Adcore Inc.

All right, let's get started. Once again, good morning and thank you for joining us. Earlier today, you might have caught our Q2 results in the press release issued this morning. We'll be walking you through those numbers today, but that's not all. We also have some exciting updates behind the scenes to share that we think you're really going to enjoy. On the call today, you have myself, Nick Campbell. I'm head of IR here at Adcore. You'll hear from Omri, Adcore CEO and founder, and Amit Kanforti, Adcore CFO. The agenda for today, before we begin, we'll go over some forward-looking statements, followed by the CEO opening remarks, then the CFO financial highlights, and finally, Q&A. If you do have a question during this call, I encourage you to use the submit a question feature in Zoom, and that will be addressed at the end. Before we begin, just please be aware during this call we might make some forward-looking statements. These statements are uncertain to nature, so please take that into account. I'll give everyone about 30 seconds to review this before we move on.

Nick, maybe you want to share your screen?

That would be a good idea. Thank you, Omri. I thought it was shared.

That's why I'm the CEO, you know?

So now I'll give you guys 30 seconds to review the forward-looking statements. Thanks, Omri. All right, very good. And with that, I'm going to pass the mic to Omri, AdCourse CEO and founder. Omri, the floor is yours.

Great. Thank you very much, Nick, for the presentation. for introducing this earning call. And let me share my screen. Just one second. Great. So again, good morning, everyone. With pleasure, we're gonna present today the company results for Q2 2025. Discuss, you know, obviously the result. I'm gonna give the management highlights for today, for the quarterly results. And Amit is going to discuss the results in more detail. But equally important, that's not something we do in every quarter. We would like to share with you some of the amazing level of innovation that we've been undergoing during this last quarter. And a lot of it, if not all, Almost all of it is related to AI. So I'm sure that you're going to love what we're about to present to you today, whether it's obviously the quarterly results, but also the innovations that we've been able to achieve this quarter. EDCO delivered a very strong Q2 2025, higher gross profit, improved margins, positive adjusted EBITDA, 35% surge in APAC revenue. So in a sense, all the important metrics during this quarter move in the right direction, especially if we compare them to previous quarter last year. A lot of the growth that we've been able to achieve in the improvement in gross margin, gross profit as well, is due to the adoption that we see with our media blast apps that come with high emerging SaaS revenue. and continued client growth throughout the region, mainly in the APAC and DMA region as well. So let's dive a bit to the numbers. Top line revenue was 6.5 million this quarter compared to 6.6 in the previous year. Quarters mainly more or less remain flat. Gross profit, however, improved 6% quarter year-on-year from 2.9 in Q2 2024 to 3.1 million in Q2 2025. If you look at the quality gross KPI, then we can see definitely gross margin improved to 47% in Q2 2025 compared to 44% in Q2 2024. So big improvement over there. And also, if you look at cash position, it grew by 23% year on year to $9 million compared to $7.3 million in the previous quarter last year. So again, cash position stronger, better gross margin, better gross profit, a lot of better adjusted EBITDA, of course. So a lot of, let's say, improvement during the last quarter. If I need to sum everything up, you know, the things that we loved or like to see during last quarter, then gross margin improved to 47% compared to 44% in the previous year. Cash and cash equivalent grew by 23% to 9 million in 2025. Reduced net loss by only up, but we cut the net loss by almost half. So it was $425,000 Canadian dollar in Q2 2025 compared to almost $700,000 in Q2 2024. So a big reduction in the company net loss. Positive adjusted EBITDA. Actually, adjusted EBITDA improved by almost 300K. So from a loss of 173,000 Canadian dollars in Q2 2024, we actually achieved a positive adjusted EBITDA of 156,000 Canadian dollars in Q2 2025. Gross profit grew by 6% year-on-year. Epic revenue grew by 35%. So again, a lot of positive growth and momentum, especially, I would say, what we call, let's say, quality KPIs, you know, KPI like gross profit, gross margin, adjusted EBITDA, cash position, all of them move in the right direction in Q2 2025. And if you remember in the beginning of the year, we discussed some of the company targets or what we aim to achieve in 2025. And I want to run a quick check to see where we stand with this target. So we discussed that ideally we would like to see a scale in revenue to 40 million this year. I know H1 was more or less flat if we look year on year, but bear in mind that Q3 and Q4 are the strongest quarter for us in here and we still have enough time to recover. It's not an ideal start of the year in terms of top line revenue, but we do see a momentum building up already. Let's say it's a bit early in the quarter, but in q in q3 and we strongly believe that we still having like positive q3 and positive q4 we can still be at least near to the targets that we discussed and strength and profitability. We said that we want to achieve a six straight take quarter of positive adjusted EBITDA. So yet again, over here, big check. We did another positive quarter, which is great. AI-driven innovation. So it's not a slogan for us. It's something that we do now on a daily basis. And actually, most of the innovation I'm about to reveal on today's earning call is AI-related. So there's a lot going on, trust me, and I'm sure that you're going to love what we're about to show you with regards to AI. And last but not least, growing SaaS recurrent revenue. Again, we see that MediaPlus is continuing to grow. We had some challenges this quarter with regards to Microsoft Advertising account linking. We have overcome these challenges and even with these challenges, still Media Blast, average MRR grew by almost 10% quarter on quarter. So I think that we still see Media Blast contribute a lot of new value to the company and improving the different metrics as well. So now, I would like to take a pause from discussing the quarterly result and quarterly numbers and talk about the future of Edcore. And the future of Edcore is very much integrated into AI. So a lot of what we're doing, a lot of what we're building nowadays is built on the foundation of AI. And I would like to present... two new features that we're very proud that we recently released into Proposely. And trust me, it wasn't an easy task to select which feature we would like to disclose today because there's so much innovation going on on Proposely on literally daily basis that we need to pick, you know, like which functionality, which feature we would like to disclose. But eventually we pick two that we think going to contribute even more value to proposals and what the app already has to offer. The first one is the ability to easily generate proposal using a simple AI prompt. So instead of manually now going and start building the proposal, building the presentation of the proposal and make sure that everything is ready, we can literally do it with AI in less than two minutes. So basically, when you click create proposal now with Proposely, you have an option to create it with AI. You're going to need to enter your company website so we can scan the website and get all the information, also get the design and look and feel of your website and copy to the presentation using AI. But equally important, creating all the content and everything that is related. And let's see a short demonstration of this new functionality in Proposely.

