Adcore Inc.

Okay, good morning and welcome to Adcore's Q3 2024 earnings call. Today, we'll be going over the company's Q3 results. On the call today, you have myself, Nick Campbell. I'm head of IR here at Adcore. You have Omri Brill, CEO and founder, and you'll hear from Amit Konforti, Adcore CFO. The agenda for today will begin by going over some forward-looking statements, followed by the CEO opening remarks, and then followed by the CFO financial highlights, and finally Q&A. If you do have a question during this call, please use the chat feature in Zoom and we'll address that at the end. Before we begin, I would like to remind everyone today that during the call, we will be making forward-looking statements that are somewhat uncertain in nature. These statements are subject to risk and uncertainty, so please bear that in mind while listening to the call. I'll give everyone a minute to review the disclosure before moving on. Okay, thank you all for your patience. We'll now begin with Omri Brill's portion for the CEO opening remarks. Omri, the floor is yours.

Thank you very much, Nick, and good morning, everyone. It's my pleasure to discuss the company Q3 financial report today, and let's start with the presentation. Okay. And so all in all, it was a very positive quarter for us. All the important metrics that the company consider as key metrics in terms of our financial statement, whether it's gross margin, gross profit, and also growth in specific markets, as we believe are strategic to the company, were quite positive. And let's dive into, let's say, some highlights of these numbers. So top line revenue concluded in Q3 2024 was 7.8 million. It's a slight decrease compared to 8.2 million in Q3 2023. Gross profit, however, grew by 12% from 3.3 million in Q3 2023 to 3.7 million in Q3 2024. So again, we are happy to see that the gross profit is growing. If you look at another key or quality growth KPI that the company is talking about usually every earning call, and we mentioned specifically two of these KPI. The first one is gross profit and gross margin. So gross margin improved a lot from 40% in 2023 Q3 to 47% in Q3 2024. That's almost 20% year-on-year improvement. We also see a very strong growth in North America, which is strategic market for us and where the company believe a lot of future revenue of the company would come from. North America today become the second biggest market of the company. Like I mentioned before that we believe that during 2025, it's expected to become the biggest market of the company. Revenue-wise, we grew by almost 30% year-on-year to $2.1 million in revenue in Q3 2024, compared to $1.6 million in Q3 2023. Some highlights of the quarterly results. Again, North America, very strong growth, 30% year-on-year. Epic revenue grew a lot as well, 26% year-on-year. That's impressive. Gross margin, as I mentioned before, improved to 47% compared to 40%. In the previous year, gross profit, nice growth of 12% to 3.7 million compared to 3.3 million. Client diversification actually improved from 4%. So from 54% to 49%, and you're going to see even a better improvement if you look at the nine months of 2023. And adjusted EBITDA concluded in almost $300,000 in Q3 2024 compared to $240,000 in the same period last year. If you look at the nine months of 2024 and compare it to the nine months in 2023, bear in mind that we are still missing a very important quarter for 2024. So it's a bit too early to conclude the year, but nine months, it's a good indicator of how the entire year look like. And basically, what we can clearly see is that, let's say, gross profit-wide, it's almost landed 10 million in the nine months of this year, and that's a 7% year-on-year improvement compared to the previous period in 2023. Gross margin improved from 41% in 2023, nine months, to 45% in 2024. North America revenue grew by 24%, which is impressive. And APAC revenue grew as well in two-digit growth to 11% year-on-year in the first nine months of 2024 compared to 2023 in nine months. And client diversification, as I mentioned before, improved a lot. So basically from 51% in 2023, it's now down to 31% in 2024. And that's a big improvement. This means we have more clients, more diversification, and basically less risk to the company, which is always good. And I think my opening remarks also give me a good opportunity to discuss the four, what we consider as a key strategic pillar of the company. These are specific areas that the company believe a lot of future growth of the company or even current growth should come from. And basically, so the first and foremost is technology and AI. We already said the company is doubling down on this important area. We're recruiting more engineers. developing a new application and also obviously improving the existing line of application and we are about to announce in the coming weeks a very interesting and exciting new applications that the team was very busy working on over the past, I would say 10 months or so. Basically, that's going to be big and it's going to come in our way and that's by far the biggest and most advanced application the company ever built and it's going to be very interesting. to see how this application is going to go to market. A second strategic pillar is enterprise and aggregators. Again, we would like to focus on bigger clients, larger budget, obviously for increased profitability, low touch and do-it-yourself. It's also another strategic pillar. Again, less touch, less personnel that helps us to be more profitable and efficient, and that's critical. And last but not least is synergy. We want to make sure the companies operate in many different markets, offering different technology solutions, marketing technology solutions. And we would like to see that each of them is creating synergy or synergistic to the other activities the company is doing. I think that's critical and we would like to see that become more and more the case. When we look at the company share price and we still feel there's a lot of disconnection where the company is currently traded and to where we should be, and this is also when you look at comparable, you can clearly see there's a very big, let's say, potential for the stock price to go up. We see if you look, for example, EV for gross profit, we talk about upside of more than 1,000%. So it's a massive upside. Edcore is currently trading on a multiple of 0.3 compared to multiple industry multiple of almost four, which is, let's say, big gap and this gap need to be narrowed. I think That's about it in terms of my remarks. Overall, a positive quarter. And I'm now going to add it back to you, Nick, and to Amit.

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