Nextech3D Ai Corp

Good afternoon, ladies and gentlemen. Welcome everyone to the Nextech AR Solutions Corporation 2021 fourth quarter and annual results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be question and answer session. Instructions will be provided at that time for you to queue up for questions. I'd like to remind everyone that this call is being recorded today, Tuesday, March 22nd, 2022. I will now turn the call over to Ms. Lindsay Betts, Head of Investor Relations at Nextech AR Solutions Corporation. Please go ahead.

Good afternoon and welcome to the Nextech Q4 earnings call. With me on the call are Evan Gappelberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer. Today, after markets closed, Nextech AR Solutions Corp. released its financial results for the fourth quarter and year ended December 31st, 2021. A copy of the earnings disclosure is available on our website and on CDAR. Some of the information disclosed on this call is based on information as of today, March 22nd, 2022, and offers forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release as well as in our CDAR filings. During this call, we will discuss IFRS results and key performance indicators. A detailed description of our key performance indicators is available in our MDNA, which can be found on CDAR. Neither this call nor the webcast archive may be re-recorded or otherwise reproduced or distributed without prior written permission from NexDeck. To begin our call, Evan Gaffelberg, CEO, will discuss Q4 and 2021 highlights, as well as any recent business developments, followed by Andrew Chan, CFO, who will review our financial results and outlook. Finally, Evan will make closing remarks before opening up the line for a question and answer period. I'll now turn the call over to Next Tech AR Solutions CEO and founder, Evan Gaffelberg.

Thank you, Lindsay. Good evening, everyone, and thank you all for joining us today. First, I want to thank all of our employees who are located across the globe, including Canada, the United States, Europe, Asia Pacific region, for their continued commitment Nextech's success throughout 2021 and now in 2022 is only made possible through the hard work, creativity, and dedication of our talented and valued employees. Our culture of organizational learning and working culture that we've developed at the company continues to drive business excellence at Nextech. In 2021, we have emphasized the accelerating adoption and extraordinary demand that we experienced for our augmented reality and metaverse solutions, specifically in Q4. And it really was reinforced with new deals closing in Q4 for augmented reality and e-commerce solutions at a pace that the company has never experienced before. The demand for 3D models, across a multitude of industries, including but not limited to e-commerce, manufacturing, and education. And we believe that this will only accelerate throughout 2022 and beyond. Our company's mission is to build the first vertically integrated AI-powered 3D model factory for the metaverse. I'm just going to repeat that, that our mission is to build the first vertically integrated AI-powered 3D model factory for the metaverse. In 2022, we're going to strive to accomplish this ambitious but attainable goal. Revenue growth has been quite dramatic since I founded the company back in 2018. We've transitioned to a SaaS business model in Q4 of 2021, which is on full display now as we roll into 2022. The ongoing COVID-19 pandemic over the past two years has certainly caused a lot of volatility in the market and a lot of unknowns. we pivoted to a world of virtual events and really the whole world pivoted to virtual events and online shopping back in 2020 and even first half of 2021, which resulted in a dramatic boost in revenue for our virtual events and e-commerce businesses in 2020 and the first half of 2021. And as we've previously mentioned, We have never considered this boost to our virtual events business to be permanent, and it really is not the main focus of our company going forward. While we have navigated the pandemic, we have always had an eye on the prize, on the bigger picture, which was always, since the founding of the company, augmented reality experiences and the modernization of 3D and AR solutions. Over the past four years, we've been investing heavily in our augmented reality and metaverse solutions, making transformative acquisitions and continuing our research and development activities to further enhance our technology stack. Finally, in 2022, we really have just begun to reap the rewards of these investments, as the world has now woken up to the idea that 3D is the future of e-commerce. The business opportunity and the demand for next tech to produce 3D models and AR experiences for the metaverse has never been greater. In 2021, the pandemic wanes. and we saw the opening up of the