No problem.

In your inbox, two minutes early.

Great. So that was just like a sneak preview, but trust me, it's a game changer because like, again, if now I'm a salesperson and all I need to do is to give a simple AI prompt to propose me, the system already going to be able to generate the proposal for me. So my life become much easier. I can create proposals with no hassle. And basically, the entire sales process become much more efficient. And that's, let's say, basically a big, big differentiator from other application out there. Another cool feature that we would like to disclose today is the ability to send one-off payment requests via Proposely. So if you remember, Proposely was built The vision and mission was to streamline the entire sales workflow, make it more efficient, increase sales and revenue to X, and basically take a very complex, I would say, process, what we call traditional sales flow, and make it as simple and easy and accessible as possible. So in a traditional sales workflow, a flow. I would say it starts probably with a presentation and then I would send the client the price quote. Maybe I would need to do some adjustment to this price quote. If he's happy with the quote, I need to send him an agreement to sign and then I need to make payment and then I need to update him on the project. Like everything I just discussed now in a typical company is required Few apps, you know, few platform. It's disconnected. It's not friendly. And Proposal is all of that. We send the one link to the client. You have the client portal and everything is there on his portal. The presentation, the price quote, the add-ons, the ability to sign the agreement, to make the payment, to get the project update. Everything in one friendly place and looking like a million dollars. And then, so this was, let's say, Proposal. supposedly, you know, like a mission. And then we say, okay, but what if the client just want to send an agreement? You know, I don't want to send the entire proposal. So we say, okay, we create a new document type under proposing quality and agreement. And it's only going to contain, let's say the presentation, the agreement, the ability to interact, you know, within the client portal. So that's an agreement document type. And then we say, but what if, It's not even an agreement. I just want to send presentation because also presentation look like a million dollar in proposing. We say, you know what? Let's create a new dog type. We call it presentation. And now we say, but what if I just want to get the one off payment for my client? So I don't need a fancy proposal. I don't need to sign a fancy agreement or anything like that. Not even a presentation. Just like send a payment request, maybe have the ability to add some add-ons, you know, some maybe like ask for a tip, for example, as an option. And that's it. Very simple. So go to Proposely, set the amount, set, you know, show description what the payment is about. put the recipient email, click send, and that's it. So imagine I'm, I don't know, like a flower boutique shop in California. I get an order for a special bouquet over the phone, but now instead of me starting to take the client credit card details or anything like that, which is not very secure or user-friendly, can easily send him a custom payment request, you know, with add-ons, maybe with tip requests and stuff like that, straight to his phone. And let's see the next videos that basically show exactly this story.

Sure, I'll send you a special birthday bouquet for your dad. I love you, dad.

I love you too, sweetie.

