Adcore Inc.

This is Adcor's Q1 2024 earnings call. We have a very exciting update for you today. Today, your host will be myself, Nick Campbell. I'm the head of investor relations here at Adcor. You'll have Omri Brill, CEO and founder, and Amit Comforti, CFO. The agenda for today is we'll begin with some forward-looking statements, followed by the CEO opening remarks, and then the CFO financial highlights, and finally Q&A. If you do have a question that comes up during this call, please feel free to use the submit a question feature in Zoom, and we will answer those at the end. So before we begin, these are the forward-looking statements you should be aware of when listening to this call. Please note these statements that are made today are forward-looking in nature. They may be projections about the business's future performance and plans, but please bear in mind that these statements are inherently uncertain as they are subject to various factors outside the business's control. At this time, I will give you about 30 seconds to a minute to review the statement before we move on. So I'll let you do that now. Okay, and with that, it's time for the call to begin. I will pass the floor to Omri. Omri, the floor is yours.

Thank you so much, Nick, and good morning, everyone. It's my pleasure to discuss today the company results for Q1 2024, and let me start by sharing my presentation. Okay. Okay. So all in all, I don't know if you had a chance to view the results already. We issued the PR and the results are already out there, but I would say that the operational efficiency boost the company gross profit and gross margin for this quarter. And we are all in all very happy with the results we've been able to achieve during Q1, 2024. And just to discuss some key key metrics from today's, from this quarterly report. Top line revenue was 6.9 million, almost 7 million compared to 6.8 million in the previous year. And that's represented 1% increase year on year. Gross profit increased by 17% to 3.1 million compared to 2.7 million in the previous year. Gross margin improves as well to 45% compared to 40% in the previous year. That represents a 13% increase in gross margin as well. This is one, if you recall, this is one of the important, like what we call quality KPIs that we are Monitoring another quality KPI that we are monitoring is revenue coming from North America, which is an important region for us. And we are happy to report a nice increase of 13% year-on-year in this important region. So good results, both in gross margin and in revenue coming from North America region. All in all, just like to recap and summarize some of the quarter highlights, I would say gross profit grew by 13% year on year. We saw a nice increase in gross margin from 40% in the previous year to 45% this year. We saw a strong revenue growth in North America by 30%. We saw a very nice jump in adjusted EBITDA of almost 200%. We had a positive shift in cash flow from a usage of almost $1 million in cash for operation in Q1 2023. We're now flat in Q1 2024, so that means it's a big improvement in net cash flow. in this quarter compared to the previous year as well. And client concentration also improved from 56% that we had in the previous year to 42% this year. So I think like all in all, a lot of very good metrics across, I would say almost across the board. Midline, bottom line, balance sheet, all the metrics look very positive for us in this quarter. If you recall in the previous call that we had to summarize 2024, we discussed what should be the company goals or focus areas that we want to focus in 2024. And we say, A, maintaining a strong balance sheet with focus on increased cash reserve. So we have reported the cash reserve remained almost the same compared to the previous quarter. And if you historically compare Q1 to Q4, usually we see a drop in cash reserve. So the fact that we've been able to preserve cash reserves in Q1 compared to Q4 is actually a very strong indicator for us regarding company ability to preserve cash. We discussed keeping the gross margin within the 40% to the 50% to raise yet again another check with requirements. in this quarter, and as I mentioned, it's a 13% year-on-year improvement. We discussed achieving double-digit growth in revenue, gross profit, and operational profit. Again, revenue remained more or less, so we saw moderate growth, but both gross profit and operational profit adjusted EBITDA, we saw a significant improvement, and that's very solid results for us. And we discuss expanding the company marketing technology and marketing solution offering. And I encourage everybody to visit the company and your website and see all the different, I would say, technology offerings that we have and marketing solutions that we have to see that the company is expanding a lot our offering. So all in all, again, very positive quarter for us. And bear in mind, Q1 historically is the slowest quarter for us in the year, you know, because of seasonality. So the company ability to present a solid quarter in Q1 is a very good indicator for what we believe 2024 can look like. And that's also a good opportunity for us to discuss the company, I would say, for strategic pillar. Again, what we discussed in the previous call as well. Just as a quick recap. So the first pillar is technology and AI is obviously continuing to develop our own proprietary technology. technology and making sure that we are embedded and implementing AI solutions throughout a different technology and application, and obviously using AI in our day-to-day operations as well. The second strategic pillars that we towards enterprise and aggregators. So this is larger type of, let's say, client that represent bigger opportunity for the company to scale. We discussed focusing on low touch, do it yourself type of activity and service offering, again, scale and efficiency. That's, you know, the main reason behind this strategic decision. And last but not least, is focus on synergy. So making sure the company is doing multiple things in multiple areas. We want to make sure that we have synergy between the different efforts the company is doing. And again, every new, let's say, venture that the company is doing, any new developments the company has announced, you need to look whether it's going to end or going in line with these four strategic pillars? If the answer is yes, that means that we are doing something in the right direction. And if the answer is no, then it means something is wrong and maybe we should look again whether we should do it or not. And other things that we discussed in the previous quarter is the, I would say, some improvement in the stock price. If you look at, let's say, from the buttons that we saw in 17 cents to now, we saw almost 40% increase. three months, 30% increase, also almost 30%, sorry, six months as well. And all in all, we see a positive trend in the stock price, but we still believe it's fairly, fairly undervalued. There's still a lot of money to be made in the ethical stock. That's at least the company point of view. At this point of view is also backed up by the comparable table. So we put peer companies, companies that are within the martech, the edtech space like Edcore. And you see if we're talking about gross profit, for example, that you see it represents a very high potential of almost more than 700% compared to the peer, you know, as the potential for the stock to go up. Again, we not only talk about it, we also doing the stuff around it. And the company bought in Q1, 2024, more than 80,000 shares for Constellation. And all in all, in the past two years, we bought more than 4 million shares for Constellation and invested almost 1 million Canadian dollar into it. And we believe that once the market gonna see like a more massive uptick within the small cap indices, that Edco basically can lead this a trend because again we put a lot of effort in order to cancel net of shares and basically that should be able us to grow more aggressively once the market condition will turn better. Last but not least, we discussed it about it in the previous earnings call as well, is the company's social responsibility. There's a lot of actions that we are taking in order to support, you know, evacuated community. Now also soldiers wounded by the war as well. And all of them are, I would say, bike related, end cycle related. And we encourage everyone to visit the company social responsibility page and also obviously keep an eye on the important, I would say, goals. So that concludes my remarks for the quarter. Again, all in all, we believe it's a very strong quarter, a very solid quarter, and a very good start for 2024. And now back to you, Nick, and to Amit.

Thank you for your comments, Omri. We'll now move to the CFO financial highlights. Amit, the floor is yours.