Helport AI Limited

Greetings and welcome to HelpPort AI's first half fiscal year 2025 financial and business update conference call. At this time, all participants are in the listen-only mode. A question and answer session will follow the formal presentation. And as a reminder, this conference is being recorded. I would now like to hand the call over to Ethan Devine, HelpPort AI's Director of Investor Relations. Please go ahead, sir.

Thank you, Operator. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to update, revise, or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. We should also review our most recent Form 6-K and other public filings with the U.S. Securities and Exchange Commission for a more complete discussion of these factors and other risks. particularly under the heading risk factors. Your host today, Guanghai Li, Chief Executive Officer, and Amy Fung, President and Interim Chief Financial Officer, will present results of operations for the six-month ended December 31st, 2024, as well as some more recent post-first half operational highlights. A press release detailing these results was issued earlier today and is available in the investor relations section of our company's website, ir.hellcourt.ai. At this time, I will turn the call over to Hellcourt AI Chief Executive Officer, Guanghai Li.

Thank you, Ethan, and good afternoon, everyone. It's an honor to welcome you to today's first half fiscal year 2025 financial results and business update conference call. Before I begin, I want to take this opportunity to introduce my colleague, president, and board member, as well as our interim CFO, Amy Fong, who just joined us in January this year. Amy?

Thank you, Guanghai. I'm very glad to be joining my first earnings call with HelpPort today. This is especially meaningful as I've had the chance to be intimately working with the company and the team for three months. after observing them from the sidelines since last August when the company went public. It took me four months to check them out and do my due diligence, and finally deciding to join after being convinced of their potential. And the last three months have given me even more confidence as have watched our pipeline grow and seen firsthand how powerful our software is. As a new joiner, I'm keenly aware of how new customers and new investors may need an explanation to fully understand what our products are, what they do, and how they serve customers. I'm aware there are quite a few newcomers to our joint earnings call today, so let me quickly give an overview. First off, our product is not a bot. It doesn't aim to replace humans. It aims to empower them. It is designed for call centers and similar environments. And our product empowers all contact agents to perform at the level of the organization's best agents. And you would ask, why is this distinction important? And I will share a recent Harvard study that found 30% to 50% of participants participating in the research study preferred to wait anywhere from two hours to two years for human response, or simply have their experience read by a person rather than receive an immediate AI reply. This highlights the strong value that people place on human empathy and connection, even at a significant time cost. And this is exactly why our product came to be. It is designed to empower and encourage human empathy, giving people the tools to perform as experts while preserving that human touch. I'll now hand the call back over to our CEO, Guan Ha.