So very nice. And it's come with a big promising. So basically nowadays, even let's say small businesses can send, let's say Amazon grade checkout, you know, like custom checkout to their clients without any issues. And that's a big differentiation and a big game changer the way business are done nowadays. And basically, we bring e-commerce for traditional businesses but do it on a customized way so it's not like we're not building a website for them we're building a special link for them that is a special let's say payment request special proposal or whatever that is custom made for this specific a client but look like a million dollar and that's a big big a value addition to our system so I want to share the presentation again. Sorry about that. Now, we discussed a bit new functionality that we added to Proposely, and trust me, there's much more that's going on in Proposely, literally on a daily basis. And now I want to discuss what AI is transforming our creative studio. So basically before AI creating, let's say commercial grade video for us was almost mission impossible. And if it was possible, we need to spend so much money and do the video production. A lot of people involved, very costly. And it's like maybe 50K, 100K, just to create one video like that, it was very difficult to do. But now with AI, our creative studio can create TV commercial-grade videos, but basically do it in less than one day. And it looks like a million dollars. Trust me, we're going to show you like two videos. One created for our client GRB in Australia, which is a kitchen warehouse e-com company. And another one was created to the Jewish agency as part of a tender that we are currently taking in Israel. So basically two videos, but basically Both of them generated by AI. By the way, the two videos that I show you to propose me also created with AI and that took us less than one day to create them. So basically again, that's the mind blowing what we can do today with AI and this is just yet another cool example.

There's a reason I come back here every day. Not just to cook, but to create.

Cool. So this is one video, again, you know, like probably, like I said, like commercial, TV commercial grade type of video can be on any national TV. And again, was created with AI in less than eight hours. So it's a mind blowing and game changing moment for us. And the same, you know, same video, different concepts, you know, generated with AI for the Jewish agency.

Back home, I had to keep it quiet. Now, I fly it loud and proud.

It's wild walking down the street, and everyone's just like me.

Back in Sydney, I'd be looking over my shoulder. Here, I'm sweet as.

The little ones can just run free here, like we used to.

I'm coming home. I'm coming home.

Cool, so I think like, I'm sure that you love what we showed you today, and that's also a demonstration that in Edco, we don't just talk AI, we do AI, we integrate AI, we implement AI, and that's already transforming the way that we are doing business, whether we are more efficient, you can already see it in the novice, let's say, whether it's, you know, like we are getting new clients because of our AI abilities, whether it's the level of innovation we can introduce to Proposely, for example, So for us, AI is not just, let's say, a slogan or a trend. It's something that is already happening and transforming the way we're doing business. And that was important for us to share it with the audience today. So last but not least, I'd like to conclude management remarks with discussing the share stock price. Currently it sits on 26 cents. We see if looking at comparable companies, we see a massive upside of almost 800%. If we look at EV to gross profit or even EV to EBITDA, a massive upside of more than 15%. 50%. And again, management still believe there's a disconnection where the stock price is currently set and where the company through valuation should be. We are working very hard every day, every week, every month, every quarter to make Edcore the best and most innovative company out there. And I think eventually stock price will catch up and basically Edcore will become the success story it deserves to be. So with that, I want to conclude my today's remarks and add it back to Amit, I guess.

Thank you and good morning, everyone. So before beginning the financial overview, I would like to remind you that the following discussion will include GAAP financial measures as well as non-GAAP results. All amounts will be presented in Canadian dollars. In the second quarter of 2025, we saw increases in both gross profitability and gross margins. Our APAC revenue grew by 35%, reflecting strong regional performance and our cash position rose by 23% compared to June 30, 2024. Let's review in more detail. For the three months ended June 30, 2025, we delivered revenue of $6.5 million compared to $6.6 million in the same period of 2024, a decrease of $0.1 million, or 1%. Gross profit for the three months ended June 30, 2025 was 3.1 million compared to 2.9 million in the prior year, an increase of 0.2 million or 6%. Gross margins for the three months ended June 30, 2025 were 47% compared to 44% in the same period last year. As for operational expenses, RMD expenses for the quarter was 0.5 million compared to 0.6 million in the prior year. SG&E expenses for the quarter were 3.1 million compared to 3.1 million in the prior year. Operating loss for the three months ended June 30, 2025 was 0.5 million compared to 0.8 million in the same period last year. A decrease of 0.3 million or 40% mainly due to improvement in gross profits. Net loss for the three months ended June 30, 2025 was 0.4 million compared to 0.7 million in the same period last year. A decrease of 0.3 million or 38%. Revenues and gross profit. Looking at the quarterly results, revenue saw a slight decrease, while both gross profit and gross margins improved meaningfully. For the first half of the year, we achieved growth in both revenues and gross profit, which is positioning us well to maintain the positive trend for the year that you see on the right. As for geographical revenue breakdown, Revenue in APAC saw a significant 35% year-over-year increase, which is driven primarily by the acquiring of new clients. Revenue in EMEA decreased by 6% and in North America by 43%, mainly due to stopped or reduced activities. In terms of financial position, We had cash and cash equivalent of 9 million as of June 30, 2025 compared to 10.8 million at December 31, 2024. Cash and cash equivalent as of June 30, 2024 were 7.3 million, showing an increase of 23% year over year. Total working capital amounted to 6.3 million compared to 7.3 million at December 31, 2024. a decrease of 1 million or 14%. As for the liability side of the financial position, we can see that the company is still debt-free. Adjusted EBITDA. The quarterly non-GAAP results reflects adjustment for the following items, depreciation and amortization, share-based payment, and other non-operational items. For the three months ended June 30, 2025, adjusted EBITDA was 156,000 compared to a negative 173,000 for the same period in 2024. This increase in profitability is primarily driven by a reduction in operational losses. With that, I will turn the call back to Nick.

