan Gappelberg
I was just going to say, Andrew, we’re always trying to optimize and reduce expenses primarily through offshore hires. But the focus — I think we’ve — the majority of the reductions are behind us. In front of us is more about growing our businesses. So that’s not really the focus anymore.
Lisa Thompson
Okay. So you where you’re going to be. All right. And I guess, my last question is you’re talking about spinning off other parts of Nextech. What’s your thinking about how far off that is in the distance?
Evan Gappelberg
I think it’s going to happen in — it’s likely to happen in the first half of 2023. But if not the first half, then it will be the second half, so sometime in 2023.
Lisa Thompson
Okay. Great. That’s all my question.
Evan Gappelberg
Okay. Thanks, Lisa.
Operator
Our next question will come from Chris Sakai with Singular Research. Please go ahead.
Chris Sakai
Hi, guys. This is Chris. Congress on good quarter. First off, on the gross margins, which I see 62% on services, which looks pretty encouraging and I think incremental improvement. How do you guys see it going forward that you have achieved the improvement? Or you think there is much more room to grow as you multiply the 3D models delivery on the revenue side?
Evan Gappelberg
Well, I think — thanks, Chris. Thanks for joining us. I think that the margins on the 3D models are not actually the biggest margins for the company. The biggest margins are going to come from platforms like Toggle 3D, which has not started to show up in our revenue stream yet. So my belief is that as new products, new SaaS products show up in the mix, the margin is going to go up. So the margin is probably going to be pretty stable where it is with the potential for an increase in the margins as we get higher margin SaaS software products into the market, which is happening in Q4 right now.
Chris Sakai
Great. This is seen by the way. But that is the recurring things that you would beat. No worries, no worries. Of the 920,000 service tech revenues, I don’t know if you guys might be comfortable to give a little bit of a flavor what percentage or what amount is directly from Amazon?
Evan Gappelberg
We’re not going to break that out right now.
Chris Sakai
Okay. And the last question is that obviously, most of the revenues that are coming from the service tech are in terms of I’m talking about the Metaverse end markets, it’s coming from retail buying and selling. And — but there are a couple of other silos, right? You’re not too much into gaming, but you are a little bit maybe into entertainment, and I was wondering if you can kind of give a flavor what kind of — if you had to kind of silo it out, what amount of revenue is coming from things outside of retail, for example, from businesses, social or banking, financial services, insurance, if you can kind of give it a flavor?
Evan Gappelberg
Yes, not much. I would say that those are untapped markets. We’ve been very focused recently just e-commerce. Yes. And so those other businesses that you mentioned are still ahead of us. And so it’s not really something we’re focused on today. But we do see those other businesses playing a bigger role in 2023 and beyond, those other verticals.
Chris Sakai
Absolutely. And then especially with the ARway and Map D maybe those might be more attuned to businesses outside of retail, right, if I’m thinking correctly?
Evan Gappelberg
That’s exactly it. So today, I mentioned Nextech Event Solutions that business is going to be what you’re describing, where it will be a much more varied group of offerings for the event industry, which leads to, as you mentioned, banking and insurance and heavy equipment and all kinds of other industries that are outside of e-commerce. So we think that’s going to take off in 2023 within the Nextech Event Solutions umbrella mobile offerings.
Chris Sakai
Yes. Thank you so much.
Evan Gappelberg
Thank you, Chris [ph].
Operator
[Operator Instructions] And our next question will come from Michael McMann [ph]. Please go ahead.
Unidentified Analyst
Okay. Thank you. With NVIDIA and Microsoft coming together to build a powerful AI supercomputer to develop AI models in the cloud. Is that — do you anticipate that affecting your business?
Evan Gappelberg
We don’t. They’re not set up as we are set up for e-commerce. They are much more geared towards other industries like the gaming industry. And so we really don’t see that affecting us at all.
Unidentified Analyst
Okay. I’ve read several reports about the FTX debacle and affecting a lot of the financial markets. Do you see that affecting directly or indirectly Nextech company?
Evan Gappelberg
Not at all, luckily, we are not involved in crypto.
Unidentified Analyst
Well, with 1 million creditors, when this all unravels. I’ve read several reports that it could affect a lot of the financial markets that’s what it has.
Evan Gappelberg
Yes, financial markets, but not Nextech.
Unidentified Analyst
Thank you.
Evan Gappelberg
You’re welcome.
Operator
Our next question will come from William Hesser [ph]. Please go ahead.
Evan Gappelberg
Hello, William.
Operator
Hey, William, you may have your mute button on.
Unidentified Analyst
Yes. I apologize. Can you hear me now?
Evan Gappelberg
Yes.
Unidentified Analyst
Yes. So yesterday on the Wall Street reporter interview that you did with Jack, you made comments about other companies contacting you to entertain a possible acquisition. Now I know Nextech has plenty on its plate at the moment. But is there any other companies that are specializing in anything involving AI or AR or anything that you guys are aligned with that’s actually worth taking a look at to acquire at the moment?
Evan Gappelberg
Yes. So we look at deals all the time. And very few of them qualify. So there’s nothing imminent. I was really just referencing that there’s a number of competitors that have asked us to acquire them, because they’re essentially out of gas, and they need a white night to kind of step in and save them or they become roadkill. So we’re not in active discussions and — but we’re always looking for opportunities, for sure.
Unidentified Analyst
Yes, it’s wonderful. And then also the comments about the future spinouts of Toggle3D and/or the Events platform or Map Dynamics and whatnot. Would you say that in either like the second or third quarter potentially of 2023, that there will be a spinout? And do you know which one would potentially come first?
Evan Gappelberg
So we’ve had a lot of success with the ARway spinout as everybody that’s invested nose. It went up 10x in 10 days. And so we are looking at those other spinout opportunities. We have not announced which ones. We’ve not announced win. But as Lisa Thompson just asked, and I just answered, I would expect sometime in 2023 to see another spinout. But we don’t — we haven’t decided what we’re going to spinout or when.
Unidentified Analyst
Okay. Wonderful. Thank you so much for your time. Evan, I appreciate it.
Evan Gappelberg
Sure. Thank you.
Operator
And with no further questions, I would like to turn the call back over to Evan Gappelberg for closing remarks.
Evan Gappelberg
Thank you all of our loyal shareholders for joining us on this call today. And everyone, have a great day. Bye, bye.
Operator
And this will conclude today’s conference. Thank you for your participation. And you may now disconnect.
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