Nextech3D Ai Corp

Good afternoon, ladies and gentlemen. Welcome everyone to the Next Tech 3D AI second quarter 2023 results conference call. All lines have been placed on mute to run 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 questions. I'd like to remind everyone that this call is being recorded today, August 22nd, 2023. I will now turn the call over to Julia Viola, Investor Relations at Next Tech 3D AI.

Hello and welcome to the Nextech 3DAI Q2 2023 earnings call. With me on the call are Evan Gappleberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer. Today, after markets closed, Nextech 3DAI released its unaudited financial and operating results for its second quarter ended June 30, 2023. 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, August 22, 2023, and contains 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. Neither this call nor the webcast archives may be recorded or otherwise reproduced or distributed without prior recognition from Nextech 3DAI. To begin our call, Evan Gappelberg, CEO, will discuss Q2 2023 highlights as well as recent business developments, followed by Andrew Chan, CFO, who will review our financial results and outlook. Finally, Evan will provide closing remarks before opening up the line for a question and answer period. I'll now turn over the call to CEO and founder of Nextech 3DAI, Evan Gappelberg.

Thank you, Julia. So, hello, everyone, and thank you for joining us for our Q2 earnings call. In 2023, we are at, you know, we're a little past the halfway mark because we're in Q3 now. But as far as today's numbers go, this represents the 50-yard line for 2023. And in 2023, it's important to underline that Nextech 3D AI became a pure play technology company. That transitioned. has yet to be recognized by our investors as we see our AI capabilities, as we see the demand for 3D models, and as we see our production capabilities continuing to ratchet up in 2023 and beyond. 3D models, as I've said many times before, but now I'm going to lean in even stronger. They are no longer a nice to have. They are a necessity in e-commerce and even beyond e-commerce into gaming and manufacturing, which we are starting to gain momentum in. These industries, which are massive, multi-trillion dollar industries, are all pivoting. 3D. And it should not be underestimated how huge an opportunity this represents for early investors in Next Tech. Amazon is the leader in the e-commerce space. They have roughly a 70% market share. They are by far the single largest enterprise customer. If you add Everybody else up in the entire e-com ecosystem, it only adds up to 30% of the market. Amazon is the giant. They are our largest customer for 3D models. And they're going all in on 3D. The world has pivoted, make no mistake about it, to 3D models. And 3D models are are the future of e-commerce. To compete in the next decade in e-com, in medicine, in education, in events, you will need a 3D model. And that is what Next Tech makes, 3D models, which positions us for rapid growth for many years to come. It was a huge challenge. getting here, it took five years, but we are here now and we see nothing but blue sky opportunities in the market going forward. Supplying Amazon demonstrates Nextech's technical proficiency and leadership in 3D modeling for e-commerce and really sets us up for success with other big enterprise accounts. Because if it's good enough for Amazon, it's good enough for everybody. But we are still hunting. Amazon is not the last stop for us. We are still hunting. We have a large number of enterprise deals that are moving forward. We already service Target. We already service Kohl's. We already service CB2s, Procter & Gamble, Ison, and many others. But we're not done. We're still hunting and we still have very, very large enterprise deals, as I said, that are moving forward. This industry is massive. It's a massive, massive opportunity for the company. And it is starting to accelerate in Q3 2023. So we're eight months in and we are seeing a ramp up for demand continuing. In 2023, especially starting now, which we're in Q3, this is another week, will be two-thirds of the way done with Q3. And we see Q3 accelerating and Q4 actually accelerating even further in 2023. The demand for 3D models in e-commerce, we believe, is only just really getting started and it's going to shift into overdrive in my opinion we're going to see the demand get to a frenzy where just like during covid you had everybody that was in in any kind of business searching for virtual events and virtual event platforms That was back during 2020, which had a significant impact on our business because we were in that business at the time. I believe that it is starting to happen again, only this time it's for 3D models. And it's a much, much more sustainable, decade-long megatrend. And I believe that right now, starting in Q3 2023, we are starting to see liftoff in the demand for 3D models. If you look at the potential future catalysts, we're signing more contracts with major players, and Nextech really is cementing itself as the world's leading supplier for 3D models. And we believe that more companies are going to become our customers in the next six months and the next 12 months. If you look at e-commerce, The business opportunity and demand for us to produce 3D models has never been greater. And we are extremely, extremely excited about e-commerce. The reason why e-commerce is having such a dramatic impact on our business is because with 3D models in e-commerce, you see a tremendous ROI. You're seeing a 40% reduction in returns. you're seeing a 93% higher click-through rate and up to a 250% increase in conversions. Nothing comes close to that. Nothing. Not video, not direct messaging, not even next day delivery by Amazon. With 3D modeling technology, we at Nextech are perfectly positioned for this next phase of growth in e-commerce, which is widely called Web 3.0. 