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spk02: Hi everyone and welcome to the Glimpse Group first fiscal quarter 2022 financial results webinar. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made and webcast include those regarding future financial results and industry prospects are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks and we would also refer you to the company's website for more supporting industry information. I would now like to hand the call over to Liron Bentabim, president and CEO of the Glimpse Group. Liron, the floor is yours.
spk00: Thank you, Mark, and thank you everyone for joining us. I'm pleased to welcome you to the Glimpse Group fiscal first quarter 2022 financial results investor call for quarter ended September 30th, 2021. This is a first quarterly results conference as a NASDAQ company and being new to the public markets, I'd like to provide a quick overview of the Glimpse Group to anyone who is new to our story. The Glimpse Group is a diversified virtual reality and augmented reality platform company comprised of multiple wholly owned integrated VR and AR enterprise focused software and services subsidiary companies, providing investors an opportunity to invest directly into the emerging VR AR industry via a diversified platform. We created Glimpse with the vision of cultivating companies in the emerging VR AR industry, simplifying the challenges they face, creating a robust ecosystem, capturing wide IP while creating scale and cost efficiencies rarely seen in early stage industries and mitigating the risk for investors and entrepreneurs. Glimpse was established in 2016 and over the last few years we have been growing at a rapid scale. We own and operate 11 subsidiary companies covering a multitude of industry segments. We have filed 13 patents with several issued so far and now have over 70 VR and AR software developers, engineers and 3D artists in three continents, making us, I believe, one of the largest independent software and services companies in the emerging VR and AR industry. For our fiscal first quarter, the three months ended September 30th, we demonstrated remarkable progress highlighted by strong revenue growth, strategic accretive acquisitions, fortification of our balance sheet and establishment of key partnerships. Here are a few operational highlights. We saw strong top line revenue growth of 292% year over year. This growth was primarily organic and a result of new customer engagements and existing customer follow on engagements, including several multi-year commitments. We continue to see strong organic revenue growth across all lines of business and in particular our core VR and AR software and services revenue, excluding project revenue, which grew 500% organically when compared to the same period a year ago. This resulted in a gross margin of approximately 85%. Our software license SaaS revenues grew by approximately 214% year over year. We have improved our adjusted EBITDA loss to 0.44 million, a 15% year over year improvement and we continue to operate on a relatively low cash burn. Seizing on the opportunity of the macro level tailwinds following the meta announcement, we completed a 15 million private placement of common stock and warrants. This was structured in a healthy way for the company with a select number of institutional investors and at a price that is approximately 43% above our recent July 1st 2021 IPO price and with warrants priced at over 110% above our IPO price. We continue to strengthen and expand the Glimpse ecosystem while broadening our strategic position in various growth industries. During the quarter, we acquired AUGD, an Australian based provider of augmented reality software and services to architecture, engineering and construction, AEC segments and allowed for the establishment of Glimpse Australia as a base of potential future operations. We also announced the acquisition of Exartera, a Boston based provider of VR and AR training and skill development services for innovative programs and corporate partnerships. Exar professionals are in high demand to support the industry's growth and from our direct experience it is already challenging to find highly qualified developers and 3D artists. Exartera's focus on teaching and skill development for the Exar industry represents a significant strategic market opportunity to empower the next generation of Exar talent for innovative programs and partnerships. Partnerships are also a key part of the Glimpse strategy. We work with several of the industry leaders on expanding our existing relationships and entering new ones. One particularly exciting relationship we just recently announced is with DID, a leader in artificial intelligence, AI driven creative media. By combining Glimpse's AR VR experiences with DID's highly realistic artificial intelligence creative reality technology we expect to be able to enhance viewing and interaction across the metaverse and begin to show partners and customers the future direction it will take. Glimpse aspires to be the premier enterprise VR AR software and services company with a global footprint both operationally and financially. Over time we believe that VR and AR will have strong global impact and presence. With that in mind it is a strategic