Kubient, Inc.

Good afternoon and welcome to QBNC's first quarter 2022 earnings conference call. Joining us for today's call are QBNC's founder, chairman, chief executive officer, chief strategy officer and president, Paul Roberts, and chief financial officer, Josh Weiss. Following their remarks, we will open the call for your questions. Before we get started, I need to alert you to our safe hardware 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 achievements can 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 under-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 achievements. 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 our 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 QB Inc. with the SEC, including our annual report on Form 10-K filed with the SEC on March 31, 2022, with the understanding that our actual future results may be materially different from what we expect, which includes these and certain other important risk factors. We qualify all of our look 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. Expect as required by law, we assume no obligation to publicly update or revise these forward looking statements for any reason or to update the 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 TBH'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, and 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, except to suit for, or superior to GAAP results. The company encourages you to consider all measures when analyzing this performance. Now, I'd like to turn the call over to Mr. Paul Roberts. Sir, please proceed.

Thanks, operator, and thanks to everyone who has joined us today. As you've seen from the earnings release that was issued earlier this afternoon, we've started the year off with a strong Q1 top line figure. For the first quarter, our net revenue was $1.2 million, which represents a 39% increase from the prior quarter and a 76% increase year over year, marking one of the strongest quarters we've had in a while. The increase was a result of new customers acquired as a result of the media crossing acqui-hire. Although we successfully delivered approximately $1.2 million in total Q1 revenue via the audience cloud and Qubient managed services, subsequently strongly surpassing our revenue target for the quarter, all of us at Qubient are aware of the need to preserve capital while we strategically explore M&A opportunities. After much consideration with the council of our management team and board of directors, the goal at this time is to guide Qubient to a position of strength where the outs more closely match the ends of our balance sheet, and we focus on maximizing the ROI of our existing capital. That said, we are now actively in a mode of scaling back our expenses, including our general overhead, along with our labor force for the sake of cash conservation. Despite the encouraging top-line achievement for the quarter, we recognize that the rate we were using cash to fund the business is not sustainable and optimal to grow the bottom line. We have already begun pulling back on certain non-essential positions and evaluating whether other divisions within our business might be streamlined further in order to conserve the company's resources. However, we still plan to maintain the necessary components of our organization on the development and operations side of our engineering core. To provide additional context, We have eliminated half of our prior headcount, which directly translates to savings in our operating expenses and subsequently presents us with more promising financial results looking ahead. The effects of the situation in Ukraine and unprecedented competition in the skilled labor market have also played a role in the decision to maximize the productivity and efforts of our core business endeavors. We've spent a great deal of time and energy building out an effective and proprietary solution that we think is going to properly address the overhanging fraud and efficiency-related troubles plaguing the advertising market, and as a result, have decided to optimize our employees to alleviate the overhead expenditures. Nevertheless, we still plan to maintain our current client roster and existing partnerships and believe that we can still conduct operations and generate strong revenues even with a more streamlined workforce. With the optimization of our internal units and conservation of capital, we look to aggressively continue efforts on the M&A front. With the change in the overall financial climate, we believe that Kubient is an extremely attractive target participant for reputable companies looking to find the proper answer to lost advertising spend on fraud-ridden media. We host a fully built-out supply-side platform with the direct publisher integrations, and a proprietary solution to remove the crippling ad fraud issue, which we believe will be the direction the ad tech industry is headed. As such, we will continue our search for synergistic businesses, both large and small, that might bolster both the supply and demand side of our business, with a focus on bolstering our technology offering to the public and our valued customers. We look forward to provide further updates on our acquisition efforts when appropriate. Beyond our continued efforts with regard to potential M&A opportunities, we've kept our focus on expanding our organic growth opportunities to provide services to the wider advertising community. As we mentioned, we are maintaining our previous client relationships and our efforts on the front of increasing the quantity and quality of partnerships has been ongoing. We've seen new fruit come to the bear on the partnership's growth front. Namely, Pubmatic and Yahoo recently decided to work with Qubient as demand-side partners in addition to their current supply-side integrations. These evolutions of partnerships are a result of contracts we signed over the past quarter, effectively plugging the ad tech company and platforms into the audience marketplace to better serve their clients. While we celebrate these partnerships, there is still work to be done to extract revenue and additional growth with these partners. Now, I'll hand the call over to Josh, who will provide additional color on the quarter from a financial perspective. Josh?

Thanks, Paul, and good afternoon, everyone. Thanks for joining our call. Now, to our financial results for the first quarter ended March 31st, 2022. Net revenues for the first quarter of 2022 were approximately $1.2 million, compared to approximately $708,000 in 2021. The increase in net revenues was primarily attributable to net revenues generated related to customer contracts acquired in connection with their acquisition of Media Crossing in November 2021. Earlier in the first quarter, we determined that it was no longer probable that we would collect payment from a customer from which we were entitled. Therefore, we ceased providing service to the customer on April 6, 2022, while still pursuing collection of payment for the work our team had already performed. With that said, we only recognized net revenues of approximately $48,000 from this customer in the first quarter, when in reality, we provided additional services of approximately $1.1 million. As of the second quarter, we received approximately $600,000 of payments and expect to recognize revenue in future periods related to the contract for any payments received in excess of the loss accrual, which I will discuss shortly. Turning to our expenses, technology expenses increased to approximately 1.2 million from approximately 520,000 in 2021. The increase is primarily due to an increase in headcount costs, hosting fees, non-cash stock-based compensation, and software expenses. General and administrative expenses increased to approximately 2.2 million compared to approximately 1.3 million in the first quarter of 2021. The increase was primarily due to increases of legal fees, including legal fees associated with the legal settlement entered into in March 2022, non-cash stock-based compensation, other professional fees, all partially offset by a reduction in state taxes. Regarding the additional line item, we recognize the loss accrual of $790,000 for media costs incurred in February and March 2022 which relates to the services performed from the affirmation customer stated at the beginning of my remarks. Gap net loss attributable to common shareholders was approximately $3.6 million loss or 25 cent loss per share compared to approximately $1.8 million or a 14 cent loss per share in the same period last year. The reason for the decline was primarily due to the loss accrual I had just discussed and the increase in expenses previously described. Adjusted EBITDA, a non-GAAP measure, increased to approximately 3.6 million EBITDA loss compared to an adjusted EBITDA loss of approximately 1.5 million in the same period last year. As of March 31st, 2022, the company had a cash balance of $20.7 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 it back to Paul. Paul?