Adcore Inc.

All right. Good morning once again. Thank you for joining us. Great to see this turn up. Earlier this morning, Adcore released its Q2 2026 financial results. And today we will be walking you through these results and providing you an update on the ongoing company initiatives. First of all, you might see some familiar faces on the call today. I'm Martijn, Chief Partnership Officer here at Adcore. Joining me today is Omri Brill, Adcore's CEO and founder, and also Amit Konforty, Adcore's CFO. And also Kobi Arbif will be here to present some great insights on our AI studio. For the agenda today, before we begin, we'll go over some forward-looking statements you should be aware of while listening to this call, followed by the CEO opening remarks, and the latest innovations on our AI studio done by Kobi, and then the CFO financial highlights. Finally, we will conclude with a Q&A session. If you have any questions throughout the call, please use the submit a question feature here in Zoom, and we'll get to those at the end of the call. Before we begin, I will give everyone a moment to review these statements. Please bear in mind when listening to the call today that the management team may use forward-looking statements which are inherently uncertain in nature. All right, and with that, I would like to pass the floor to Omri for the CEO's opening remarks. Omri, the floor is yours.

Thank you very much, Martijn, and good morning, everyone. It's my pleasure to discuss the company financial results for Q2 2026. I'm going to give, let's say, the eye level of the results, obviously covering some of the stuff that we've been doing, innovation and working during the last quarter. Obviously, we have some nice presentation to show you on the back of my remarks. And I will see if Amit Konforty will dive into the Narbis in more details after that. So let's start with it.

Okay.

Just again.

Yeah, under review and then full screen, you will be able to start the full screen here in the bottom.

Yeah, sorry. Yeah. Thank you, Martijn. Okay, so all in all Q2 was a very strong quarter for us, top line revenue grew by 10%, gross profit even doubled up, this grew by almost 20%, so we see a really positive trend and when we look at the numbers, also comparable numbers, you will see that this wasn't the usual quarter for us. If you look at top line revenue, it's amended to $7.2 million in Q2 2026 compared to $6.5 million in the previous year. Again, 10% year-on-year growth. And gross profit, $3.7 million in Q2 2026 compared to $3.1 million in the previous year. You can see that the gross profit was almost as strong as Q4 2025 and that's Q4 it's let's say a robust quarter for us. So basically in Q2 we've been able to achieve almost as strong number as Q4 and that's tell you a lot about how unique in that regard this quarter was really was. And if you look at, let's say, quality metrics, what the company considers quality metrics, we can still see that, again, gross profits 3.7, almost 20% even in growth. Cash position still solid of 4 million during this quarter. Again, you see some seasonality, right? In Q4, the company usually acquired more cash, and then the cash position is going down as the quarter move along. But again... that's something that is part of, I would say, the normal course of business for the company. So to discuss number, high level, again, 7.2 million top line revenue, 10% increase, gross profits 3.7, almost 20% year-on-year increase, email revenue grew by 12%, which is solid, and North America saw a really nice rebound, too, grew to 1.5 million, and that's on the back of I would say soft deals that we saw in 2025 for this region so basically this is exactly what we anticipated we say that we would expect to see some stabilization starting in the beginning of the year and now a nice rebound move in this last quarter so that's important for us If you look at age one, so again, very strong start of the entire year. Total revenue almost 16 million, 16% year-on-year growth. That's impressive. Gross profit grew to almost 7 million. Again, 10% year-on-year growth in, I would say, year-on-year. and North America again after a softness that we saw in the beginning of let's say the year in 2025, 6% so back in positive trend so all regions actually are growing in age 1, 2026 and that's exactly how we would like to see it moving forward. and now I would like to discuss a bit more technology and innovation in the last earning call we already discussed that we built and shipped the first AI agent for Proposely the inbound agent and basically you can think of the inbound agent as a receptionist so that's the guys that answering the phones that coming to the companies that answering the emails that can sit on the whatsapp on the Facebook Messenger, all different channels and basically one agent that can do the work of one person of 10 receptionists or even a team of 100 receptionists. So that's all done by this agent but it don't stop in just answering question and give information it can literally send Thank you for watching. Amit Malkin Amit Malkin, Rob Reynolds, Roy Nevo, Amit Moll This agent is responsible for the deal to get closed. And customer agent taking his responsibility to start when the offer already closed. Basically make sure that the client is happy, satisfies, gives him update. He can do a collection if need. You can do upsell and cross-sell. So everything that is more, let's say, I would say post-sell type of activity. Again, between the inbound, outreach, deal and customer agent, you have your entire sales team. And that's not like a slogan. That's what is already up and running and reality on the ground. And we are super happy about it. and a bit more detail. So I think in proposedly in six months time we did a complete platform where I would say Flip over the platform from a workspace document type of platform to agent-first platform, which workspace and basically document are now tools in the agent's toolbox. So basically it's a complete, I would say, upside down for the platform used to be. So it's not like agents are serving the documents now, the agent, basically the document serving the agents. And that's a complete, I would say, platform a complete evolution of where the platform is today and that's a big promising moving forward and we can discuss it a bit more detail if needed during the Q&A session as well and now the next thing is AI Studio AI Studio is already up running and generating some early revenues we have really good traction and good sign for good market fit about this product Kobi will give you a quick demo about the latest and greatest What we've been able to build and ship during the last quarter in AI Studio as well. So I think like stay tuned for Kobe presentation. And I think like that's cover, I would say the highlights of the technologies that we've been built or working on during the last quarter. And last but not least is Comparable. Current share price is $0.15 Canadian dollar. We see a very big upside, you know, if you look at EV to gross profit compared to Comparable, almost 900%. Let's put the target price at around $1.3 Canadian dollar. It's a big gap from where we are today. and ideally we would like to see the gap is starting to close so basically the company have high expectation from the future where this company is going to this high level of innovation maybe like never before in the history of the company and we are very optimistic of the level of maturity that our product achieved already and I think like it's sure going to be an interesting time for us you know making sure that basically the Generating revenue and we can take them to the next level. With that, I conclude my remarks and I will add the floor, I guess, now to Corby.