global economy, which has resulted in a reduction of the necessity for virtual events and has impacted the entire virtual events industry as a whole. We have prepared for this inevitability by cutting our headcount substantially as our virtual events revenue growth leveled off. However, our live event business is alive and well and growing rapidly. We are a diversified company, which gives us the good fortune to be able to pivot resources and we have moved our resources from virtual events to live events. We have moved some key clients from virtual events to live and hybrid events, which allows us to continue our momentum within the events business on our MapD platform. In 2022, we are seeing a healthy uptick in the live event business with our average monthly MapDynamics revenue, which is our live event platform, increasing 78% since Q4, with the average MapDynamics order increasing 16% compared to Q4 of 2021. Also, with our 2022 integration of Stripe, which we previously announced of the MapD platform, we've seen further growth of high margin revenue with these events. The Stripe integration provided an additional no-touch $760,000 in projected annual revenue for Next Tech through a 2.3% platform fee when Stripe is used for booth sales, again, for these live events, which is a business segment that we own and operate and are growing currently. We expect this high margin revenue to accelerate in 2022 as we introduce a new ticket sales capability, which will have at least a 2.3% fee, which will take effect in April of 2022 or in the next few weeks. So we see that business as extremely strong, high margin, profitable business. business that we are just starting to scale currently in 2022. Revenue from our AR solutions continues to rapidly accelerate. The demand for 3D models for e-commerce has increased as a new, immersive, and engaging way of online shopping has been introduced. Businesses are finally starting to recognize the benefits, and consumers are beginning to expect these experiences. In Q3, we announced our expectation to close 2021 with all of our revenue in the $25 to $29 million range. We closed out 2021 with a record-breaking $25.9 million in revenue representing 40% year-over-year growth, which isn't too shabby. We are now signing up new accounts to ARTize 3D, which is our flagship product, our flagship product for producing 3D models. And we're signing up these customers for many different industries, including furniture, fashion, sporting equipment, pet wear, jewelry, eyewear, home goods, bespoke gifts, automotive and more. And we're experiencing a big jump in demand for our 3D model making solutions, which we do not see slowing down anytime soon. We are already seeing our enterprise business, which we previously announced that Kohl's is our customer, Kmart is our customer, Pier One's our customers. We're seeing those businesses accelerate severe order flow for additional 3D models. We are also signing new deals with many small to medium-sized e-commerce sites. In Q4 alone, we saw a substantial uptick in customer adoption of our technology that are either signing 12-month annual recurring revenue contracts or annual repeat customers that keep coming back because of our incredible customer service and product technology stack. So we have almost a million dollars in annual recurring revenue or annual repeat customers. If you look at our renewable software license revenue, we pegged that at around $1.4 million in 2021, which clearly is the growth engine of the company, up 316%. year over year. All of this is truly a validation of our efforts to disrupt the emerging multi-billion dollar 3D model market with the highest quality, lowest cost, most scalable 3D model solution anywhere. All signs in 2022 point to being a historic and breakout year for everything 3D. 3D models for e-commerce, annual recurring revenue. That's our business as we go forward. That's the area of business that we believe can scale quite quickly and should be what investors keep their eye on to measure the health of the company and our growth potential. Since 2018, we've reported to investors dynamic growth and shown our ability to pivot while delivering on our promise for AR for e-commerce and revenue growth, which is now accelerating into 2022. And really, all of that speaks for itself. We started out with just a kernel of AR in 2018. We moved into the e-commerce space in 2019. As we move forward in 2020, we added virtual events into the mix and live events. Now in 2022, we are seeing the rapid acceleration in 3D and AR happening. And we strongly feel that the growth engine for revenue going forward will be our augmented reality and metaverse solutions. These solutions are being integrated to become one unified end-to-end suite of solutions called the AR Times Metaverse Suite, which we have previously demoed during an investor presentation and is