Thank you very much, Amit. At this time, we will move over to the Q&A session where we have a number of submitted questions. And we'll begin with APAC, which again, another strong quarter with around 35% growth. You know, can we expect this to continue and what's really working for you in that region?

It's a good question, and we're definitely happy from the result and the performance that we see in this specific region. I would say, first of all, what is working for us in this region, I would say it's a mix of new client acquisition. So we've been able to acquire some very nice clients in this specific region that obviously contribute to the results that we see coming from this quarter, as well as, I would say, performance or increasing SaaS revenue from our Media Blast app that is directly related or contribute within this specific region. So I think it's a combination between SaaS revenue that are growing for us and new client acquisition. And yeah, we expect the positive trend in this specific region to continue throughout 2025.

Very good. And Q2 gross margins were at 47%. That's relatively high when looking at previous quarters. Can you elaborate on how you're able to achieve this and if that's sustainable?

Indeed. Maybe Amit, you would like to cover this one?

Yeah, sure. So basically part of the increase in our gross margin in this quarter is due to an increase in our SaaS revenues. and also improved efficiency that we presented partially by implementing AI operations. This is the reason.

Thank you, Amit. Next question is, is Adcore able to leverage some of the new AI tools coming out, particularly there's Google AI Max, and can we use this to monetize it and gain market share?

So it's a good question. I would maybe start by quoting what Google is saying in his latest Ernie call. There was a lot of, let's say, concern regarding AI impacting Google business model, for example. And Google actually say that it look at it as a moment of big expansion. And we truly believe that's the case. This represents a massive opportunity for us. And Ed Corbin, an innovative technology company, basically is poised to lead this trend as well. And it's not a trend. That's a revolution. And we would like and want to be part of this AI revolution. You know, Google recently held a very big event in APAC, and Adcore was presented to be the poster boy, I would say, for implementing Google New AI Max, which is an AI-based campaign, you know, for sales that Google literally introduced. We did a big case study, you know, like presenting the result of this tool in front of our clients, candle folks. So that shows you, you know, how Adcore basically is in the front row of this massive transformation. And I think that being able to be there, it's also helped us to attract new clients, new businesses. People look at Edcore as an innovative company and a company that you would like to be part of, you know, partner with in order to benefit from all this AI boom.

Thank you, Omri. And kind of similarly, you know, AI is having a huge impact on many industries. Does AgCorp have a plan on how we are going to use AI to increase our revenue and reduce costs?

So I think like for Edco, and I believe we already proved it during this earning call and during the presentation, AI is not a slogan, it's a way of life. And it's already deeply integrated with everything we do more or less, you know, whether it's our technology, whether it's the way we operate and run business, and you can already see it in the results, you know, like Amit rightly mentioned before, some of the improvements that we see in efficiency is because of AI, you know, we can get more work done faster, easier, with less people sometimes. And that's a game changer. And when we talk about technology and talk about innovation, the sky's the limit. You saw how easily it's now, let's say, to create a proposal using AI, for example. Never... been able before getting a TV, you know, like great commercial in less than eight hours or day work time, you know, like, so I don't know what's, you know, all the Hollywood studio going to do now, but, but the need to be careful of the ad for AI studio nowadays. So I think like, again, AI is here already. It's already the way which we do in business for, for better. And it's going to have even more positive effect as we move along, you know, next quarter, next year, It's definitely a big game changer for better for us.

