Blackline Safety Corp.

Thank you for standing by. This is the conference operator. Welcome to the Black Line Safety Corp fourth quarter 2022 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 for analysts to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Scott Boston, Vice President of Finance. Please go ahead.

Welcome, and thank you for joining us. I'd like to remind everyone that this call is being recorded today, Tuesday, January 24, 2023. With me today is Cody Slater, CEO and Chair of Blackline Safety Corp., as well as our CFO, Shane Brennan. 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, please 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 investor section of our website. Neither this call nor the webcast archive may be re-recorded or otherwise reproduced or distributed without prior written permission 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 fourth quarter 2022 conference call. Today we'll be discussing our fiscal results for the fourth quarter and fiscal year ended October 31st, 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 fourth quarter represented a strong finish to our fiscal 2022. as we not only grew revenue on a year-over-year basis for the 23rd consecutive quarter, resulting in record annual revenue of nearly $73 million, representing 34% annual growth. In Q4, we also executed on a meaningful cost reduction plan that we laid out to investors during our second quarter earnings call. Continued revenue growth, coupled with the tremendous progress we've made in reducing our cost structure is building momentum towards positive adjusted EBITDA generation for the company. Speaking to our continued revenue growth, total revenue for the quarter was up 14% from the prior year to $22 million, which included outsized growth of 33% from our higher margin services segment. Our overall growth was driven by strong regional performance in multiple key markets. Our rest of the world revenue, which includes regions outside of Canada, United States and Europe, to 105%, driven by our two largest deployments to date for the region as we continue to earn stronger returns on the prior investments we have made in this region. In Canada, our sales team continued to execute across a variety of industries, resulting in a 79% revenue increase. In Europe, we began to see the benefits of the leadership and strategic alignment changes we undertook last year as the region returned to growth. generating a 13% increase over the prior year period and a 57% increase over the prior quarter. We are pleased with this performance and the outlook in Europe as we expect the region to be a meaningful contributor towards Blackline's future revenue growth. Now shifting to our business segments, product revenue of $11.1 million was largely unchanged compared to the prior year quarter, but was up 25% sequentially. It should be noted that prior year Q4 hardware sales benefited from the company's single largest order ever shipping during the quarter. Product gross margin came in at 26%, our best performance of fiscal 2022, as our operations team successfully mitigated global supply chain challenges and inflationary pressures. It is worth highlighting the product margins in the quarter saw negligible benefit from the 15% pricing increase we recently implemented as we fulfilled orders in our pipeline in place before the pricing change. This pricing increase is expected to generate a significant increase in margins through fiscal 2023. When we combine the pricing increase with forthcoming integration of product design improvements from learnings in the G6 development, we believe we are building towards 40% product margins by the end of fiscal 2023. On the service side, we continue to generate strong growth with a 33% increase to 10.9 million in Q4. This exceeded the 30% growth we recorded last quarter, which at the time was the strongest service growth we had achieved over the past two years. We also generated 35% year-over-year growth in ARR to 36.6 million. This increase was driven by our software services, which increased 35% to $9.2 million as we continue to activate new devices, which is the inherent benefit of our hardware-enabled SaaS business model that drives high-margin recurring revenue as we take market share and deploy new devices. Our rental business also continued to grow at a high rate, resulting in 70% growth to $1.1 million. our first quarter over $1 million for the rental business, as we continue to generate strong value on our past investment in the rental fleet. Overall service margins remained healthy, coming in at 70%. Similar to our hardware business, we implemented a 15% pricing increase late last year that, along with greater adoption of our higher-value service offerings across our install base, puts us in position to push our service margins towards 75% by the end of fiscal 2023. While we are confident in our revenue and margin outlook, I want to highlight the impact of the cost reductions we achieved in the second half of fiscal 2022 as we focus on profitability. We recorded total operating expenses for Q4 of 20.3 million, representing a more than $4 million sequential decrease and meeting our guidance to have Q4 operating expenses at or below our Q2 levels of 21.5 million. This success is the result of better leveraging our past investments in our sales and marketing teams and rationalizing our product development costs as we move past our most significant product launch in recent history with the G6. This step change reduction in our operating costs along with our continued success in the market puts us in strong position to deliver on our goal of achieving profitability. I will now turn the call over to our CFO, Shane Grennan, to discuss our fiscal fourth quarter results and financial position in more detail.