Adcore Inc.

Good morning everyone and welcome to our investor update conference call. All callers are in a listen only mode. We're going to let everybody join in and we will officially begin in the next few moments. Okay, we can begin now. On the call this morning, the company's CEO Omri Brill will provide an update on the company's operations and strategy, followed by a financial review by ADCOR's CFO Yatir Sadot of the company's Q1 2023 financial statements, after which we will answer pre-sent questions and take questions from participants. I would like to take a moment to remind participants of the Safe Harbor Statement. This conference call contains certain forward looking information and forward looking statements, collectively forward looking information, including statements about the company. I will now give you a few moments to take a look at the forward looking information as reflected on the screen. Okay, at this time, I'll be turning the call over to Omri Brill, AdCourse CEO, to update you on the operations and strategy of the business.

Okay, thank you very much, Gab, and good morning, everyone. Thank you for joining us today for the company Q1 2023 earning call. and for us in the advertising space, Q1 is traditionally the slowest quarter in the month, in the year, sorry. So basically they start very slowly, then it slowly pick up Q2, Q3 and Q4. And actually, when we look at the company quarterly results and we can see exactly this trend in 2022. So that's a really good example. Q1 2022 was 4.7 in top line revenue. Q2 was 5.2 and then 7.5. 0.5 million and Q4 2022 was 8.8 million. So basically, being able to demonstrate such a strong earning report for Q1 2023 give us a lot of confidence regarding what the company will be able to achieve in the entire year. So it's definitely a very strong start of the year. We are very happy and pleased with the reports that we're going to demonstrate today or showcase today. Let's dive into the numbers a bit. Just one sec. Q1 2023 top line revenue was 6.8 million compared to 4.7 in Q1 2022. That's a massive increase of 45% year over year. Gross profit were up by 35% year over year to 2.7 compared to 2 million in the previous year. When we look at quality gross KPIs and the company historically, they only call report to KPIs, gross profit and gross margin, and also revenue coming from North America region for us. But obviously the company have many more important KPIs, but this is some of the KPIs we like to call quality KPIs. And yet again, we see a very strong number. So QE1 2023, like I said before, 2.7 in gross profit, compared to 2 million in the previous year. Growth profit up 35% and growth merging were 40%, which is actually in the higher range of our original guidance, which were 38%. to 40%. So we are very happy with the mid-line result, obviously. And again, when we look at revenues coming from North America, we see a massive 61% year-over-year growth to more than $1.5 million in Q1 2023, compared to less than $1 million in the previous year. So again, two very important KPIs, and both of them are actually moving in the right direction. I want to touch base about AMFI numbers a bit, and these two very interesting graphs that I would like to share with you today. Actually, the first graph is the AMFI monthly average band rate. And we started this graph in Q1 2022, and the average band rate over there back then was 120K. That's USD, by the way. It was very, sorry, monthly average. And then it went down Quarter over quarter, we can see that, let's say, for example, Q4 2022 was a bit less than 100K. And Q1 2023 was around 80K. So that's 33% decrease compared to the peak that we had in Q1 2022. And the company is taking a lot of aggressive measure in order to make sure that the ban rate is going to be reduced significantly. to 60K average in Q2, and then around 40K in Q3, and 33 we estimated in Q4 2023. So that's like, if you need to compare it to 120K, that's a 75% reduction. And the way we've been able to do so is because a lot of the heavy liftings that were associated with building up a new platform, onboarding a lot of new teachers, for example, a lot of tech investment and content creation investment, all of this major heavy lifting we've been done with. So that's actually good news. We've been able now to reduce, for example, the R&D team from six people in the peak to three people. Now, content team was reduced for three to four people in the peak to, I would say, less than one person now working full-time on the Anfi content. So basically, there's a lot of, let's say, saving we can do. And obviously, we expect revenue to increase as well. But in the end of the year, we plan that Amphibian Red is going to be insignificant to the company ordinary course of business, which is, I think, it's a good news for us. It's a good news for our investors as well. And on the upside, although like having this, Amphibian Red is also an upside. But if you look at the bottom report, the blue report, we can see the monthly average blog visitors that we have to Anfi. And like I said, the company invested a lot of creating relevant content for Anfi. And we can see over here a very impressive increase in blog visitors over the course of the past quarter. Again, this is monthly average blog visitors. And if Q1 2022 was less than 3K visitor a month, Q1 2023 was already around 50,000 visitors a month, and then we expected Q2 2023 to be at more than 100,000 visitors, and this is based already on visibility