VerticalScope Holdings Inc.

Hello and welcome to today's Vertical Scope Holdings Inc Q2 2022 earnings call. My name is Jordan and I'll be coordinating your call today. If you'd like to register a question, you may do so by pressing star followed by one on your telephone keypad. I'm now going to hand over to Diane Yu, Chief Legal Officer, to begin. Diane, please go ahead.

Thank you, Jordan. Good morning, everyone, and welcome to Vertical Scope Holdings' second quarter 2022 earnings call. I'm joined by Dwight Laidlaw, our founder and chief executive officer, Vince Bellissimo, our chief financial officer, and Chris Goodridge, our president and chief operating officer. We'll begin with commentary on the quarter before opening the floor to questions. Before we begin, I'd like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. A more complete discussion of the risks and uncertainties facing the company appears in the company's management discussion and analysis for the three-month period ended June 30, 2022, which is available under the company's profile on CDAR as well as on the company's website. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this presentation. The company disclaims any intention or obligation except to the extent required by law to update and revise any forward-looking statements as a result of new information, future events, or for any other reason. Our discussion today will include references to adjusted financial measures, including adjusted EBITDA, free cash flow, free cash flow conversion, MAU, and ARPU, which are non-IFRS measures. All references to currency in this presentation shall refer to U.S. dollars unless otherwise specified. Now I will turn the call over to Rob Laidlaw. founder and CEO of Vertical Scope. Rob?

Thanks, Diane. Good morning, everyone, and thank you for joining us today. During the second quarter of 2022, our business performed very well. We are proud of the results we are presenting today, and we're excited about the bright future for our company. I'd like to thank our team for their efforts this quarter, setting us up for success this year. Without our team, we wouldn't be here sharing these incredible results today. Revenue growth of 51% in the quarter was powered by our advertising business, which continues to show signs of strength, growing 43% year over year, inclusive of a 62% gain from our programmatic business. Our direct business, which is predominantly organic growth, grew 15% year over year, despite the tough macroeconomic environment as advertisers tighten their belts. Helping our growth, we are beginning to see some gains from the automotive sector. as some advertisers began spending in Q2 and have signed contracts with us for Q3. We believe we have seen the bottom on supply chain issues and are starting to see recovery. Our e-commerce business continued the improving trends that we saw in Q1 and grew 68% year over year. This is an impressive result and comes despite continued headwinds for our fitness business. Other properties in our portfolio, including properties we acquired in Q4, we're able to overcome those headwinds and deliver a solid result for our business. While we expect some reduction in consumer spending in future quarters, we are optimistic that we are well-positioned for continued growth now that we have lapped the COVID-impacted quarters, and as retailers look to offer savvy shoppers on sites like Red Flag Deals, discounts on tough-to-sell inventory, and run promotions with our advertising and commerce businesses. Our acquisitions are performing very well, and we continue to believe that the two large acquisitions we did in Q4, HomeTalk and the Streamable, will deliver between 10 and 14 million of incremental EBITDA in 2022. With their strong performance, we have increased our expectations around contingent considerations, as we expect the threshold for achievement of the earn-out in 2022 to be highly likely to occur. This is great news for us and for the entrepreneurs that will receive their earn-out payments. Vertical Scope continues to be a great buyer of online communities and structures achievable earnouts where we can succeed together with founders, a true win-win. Adjusted EBITDA grew 54% year-over-year to $9.3 million in the quarter. Perhaps even more impressive is that our free cash flow of $7.2 million represented 78% of that adjusted EBITDA. Our unique financial model and the ability to generate that type of free cash flow also allowed us to reduce our revolving debt facility at the end of the quarter and take advantage of lower interest rates for the forward period. While we prefer to deploy this capital on acquisitions, we are being patient in finding the right transactions, and we're happy to gain more financial flexibility while retaining access to capital for M&A. Fetching on MAUs. They came in at $109 million for the quarter, up 15% versus the prior year, inclusive of a 4.4% organic decline in line with our expectations. We did see some improvement in the MAU trend within the quarter and are hoping to trim these declines in the second half of the year. We think we should see quarterly improvements on that decline going forward. Our sites do tend to perform better in difficult economic times as users are staying home, doing more DIY projects, and engaging in their hobbies and passions to take their mind off the market. As we look forward to the second half of the year, we are being cautious in our approach. Our business has held up very well, and we are not seeing the same level of headwinds as some of the larger tech companies, particularly those that are monetizing large mobile app audiences. Our desktop and mobile web audiences that are in niche categories with strong shopping intent continue to monetize well. But I think we should expect and plan to see some tougher conditions in Q3 and Q4. But to be clear, we're not seeing that yet. Finally, I want to make a comment on our recent stock performance. It's been a little bit disappointing for myself as a shareholder and leader of the company, as we feel our business is being deeply misunderstood and mispriced by the market. And as the CEO, it's my responsibility to make sure that the market understands our value. We have a unique and powerful financial model that's driving real free cash flow to the bottom line. And we can make highly accretive acquisitions in good times and tough times. We are certain that the recent stock performance does not reflect the fundamentals of our business that we have achieved in Q2, including 51% revenue growth, 54% adjusted EBITDA growth, or our $7.2 million in free cash flow. We are looking forward to continuing to prove ourselves in the second half of this year and better educate investors on Vertical Scope's value to shareholders. With that, I will turn it over to Vince to walk you through the financials in more detail.