Kubient, Inc.

Good afternoon, and welcome to Coovian's second quarter 2021 earnings conference call. Joining us for today's call are Coovian's founder, chairman, chief strategy officer, and interim chief executive officer, Paul Roberts, and chief financial officer, Josh Weeks. Following their remarks, we will open the call for your questions. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone keypad. If at any time during the conference you need to reach an operator, please press star 0. Before we get started, I need to alert you to our safe harbor statements under the Securities Litigation Reform Act of 1995. During this call, we will be making forward-looking statements, including statements related to future events or to our future financial performance and involve known and unknown risks uncertainties, and other factors that may cause our actual results. Levels of activity, performance, or achievement may be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Listeners should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond our control and which could and likely will materially affect actual results, levels of activity, performance, or achievement. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected or implied during the call. Furthermore, listeners are referred to the documents filed by Kubian Inc. with the SEC, including our annual report on Form 10-K filed with the SEC on March 30, 2021, and our quarterly report on Form 10-Q for the first quarter of 2021 filed with the SEC on May 14, 2021, with the understanding that our actual future results may be materially different from what we expect, which include these and certain other important risk factors. We qualify all of our forward-looking statements by these cautionary statements. Also note that the forward-looking statements on this call are based on information available to us as of today's date. Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update for reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Please refer to Coovian's SEC filings, specifically its registration statement on Form S-1, initially filed on December 12, 2020, for a more detailed description of risk factors that may affect the company's results. During the call today, management will discuss adjusted EBITDA, a non-GAAP financial measure. In the company's press release and filings with the SEC, both of which are posted on the company's website, you will find additional disclosures regarding this non-GAAP measure, including a reconciliation of this measure with its comparable GAAP measure. Non-GAAP financial measures are not intended to be considered in isolation from, a substitute for, or superior to GAAP results. The company encourages you to consider all measures when analyzing its performance. Now, I would like to turn the call over to Paul Roberts. Sir, please proceed.

As we celebrate our fifth approaching one-year anniversary as a publicly traded company, We have been encouraged by the progress we've been witnessing across all fronts of the business. Though there were certain challenges and headwinds that came our way, our team has consistently demonstrated resilience and the ability to adapt despite the obstacle that was thrown our way. To begin, we've experienced literal growth at Qubank with respect to our workforce. We have hired a total of eight employees within the second quarter and are now at a total of 32. which is an approximate increase of 40% year-over-year and gets us closer to our year-end goal of 40 to 50. However, one thing I would like to share and be transparent about is the difficulty we've experienced in onboarding high-caliber individuals to the team. We believe we are very fortunate to have been able to onboard some incredible talent already this year, but as I'm sure most of you are already aware, we're currently in one of the most booming economies from a job market standpoint. A recent Wall Street Journal article stated that there was a record 9.2 million job openings across the country this summer due to the businesses opening back up after lockdown mandates were lifted. As a result of supply far exceeding demand, we've reluctantly found ourselves having an arduous time finding top talent. Our team is still looking to ramp up the number of folks in sales division in addition to engineers on the back end. But due to the current situation with the U.S. economy, it will take more time than expected to find the right people for the job. Despite being a macro headwind that is out of our control, we were still able to hire Mike Gavigan and Mark St. Amour as vice presidents of performance media, in addition to other senior leaders on our team that we mentioned on the last earnings call. Furthermore, we were also fortunate enough to appoint industry veterans John Bond, and Larry Harris to our board of directors at our recent annual shareholders meeting in late June. Both gentlemen bring a wealth of knowledge and experiences, executives with deep ad tech backgrounds, and I look forward to the impact they'll be making for Kubian. An exciting piece of news I'd also like to share is that our company will officially be going back into the office starting September 15th, barring any massive breakouts of the Delta variant. Although our employees have been able to maintain productivity levels working remote, we're certain that moving back into the office will only help, as we'll all have the opportunity to work next to each other at close proximity without our dogs furiously barking in the background during Zoom calls. Before I dive any deeper into updates for the quarter, I'd like to pass the baton over to Josh for an update on the financial front. Josh?

Thanks, Paul, and good afternoon, everyone. Thanks for joining our call. Now to our financial results for the second quarter ended June 30th, 2021. Net revenues increased to approximately 498,000 compared to approximately 92,000 in the same period last year. The year-over-year increase in net revenue is primarily due to the increase in revenue from one new customer during the three months ended June 30th, 2021. Something I wanted to emphasize was the timing of our contract execution to revenue recognition to provide you all with a better understanding of our lead time. A common misconception within our industry is the fact that a signed contract directly correlates to revenues the following day, when in reality, that is not the case. Just because a customer is signed up to use our audience cloud, it doesn't mean that revenue is immediately generated and recognized. After contract execution, our engineering team will typically integrate our technology into the customer's infrastructure, followed by a thorough testing process, all of which can take between four to 10 weeks, depending on the complexity of our partner's technology. Nevertheless, we are committed to lowering this number going forward to increase efficiency and have a faster path towards revenue recognition. Turning to our expenses, Technology expenses increased to approximately $620,000 from approximately $497,000 in the same period last year. The year-over-year increase was a result of increases in salary expense of approximately $80,000 arising from an increase in technology personnel headcount, consulting expenses of approximately $22,000, and cloud hosting costs of approximately $37,000. General and administrative expenses increased to approximately $1.1 million compared to approximately $602,000 in the same period last year. The year-over-year increase in general and administrative expenses was primarily due to increases in salary expense of approximately $154,000 arising from an increase in general administrative headcount, approximately $259,000 in professional fees, and approximately $118,000 of insurance expenses. GAAP net loss was $1.7 million or a $0.12 loss per share compared to a net loss of $1.5 million or a $0.42 loss per share in the same year-ago period. The year-over-year increase in net loss was primarily due to increases in operating expenses as enumerated above. Adjusted EBITDA, a non-GAAP measure, decreased to approximately $1.6 million EBITDA loss compared to an adjusted EBITDA loss of $957,000 in the same period last year. As of June 30, 2021, the company had a cash balance of $30.5 million. That concludes my financial summary. For a more detailed analysis, please reference our Form 10-Q, which we plan to file today. I will now turn the call back over to Paul, who will discuss some of our major operational updates and provide a general outlook of our business. Paul?