expected to launch next month in April. We are focused as a company on the development and release of multiple first-to-market SaaS platforms for augmented reality and the metaverse to capture market share with our entire suite of interconnected products. Just to recap some of the products that have launched and some of the soon-to-be-launched SaaS offerings. In Q4 of 2021, we launched ARTize Labs for higher ed, ARTize Decorator for e-comm, and the Stripe integration all happened in Q4 2021. In Q1 2022, we announced ARTize 3D as the public launch, ARTize Maps, the app, was launched in beta, which is a spatial mapping app that's currently being showcased at MIT. We also launched ARTize Holograms, our human hologram creator app, which is about to be turned into a web-based human hologram experience, which we think will unleash the true potential of that app. ARTize 3D, we integrated with Shopify, That was a big deal. We're seeing fruits of that integration with many downloads and many customer sign-ups on Shopify. We also have ARTi Swirl and ARTi Social Swirl launched in Q1. ARTi's Metaverse Studio, as mentioned, launching very soon in April. Our CAD to Poly SaaS product, is expected to launch in Q2. ARTize 3D getting integrated into BigCommerce is expected to launch in March. ARTize 3D WooCommerce integration will be May. ARTize Magento integration May. We are just beginning to see the revenue and business emerge as we move full force into 3D model making, augmented reality, and metaverse solutions with our new SaaS offerings. SaaS integration with our product line has significant implications for scalability of our products and our revenue growth. With the continued rollout of our SaaS platforms, Next Tech continues to move away from a managed solution towards annual recurring revenue. I would say that we have successfully accomplish that goal. And as we move forward, we're moving towards a low touch slash no touch business model with monthly recurring revenue and annual recurring revenue. To give our investors an idea of what we're seeing in 2022 so far, our ARR, annual recurring revenue, has increased 57%. since the end of the year 2021. Average new 3D deal size is up 53% compared to Q4. We're quoting on the whale of whales, let's call it. It's a quote that we're working on, 39,000 SKUs. It could even be bigger than that. It's not a guarantee, but it's a quote and it's very close. We are contracting with repeat customers. There's an additional 3,000 SKU order. CB2 ordered 2,500 SKUs, and we have partnerships with Designer Inc., ShopLine, FKA Brands, and more. To date, Nextech has created over 10,000 3D models with about 70% of those models created since Q4 2021. That's enormous growth in our production of 3D models. In the past nine months, Nextech's 3D models have had 3.5 million views. About 1 million of that 3.5 million has happened in 2022 alone. So about a million views of our 3D models in 2022 alone in just the first, not even three months. And we're just getting started. This massive estimated $200 billion 3D model making for the e-commerce business opportunity really just started to emerge in Q4 of 2021 and is continuing in 2022. we believe it's going to continue. And we believe we're going to continue to win business because of our strategic SaaS and third-party integration initiative with the Shopify's of the world, which will get our ARTize 3D solution in front of millions of e-commerce merchants globally. And because of our belief that we have the best solution, the lowest cost, highest quality, most scalable solution in the market today. It's only a matter of time, in our opinion, that our competitors will give up, that our competitors will not be able to compete with us, as we believe we have the only truly end-to-end solution for the e-commerce industry. Now, since Facebook rebranded itself as a metaverse company, it seems like a long time ago, but it really was just a few short months ago, There's been a complete shift towards all things 3D and AR and the metaverse, and there's really no turning back. As everybody knows, Zuckerberg came out and said, I believe the metaverse is the next chapter for the Internet, and big tech believes the same thing. Microsoft, Google, NVIDIA, Unity, Shopify, Qualcomm, they're all spending and investing billions, maybe hundreds of billions in the metaverse. Many notable brands have entered the metaverse, including Nike, Adidas, Coca-Cola, Louis Vuitton, Gucci, Disney, McDonald's, and many, many more. This is all great news for Next Tech. Big tech's commitment, big brand involvement, and the shift towards mass consumer adoption will only put wind in our sails. We have a unique position as the end-to-end metaverse solution providing spatial mapping, augmented reality, and 3D models. Ultimately, you add that together, you get the trifecta. We've created a platform like no other that