ACCESS Newswire Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Issuer Direct Corporation second quarter 2021 earnings conference call. Today's call will be conducted by the company's founder and chief executive officer, Brian Balberny, and its chief financial officer, Steve Nur. Before I turn the call over to Mr. Brian Balberny, I'd like to read you the company's abbreviated safe harbor statement. I'd like to remind you that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships, and any other statements that may be construed as a prediction of future performance or events are forward-looking statements. which may involve known and unknown risks, uncertainties, and other factors, which may cause actual results to differ materially from those expressed or implied by such statements. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only. With that said, Mr. Valberni?

Thank you, operator. Good afternoon, everyone. And thank you for joining us today to discuss the company's second quarter results. At the market close, we issued a press release announcing our results for the quarter. And during today's call, we will be referencing these results as well as discussing the second half of the year. For your convenience and reference, a copy of the press release is now available in our new newsroom at newsroom.issuredirect.com. A new product offering we will discuss further in a few minutes. We are thrilled with the quarterly results. We have carried the momentum of the last several quarters of consecutive growth into and through the second quarter that we will be talking about today. Q2 revenues were up 17% over the prior year, and first half 2021 revenues now have grown 20% over the first half of last year. Total revenues for Q2 2021 were $5,720,000 compared to just $4,883,000 in Q2 of last year. Total revenues now for the first half of this year have totaled $10,700,000, and Steve will talk more about this in detail in a few minutes. Changing gears to customers, on a year-over-year basis, our total customer count grew 31% for the quarter from 2,867 to 3,754. Our private customers grew 52% again this quarter, totaling 2,115 versus just 1,390 in the prior year. We are also impressed with our public company growth of over just 10% to 1,639 from 1,477 in the prior year. In our prior call, we talked briefly about the trend we thought was interesting in our pipeline for the number of public companies subscribing to and using our platform and solutions. Q2 illustrated this perfectly, something we will monitor in the back half of the year, as the public company markets appear to be very attractive still, both in financings, IPOs, and M&A transactions. With that said, the growth in our small and private midsize businesses is amazing. Fueled by our newswire offerings, a trend we feel strongly will continue for years to come. Our total customers are well on their way to our 2022 customer goal of 5,000. We have a lot to discuss today, not only record revenues, customer counts, and earnings, but also some new products that we have launched in the last couple of days and where we think we will end up with the back half of the year. I'll turn it over to Steve.

Thank you, Brian, and good afternoon, everyone. As Brian mentioned, we are extremely pleased with the results of the second quarter and to be able to announce our second consecutive record quarter in terms of overall revenue. Both our communication and compliance businesses are performing well. However, we continue to focus on the growth of the communications business, mostly related to the continued success of our Newswire business and additional subscriptions of Platform ID. Additionally, with the continued investments we are making in our product development and sales and marketing teams, we are aiming for more record quarters to come. I will now highlight some of the financial results we achieved during the second quarter and first six months of 2021. Total revenue for the second quarter of 2021 was $5,720,000, an increase of $836,000, or 17%, compared to just over $4,884,000 in the second quarter of 2020. For the six months ended June 30, 2021, total revenue was $10,700,000, an increase of $1.8 million, or 20% from the first half of 2020. The increase was due to double-digit increases in both our communications and compliance revenue streams. I'll first start with the communications business, which increased $496,000, or 16%, and $1,275,000, or 24%, during the three and six months ended June 30th, 2021, compared to the same periods of the prior year. During the second quarter of 2021, communications revenue accounted for 61% of our total revenue, and 63% for the first six months of 2021. In the prior year, communications revenue was 62% and 61% of total revenue, respectively. The increase in revenue is driven by our AccessWire branded Newswire, which not only drove standalone press release revenue, but also new subscriptions of Platform ID. AccessWire revenue increased 30% and 34% for the second quarter and first half of 2021, compared to the same periods of 2020. due to an increase in volume, customer count, and revenue per release as we continue to benefit from our e-commerce platform. We also continue to generate increased revenue from licenses of Platform ID. During