goal of ours to embrace and foster international investors and markets. As a first step Glimpse's NASDAQ listed float was listed on the Frankfurt Stock Exchange and its electronic trading platform Exarera along with other leading German exchanges. We believe over time this will increase liquidity and raise market awareness for Glimpse in Europe utilizing the NASDAQ float. With a clean capital structure and an influx of cash and with no material liabilities we are well positioned to capitalize on the significant growth opportunities in this emerging market and for future organic and inorganic growth. After the most recent acquisition of Exarera the Glimpse group owns and operates 11 subsidiary companies that are serving a diverse set of industries ranging from health care to corporate training from financial services to therapy and support from media and entertainment to education. In our view our ecosystem represents a key competitive advantage especially in an early stage industry. We are constantly looking to add high quality companies that will expand us into new industry segments, increase our scale and further diversify and deepen the Glimpse ecosystem or enhance and strengthen our positioning in existing markets. While the industry is still in its nascent stages we can now clearly identify significant opportunities in the immersive world categorized at a high level into four distinct buckets. The first one that is gaining significant early traction is marketing. Brands are seeing great success leveraging augmented and virtual reality to connect with the younger demographic of consumers building brand awareness, engagement and a truly immersive connection. There is demonstrated effectiveness with clear ROI and we see existing marketing and branding budgets increasingly allocated to AR and VR. Immersive technology is a natural medium for learning and education although early we can see success in the full spectrum of learning from K-12 through higher education to corporate training for both soft and hard skills as well as medical industrial and professional training. Immersive learnings allow for a winning combination of a strong ROI and a significant increase in efficacy. One of the advantages of the XR technology is that it allows us to visualize anything and everything from buildings that have not yet been built to products we don't have in our hands all the way to visualizing complex data in new insightful ways. The end game for immersive technologies is the Metaverse. While in its infancy the Metaverse has potential to bring into our life a new dimension dramatically changing the way we work and play. In time the Metaverse will open up a new 3D digital world enabling us to work in virtual offices, travel to virtual worlds, learn in virtual schools and shop in virtual stores. We believe that Glimpse is positioned to play an enabling role in the development of the Metaverse as it evolves from its concept to a business reality and as other emerging technologies, AI, computer vision, blockchain, NFT potentially coalesce together with VR and AR over time. We recently saw a seismic shift in the awareness of the potential of the immersive industry following Facebook's rebranding to Meta as well as a wide array of other industry giants such as Microsoft, AMD, Nvidia, Dropbox and Match Group announcing Metaverse plans. We believe that these announcements and the financial commitments within them will significantly propel the industry forward and serve as a strong accelerant. They are complementary and beneficial to Glimpse and in alignment with our vision of becoming the premier software and services VR AR company in the evolving Metaverse landscape. With that I will now turn it over to Meydan Rahm-Gloom, Glimpse's CFO and COO to review the financial results. Meydan.
spk01: Thanks Liron. I will constrain my portion to a succinct review of our financial results. A full breakdown is available in our tent queue and in the press release across the wire after market closed today. Please note that I'll refer to adjusted EBITDA and other non-GAF measures. For the calculation of adjusted EBITDA and other non-GAF measures, please refer to our MD&A section which is available in our tent queue filing which you can find on our website under SEC filings. Total revenue for the three months ended September 30, 2021 was approximately $1.02 million compared to approximately $0.26 million for the three months ended September 30, 2020, an increase of approximately 292 percent. This growth was primarily due to the addition of new customers and was partially impacted by the delay of revenues from Q1 fiscal year 21 into Q2 fiscal year 21 due to COVID-19 constraints. Software license revenue was approximately $0.22 million for the three months ended September 30, 2021 compared to approximately $0.07 million for the three months ended September 30, 2020, an increase of approximately 214 percent. As the VR and AR industries continue to mature, we expect our software license revenue and SAS revenue to continue to grow on an absolute basis and as an overall percentage of total revenue. For the three months ended September 30, 2021, VR, AR software and related services revenue, not including VR, AR projects, was approximately $0.8 million compared to $0.14 million