3D models can be used for virtual photography. You can use them as try-ons. So you can have a 3D model, and you can literally see what a product looks like in your space. You can see what they look like on your face, on your feet, on your wrist. It opens up a whole new opportunity for consumers to feel more confident buying products online. And it's predicted that over the next decade or two that 95% of all commerce, that's right, 95%, that's pretty much everything, will be conducted online. And that's only possible because of 3D models. If companies don't adopt this technology, If they sit on their hands, they will be left behind. So everything is perfectly aligned for Next Tech as we are going to experience this dramatic growth over the coming years and decades. As our AI improves, our 3D production capabilities improve. that hits our bottom line and our profits improve. Now, if we shift our attention to our portfolio of companies, apart from A.R. Times 3D and our 3D modeling business, we own two other public companies. Nextech owns some very valuable breakthrough technology in industry-disrupting products, and A.R. Way which the symbols ARWY in Canada, ARWYF in the U.S., is an augmented reality experience platform that we own roughly 49% of the shares outstanding. It's an easy-to-use, out-of-the-box AR platform. We are targeting the indoor navigation market, just like Google owns outdoor navigation with GPS. ARWay, we are anticipating, is going to own the indoor navigation using its proprietary technology. So ARWay is having quite a year in 2023. We have over 30 pilots underway with big brands. Some of them are governments. Some of them we talk about. Some of them we can't talk about. But we did announce just, I think it was a week ago, that we signed a deal with the Irvine Spectrum Center Mall in Irvine, California, a massive million square foot mall that's a paid-for deal. They're rolling out ARWay and That is just an enormous, enormous opportunity for our way to become a leader in the mall industry, which is massive, obviously. We also recently signed a deal with Localiza. Localiza is the largest car rental company in South America. They're like Enterprise or Hertz in North America. They have over 500 locations in airports, So, you know, ARWay is doing quite well. The share price, I believe, is extremely undervalued. We are in talks with major AR glass companies about using ARWay in their ecosystem. So, we have some very, very high hopes, and we think that ARWay is going to be the dominant indoor navigation system that people are going to use, just like you use your Google Maps to drive, you're going to use ARway as you walk indoors and you navigate, whether it's a museum, whether it's a theme park, whether it's a trade show, a hospital, an airport, a warehouse. a mall it all of those all of those require some kind of navigation and arway is perfectly perfectly suited for that so we're expecting quite significant contracts for arway and we expect that business uh to do quite well in 2023 and beyond if we look at map dynamics We licensed our ARA platform to MapD, and we expect to see significant growth because it's just a perfect product market fit. You have navigation capabilities inside the MapDynamics app so that when people go to trade shows and events, they click on a navigation button, and it opens up a map. And using augmented reality navigation, you can navigate to a booth, And you'll see sponsorship. You'll see a product offering. It's just the next level experience for events. And we have some big news that we expect to announce in the near future related to that. As we look at, you know, Toggl. Toggl is another one of our spin-outs. Symbols T-G-G-L in Canada, T-G-G-L-F in the U.S. We've announced that it's had huge success with signups showing over 300% growth. But that's just the beginning. That's just the tip of the iceberg. We recently hired Anita Maté as Director of Growth Marketing from Amazon, which is just a coincidence. But she is an experienced marketer, and she now is tasked with focusing on converting users to paid SaaS subscribers. It is too early to really talk numbers because we just launched in June, and it takes a little while to ramp up. But it's fair to say that we are very, very confident with the business use cases we are seeing. And we're in discussions with large enterprise customers for Toggle that have come knocking on our door that have a dire need for its technology. So I would just say to our investors, be a little patient with Toggle. It's only been public since June of 2023. In closing, 2023 has been challenging as a shareholder. Again, I am the single largest shareholder with 11 million shares. There's nobody that's taking it on the chin more than I am. But I don't stress about it. I am not stressed. In fact, I see opportunity. I see huge opportunity. In my opinion, and this is just my opinion, that 2023 is going to be a year of of significant growth for our business. And I believe that the strong companies, which Next Tech is one of, bounce back. And I think we will see a rip-your-face-off bounce back for Next Tech. I'm not going to say the day. I'm not going to say the week. But I believe Next Tech is going to bounce back quite significantly. We are fully focused as a company on becoming the world's leading 3D modeling company. To do this, we've made critical business decisions, as mentioned, by becoming a pure play tech company and jettisoning our legacy business. Just as importantly, our revenues are ratcheting up. And even more importantly, our burn rate has come down to only 300 000 a month that is a huge improvement compared to where we were in the previous years and it gives us the runway to be able to build our business to become a profitable technology company we are continuing to integrate ar aritize 3d With third-party e-com platforms, we're rolling out a SaaS product. And I believe that all these decisions that we've been making over the past year specifically is going to be paying significant dividends for Next Tech shareholders. Next Tech is capturing market share in the early days. It's seen its customers. come back for more and more 3D models and more and more renewals. And with Amazon, we believe that we have a very, very bright future. I've never been more excited and confident about the position that our company is in and the opportunity that we have in front of us. Before turning the call over, I'd like to thank our experienced executive leadership team for their hard work and dedication. and thank every Nextech employee working day in and day out, striving for success to achieve our company's goals. I also want to thank our new board members, Nidhi Kumbhra and Anthony Pizzonia, that have recently joined us, adding greater board independence. I also want to thank our loyal shareholders, for sticking with Nextech through the ups and downs. I have full confidence in our company's direction, and I'm looking forward to continuing growth in 2023 and beyond. With that, I'll turn the call over to Nextech's Chief Financial Officer, Andrew Chan, to provide full commentary on the financials. Andrew, take it away.