that we have with April and almost half of May as well. So basically, very nice growth trend in terms of interest, visitors, and stuff like that. So again, that's something that was important for us to share with our shareholders. And so just to recap some of the highlights of Q1 2023 report, again, revenue grew by 45%. That's an impressive number. Gross profit grew by 35%. Again, a very nice growth. E-mail revenue grew by more than 80%. Very fast growth coming from this region. North America revenue grew by more than 60%. year over year as well. And even APACs, and we saw a massive decline in this region in 2022, resume its positive growth trend and grow in 30%. And we believe we will be able to demonstrate or show more growth coming from this region in this coming year as well. And when we look at the comparable, the company still believe that the share is still very deeply undervalued. Current share price is 23 cents. As of yesterday, closing a number. We believe there's a very big upside for the company. And that's why the company is buying shares in the market. So we have the NCIP plan going on. And we also bought in market. and off-market total shares that we bought since starting this plan exactly one year ago was accumulated to almost 4 million shares that were bought and canceled and almost 1 million Canadian dollars that was invested in this process. And actually, the company still believes the stock is undervalued. plan to resume the NCIB for additional year and once it's going to be a gut clearance for the exchange, we can announce it and basically that's the company intention and the company is in and the shareholders continue to buy shares, both from the company level and I myself on the personal level as well. Everybody is committed. Everybody understands it's like a value that basically in the current stock price. So if you remember in the last earning call, when it was the summary of Q4, we talked about the company goal and targets for 2023. And I want to go over each of the six goals that we announced in the last earning call and see if the company has been able to meet them or not. So, the first goals that we set is that we want to maintain a strong balance sheet with a focus on increasing cash reserve. So, obviously, we had some drop in the cash reserve quarter over quarter. But again, Q4 compared to Q1, that's something that the company expects. And for the long run, the company... Still believe it can actually increase its cash reserve in 2023. And basically, the company remains very much committed to maintaining a strong balance sheet. So I would say after check over here. Second target is keeping the gross margin within the 40 to 50%. 50% credit. Again, 40%, that's what we did, and that's a check. Achieve a double-digit growth in revenue, growth profit, and operation profit. So that's a full check over here. 45% year-over-year growth in revenue. 35% year-over-year growth in revenue. in gross profit and operation profit improve or the loss in operation profits improve in almost 100%. And we want a number four goal is to expand our global footprint in North America. Yet again, we demonstrate a very strong 60% year-over-year growth, so that's a big check. Number five, strengthen the strategic partnership to drive mutual growth and market share. The company recently announced being selected as the number one Microsoft advertising partner in the entire EMEA region, so that's a big accomplishment. And there's also other exciting news we can't reveal yet regarding this partnership. And we are working very hard and signing new partnership as well. So we're going to announce some exciting partnership coming in the next coming months. So I think, again, a big check over here. The company is in the right track, and every partnership that we sign increases the network effect of the company and the value proposition. And also, it's a good signal to other platforms to say, yeah, this is probably a good company to team up with, to make it a partner, to make it an official reseller. And in some cases, we're also talking about exclusivity in specific markets. And then number six is invest in research and development and driving, obviously, innovation. So yet again, a big check. The company is working on a very exciting, I would say, addition to the company app pipeline. Both a new feature and new apps that are going to release this quarter in Q2. So there's a lot of exciting news coming our way. And I say in the end of the day, like if you need to look of what the company says, it's going to be the company goal. So target for 2023, I'm happy to report the company being able to meet maybe 90% of the goals and targets it's put to itself. So I can be very pleased. why the company has been able to showcase such a strong report in Q1. And we are very bullish and optimistic about what we can still achieve in the next coming year. I know that you're still waiting for guidance for the the second quarter, but we would like to supply them in the beginning of June when we have a bit more clarity about this quarter. But again, we see what I can show that we see the same trend that we saw in Q1 carried into Q2 as well, which is obviously a positive signal. So that's it from my end for the company remarks, and I'm going to add it back to you, Gab, and I guess to our CFO as well.

Thank you so much, Omri. And with that, Yatir, I will turn this call over to Yatir Sadot, AdCourse CFO, to review the first quarter financials in more detail. Yatir?