ACCESS Newswire Inc.

Thank you for standing by and welcome to the issuer direct corporation third quarter 2022 earnings conference call. Today's call will be conducted by the company's founder and chief executive officer, Brian Balbirnie, and its chief financial officer, Tim Petoniak. Before I turn the call over to Mr. Brian Balbirnie, 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. Balbirnie.

Thank you, operator, and good afternoon, everyone. And thank you for joining us today to discuss the company's third quarter 2022 results. Today is a special day for us. I recognize that we need to cover the quarterly results, but we intend to spend a good bit of time talking about the recent transaction of Newswire, how it impacts our business, and what's in store for us in the coming years. While total revenue in the third quarter was less than we expected, resulting in a 3% decrease year over year, we worked hard to drive margin improvements to 77% from 75% in the prior year. We also saw deferred revenue remain strong, and bookings over the prior periods grow because of our success in multi-year contracts. AccessWire grew 6% over the prior year, and compared to the market, continues to outpace incremental growth compared to the bigger three news wires in the quarter. Before I turn the call over to Tim for his prepared remarks on the quarter, I wanted to cover a couple important items. When we first announced our repurchase program in years past, it was clearly illustrated that it was part of our capital allocation strategy to utilize cash flow from operations and not capital raised in prior offerings to repurchase our shares. The capital had to be used to drive strategic growth long-term and demonstrate transformational qualities, be accretive, and help us continue to drive greater cash flows and operating leverage. With that said, early this quarter, we completed the repurchase plan and retired the remaining 38,563 shares repurchased in the period, completing the entire purchase plan. Moreover, when we think about strategic growth, specifically M&A, we have always said that we're focused on finding complementary products in the investor relations and public relations communication space. These complementary products, as previously stated, need to be media database, media monitoring and analytics, and or advanced news and media rooms, as well as social technologies if possible. Today's announcement not only meets these requirements, but also gives us further scale in our press release distribution business. The acquisition of Newswire has us beyond excited. We can't wait to get our new team members and customers integrated over the next couple of months. There's a lot to talk about, so I'll turn the call over to Tim so he can go through the third quarter at a high level, and then we can discuss Newswire in greater detail. Tim?

