VerticalScope Holdings Inc.

Hello everyone and welcome to the Vertical Scope Holdings Inc Q4 and Full Year 2025 Earnings Call. My name is Emily and I'll be coordinating your call today. After the presentation you will have the opportunity to ask any questions, which you can do so by pressing Start followed by the number 1 on your telephone keypad. I would now like to hand over to Diane Yu, Chief Legal Officer to begin. Diane, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Vertical Scope Holdings' fourth quarter and full year 2025 earnings call. I'm joined by Chris Goodridge, our Chief Executive Officer, and Vince Bellissimo, our Chief Financial 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 analysis for the three and 12-month period ended December 31st, 2025, which is available under the company's profile on CDER+, 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, and MAU, which are non-IFRS measures. All references to currency in this presentation shall refer to USD unless otherwise specified. Now I will turn the call over to Chris Goodrich, CEO of Vertical Scope. Chris?

Thanks, Diane, and good morning, everyone. Thanks for joining us today. Throughout 2025, the digital landscape underwent a significant structural evolution as AI began to reshape how users discover and interact with content across the open web. While this change has naturally impacted historical search to programmatic patterns, the hallmark of Vertical Scope has always been our ability to adapt, evolve, and seize the opportunities that arise from change. Our team is operating with a high degree of focus and a clear-eyed strategy to win in an AI-centric world. The speed of our execution is a direct reflection of the scrappiness and curiosity inherent in the Vertical Scope DNA. And I want to thank every one of our team members for staying true to the authenticity that makes our communities great. These values are exactly what will drive our next chapter of growth. Our strategy in 2026 continues to have four key components. First is growing our direct connections, both with our users and advertisers. Second, diversifying our revenue sources. Third, AI-driven product growth. And fourth, leveraging our strong liquidity position and cash generation to make disciplined investments to accelerate our growth. Despite the enormous amount of change happening around us, we've built a stable and resilient foundation from which to grow. Our monthly active users reached 86 million in Q4, representing a sequential increase from 83 million in Q3. This result is the product of a deliberate strategy. We're prioritizing the growth of our high-intent direct user base while simultaneously scaling our ability to acquire new audiences. We expect this stability to continue through Q1 and provide a foundation to expand our overall NAU as the year progresses. I'll offer a few comments on our results in Q4, and then Vince will walk you through the details. Although we continue to see our year-over-year performance impacted by search-driven traffic patterns that emerged in Q1 last year, our Q4 results represent a turning point for Vertical Scope. We're reporting sequential improvements across every one of our key performance indicators, MAU, ARPU, revenue, adjusted EBITDA, and free cash flow. First, our revenue improved 5% sequentially in Q4 and came in at 15.4 million. Year-over-year revenue was down 23%, almost entirely as a result of lower programmatic advertising compared back to a very strong Q4 for both traffic and CPMs last year. Open market programmatic CPMs showed some uncharacteristic softness in the quarter and didn't enjoy their normal seasonal spike. We think our experience there is largely in line with industry trends, but we also expect this to improve in 2026 and get back to more ordinary seasonal patterns. Direct advertising was relatively stable, coming in 1% lower year over year in Q4. However, our added focus on this channel is setting us up for a great start to the year with our direct bookings for 2026 already up double digits over last year as of the end of February. We're seeing strength across automotive and outdoor brands that are seeking to reach our authentic audiences, and we've also won significant new mandates with insurance customers and telco customers in both the U.S. and Canada. E-commerce had a third straight quarter of growth. It was up 21%, and we continue to see a lot of opportunity to build out our e-commerce business in 2026, led by our AI-focused product initiatives on Fora. And finally, we continue to demonstrate strong profitability in Q4, with adjusted EBITDA margins hitting 45% and our free cash flow conversion reaching 101%. Our financial discipline will give us the flexibility to continue to adapt and make investments to accelerate growth. Turning to our product development initiatives, our team has been hard at work to unlock the growth potential of AI across our platform, and we're seeing tangible results from these efforts. Vertical Scope is well-positioned to build new AI-driven