Nextech3D Ai Corp

call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Instructions will be provided at that time for you to queue up for your questions. I'd like to remind everyone that this call is being recorded today, Thursday, November 11, 2021. I will now turn the call over to Evan Gappleberg, Chief Executive Officer Andrew Chan, Chief Financial Officer, and Julia Biola, Investor Relations at Nextech AR Solutions Corp. Please go ahead, ma'am.

Thanks, Operator. Good afternoon, and welcome to the Nextech Q3 earnings call. With me on the call are Evan Gaffelberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer. Today, before markets opened, Nextech AR Solutions Corp released its financial results for the third quarter ending September 30, 2021. A copy of the earnings disclosure is available on our website and on CDAR. Some of the information discussed on this call is based on information as of today, November 11, 2021, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release as well as in our CDAR filings. During this call, we will discuss IFRS results and non-IFRS financial measures. A reconciliation between IFRS results and non-IFRS financial measures is available in our MD&A which can be found on CDER. Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior written permission from Nextech. To begin our call, Evan Gappelberg, CEO, will discuss the highlights of our third quarter as well as recent business developments, followed by Andrew Chan, CFO, who will review our financial results and outlook. Finally, Evan will make some closing remarks before opening up the line for questions. I'll now turn the call over to Evan Gapelberg, CEO.

Thank you, Julia. Good afternoon, everyone, and thank you for joining us today. First, I do want to thank our employees all over the world. They're in Canada, the United States, Europe, and, of course, the Asia Pacific region. Thank you all for your continued commitment. Nextech's success throughout the year and in the third quarter 2021 were made possible only through the hard work, creativity, and dedication of our talented and valued employees. Our culture of organizational learning and respectful collaboration continues to drive business excellence at Nextech. I would like to give a special thanks to Firas Abu-Tatha for his leadership and positive energy in his new role as general manager. In September, we issued a company update to shareholders highlighting our ongoing strategic initiatives and the important period of growth and transition that we are currently in. Since we issued the update, the excitement we expressed about our accelerating adoption of our augmented reality and metaverse solutions has been further reinforced with new deals closing for augmented reality for e-commerce at a pace that we have never experienced before. We believe that this will continue for the foreseeable future and are very excited about this timely industry development. As we look at Next Tech's Q3, it was a transformational, transitional quarter, and we are transitioning from a managed service business to a SaaS business and an augmented reality and metaverse business. So during the past 18 months, to give some perspective, the mass adoption and reliance on virtual events has And the buying burst that we saw in our e-commerce business throughout the worst of the COVID-19 pandemic in 2020 gave Nextech, it did give us a very welcome tailwind. However, as you all know, we never considered this thematic boost to our business driven really by a once-in-a-hundred-year pandemic to be permanent. While we navigated the pandemic, we have been investing heavily into augmented reality, both through R&D and through M&A. And we've always had our eye on the bigger business opportunity of augmented reality and the metaverse, which has finally arrived. The entire world, including us, we're in uncharted territories with COVID-19. Our virtual events and e-commerce business is and will continue to be strong. However, with the opening of the economy and related reduced spending in the entire virtual events industry, not specific to us, revenue growth around virtual events is leveling out. And while revenue from our AR solutions is accelerating rapidly, we expect to close 2021 with overall revenue in the range of 25 to 29 million, up from 17.6 million in 2020, which represents a greater than 60% growth year over year. Again, we see a rapid acceleration happening in augmented reality. We feel strongly that the growth engines going forward will be augmented reality and our metaverse business, which are merging, really, to become one suite of solutions called ARTize Metaverse Studios. Now, as we look at, again, in the rear view, at our virtual events and e-commerce space, it really did provide us with an ideal proof-of-concept launchpad for our augmented reality solutions. Again, we never planned on this to be our long-term core product