Yeah, agreed, Omri. It's quite incredible what you can do with AI in those videos in less than eight hours. It's quite amazing. But moving on to the next question here. LinkedIn has your employee count at 95 people. That's about a 25% growth increase over the previous year. Is that accurate figure?

Yeah. Yes and no. I believe they're more accurate number and that's including, you know, both, you know, like direct employees and non-direct employees is around maybe more accurate is 75, I think, Amit, correct me if I'm wrong.

Yeah, that's correct.

Okay, so I believe the LinkedIn is probably, you know, some of it related to legacy, maybe employees and people that will, maybe it's having a hard time, you know, to disconnect from headcount. But I'm not sure 95, it's a bit exaggerated. What is true is the headcount is growing in the number of employees. You know, if we need to look at the same number last year, probably the headcount were around 65, 63%. Having said that, we took a very different strategy in 2025 than we took in the previous year. And most of the growing that we see nowadays coming from specific region of countries that come with relatively low salaries. You know, we're growing a lot, our team in Vietnam. We started to grow our team in South America, for example, in Argentina. But these people come in, I would say, one third or one quarter of the cost that basically it's cost us to get somebody on record deploying, let's say in Australia or in Canada or in Israel. So it's a big game changer. So we are growing the team, but not growing actually the salaries expenses. Amit, like correct me if I'm wrong, but I don't believe there's like a big growth in salary expenses like Q2 this year compared to previous year.

Yeah, that's correct.

Okay, so I think that's just the, let's say, the early sign of this transformation that we are undergoing. And trust me, maybe these people come relatively in less cost, but by their no mean, you know, lesser of employees, you know. This is like grade A employees that we can get, like including developers in these specific countries. And basically, that's going to be transforming the way we can do business and our salary costs moving forward. So the idea is, yeah, to grow the ad count in needed, but growing it in countries, they're not going to cost us as much, let's say, as people in Australia, people in US, people in Israel.

Very good. Thank you, Omri. And I guess on that note, does ADCOR have any plans to open up a new office, perhaps in South America?

So I think like the short answer, not now, not as I know of, at least, because to be honest, it's not needed. You know, part of our ability to reduce costs is, you know, like we can employ someone in Argentina as a contractor. working fully remotely without having an office cost associated to it, and we can still get the work done. So I think currently we're fine with our current offices, branches, and if you're going to employ somebody, so we don't need to run and open a new branch in Argentina or Vietnam or anything like that.

Thank you, Omri. And in the press release, you discussed some new features on Proposely. I'm interested, do you ever expect to go live day for the app and how is the beta testing going?

Okay, so actually beta testing is live, right? So Proposely is working and we do have like an active beta client. And I think like, yeah, it's a transformational moment for the application, you know? Like going to beta or close beta stage, is a very important critical stage for in the app life cycle. You know, it's helped us to better understand, you know, the market fit. If we still have some gaps, you know, between the current functionality that the app can support and the actual needs of, let's say, our real clients. And we did find out that we have some gap. We are narrowing them as we speak. And basically I think like, so that's like a big change. And also the shift, the focus is shifting, shifting from pure R&D to let's say more business side of the application, whether it's client acquisition, whether it's onboarding teams, whether it's client success team. So I think like we gradually now shifting focus from just like pure product related R&D focus to more business side of the application and the activity. And I think like that's an important step moving forward. And a critical step in order for Proposit to be the success story, we're all working very hard for it to be.

Very good. Thank you, Omri. And I believe that concludes all the questions we had for today. So at this time, I will move over to thank you, Amit and Omri, for your notes today. And thank you for joining the call. I want to give Omri the last moment here to end off the call.

Okay, with pleasure. So again, thanks for everybody that joined today's call. I think it was an interesting call. It wasn't a usual, typical call. From one end, you know, we had like a strong quarter, a positive quarter with, you know, like all the quality indicators moving in the right direction. But also bearing in mind Q2, Q1 for us are not the most important quarter of the year. So we still have, let's say, the peak of the year is in front of us, whether it's Q3 or But it was an interesting earning call because we've been able to showcase, you know, our AI is transformation, transformating Edco and what we can achieve, what type of innovation level we can achieve now with AI. And this is like an eye-opening moment for us as a company, for shareholders to understand this is the future and the future is already here. And Edco is part of this future. And I think it's very promising. And we look at, let's say, on the next quarter, the next, let's say, Here, very optimistic.

Thank you, Omri. Very exciting indeed. And as you mentioned, the future is now. So quite, quite exciting. That's it for today. Thank you all for joining and have a great rest of your day. Thank you.