for the prior year, an increase of approximately 500 percent. For the three months ended September 30, 2021, non-project revenue accounted for approximately 84 percent of total revenues compared to 54 percent revenues for the previous year in the same period. Gross profit increased to $0.87 million or 85 percent of revenue for the three months ended September 30, 2021 as compared to a gross profit of $0.12 million or 46 percent of revenue in the previous year for the same period. This produces higher gross margin and improved management of our project revenue cost of goods sold. Operating expenses for the three months ended September 30, 2021 were approximately $2.27 million compared to $1.36 million for the three months ended September 30, 2020, an increase of approximately 67 percent. This increase was driven by increased employee headcount to support growth and the occurrence of expenses specific to Glimpse becoming a publicly traded company. For the three months ended September 30, 2021, net loss from operations was approximately $1.4 million compared to a net loss of approximately $1.24 million for the three months ended September 30, 2020, an increase of approximately 13 percent period to period. We sustained a net loss of $1.66 million for the three months ended September 30, 2020 as compared to a net loss of $1.28 million for the prior period, a loss increase of $0.38 million or 30 percent. This reflects a period over period increase in revenue and related gross profit offset by an increase in operating expenses and the occurrence of non-cash loss on conversion of convertible notes, the common stock as a result of our July 1, 2021 IPO and a decrease in non-cash interest expense. As it relates to cash flow, we look at two main parameters. Net cash use and operating activities was $1.05 million for the three months ended September 30, 2021 compared to $0.16 million during the prior period, an increase of approximately $0.89 million. This includes one-time cash expenses of approximately $0.6 million related to Glimpse becoming a publicly traded company. For the three months ended September 30, 2021, our adjusted EBITDA loss, a non-GAAP measure, improved by $0.08 million to negative 0.44 million or approximately 15 percent compared to negative $0.52 million for the three months ended September 30, 2020. Our net cash burn at current revenue levels is approximately $2 million annually, which is relatively low in our view, mostly variable in nature and under tight control. Net operating loss carry forwards, NOL, were approximately $12.3 million at the end of the quarter. To recap, we ended our first quarter of our fiscal year with a strong balance sheet of approximately $12.5 million in cash. That was bolstered by the $15 million private placement of which we received gross proceeds of approximately $13.6 million. As of today, we have over $25 million of cash on hand, no material liabilities, no preferred equity outstanding, and no convertible debt. With a fortified balance sheet, strong revenue growth, a low cost structure relative to a growth tech company, and the very positive fundamentals of our operations, we remain well positioned for future growth. I'd now like to pass it to Liron for some closing remarks after which we will begin our question and answer session.
spk00: Thank you, Madame. Looking ahead, this is an exciting time for Glimpse and the VR AR industry. While it is still early in the industry's life cycle, we believe that the development of the VR AR industry in general and the metaverse in particular is likely to accelerate given the recent surge in awareness, interest, funding, activity, and adoption. Glimpse is well positioned financially, operationally, and strategically to leverage its unique platform model of diverse subsidiaries targeting different industry segments to create scale and value. In parallel to our organic growth, we continue to look for additional acquisitions that will fit into our ecosystem. Between these, our expectation is for a strong remainder to our fiscal 2022, October 21 to June 22. We would like to thank all of our shareholders for their ongoing support as we continue to push forward with creating a leading enterprise focused software and services company in the emerging XR space. I thank you for your interest in and support of the Glimpse Group and now I'll turn the call back to Mark to take some questions.
spk02: Thanks, Liron. If you'd like to submit a question, you can either type it in the chat box below or raise your hand and ask verbally. We'll start with any audio questions and follow that with some writing questions as time allows. I'll pause here for a second to let the questions get in queue. Thanks. Does anyone have any questions? Before we proceed to closing remarks, we'll ask one more time and please raise your hands or submit a writing question in the chat box below. Thanks. Okay, then. So at this time, I'll conclude Q&A and I will turn the call back to Liron for closing remarks.
spk00: Thank you, Mark. I would like to thank each and every one of you for joining our earnings conference call. We look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach us to us directly or through our IR firm MZ group. Thank you.
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