offering. However, businesses have enabled us to individually validate market acceptance for each of our product categories, which really puts us in a leadership position as we really just are emerging companies into the augmented reality space right now. So AR for e-commerce, the 3D product visualizations and web AR, AR for advertising, the 3D ads, AR for human holograms with HoloLens, AR for higher ed with Wyerson Labs, and AR ties for bespoke immersive AR experiences. All those things, including our AR portal and 360 video visualizations, all those products that we've been working on for the past three years are now starting to pay big time dividends. The growth that we experienced since our launch as a public company and even since the founding in 2018 and continues into 2021 and beyond is undeniable. we have been growing we went essentially from zero to an estimated 25 to 29 million in 2021 we started out with ar in 2018 then it was e-commerce plus ar in 2019 then in 2020 it was e-commerce virtual events plus ar now As we enter 2022, our growth engine will almost exclusively be AR and the metaverse, meaning we'll have foundational revenue from our e-com and virtual events business, but the growth engine will almost exclusively be AR and the metaverse. We are just beginning to see the revenue and business emerge at a rapid pace and as we are full force into our transition into the augmented reality and metaverse business with our new SaaS offerings. We are just now entering the market, and just now AR is providing us with this engine of growth that will take us forward in Q4, which is looking very positive. The AR new sale, and we see that continuing in 2022 and beyond. We've already seen our business, our existing business with Kohl's, Kmart, Pier One, and Lightning Plus accelerate with reorders. And we are signing new deals every day with many notable brands. I think our e-commerce and events business, again, has foundational revenue streams, which will continue to grow. but not at the rapid pace that we've seen in the past. Rapid growth engine for us, again, is augmented reality in the metaverse. To give you an idea of what we're seeing already in Q4, currently we are at the signing stage with a large brand that is interested in 2,500 3D AR models to start that could grow to 10,000 models. We are quoting on a 20,000 3D model request that could grow to 400,000 models. We are quoting on multiple 10,000 3D model requests. As previously mentioned, we expect our integration with Shopify to happen in December, which will open up our solutions for the 3 million plus merchants in a frictionless and direct way. All this new business is set up to be MRR or monthly recurring revenue. So I'm super excited. As you can imagine, everybody at Next Tech is super excited. Couldn't be more excited about the business in our augmented reality solutions. This business And business opportunity is brand new in Q4. Imagine we will be in 12 months. This business was not possible for us to deliver on before the transformative acquisition of 3DAI. We believe we will win the business just mentioned and much, much more. Why? because we believe that we have the lowest cost, highest quality, scalable solution on the market today. Next Tech is more confident than ever in the accelerating momentum of our augmented reality and metaverse solutions and expects 2022 to be a year of hyper growth for all things augmented reality and the metaverse. It's a very exciting time to be a public company and investor in this space. Just listen to what big tech is doing and saying. Facebook rebranded itself, as everyone knows, as a metaverse company. Nextech is a metaverse company. Facebook came out and said, I believe the metaverse is the next chapter for the Internet. Go back to the history books. Take a look at what happened to Internet companies and Internet stocks in the 1990s. Apple is racing toward its first release of a mixed reality headset. That is going to light a fire on top of the fire that Facebook lit for the augmented reality metaverse space. Microsoft just came out with a metaverse solution. Epic Games, NVIDIA just announced the Omniverse. Niantic just came out with LightShift, their version of a metaverse solution. Google and all of big tech names are spending tens of billions to ensure each of their own unique version of the metaverse. And Next Tech is participating. We are part of that ecosystem, and we will rise up with big tech, regardless of how the big tech battle shakes out. One thing is certain, Nextech's place as a unique provider of augmented reality and 3D assets for the metaverse is solid. Our AR times metaverse studio could not be better positioned to benefit from surrounding big tech commitment and consumer adoption of the metaverse and augmented reality. Nextech has been committed to augmented reality since we launched in 2018. Our name, Nextech AR