Thank you, Omri. Hi, everybody. I'm Kobi, and I'm leading the go-to market of the AI Studio app, basically in charge of generating revenue out of the platform. Now, I know in our last earning calls, you have seen the app already. You got excited of seeing how cool it is. So it actually became even cooler in the last months. We actually added some really, really cool and really smart features that we can see from our client that are already using it, how excited it is and how it's going to save a lot of time and a lot of resource for our partners. So I'm going to show you today, I'm going to focus on how we generated a special flow that allows users to create any kind of creative format. From a single static banner, it could be a banner that you created on our platform. It could be a banner that you created by yourself, but in a single static banner, you will be able to generate all the way to motion banners, moving on to a UGC user-generated content, you know, like influencers and TikTok videos, and all the way to a TV production, CTV production commercial, only in a single click. Sounds a bit like magic, but it is. It's already here. It's already working on our platform. Let me share my screen to show you the full-on example. So actually, I started putting in a brief, a very simple one-line brief saying, generate me static banner for a spooper promotion sale 30% off. and Sunny Sunny. It's a cosmetic sunscreen brand giving a bit of glow, attracting women. So the platform generated four different design concepts. By the way, that's itself. If someone knows a bit about how advertising studios work, It takes about five, six hours work that took me less than a minute to generate. So they generated those four different creative static. Let's say I'm in love with this one. This one is my favorite. So I'm just clicking here. And with that single click, I can create a motion banner, a user generated content video, or a full-on commercial. Let's see how it actually looks like. So I'm clicking the motion banner. Let's see the end result. I'm getting this.

Kubi, maybe you need to share again with sound?

Sorry, one second.

Wait.