Yeah, thank you, Amy, for joining us and also for a reminder of why Helper AI's product is different and necessary in the world of AI and why our customers find it useful in serving their customers. This has translated into the great business progress we have made since our listing on NASDAQ on August 5th, 2024. First, let's look at our global market expansions. As a profitable company with three consecutive years of earning growth, we went public with a clear objective to scale our proven software product in key international markets. especially in the U.S. and Southeast Asia. We remain firmly committed to this objective. Our U.S. and Philippines operations are already seeing measurable and very promising traction, and we are actively expanding our footprint in North America and Southeast Asia to capitalize on surging demand, both from existing clients and untapped markets. So let me provide an update on our technological advancement. On the technology front, we have successfully harnessed the power of large language models, significantly leveraging the ability to digest the lower unconstructed information. But we don't just rely on large language models. We create domain-specific small language models and knowledge bases. which are optimized for specific sectors as customer use cases. These smallest language models and knowledge bases offer advantages in accuracy, response time, cost, and contextual relevance. We are continuing to roll out new product capabilities that support our customers' needs. This includes more domain-specific language models introducing voice cloning capabilities and offering multilingual versions of our software to further solidify our position in the AI-driven customer contact space. We have invented our own tools and know-how in building and training a client AI software very quickly, usually within a few weeks, by working with customers and using their proprietary knowledge materials, and the processes so as to ensure our customers can harness the true power of AI. Our in-house AI training and operation capability remain cornerstones of our competitive advantage. As we expand into new regions and verticals, we are significantly increasing investment in these core capabilities to deliver even faster client onboarding and accelerated time to value. Next, let me give you an update of our recent progress in serving new market segments. First, in December, we formed a strategy partnership with U.S.-based LandShare Mortgage Corporation, a wholesale lender with a network of over 100,000 loan officers. Our AI-driven software is expected to equip law officers with the tools they need to effectively communicate with followers and facilitate enhanced promotion of land-sure products. Second, in the insurance sector, more recently, we have secured partnerships with seven leading insurance agencies across the U.S. with successful initial deployment and positive market feedback. First, use cases serve as a strong foundation for continued expansion and the large-scale growth potential. And third, in the consumer financing market, since January, we've also made rapid progress in the debt collection space, securing partnership with three major consumer financing companies in Southeast Asia, two of which are listed in the U.S. And lastly, we have also achieved important milestones in the public service sector. Our technology passed Google's stringent security standards, and we successfully supported Google in delivering service to one of its key U.S. government accounts on the West Coast. We have already entered into the next phase of collaboration with that client, laying a solid foundation for future growth in the public sector and the further cooperation with Google Cloud. Our successful entry into this new market, coupled with our growing operational expertise, which has seen us rapidly deploy our software across this high growth verticals, make us optimistic as we look toward the future. What are our strategy priorities? Since the end of our previous fiscal year on June 30, 2024, Helper AI has achieved remarkable progress. Looking ahead, we are focused on four high-impact strategy priorities. First, we are doubling down our international expansion effort in North America and Southeast Asia. with a focus on scaling operations and accelerating revenue realization in the high-growth markets. Second, we are continuing to expand and further monetize our AI plus BPO service model. Under this model, new customers can quickly see ROI by using our in-house AI-enabled customer contact agent. This approach provides a low-risk rapid prove our concept for customers and has been instrumental in gaining a foothold of new markets such as consumer financing. Third, we will continue to invest in R&D and innovation to further strengthen our technological leadership and competitive edge. Our industry is at the critical juncture in which enterprise are actively looking for AI solutions to automate tasks, gain productivity, lower cost, and drive revenue. Our unwavering commitment to our customers is based on our ability to continuously innovate. Finally, we will focus our resources and prioritize expansion in five high-growth verticals, BPO contact centers, insurance, mortgage sales, consumer financing, and public sector. By tailoring our AI solutions to each vertical, including knowledge base generation, AI training, and IT integration, we aim to build category leadership and accelerate adoption in these high potential markets, which are fine for disruptive technologies such as ours. As we look ahead to the remainder of fiscal year 25, these four strategy priorities reflect our focus on execution, scalability, and technology leadership. We believe these initiatives will position Helper AI for sustainable long-term growth across both developed and emerging markets. I thank you for your attention. I will now pass it over to our president and the interim CFO, Amy, for our financial overview. Amy.