Solutions, speaks volumes. We now have a head start in what is now emerging as a metaverse opportunity. During the third quarter and into Q4, our completion of the ARWay acquisition and and our integration of the 3DAI acquisition already leading to new revenue opportunities. Again, they were simply not possible in prior quarters. Our introduction of the mini metaverse during the third quarter was also well received, and customer adoption has already begun. Last month, we announced the City of London's implementation of our spatial mapping technology at Harmony, of london uh wall place it's really just the beginning that there are endless opportunities for the application of next tech spatial mapping and anarchized metaverse solutions from arv in the city of london is really again just the beginning in fact i got a phone call today from somebody in Big Telco asking if they could partner with us on a metaverse 5G solution. So there's just a lot of interest in this space, a lot of demand. We have a proven suite of solutions combined with Airways Cloud and 3D mapping technologies, which opens a huge addressable market within the metaverse. The ARTized Metaverse Studio as a SaaS product is launching in Q1 2022. We have not seen the fruits of that product offering yet. It will be available for pretty much anybody to turn their space into a mini Metaverse, whether it's a mall, a university, a corporate headquarters, even for regular people who want to turn their house into a mini Metaverse, just like our CTO Nima did last week. It's all possible with Nextech's ARTize Metaverse Studio. The augmented reality tidal wave is finally here, and we are here and ready to take full advantage of it. It's gone from AR, VR to now becoming the Metaverse wave, driven by big tech adoption. It's here to stay. It will be a multi-decade, multi-billion dollar per year wave I've been talking about it for three years, but it's here. Mass adoption is really just in the beginning. Big tech is building the AR ecosystem that Next Tech eats and breathes in. And we feel strongly that Next Tech's realization of market share capture within this burgeoning new industry is happening. And again, we are just at the beginning. Furthermore, to our confidence in 2022 revenue growth and beyond, it's really bolstered by the go-to-market strategies of both our SaaS 3D for e-commerce solution as well as from our Metaverse Studio rollout, now integrated as one solution onto NextTech's ARTize Metaverse Studio, which I said is a big deal. It really is a big deal. Once consumers and businesses experience 3D, they do not return to 2D. Once you experience 3D, there is no going back, which means that we have a very, very sticky product. Think of it like this. It would be like going from a dial-up modem to a high-speed modem only to go back to the dialogue if you went back to 2D. It just does not happen. Our AR products are sticky and have significant implications for monthly recurring revenue and annual recurring revenue, which will accelerate with the adoption and stickiness of our entire augmented reality suite of products and services. As we speak about our SaaS product roadmap, in late Q3, really the last two weeks, we began to roll out our AR for e-commerce SaaS platform during the quarter. Our AR business is already the fastest growing segment of our business. 3DAI is already SaaS and self-serve enabled. And during this quarter, HoloX, will be SaaS-enabled. It's a very, very near future. ARtize Metaverse Studio in Q1 will be live. Our CAD to Poly, HoloX, 3D advertising, TV AR, all of this is going to be SaaS, and all of this is going to be self-serve in the near term. SaaS and self-serve integration that I referenced ago, it really does have enormous implications for the scalability of our product suite and our future revenue growth. With SaaS and self-serve, Next Tech will move away from a managed solution platform toward monthly recurring revenue. Business scalability is key. Low touch, no touch is key. And this has already begun, which is key. In the near future, we will begin disclosing more details around monthly recurring revenue related to our emerging SaaS business. Now, we did include a graphic in the press release that went out today. The key to that graphic is that our model-making demand is rising exponentially. So we have You know, a lot of customers that are lining up at our door that are asking for more and more and more models. And that is a very, very healthy sign for our business. You can see brands that we're working with, as mentioned previously, Kmart, Sears, Lighting Plus, Pure One, Kohl's, and brands that we're speaking to. We are already seeing in Q4, in just a few weeks, a rapid ramp-up in demand for the 3D models that we make. And so it's just important that everybody that's listening understand that our Q3 is rear-view mirrors. What I'm speaking to is what's happening now and the