ACCESS Newswire Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Issuer Direct Corporation first quarter 2024 earnings conference call. My name is Jennifer Hammers, Executive Vice President of Sales and Marketing. I've been with Issuer Direct for three years, leading an amazing team of 32 professionals. Like I, they care passionately about our customers and our brands. Like my fellow employees doing this in previous quarters, this is our way of ensuring our shareholders get to know all of us here at our company. With that said, it is my pleasure to introduce the company's founder and chief executive officer, Brian Balberny, and our chief financial officer, Steve Nur. Before I turn the call over to Mr. Balberny, I'd like to read you the company's abbreviated safe harbor statement. I'd like to remind you that the 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 this 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, Brian, I hand it over to you.

Thank you, Jen, and happy third year anniversary to you. I believe it's next week, actually. For those of you that don't know Jen, she is the quintessential leader of a sales and marketing team. High energy, always pushing for more, and working tirelessly on moving the business forward in every way possible. The brand we started 18 years ago is stronger today because of her and her team's efforts. The new product names like Amy, PR Optimizer, and our new media suite are her creations. Keep it up. I can't wait to do our rebrand with you. With that said, greetings, everyone, and thank you for joining us today to discuss the company's first quarter 2024 results. I am not pleased with our first quarter. Total revenue was down 19% year-over-year to $7 million, and I have said in the past quarters, our compliance business would decrease by single digits each quarter, actually always performed or exceeded in those prior years. Unfortunately, this quarter, our compliance business was down 27%. Our communications business also was down 17% for the year-over-year basis. There are leading indicators as to why this is occurring in our business, which I will discuss later, as well as what our plans are to correct, insulate, and regain our growth trajectory. There is a lot more to talk about, so I will turn the call over to Steve to cover the first quarter highlights. Steve?

Thank you, Brian, and good afternoon, everyone. As Brian mentioned, 2024 is off to a slow start. However, we are encouraged by our ability to continue to generate positive cash flow from operations. I will now highlight some of the results we achieved during the first quarter of 2024. Total revenue was $7 million, a decrease of $1.7 million, or 19%, compared to $8.6 million for the same period of 2023. The decrease was due to decreases in both our communications and compliance revenue streams. Our communications business decreased $1.1 million, or 17%, to $5.5 million, or 78% of total revenue. For the first quarter of 2023, communication revenue accounted for 76% of total revenue. Decrease was due to both decreases in volumes and pricing in both our AccessWire and NewsWire news distribution brands. Additionally, we had a decrease in our webcasting and events business due to a large conference that occurred in the first quarter of last year did not occur this year. Compliance revenue decreased 27% for $550,000 during the first quarter of 2024 compared to the same period of 2023. The decrease was primarily related to a decrease in revenue from print and proxy fulfillment services due to fewer and smaller transactions than in the prior year. Additionally, we had a decrease in revenue from our transfer agent services due to a decrease in corporate actions and directives during the period. Revenue from these two services tends to fluctuate from quarter to quarter because they are project-based and dependent on market activity. Switching over to gross margins, our overall gross margin decreased 23% from $1.5 million to $5.2 million. Gross margin percentage was 75% for the first quarter of 2024, compared to 79% for the same period of 2023. Gross margin from our communications business decreased from 79% in Q1 of 2023 to 75% for the first quarter of 2024. This was primarily attributable to the lower revenue just discussed. Gross margin percentage from our compliance business also decreased to 75% compared to 78% for the first quarter of 2023. This decrease is primarily due to lower margins on smaller print and proxy fulfillment projects and lower transfer agent revenue. Moving to operating loss, we posted an operating loss of $52,000 for the first quarter of 2024, compared to operating income of $581,000 during the first quarter of 2023. The decrease in operating income is primarily due to the decrease in revenue and margins I just noted, partially offset by a decrease in operating expenses. General administrative costs decreased $513,000, or 22%, due primarily to a benefit related to the reversal of previously recognized stock compensation expense associated with the resignation of an executive officer, as well as lower non-recurring transaction and integration expenses, partially offset by an increase in bad debt expense. Sales and marketing costs decreased $285,000, or 12%, as compared to the same quarter of the prior year due to lower headcount and reduction in sales commissions. Lastly, product development costs decreased $120,000, or 16%, as compared to the prior year. This decrease is primarily due to capitalization of $245,000 of costs related to additional development of our media suite product, as well as enhancement to our AccessWire system. No costs were capitalized during the first quarter of 2023. On a GAAP basis, we reported a net loss of $139,000 for $0.04 per diluted share during the first quarter of 2024, compared to a net loss of $144,000, also $0.04 per diluted share during the first quarter of 2023. That income for the first quarter of 2024 is consistent with that of the first quarter of 2023, despite lower operating income because we recorded a gain in the change of fair value of our interest rate swap of $205,000 during the first quarter of 2024 compared to a loss of $165,000 in the prior year. We also had a loss of $370,000 recorded in the first quarter of 2023 related to the early extinguishment of debt associated with the Newswire purchase. Looking to some non-GAAP metrics, we generated EBITDA of $923,000 for the first quarter of 2024, an increase of $141,000, or 18% compared to the first quarter of 2023. As a percentage of revenue, EBITDA increased to 13% for the first quarter of 2024, compared to 9% during the first quarter of 2023. However, adjusted EBITDA for the first quarter of 2024 decreased 60% to $751,000, compared to $1.9 million during the first quarter of 2023. As a percentage of revenue, adjusted EBITDA was 11% for the first quarter of 2024, compared to 22% for the first quarter of 2023. Non-GAAP net income for the first quarter of 2024 decreased to $321,000, or $0.08 per diluted share, compared to $1.3 million, or $0.33 per diluted share during the first quarter of 2023. 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 3% to $5.6 million as of March 31, 2024, compared to $5.4 million as of December 31, 2023. In the cash flow statement, we generated cash flow from operations of $986,000 for the first quarter of 2024, compared to $272,000 during the first quarter of 2023. This marks our 37th consecutive quarter of positive cash flows from operations for the company. Adjusted free cash flow was $783,000 for the first quarter of 2024, compared to $739,000 for the first quarter of 2023. I will now turn it back over to Brian, who will provide some updates on the business, customers, volumes, and everything else we have planned for the remainder of the year. Brian?