offerings, given our enormous data sets and high-quality user-generated content. AI is allowing our teams to build new products and scale them faster than ever before. We continue to roll out translations, and it's proving to be a steady source of growing traffic. Our mobile app also continues to gain users every day, and we're starting to unlock new multi-community experiences to drive stronger network effects, improving both engagement and retention. And our AI-powered community assistant, Fora Frank, is making an incredible impact in our communities and driving deeper engagement and posting activity. In fact, we're seeing close to a 40% increase in posting rates for new users when they've received a reply from Fora Frank. Going forward, we see many opportunities to expand Frank's capabilities, driving engagement higher and powering new commerce experiences. One of our AI initiatives that we're most excited about was beta launched in Q4 and is quickly having a noticeable impact on our results. We call it Audience Engine. It's built by our team and uses AI and advanced data signals to identify and engage high intent users across multiple platforms and monetize them in the most efficient way possible. It expands our historical strength in building intent-based communities beyond organic search and allows us to proactively attract users aligned with our vertical expertise. This capability complements our existing high-quality communities. Our form audiences remain deeply engaged, and we're now adding scale on top of that engagement. It also reinforces the core vertical scope flywheel. More relevant users mean better advertiser and commerce outcomes, which funds further audience expansion. The early results are impressive. Audience engine has gone from initial beta launch in Q4 to hitting a run rate of 1.4 million in annual IP dot in January, and the current growth rate has us on a path to double that by the end of Q2. This is a really high margin source of revenue, and we expect to maintain high margins as we scale up the operation with AI rather than headcount. There will be a lot more to come on that in the quarters ahead. Turning to data licensing, while this has not yet emerged as a primary revenue driver, we're maintaining a patient and disciplined approach to ensure we're maximizing the long-term value of our content and data. We're encouraged by industry progress towards more robust legal and technical frameworks, such as the RSL Collective, which is building early momentum among platforms and publishers. However, the current landscape remains a challenge as large language models continue to bypass traditional robots.txt protocols in terms of use. Industry leaders like Reddit and traditional publishers are taking legal action against these practices and will remain vigilant in protecting our rights and platform as well. To that end, we implemented Tolbit's technology last September to block and redirect unauthorized AI bot traffic. While monetization through the platform is in its early stages for all partners, the insights we've gained are powerful. Between the launch in late September and the end of January, we blocked and redirected a staggering 415 million scrape attempts from the leading LLMs. Perhaps the most telling metric is this. Tolbit now works with over 7,000 online properties that Vertical Scope alone accounts for over 20% of all AI bot requests through their entire platform. To us, this is a clear signal of market demand. We'll continue to aggressively block these unauthorized attempts until we reach commercial agreements that fairly value our content. We remain in active engagement with major AI players, but we're prepared to pursue all avenues to ensure our assets are protected and properly valued. Finally, before passing the call over to Vince, I'll touch briefly on capital allocation. We completed two additional tuck-in acquisitions in the fourth quarter, bringing our total to six for 2025. These were disciplined high-value additions that fit squarely within our enthusiast ecosystem. We entered 2026 with our strongest liquidity position in several years and with very low leverage. Our philosophy on capital remains clear. We believe the highest return use of our cash is an investment in growth. This includes discipline M&A pipeline focused on assets that accelerate our core strategy, specifically those that deepen user connections, fuel AI-driven innovation, and further diversify our revenue through high-growth channels like e-commerce. We'll continue to be opportunistic but rigorous, ensuring that every acquisition is accretive to the high margins and robust free cash flow generation that have become the hallmarks of Vertical Scope's business model. In closing, 2025 is a year of strengthening our foundation and reestablishing our core growth drivers. We've built a resilient cash flow positive machine and with a strong balance sheet to support our ambitions, we're ready to take a leap forward in 2026. With that, I'll turn it over to Vince to walk through the numbers in more detail.