Thank you, Guanghai. As a newcomer to Help Port AI, I'm glad to see the continuous and consecutive revenue growth on a half-yearly basis since 2023. This healthy trajectory gives me confidence that we have a solid product and proven ability to track further progress in the future. Now let me walk you through our financial performance for the first half of fiscal year 2025. For the six months ended December 31st, 2024, HelpCourt AI recorded a revenue of $16.4 million, reflecting a 13.1% period-over-period increase. This growth was driven by continuous demand for our AI-powered communication tools, particularly within enterprise sales and contact centers. We also saw a 29.1% increase in average monthly subscribed fees, what we see as this clear signal that our platform continues to resonate with customers seeking scalable, intelligent AI solutions. And I know many of you on the call are experts in SaaS business models. Indeed, while our company has a demonstrated track record of success in Asia for a number of years, our deliberate pivots The global market since last year requires us to power through sales cycles with new customers that typically need at least six months and sometimes more with larger customers. What attracts me to this company is its SaaS model, which has already demonstrated strong revenue stickiness in Asia. In the U.S., we are now seeing green sprouts growing with more and more pilots and proof of concepts happening with new customers. While the revenue contributions are still small, they are promising and represent important steps towards the buildup of a robust long-term SaaS model. On the earnings front, we remain profitable during the period with net income of 1.1 million and non-GAAP adjusted net income of 1.6 million. Growth margin came in at 54.6%, reflecting elevated amortization costs from software R&D, increased outsourcing operation fees, and expanded cloud infrastructure spending. Of course, this is not the same profit level as we saw previously. But as a growing AI tech company, we're strategically prioritizing expansion into new markets, in investing in additional R&D, as well as in our sales team and G&A to support our continued growth. We believe that these efforts are crucial in helping us compete effectively and capitalize on our technological strengths. Since I joined in January, I've been talking to many large potential customers across industries as well as across geographic regions. What excites me tremendously is the receptiveness and enthusiasm for our products. Time and again, after seeing our demo in action, the prospective customers ask for a second meeting with us together with their technology team. Within weeks, they're often ready for a pilot. This has translated into a strong and robust pipeline so far. The challenge now is to guide many of our customers through this phase quickly and effectively, accelerating the path to revenue conversion. Simply put, our focus going forward is clear. Execute with determination, scale responsibly, and deliver sustained growth. In the second half of fiscal year 2025, We aim to build on the foundation already laid in the fiscal first half by emphasizing on three focus areas. One, turning pipeline into performance, particularly in North America and Southeast Asia. Two, improving profitability through operational efficiency and margin discipline. And three, investing in long-term value, including further development of our product and operations. With growing customer engagement, support from strategic partners, and our expanding international presence, we see meaningful tailwinds heading into second half. I'm sure many of you on today's call are curious about our 2025 remaining of the year's outlook. While I'm extremely excited about the promising developments in our technology, partnerships, and customers, Many of the contributions from recently signed partnerships and penetration in the U.S. and Southeast Asia are just beginning to materialize. With that in mind, we're forecasting 15% to 20% top-line growth for the full first fiscal year. Growth, margin, and net income will remain under pressure in the short term as we continue to execute on our international expansion efforts and invest in our core technologies. which is essential for us to stay competitive in enterprise AI. Looking ahead, we remain focused on balancing top-line growth with profitability to set ourselves up for innovation, leadership, and success long-term. That concludes our financial update. Before we move to the Q&A section, I'd like to take this opportunity to welcome investors, analysts, and our shareholders to visit us in San Diego, experience a live product demo, and get a closer look at what's ahead. It's an exciting time at Hellcourt AI, and we're thrilled to have you with us on this journey. We'll now open the floor for questions. Thank you.

Thank you, Ms. Fong. Ladies and gentlemen, at this time, for any questions over the phone, please press star 1. And if you find your question has been addressed, you may remove yourself from the queue by pressing star 2. Once again, star 1 for questions, and we'll pause for just a moment.

Ladies and gentlemen I have nothing coming in over the phones at this time. It appears we have no further questions over the phone.

Mr. Hullab, I'll turn the call to you for any webcast questions.

Our first webcast question asks, it appears that your top-line growth has slowed compared to previous periods. Why are you confident in your future growth?

Thank you. That's a great question. As we mentioned when we went public last August, we aspire to becoming a leading global company, tapping into high-growth new markets, such as North America and Southeast Asia. To that end, we have intentionally shifted efforts and resources to these new markets, away from where we used to generate the bulk of our revenues. While we have sold seats in the new markets, as you can imagine, we need to work through a normal sales cycle, which is typically six months and longer with larger customers. This is translated into lower revenue growth for the time being, as expected. We believe this is a necessary transitional phase of our company's evolution as we prove ourselves with new customers in new markets. There is certainly a trade-off in terms of short-term revenue, but we believe such trade-offs are necessary for us to tap into bigger market opportunities globally. Most importantly, we're now seeing some very promising early signs from our efforts. Truly, we're very pleased with our success working with Google within a few months of meeting them, signing up more and more users such as large insurance broker and mortgage brokers such as Lendsure in the US, as well as large consumer lending companies in Southeast Asia doing debt collection. Time and again, these new customers have told us that our mature and easily deployable product is best in class. And as evidence, their endorsements are substantiated by the robust pipeline that we are seeing, which is very encouraging. Now, the challenge for us is to power through this space of proof of concepts, pilots, to convert these into sustainable revenues. Given our track record in doing so in our original market, we're confident that we can replicate that success in these markets, especially given these promising signs.

