Last night, Silvia, Inc. distributed a press release indicating it had taken actions to save approximately $10MM per year. This morning, I spoke with CEO, Anthony Pompliano (Pomp), about the restructuring. About $3.6MM will come from compute savings. Rather than send all user requests to the expensive frontier models at companies like OpenAI and Anthropic, Silvia is hosting more of its own computing power. (The coming shift from expensive large language models to locally hosted small language models with specific expertise is something DKI has been writing about for a while.) Current cash savings are about $300k/month even as use of CFO Silvia rises. Given that Silvia had said annual cash expenses would be $17MM, this represents huge savings. If/when more companies go this route, it will be a challenge for the current frontier model token sellers.
Silvia, Inc. also replaced the CFO, COO, and legal counsel. There was no conflict and no indication of any performance issue. The reason for the change was cost savings. Initially, CFO Silvia and ProCap Financial had individual teams. When ProCap Financial acquired Silvia, the Silvia team that had built the systems was let go. Given that the three people on the ProCap side had compensation of about $9MM annually, replacing them with the previous CFO Silvia team results in about $6.5MM of savings. This calculation includes cash plus stock.
The previous Silvia Inc. CFO and COO are rejoining the team and Pomp is budgeting a salary for a new internal legal counsel. The cash savings from these three moves will be about $2.5MM annually. It could be slightly higher if the new legal counsel is less expensive than budgeted.
This puts total cash savings around $6MM per year meaning the previous $17MM annual expense budget falls from $17MM to $11MM. Note that this could rise when the company begins to take on marketing cost. So far, the high growth rate at Silvia has been organic through word of mouth and social media.
On the call, Pomp reiterated that the paid conversion rate is 25% and that retention is 90%. So, 25% of people who use CFO Silvia, like it enough to get a paid plan, and 90% of them stick around and keep paying. These are extraordinary numbers and we expect that they’ll fall as the company grows. I’ve noted in the past that 5% would be a good conversion rate so there’s a lot of room for Silvia to become more profitable even with more realistic long-term conversion metrics. (The above information was provided by Pomp at the company’s recent investor day and does not represent previously undisclosed public information.)
In addition to the growth in people paying to use CFO Silvia, we’ll start to see some revenue next year from the new ETFs being released. Long term, there is the opportunity to provide banking services, something I highlighted in DKI’s initiation report. I’ve said in the past that this is one of the most shareholder-friendly management teams I’ve ever seen. I reiterate that opinion now.
IR@DeepKnowledgeInvesting.com if you have any questions.
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