As Brian just mentioned, quarterly results were primarily driven by our AccessWire news brand, increasing 6% over the prior year while contributing increased gross margins and enabling us to maintain our overall gross margin levels of 77%. During the third quarter of 2022, we achieved quarterly revenues of $5.3 million, a 3% decrease from $5.5 billion in Q3 of 2021. For the nine months ended September 30th of 2022, total revenue was $16.4 million, a 1% increase from $16.2 million for the first nine months of 2021. The decrease for the quarter was primarily driven by our communication revenue streams. specifically our events and webcasting business, due to less demand for our virtual products, as well as the delay in certain events, which pushed into fourth quarter of 2022. The increase in total revenue for the first nine months of 2022 was due to increases in both communications and compliance revenue during the period. Communication revenue increased 0.2 million or 2% over the same period of the prior year. The increase once again was driven by AccessWire, which increased 13% compared to the same period of 2021. We also had increased revenues from our investor relations websites and newsfeeds products. These increases were offset by declines in revenue from our events and webcasting business due to lower demand and delay of events I previously mentioned. For the third quarter of 2022 and the nine months ended September 30th of 2022, communication revenue accounted for 66% and 65% of total revenue respectively. In the prior year, communication revenue was 67% and 64% of total revenue. Revenue from our compliance business increased 1% for both the third quarter and the first nine months of 2022 compared to the same periods of 2021. The increase is primarily due to revenue from our print and proxy fulfillment service business due to larger transactions during the period. Revenue from our transfer agent service business also increased for the three months ended September 30th of 2022 due to an increase in subscription fees, however, continues to remain lower on a year-to-date basis. For the nine months ended September 30th of 2022, the increase in revenue from our print and proxy fulfillment service business was also partially offset by declines in disclosure services and software revenue, as well as our legacy ARS service business due to customer attrition. Moving down the P&L, our overall gross margin percentage improved 200 basis points and 300 basis points during the three and nine months ended September 30th of 2022 compared to the same periods of the prior year. Gross margin percentage was 77% for both Q3 and the first nine months of 2022 compared to 75% and 74% for the same periods of last year. Gross margin percentage from our communication business decreased one percentage point from Q3 of 2021, primarily driven by a decline in timing of event and webcasting revenue for the period, partially offset by an increase in access wire revenue as a percentage of total communication revenue. For the first nine months of 2022, gross margin percentage of the communication business increased three percentage points due to lower teleconferencing costs, coupled with an increase in access wire revenue as a percentage of total communication revenue. Gross margin percentage from our compliance business increased eight percentage points for the three months ended September 30th of 2022 and three percentage points for the nine months ended September 30th of 2022, compared to the same periods of the prior year. These increases were primarily driven by lower amortization related to the capitalized costs associated with our disclosure software, which is now fully amortized, partially offset by higher costs associated with our print, proxy, and fulfillment service business. Continuing on to operating income, we posted operating income of $800,000 for Q3 of 2022 compared to $1 million during Q3 of 2021. For the nine months ended September 30th of 2022, operating income was 2.6 million compared to 3 million during the first nine months of 2021. The decrease in operating income is primarily due to increase in SG&A expenses associated with the expansion of our corporate team in anticipation of the acquisition announced earlier today. G&A cost increased 32% and 25% for the three and nine months ended September 30th of 2022 compared to the prior year due to an increase in stock compensation, recruiting fees, increased headcount, and one-time due diligence cost associated with the Newswire acquisition. Sales and marketing cost decreased 9% for the third quarter of 2022, however, increased 6% for the first nine months of 2022 compared to the same periods of 2021. The decrease for the quarter is primarily due to lower commission expense, partially offset by the increase in advertising and digital marketing expense. The increase for the first nine months of 2022 is related to the investment in our sales and marketing initiatives with an increase in headcount, advertising, digital marketing, and system enhancements, partially offset by a decrease in commission expense. Product development costs decreased 34% for the quarter and 16% for the first nine months of 2022 compared to the same periods of the prior year. The decrease is due to fewer consultants used on development projects during the current year, partially offset by costs capitalized in the prior year related to the development of our newsroom product. On a GAAP basis during Q3 of 2022, we generated net income of $700,000, or $0.19 per diluted chair, compared to $1 million, or $0.27 per diluted chair, during Q3 of 2021. Net income was $2 million, or $0.55 per diluted chair, for the first nine months of 2022, compared to net income of $2.7 million, or $0.70 per diluted chair, for the first nine months of 2021. NEN income and diluted earnings per share for the three and nine months ended September 30th of 2021 included a benefit of $366,000 related to the filing for the employee retention credits under the CARES Act. Looking at some non-GAAP metrics EBITDA for the third quarter of 2022 was $952,000 or 18% of revenue compared to $1.6 million or 30% of revenue during Q3 of 2021. For the first nine months of 2022 EBITDA was $3.1 million or 19% of revenue compared to $4.3 million or 26% of revenue during the first nine months of 2021. As noted earlier, EBITDA for the three and nine months ended September 30th of 2021 included a benefit of $366,000 related to the filing for the employee retention credits under the CARES Act. EBITDA for the three and nine months ended September 30th of 2022 included increases in stock compensation expense of $87,000 and $327,000 respectively, as well as one-time due diligence costs associated with the Newswire acquisition of $77,000 and $90,000 respectively. Non-GAAP net income was $1 million or $0.27 per diluted share for Q3 of 2022 compared to $900,000 or $0.24 per diluted share during Q3 of 2021. For the first nine months of 2022, non-GAAP net income increased to $2.9 million or $0.77 per diluted share compared to $2.8 million or $0.73 per diluted share during the same period of 2021. Switching over to the balance sheet and the cash flow statement. Our deferred revenue balance, which is revenue we expect to recognize primarily over the next 12 months, increased to 3.4 million as of September 30th of 2022 compared to 3.1 million as of December 31st of 2021, an increase of 11%. And the cash flow statement, our cash flow from operations for the first nine months of 2022 was $3 million compared to 3.3 million in the prior year. This marks the 31st consecutive quarter of positive cash flow for the company. I will now turn the call back 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, and most importantly, discuss the Newswire transaction. Brian?