Blackline Safety Corp.

Welcome to the Blackline Safety Second Quarter Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Scott Boston, Vice President of Finance. Please go ahead.

Thank you, Shah. Welcome, everyone. Good morning, and thank you for joining us. I'd like to remind everyone again that this call is being recorded today, Tuesday, June 14, 2022. With me today is Cody Slater, CEO and Chair of Blackline Safety Corp., as well as our Chief Financial Officer, Shane Grennan. Before turning the call over to Cody, I would like to note that some of the information discussed in this call is based on information as of today and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings news release as well as in the company's CDAR filings. During this call, there will be a discussion of IFRS results non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures. Reconciliation between IFRS and non-GAAP financial measures is available on the company's earnings news release and MD&A, both of which can be found on our website, blacklinesafety.com, and on CDAR. All dollar amounts are reported in Canadian dollars unless otherwise noted. Participants are advised that this webcast is live and is also being recorded for playback purposes. An archive of this webcast will be made available on the Investors section of our website. Neither this call nor the webcast archive may be re-recorded or otherwise reproduced without prior consent from Blackline Safety Corp. With that, I will now hand the call over to Mr. Slater.

Thank you, Scott. Good morning, everyone, and welcome to Blackline Safety's second quarter 2022 conference call. Today, we will be discussing our fiscal results for the second quarter ended April 30th, 2022. which were issued before market opening this morning. To set the agenda for today's call, I will start by providing some high-level remarks. Shane will then discuss key financial highlights of the quarter in greater detail, and I'll conclude by providing our outlook and some closing comments before we take questions. Our second quarter was another quarter of robust growth, with revenue up 43% year-over-year to $16.7 million. This represents the latest in an enviable record of 21 consecutive quarters of year-over-year revenue growth. This quarter's performance was driven by strong regional results as we continue to garner increased traction throughout our markets, with the U.S. market up 51%, our rest-of-the-world markets up 62%, and for the first time in two years, a return to growth in Canada, with the markets here up 65%. However, growth in Europe of 9% was below our expectations. I'd note that these numbers exclude 0.8 million of high-margin G7X orders received at the end of the quarter that we expect to realize in Q3. Product revenue in the quarter grew significantly and is up 72% year-over-year to 7.9 million as past investments in our sales and marketing network and capabilities continue to drive market penetration. I would note this growth in product revenue is being achieved while many larger competitors in our market are posting flats to negative hardware sales. On the service side, revenue grew 24% year-over-year to $8.8 million, including software services growth of 26% year-over-year and 5% sequentially. As our hardware-enabled software-as-a-service business model continues to deliver long-term recurring revenue. Our services growth in the quarter was lower than expected, as some deployments from larger orders in the last two quarters are taking longer to implement. But we expect these deployments to be completed over the remainder of the fiscal year and further accelerate our service growth. Our recurring service-based business continues to generate strong SaaS KPIs, with net Vela retention of 105% and annual recurring revenue, or ARR, growth of 24% year-on-year, to 30.8 million, up 4% sequentially from 29.6 million. Note that we adjusted our ARR definition to represent the annualized average of the prior three months rather than an exit rate, as we believe this provides a more accurate snapshot of our ARR that is less affected by the timing of customer renewals. Our service margins have remained very healthy at nearly 70%, essentially unchanged from the prior year. The majority of lifetime gross profit for most of our products is derived from these higher margin recurring revenues and not the initial hardware sale. For example, on the G7 wearable, our line of cloud-enabled wearable safety devices, every $1 of hardware sales generates $4 in lifetime recurring service revenue. This hardware-enabled SaaS model sees the recurring service revenue deliver approximately 90% of the lifetime gross profit after the initial hardware sale. by providing a predictable stream of high-margin service revenues. Over the last 18 months, we implemented our Invest2Growth strategy to accelerate investments in sales and marketing and advance our game-changing product roadmap. This has seen us expand our market footprint to six international offices with 220 distributors and 60 regional sales managers, add industry-leading products and services such as XO and Push2Talk, driving dramatic quarterly revenue growth of 77% over that period. We are now in the midst of streamlining our expense profile as we've done much of the heavy lifting on G6 development and the global expansion of our sales capabilities. In fact, we expect operating expenses in Q4 of this year to be at or below Q2 levels. We also see opportunities to increase margins through adjustments in pricing, product design, and economies of scale in our manufacturing. to help address the margin compression caused by global supply chain challenges and associated cost inflation. G7 was launched five years ago and has yet to see a pricing increase, so we expect broad market acceptance of this approach. They are also shifting some of our R&D focus to reduce the cost of bill, which we see as another margin expansion opportunity. They are planning a pricing increase in our services as well, which will be the first service pricing increase in five years. Effecting a service pricing increase will provide even higher margins here and further accelerate our service revenue growth. This will occur over time as legacy price contracts expire and are renewed at the higher rate, and as we add new service revenues from new device sales. Collectively, we expect our operating expense management and margin improvement, along with continued pipeline growth, to significantly improve overall financial performance. I will now turn the call over to our CFO, Shane Grennan, to discuss our fiscal second quarter results and financial position in more detail.