Let's try it again. Sorry about this. So, interesting fact about motion banners. Actually, what we know from research and our own experience is that motion banners are able to double the conversion rate of a campaign, reduce dramatically the cost per conversion, and generate just much better results. Again, there's no need to produce, there's no need for an AI motion designer to generate those things. Clicking a button, anyone can do that. Really, I'm not a designer. and I've done it myself. So take this motion banner. I want to even challenge it even more. I want now to go live on TikTok, for example, with influencers talking about this amazing product. I click user-generated content and I get this amazing thing. What it actually did, it took the person, the girl from the banner, generated her as an avatar and was able to generate a UGC, a full influencer video in a click of a button.

Twist, swipe over makeup, every two hours. Bag, Palms, Sunlight

Looks amazing. I don't know. Now, let's put it this way. Using the platform, it's super, super easy. But this month, it became even easier for our users to use it. We added our AI agent, which is embedded within DeFi. The Adcore AI Studio app can just ask whatever you want, generate a banner, generate a commercial, generate a picture, whatever you want. You can use the AI agent to do it for you without saying too much. Just say what you want to be in the banner and the AI take it from there. You know what? Amit Konforty, Amit Moll Connected to ChatGPT, Connected to Cloud, whatever AI you're working on. Same, create a banner with Edco, AAP Studio, just add the brand name, what is the discount, and it's automatically generating. With a click of a button, you get a full set of banners. And of course, from that, again, you can create a UGC commercial and so on. So, obviously, bottom line, we have So more to come. Stay tuned. Thank you.

Thanks so much, Kobi. It's amazing to see how much you've developed since the last time we met at the Q1 2026 earnings call. So it's amazing progress and I'd love to learn more in the next update. With that, we'd like to pass it on to Amit Konforty, CFO of the company, for some CFO highlights and financial highlights. Thank you, Dan. One second.

Okay, so good morning everyone. 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. The second quarter of 2026 showed continued momentum with revenue growing 10% year over year and gross margins improving to 51%. This is in line with the overall first half performance, which also reflects higher revenue and gross profitability. Let's review in more detail. For the three months ended June 30, 2026, we delivered revenue of $7.2 million compared to $6.5 million in the same period of 2025, an increase of $0.7 million or 10%. Gross profit for the three months ended June 30, 2026 was 3.7 million compared to 3.1 million in the prior year, an increase of 0.6 million or 19%. Gross margins for the three months ended June 30, 2026 were 51% compared to 47% in the same period last year. The increase in margin is due to the increase in revenue and the change in client mix. As for operational expenses, RMD expenses for the quarter were 0.6 million compared to 0.5 million in the prior year. The slight increase in expenses was primarily driven by increased use of AI-related tools. SG&A expenses for the quarter were 3.7 million compared to 3 million in the prior year, an increase of 0.7 million or 22%. The increase was mainly driven by payroll-related expenses and was partially impacted by foreign exchange rate fluctuations. Operating loss for the three months ended June 30, 2026 was 0.6 million compared to 0.5 million in the same period last year. Net loss for the three months ended June 30, 2026 was 0.8 million compared to 0.4 million in the same period last year, an increase of 0.4 million. Revenues and Gross Profits As shown on the left side of the slide, Q2 revenue grew 10% year-over-year to $7.2 million, with gross profit increasing 19% and gross margin improving from 47% to 51%. This is driven again by changes in climate mix. Looking at the first half results, in the middle we observe a similar trend with revenue growing 16%, to 15.7 million and gross profit increasing 10% to 6.8 million. This is consistent with the full year trend on the right, which highlights ongoing annual growth in both revenue and profitability. As for the geographical revenue breakdown for Q2 2026, APAC revenue continued to grow year over year, EMEA revenue grew 12% year-over-year primarily due to new client acquisition and expanded activity from existing clients North America revenue rebounded after a slower prior year delivering a 27% year-over-year increase In terms of financial position We had cash and cash equivalent of 4 million as of June 30, 2026 compared to 10.3 million at December 31, 2025. Total working capital amounted to 3.1 million compared to 5.1 million on December 31, 2025. 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 reflect adjustments for the following items. Depreciation and amortization, share-based payment, and other unusual and non-recurring items. For the three months ended June 30, 2026, adjusted EBITDA was $41,000 compared to $155,000 for the same period in 2025. The decrease in adjusted EBITDA was mainly driven by the increase in operating loss. With that I will turn the call back to Martijn.