the second quarter, we signed 36 new contracts with annual contract value, or ACV, of $340,000, bringing our overall contracts to 403 with an ACV of just over $3.3 million. This compares to 341 contracts with an ACV of approximately $2.7 million at the beginning of 2021, It reflects an increase in average revenue per contract, which is $8,280 as of June 30, 2021, compared to $7,850 as of December 31, 2020. On the compliance side, both the capital markets and corporate transactions sparked an increase in revenue from both print and proxy fulfillment services, as well as transfer agent services. As a result, compliance revenue grew $340,000, or 18%. and $525,000, or 15% during the three and six months ended June 30th, 2021, compared to the same periods of 2020. Due to the reliance on the markets and timing of certain projects, revenue from these services tends to fluctuate from quarter to quarter. Changing gears to gross margin, our overall gross margin increased 20%, or $718,000, and 25%, or $1,541,000 during the three and six months ended June 30th, 2021, compared to the same periods of the prior year. Gross margin percentage was 74% for the second quarter of 2021 and 73% for the first half of 2021, compared to 72% and 71% for the same periods of last year. Gross margin from our communications business was flat for the quarter at 75%. It increased 1% for the first half of 2021 to 74% from 73% in the prior year. Gross margin percentage from our compliance business improved from 68% during Q2 2020 and 66% for the first half of 2020 to 72% for both the second quarter and first half of 2021. The increase in compliance margin is due to the increase in transfer agent revenue on a relatively fixed cost base, as well as a decrease in amortization of our compliance software and lower fulfillment costs associated with our legacy ARS business. Moving down to operating income, we posted operating income of $1,361,000 for the second quarter of 2021 compared to $1,001,000 during the second quarter of 2020. For the six months ended June 30th, 2021, operating income increased 66% to $2,070,000 from just over 1.3 million during the first half of 2020. The increase is primarily attributable to the aforementioned increases in gross margin, partially offset by an increase in operating expenses due to continued investment in our sales and marketing, product development, and corporate teams. Sales and marketing costs increased 27% for the second quarter and 24% for the first half of 2021, compared to the same periods of 2020, due to an increased headcount, commissions, and digital marketing costs. Product development costs increased 55% for the quarter and 41% for the first half of 2021, compared to the same periods of the prior year. This increase is also due to an increase in headcount in our development team. We also capitalized $161,000 of costs related to the development of our newsroom products, which Brian will go into more detail about in a few minutes. On a GAAP basis, during Q2 2021, we generated net income of $1,106,000, or 29 cents per diluted share, compared to $772,000, or 21 cents per diluted share during Q2 of 2020. Net income was $1,651,000, or $0.43 per diluted share for the first half of 2021, compared to net income of $998,000, or $0.26 per diluted share for the first half of 2020. Looking at some non-GAT metrics, EBITDA for the second quarter of 2021 was $1,641,000, or 29% of revenue, compared to $1,354,000, or 28% of revenue during Q2 of the prior year. For the first half of 2021, EBITDA was $2,633,000, or 25% of revenue, compared to $1,976,000, or 22% of revenue during the first half of 2020. Non-GAAP net income was $1,185,000, or $0.31 per diluted share for Q2 2021, compared to $974,000, or $0.26 per diluted share during Q2 2020. And for the first half of 2021, non-GAAP net income increased to $1,872,000, or $0.49 per diluted share, compared to $1,372,000, or $0.36 per diluted share during the first half of 2020. Switching over to the balance sheet and cash flow statement, our deferred revenue balance, which is revenue we expect to recognize primarily over the next 12 months, increased to $2,699,000 as of June 30, 2021, compared to $2,212,000 as of December 31, 2020, an increase of 22%. On the cash flow statement, our cash flow from operations for Q2 2021 declined to $812,000 from $1,477,000 during Q2 2020, however, remains flat for the first half of 2021 at $2,081,000 compared to $2,079,000 in the prior year. The decrease in Q2 is primarily related to the timing of collections, as well as the amount and timing of tax payments made during 2021 as compared to 2020. We expect to see increases in cashflow from operations in the back half of 2021. With the investments we have been making in our products, development teams, and sales and marketing, combined with the growth in customer accounts and the base of platform subscriptions we've built, we're excited to see what the remainder of 2021 and beyond will bring for us. We'll continue to execute our strategy and goal to continue generating year-over-year revenue, EBITDA, and cash flow growth. I'll now hand it back over to Brian, who will provide some updates on the business, our new products, and everything else we have planned for the remainder of the year. Brian?