ACCESS Newswire Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Issuer Direct Corporation second quarter 2024 earnings conference call. My name is Preston Burnett and I am the Director of Operations here at Issuer Direct. I have been with Issuer Direct for almost 17 years, leading an amazing team of editors, compliance professionals, and customer experience rock stars. Like my fellow employees doing this in previous quarters, Having myself on this call is our way of ensuring our shareholders get to know all of us here at our company. Over the years at Issuer Direct, I've had the privilege of witnessing our transformation from a privately owned firm to our current status. What began as a company offering edger filing services has evolved into one of the select few global news wires, distributing news worldwide to top media outlets. I'm amazed to see how our company has evolved and even more excited to see where we'll be going in the future. With that said, it is my pleasure to introduce the company's founder and chief executive officer, Brian Balberny, as well as 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 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 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, Brian?

Thank you, Preston. I can't express how grateful we are to you, your dedication, and continued growth here at Israel Direct. As a fellow employee and shareholder, I am honored to do this with you every day. In retrospect, I don't think there has been a department, product, or process that we have built that you have not been a part of. Very impressed with your passion, growth, and where you're headed here at the company. Thank you, Pete. With that said, greetings, everyone, and thank you for joining us today to discuss the company's second quarter 2024 results. Our press release, which is accessible in our newsroom, has just been released and provides key takeaways about our performance for the quarter and first half of 2024. I know top-line reviews don't show it, but there's a lot to be excited about here. Our new board of directors has been extremely helpful right out of the gate, helping management and market positioning, long-term strategy, and prompt decision-making, which in a fast-changing market and industry is exactly what we need to be moving the company forward. Joe Staples is an amazing B2B marketing executive with well over 20 years in the SaaS industry. We could not be more excited about Joe and what he's already doing to have an impact on the business. Wes Pollard is no stranger to Azure Direct, having served as their CFO several years ago and was part of our first news distribution acquisition of AccessFire. Graham Rain will remain on the board and be the chairperson of the audit committee. I will resume the post of the company's chairman. As a four-person board, we will look to expand at some point by the end of the year or in time for next year's annual meeting, seeking other candidates that have an extensive experience in our industry. I want to thank our shareholders who have been confident in our management team, the business, and our product platform and where we're headed. The second half of the year is going to be packed full of great things as we position the business in many ways, what we've talked about to you previously. Last quarter, we did talk about leading indicators in the industry, volumes, and how it was impacting the business. In the narrative, we talked about what we're doing to correct, insulate, and regain our growth trajectory. As a result of several things we will discuss later, we are happy to share with you our combined news distribution brands showed nice signs of recovery in the quarter, volumes were up, and on a year-over-year basis, revenues grew 12% and 3% sequentially. This result solidifies what we did to correct and insulate our position in the market. Average price did move 15% higher as well for the quarter, coming from upmarket customers, large contracts, and strategically positioned distribution add-ons. Customer accounts were also up 19% over the prior year and 2% sequentially, coming in at $12,388. Later in the call, we'll talk about where the growth is coming from and how our customer spends in the second half look in the future. There's a lot more to talk about today, so I'll turn the call over to Steve to cover the quarterly highlights. Steve.