Thank you so much Amit. With that, we arrive at the Q&A portion of this call. We got a couple questions in. The first one I direct to you, Omri. It's about the gross margin expansion. The question is, gross margin expanded nicely to 51% from 47% year over year, with gross profit growing almost twice as fast as revenue. Could you walk us through what's driving that mix shift and how much more room you see keep expanding the margin?

So it's a good question. I would say, A, first of all, like I would say it's go end in end, right? If you see top line revenue growing, gross margin improving, so one can expect gross profit will follow. And actually it followed quite nicely, almost double the growth that we saw for top line revenue. So I think that the company, like we have different revenue streams and we're focusing on the revenue streams that are more profitable. Profitable for the company coming with better margins. And I think this type of strategy is proving itself. So you see like a nice, I would say, improving the company gross margin. And we expect to see this trend carry on. I would say with some exceptions. Obviously, Q4 can have a lower gross margin traditionally because of the spike in cost of revenues that are related to holiday-related spending. So I think the trend is a trend, I would say, It's definitely looking more positive and we expect gross margin to remain solid.

Thank you, Omri. The following question is regarding North America. It's encouraging to see North America bounce back with 27% growth after a softer 2025. What's behind that turnaround and do you feel good about that momentum carrying into the second half of this year?

I think maybe Amit can shed a bit more light, but I think most of the growth that we saw in North America is coming from actually existing client activity. So in improving this activity, I would say, and that's something that is very encouraging for us to see, let's say, the momentum is shifting. and these clients are now growing again, growing the spend and basically that's always a positive sign. So I think this is one thing. Also bear in mind that moving towards and seeing like H2, we still have better numbers to present because the comparables should be working in our favor. Soften 2020-25. So I think like, yeah, we are more positive regarding North America and we expected to see this type of behavior. We and I'm happy that we've been able to achieve it in Q2 and we are hoping to preserve this type of momentum carry into the second part of the year as well.

Great. Thank you, Omri. The next question is about our AI development and development in general. You committed to three autonomous agents by Q2 and actually delivered five, which is a nice execution story. What kind of early customer feedback or usage signals are you seeing from proposed lease agents and also the creative agents on the AI studio?

Okay, so first of all, if we miss, we might as well miss, you know, like over-delivered and under-delivered, I guess. But I would say, like, if we're talking about proposedly, obviously we have four different agents now running live. Inbound agent, outreach agent, deal agent, and customer agent. and we see like a good, I would say, market fit, you know, from early beta clients. So they are excited about what these agent capabilities are, what type of issues they can solve for their organization. And I think like in general, we see, okay, this is like definitely a place for the solution like Edco is building in the market. And actually it's quite a unique solution in the market because maybe everybody more or less can, I would say, Build an AI agent nowadays, but let's say AI agent that is integrated to the different workspace and platform and document and can generate revenue from A to Z just from visitor. That's quite a unique sales story that only ad corp possess. And I think that's put us in a very different, I would say, A position from other vendors in the market today. So AI, like proposing, I'm definitely happy from the early reactions that we are getting. And maybe Kobi can elaborate a bit more about the reactions that you see from early users of AI Studio with regards to the agent.

Of course. As far as the AI platform in general, we have already started to go to market. We actually have quite a few working partners already. The feedback, of course, it's about saving time, saving resources. And I just finished a call actually with one of our partners who are using the connector to cloud actually with our agent. And she's saying that it's never been easier for her to generate creative. She doesn't need to count on our agency anymore to send her deliverables. They don't need designers. They don't need to pay extra. And what they're actually paying is like less than a day work of a designer and they're getting a full stack of creative that can take a full month to work on. So obviously no complaints, only really just compliments on how good the platform is right now.