The next question asks, this is more of a macro question. There are so many AI companies out there with more appearing almost daily. How are you different?

I'm glad you asked this question. That was also my question when I considered joining this company. Indeed, there's a proliferation of AI companies out there, each offering a different proposition to customers hungry for AI solutions. And as you and I know, many of them do not yet have a product and are still in a product development stage. We're different. We have a proven product, a SaaS application, which has already been deployed with over 30,000 users. We also have a proven SaaS business model already revenue generating and profitable for a few years. Our founding team has worked together for decades for call center businesses, knowing intimately the challenges and pain points of call centers, therefore developed the product that is highly fit for purpose. immediately usable by call agents. And we're not everything to everyone. Our product is focused in call center and call center-like settings, giving call agents the tools to do their jobs effectively and accurately, and allowing their supervisors to do their job efficiently and in full compliance with relevant rules and regulations. We do not replace humans, but empower humans. We're also very focused on specific sectors, such as insurance, mortgage, consumer finance, and public sector. This allows us to be laser focused on developing in-depth knowledge in these sectors, which will ultimately be the barrier of entry to new competitors, which we have yet to see in the future. We have a clear idea of who we are, what we provide, and who we aim to serve. allowing us to focus deeply on what we do best. I believe this is what sets us apart from other companies out there.

Our next question asks, you mentioned some of your new U.S. customers like Lensure and insurance brokerages. Why do you think these accounts are promising and helpful for your long-term growth?

North America is the world's largest brokerage. customer contact market. We know this market's high purchasing power and widespread SaaS and AI adoption makes it a prime market for scalable, rapid growth of our product and services. Within this large market, there are particularly attractive verticals like mortgage sales and insurance sales, where AI-driven sales tools can deliver maximum impact. These are highly regulated sectors with large numbers of workers and acute needs for productivity, compliance, and revenue growth, requirements that our products address perfectly. Knowing how these sectors work will allow us to build a long-term barrier of entry, giving us an advantage vis-a-vis our competition in the long run. Of course, the relatively high value of the products being sold, mortgages and insurance, is very attractive. This means our software's ability to drive outbound sales can yield meaningful gains in revenue for customers and for ourselves.

Our next question asks, gap net income really took a hit. What was the main component? R&D, cost of being a public company, global expansion. What drove these declines?

There are four components that significantly affect our gap net income. The increase in amortization of intangible assets, software R&D, global expansion efforts, which saw a significant jump in headcount, particularly in sales, marketing, operations, and management as we open new offices in overseas markets. Highly outsourced operation fees, and elevated expenses, legal accounting from being a public company. How should we think about net income going forward and the balance of fiscal year 2025? These investments will continue in the long short term as they're critical to our R&D and expansion efforts. As such, we expect net income to remain under pressure for the balance of fiscal year 2025. As revenue begins to materialize from our pipeline in North America and Southeast Asia, we expect our profitability to rebound.

Last webcast question. Based on cash available and reduction in net cash provided by operating activities in the first half, it seems the company may need to raise additional capital.

Yes. Cash was $0.9 million as of December 31, 2024, as compared to $0.1 million a year earlier. However, this figure does not fully reflect the cash position available to the company. $2 million of additional cash is held on the company's behalf by a contracted third-party entity that collects payments from customers. This amount is recorded as prepaid expenses and other receivables on the balance sheet. When we adjust to these funds, the company's total available cash is $2.9 million. That being said, the company is certainly open to partnering with right strategic investors to bolster our balance sheet and to provide additional cash to scale our sales and operations, invest in R&D, and pursue opportunistic M&A transactions.

That concludes our webcast Q&A.

Thank you, Mr. Holub. And again, ladies and gentlemen, it appears we have no further questions over the phone at this time. So, Mr. Lee, I'd like to turn things back to you for any closing comments.

Thank you, operator. I would like to thank each of you for joining our financial results and business update conference call and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of our questions, please reach out to our IR firm and the group who would be more than happy to assist. This concludes our update for this past half year. Thank you.

Thank you, Mr. Lee. Again, ladies and gentlemen, that will conclude today's Hellport AI's first half fiscal year 2025 financial and business update call. Again, thanks so much for joining us, everyone, and we wish you all a great day. Goodbye.