future, which is what you're investing in. So when you look at the potential applications for what Next Tech is building and the anticipated market adoption, we estimate a total addressable market for our metaverse opportunity to be $250 billion by 2024 for SaaS e-commerce alone as a segment of the entire $250 billion metaverse addressable universe, we see a total addressable market of $102 billion. So the bigger number is $250 billion, and then you have $102 billion, which is really the e-commerce piece of that. The most exciting thing happening today globally, not at Nextech, is that all objects are being turned into 3Ds. on the web with no app required. All objects refer not only to e-commerce, but everything that is manufactured, apparel, automotive, electronics, aerospace, oil and gas, real estate, et cetera. The reason why that's so exciting is really two reasons. One, it's ubiquitous. The web dial tone is everywhere. And anything that's ubiquitous gets interesting. Two, we think we have figured out a way to own it. What's so compelling about creating and owning all these 3D assets is there's going to be a lot more innovation in AR that will be foundational for the emerging metaverse. And, of course, for us, owning those 3D models means a never-ending stream of monthly recurring revenues. As we continue down this path of becoming the 3D model factory for the world, and the metaverse specifically, we do expect that our gross margins around our emerging augmented reality and metaverse solutions offerings to increase rather dramatically, particularly as we bring the SAS into the equation. On another note, speaking to our uplifting goal, I would also like to take a moment to reassure our shareholders that our previously stated goal of U.S. uplifting is still on the table. It is still a priority issue. Well, there have been many, some bumps, and, you know, maybe we got stuck in the mud on this attempt during 2020, 2021. We feel we are better prepared than ever to achieve this goal. During the third quarter, we did announce our change of auditors to Markham, a very, very reputable U.S. audit firm within extensive experience in U.S. exchange uplifting market companies like Nextech. We've also began the build-out of a much more robust investor relations program in order to observe and comply with U.S. exchange and SEC regulation and preparation of entry onto U.S. exchange. We cannot specify timing around this objective, but we can state it is a priority for us We are taking all necessary steps in order to achieve U.S. exchange uplisting, including hiring a U.S. investment bank, H.C. Wainwright. It was a big step for us as a public company to have a U.S. investment bank that has the ability to write research reports and introduce us to their institutional investors. So we're excited about that. In closing, and I know everyone wants this to end, Q3 was an important quarter for growth and transition for Next Tech. Next Tech is focused on advancing and garnering greater industry leadership in the augmented reality space and the metaverse and our entire suite of increasingly interconnected products. Now, if we look around us and we see where does Next Tech fit in, Where do we fit into the ecosystem? Where do I put next tech? We believe we fit in with the tech giants who essentially own a market. When you have a new industry, everything gets reset. There's an opportunity for the small company to become the big company. And there's an opportunity for the big company to fall behind. Today, Apple owns your phone. Google owns the search. Amazon owns shopping. Facebook, Snap, Facebook, Snap, and TikTok, they own your social media. And Next Tech, as the owners of the 3D model creation, and importantly, the models themselves, our position at this table will become increasingly important to the development of an agnostic platform And we believe that we will be the 3D model supplier globally that dominates that sector. We currently have many customers that use our 3D modeling technology, including some of the biggest brands. But we are still just getting started. It feels like all of our hard work is about to pay off as we are entering the the first inning of our transformation to a self-serve SaaS business model, which will allow us to populate the world with 3D models and AR visualizations. A lot has changed since we spoke on the last quarter's earnings call. Since then, augmented reality and the metaverse have taken center stage, and this is what we have been preparing for. This is what I've been preparing for. This is why I founded Next Tech in January of 2018. Today, we have a head start. Our solutions have already been validated in the market, and now we are poised to benefit from the coming mass adoption of augmented reality and the metaverse. With that, I'll turn the call over to Andrew Mann, our CFO, to provide further commentary on the quarterly financials.