allow for immersive experiences, ease of use, and low cost. All of this is now on display at MIT tomorrow for the hackathon, which we publicly announced today. Our position will be cemented further upon the release of our ARTIZ metaverse suite, which is coming up in a couple of weeks. As mentioned, the ARTIZ suite of SaaS products allows you to sign in and essentially Choose your SaaS solution, whether you want a 3D model solution, an exploded view, whether you want our showroom, hotspots, animation, swirl ads, our configurator, it's all there in one place. It will become the 3D destination for businesses. There's endless use cases. malls, sports stadiums, retail stores, university campuses, theme parks, museums, corporate headquarters, events, live events, restaurants, rental properties, anybody that wants to turn their place of business or even your home into a metaverse. It's all there. Considering the potential applications for what Nextech has built and anticipated market adoption, we believe that there's over $250 billion up for grabs. We believe that the SaaS for e-commerce alone as just a segment of the entire 250 billion metaverse addressable universe is over $100 billion. So it's not a small number. And we believe that we have a leadership position and an opportunity to take huge market share over the coming years. I want to change gears. I want to speak to our investors for one moment about NASDAQ and our uplisting goals. Everybody should know by now that we have applied to NASDAQ and we still are looking at this as a top priority. We appreciate all of your patience while we work towards this goal, and we strongly feel that we are better prepared than ever to achieve it. Case in point, during Q3 of 2021, we announced our change of auditor to Markham Markham is an extremely well-known, reputable U.S. audit firm that has hundreds of companies that they've taken to an uplisting on NASDAQ or NYSE. We have also hired top new legal counsel at Haynes & Boone, who have a track record of success in getting companies uplisted. We are currently working with Markham and Haynes and Boone and are confident in their extensive experience in the U.S. exchange uplistings of companies that are like Nextech. I cannot specify timing around this. I cannot reiterate enough that this is a priority for us, and we are taking all the necessary steps to while observing and complying with U.S. exchange and SEC regulations in preparation of entry onto a U.S. major exchange. In closing, Q4 was an important quarter for growth in 2021. As a whole, it should be viewed as a transformative year for NextEx. We officially became a metaverse company with two transformative acquisitions, and we succeeded, which was not easy, in moving our business model from a managed service to an ARR slash monthly recurring revenue formula. Next Tech is now fully focused. on obtaining greater industry leadership in the augmented reality and the metaverse space with our entire suite of interconnected products. In 2021, augmented reality and the metaverse took center stage. These solutions have changed from a nice-to-have to a must-have in 2022. And this is really what we've been preparing for since the founding of the company in 2018. I'm more confident than ever in the accelerating momentum of our augmented reality and metaverse solutions, and I expect 2022 to be a year of hyper growth for all things augmented reality and the metaverse. There has been a digital transformation, and once you go 3D, you do not go back to 2D. Our AR products are sticky. and has significant implications for monthly recurring revenue and annual recurring revenue, which will accelerate with the adoption and stickiness of our entire augmented reality products and suites, which, again, is launching in April. Fueled by the metaverse, the augmented reality tidal wave is finally here. I've been repeatedly saying over the past four years, many of you have heard this, that this will be a multi-decade, multi-billion dollar megatrend. Big tech is now committed to building the ecosystem that next tech thrives in. And we feel confident. We feel very confident that our goal will be achieved. We are just at the beginning. It's an exciting time. to be a public company and to be an investor in this space. The future is bright for Nextech AR. Today, I have the utmost belief in our company's direction, our executive team, and in everybody behind the scenes working to achieve our vision of building the first vertically integrated AI-powered 3D model factory for the metaverse. With a successful 2021 now behind us, I believe that 2022 will go down in history as the breakout year for everything 3D and a great year for growth for Nextech and our shareholders. With that, I'm going to turn the call over to Nextech Air Solutions CFO, Andrew Chan, who will provide commentary on the quarterly results. Andrew, take it away.