Thank you, Brian, and good afternoon, everyone. As Brian mentioned, we are encouraged by the rebound in the access to our volume in the second quarter, with revenue increasing 17% over the first quarter. I will now highlight some of the other results we achieved during the second quarter and first half of 2024. Total revenue was $7.7 million and $14.6 million for the second quarter and first six months of 2024, respectively. which was a decrease of $2 million, or 20%, and $3.6 million, also 20%, compared to the same periods of 2023. For the three months ended June 30, 2024, the decrease is attributable to a decrease in revenue from our compliance revenue stream. However, for the six months ended June 30, 2024, the decrease in revenue is attributable to both our compliance and communications revenue streams. Our communications business was flat for Q2 2024 compared to Q2 2023. For the first half of 2024, communications revenue decreased 1.1 million, or 9% compared to the first half of 2023. The decrease for the first half of the year was primarily related to a decrease in volume in our Newswire news distribution brand. 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, but did not occur this year. As noted earlier, volumes from our AccessWire news distribution brand were lower comparably year over year for the first quarter, and were flat year over year for the second quarter. Communications revenue represented 77% and 78% of total revenue during the three and six months ended June 30, 2024, respectively, as compared to 62% and 68% for the same periods of 2023. Compliance revenue decreased 2 million, or 53%, and 2.5 million, or 44%, during the second quarter and first half of 2024, respectively, compared to the same periods of 2023. The decrease was primarily related to a decrease in revenue from print and proxy fulfillment services due to a few one-time significant transactions which occurred during the three and six months ended June 30, 2023, however, did not occur in the current year. Additionally, we experienced 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 was $5.9 million and $11.1 million for Q2 and the first half of 2024, respectively. This is a decrease of $1.4 million, or 19%, and $3 million, or 21%, for the second quarter and six months of 2024, compared to the same periods of the prior year. However, gross margin percentages were relatively consistent at 77% and 76% for the three and six months ended June 30, 2024, compared to 76% and 77% for the same periods of 2023. Gross margin from our communications business increased to 78% and 77% for the three and six months ended June 30th, 2024, compared to 76% and 77% for the same periods of the prior year. This is primarily attributable to optimization of our editorial staff and slightly lower distribution costs. Gross margin percentage from our compliance business decreased to 74% for both the three and six months ended June 30th, 2024, compared to 76% and 77% during the same periods 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 income, we posted operating income of $334,000 and $282,000 for the three and six months ended June 30th, 2024, respectively, compared to operating income of $1.7 million and $2.3 million for the same periods of 2023. The decrease in operating income is primarily due to the decline in revenue, specifically from the one-time significant print and proxy projects in the prior year. Operating expenses were flat for Q2 2024 compared to Q2 2023 and decreased $916,000 or 8% for the first half of 2024 compared to 2023. The decrease in G&A expenses of $623,000 or 14% was primarily the result of 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. Sales and marketing costs decreased due to lower headcount and a reduction in sales commissions. On a GAAP basis, we reported net income of $7,000 during Q2 of 2024, compared to net income of $1.4 million, or $0.36 per diluted share during Q2 of 2023. For the first half of 2024, we reported a net loss of $132,000, or $0.03 per diluted share, compared to net income of $1.2 million, or $0.32 per diluted share during the prior year. Looking at some non-GAAP metrics, we generated EBITDA of $1.1 million, or 15% of revenue, and $2 million, or 14% of revenue, for Q2 in the first half of 2024, compared to EBITDA of $2.9 million, or 30% of revenue, and $3.6 million, or 20% of revenue during the same periods of 2023. Adjusted EBITDA was $1.5 million, or 19% of revenue, and $2.2 million, or 15% of revenue for the second quarter and first half of 2024, compared to $3 million, or 31% of revenue, and $4.9 million, or 27% of revenue for the same periods of 2023. Non-GAAP net income was $847,000, or 22 cents per diluted share, $1.2 million or $0.31 per diluted share for the second quarter and first half of 2024, compared to $2 million and $0.53 per diluted share and $3.3 million or $0.87 per diluted share for the same periods 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 1% to $5.5 million as of June 30, 2024. In the cash flow statement, we experienced negative cash flow from operations of $190,000 for the second quarter, generated cash flow from operations of $796,000 for the first half of 2024, compared to $1.7 million and $2 million for the same periods of 2023. The decline year-over-year is primarily due to the one-time significant print and proxy projects in the prior year, as well as the timing of certain payments which were required in the second quarter of 2024. I will now turn it back over to Brian, who will provide some more details on our business, things we are excited about, as well as other updates on customers, volumes, and everything else we have planned for the second half of the year. Brian?