So that's the best type of stories, right? The client has a success story that they're happy with it using the agent. I think that's exactly why we are working so hard building this type of solution for the client to give us this type of feedback. So that's amazing. Thank you for sharing, Kobi. Thank you.

Amazing. Thank you, guys. The next question is probably more for Amit, as it's a financial question. The question is, you mentioned the cash flow and working capital decline is largely seasonal and should reverse in H2. Could you please give us a bit more color on the expected timeline for that recovery?

Yeah, definitely. So basically, historically, Q4 is like the strongest quarter of the year for the company. So we do expect to see a recovery. The decrease that we see now in H1 is partially payments for Q4 of last year. So it's something pretty usual in the company. All right.

Thanks for elaborating on that. The next question either for you, Amit or Omri, it's about the efficiency plan rollout. Omri mentioned there's plans for 15 to 20% OPEX reduction plan. Question is, could you share more on the expected timeline? If there's any one-time implementation costs and which areas of spend will primarily be targeted?

So I think like the biggest, I would say, line item of expenses for the company is obviously employee costs, right? So this would be the first place that we need to tackle. I think like we saw like some headwind, you know, with regard to what Amit mentioned, the current exchange inflations basically didn't work in our favor during H1 2026. And that's something we need to take into account. We need to take actions. So I think we are planning some employee cutoff to reduce the numbers of employees. That's one. Looking at other lines of expenses the company is having, whether it's AI token and other things that basically consuming a large budget for the company is spending right now. And I think all in all, in terms of timelines, we want to do the majority of, let's say... Cut effort or saving effort during Q3 2026. So basically, we might have some carry-ons, but the idea is to enter Q4 2026 as far leaner and slimmer company, you know, with, I would say, ideally, SG&A costs drop by 15-20%. That's the goal for the company.

Great, thank you, Omri. I think we have room for one or two more questions. The next question is about balancing growth and profitability. Omri, you mentioned to keep adjusted EBITDA positive while simultaneously investing in a fairly ambitious agent build-out. How are you thinking about that balance between funding innovation and protecting profitability as you head into the second half of 2026?

That's actually a very good We are moving fast. We already proved it, right? We talked, we are going to ship, build and ship 3A, Amit Moll, Amit Moll, Amit Moll So I think like there should be a balance between the two and the company already proved, you know, historically that we know how to do it and we know how to do it quite good. So I think like I'm pretty confident, I would say, that we can be able to continue to balance between these two, I would say, conflicted sometimes efforts.

Thank you, Omri. That brings us to the last question for today, which is the first half revenue grew 16% and the gross profit grew 10%. So strong first half overall. How much of that momentum do you expect to carry through the second half, which you reflect as seasonally your strongest?

That's another good question. I would say A, definitely very strong start of 2026, right? Top line revenue, midline revenue, all of them move in the right direction. So we definitely see some tailwind. For that regard, like I mentioned before, we had some tailwind. regarding currency exchanges, which reflected an increase of costs. I would say the plan is to go into Q4, which is the most important quarter for us, as a slimmer company, but maintain the same momentum. So if we can balance the two, if we can achieve the two, continue growing top-line and mid-line revenue, but reducing the SG&A costs, then I think that should be like a story to tell, right? And put the company in a better position moving forward.

Absolutely. Thanks so much, Omri. We covered a lot, both on the slides, the presentation by Kobe and also the Q&A session. Do you have any final closing remarks for the audience today, Omri?

so I think like all in all the company being able to present a robust quarter let's say again as robust almost as Q4 2025 and that's telling you a lot a lot of innovation going on also the level of maturity of both of the flagship app which is proposed in AI studio is far better AI studio already generating real revenue and basically we have like a very strong and robust GTM regarding this app proposed early beta user but exciting Amazing.

Thanks so much, Omri. Thanks, Amit. Thanks, Kobi, for your contributions today. And most of all, thanks for everyone joining this call. With that, we conclude the earnings call today. Looking forward to see you next time. Thanks so much and have a great day.

Thank you, everyone. Thank you.