illumin Holdings Inc.

Good morning, everyone. Before we begin the official remarks, here is the cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable securities laws including, among others, statements concerning the company's objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Please refer to the cautionary statement and the risk factors identified in our filings with CDER for a more detailed explanation of the inherent risks and uncertainties that could affect such forward-looking statements. Following the presentation, we will conduct a Q&A session. I would now like to turn the conference call over to Tal Hayek, Chief Executive Officer.

Good morning, everyone, and thank you for joining us today for Illumine's Q2 2026 earning call. My name is Tal Hayek, co-founder and CEO of Illumin. As many of you know, I came back to run the company in the beginning of Q2 of this year, and I'm quite pleased with the results we're seeing so far. I'll begin with a brief overview of our quarterly highlights. Followed by an update on our platform evolution and go-to-market progress. Then, I'll turn the call over to Michael Amaro, our Interim Chief Financial Officer, who will provide detailed review of our financial results. I would like to thank the Illumen team for rising up to the challenge and delivering the highest revenue quarter in the history of the company. With a total of $50.2 million, Delivered by positive performance across all sectors, I am very proud of what we achieved so far. A major contributor was our exchange business, which generated $27.1 million in revenue, as demand from both new and existing customers continued to grow. We're incredibly proud of the team's execution and the results they've built in this part of the business. We also saw a meaningful turnaround in our DSP business. Both managed service and self-serve delivered year-over-year growth, generating $12.3 million and $10.8 million in revenue. Together, these results renewed momentum in our platform and were supported by an addition of nine net new clients during the quarter. This quarter also reflected the strength of our business model. We achieved record revenue while maintaining balanced contribution from both our demand side and supply side business. And at the same time, our approach to operating expenses helped reduce cost and improve profitability, demonstrating that we can grow the business while operating more efficiently. We also continue to strengthen the platform through strategic partnership that deliver greater value to advertisers. During the quarter, we expanded our partnership with Synth Group to bring real-time brand leaf measurement directly into campaigns, giving marketers faster insight into campaign effectiveness. And more recently, we announced our special partnership with Audient Security, Bringing additional audience intelligence into Illumen to help marketers discover, activate, and measure audiences with greater precision. Together, these innovations reinforce our commitment to build a more intelligent, measurable, and effective advertising platform. While there is still work ahead, we believe that we are moving in the right direction and have established a stronger foundation for continued growth. I will now pass the call to Michael to share financial results.

Thank you, Tal. Good morning, everyone, and thank you for joining our 2026 second quarter earnings call, which we reported earlier today. Second quarter 2026 revenue was $50.2 million, representing 52% growth, $33.1 million in Q2 2025. This marks a record quarter for Lumen and the first quarter in which revenue surpassed the $50 million threshold. Exchange service continued to be a strong performer this quarter with all service lines delivering double-digit year-over-year revenue growth. Gross profit or net revenue for the second quarter of 2026 was $17.6 million, increasing 24% from $14.2 million in Q2 2025. Although the revenue mix shifted towards service lines with traditionally lower gross margins, increased revenue for the quarter more than offset this impact, resulting in the higher gross profit. Gross margin for the quarter was 35.1% compared to 42.9% in the prior period. This year-over-year change was driven by a higher proportion of revenue from service lines with lower margins, such as Exchange Service. Exchange service revenue for the second quarter increased 108% over the year, $27.1 million, reflecting strong new customer acquisitions and augmented spend from existing clients, as well as expanded partnerships with publishers. Q2 was the exchange's best quarter yet, and its performance continues to underscore the impact of the strategic investments we made over the past year, core technology enhancements, strengthened external partnerships, and expanded customer capabilities. Turning to self-service, revenue was $10.8 million for the quarter, which was an increase of 18% compared to prior year and represented 22% of total revenue. This was primarily driven by higher spend by existing customers and the onboarding of new clients. In managed service, revenue was $12.3 million for the second quarter, an increase of 13% compared to $10.9 million in Q2 2025. This favorable variance was driven by similar factors of self-service, higher volume of spend by customers and acquisition of new customers, largely due to enhanced features with external partners. Total operating expenses for the second quarter of 2026 were $18.7 million compared to $19.2 million in the same prior year period. The year-over-year decrease reflected lower share-based compensation and general and administrative costs that were partially offset by higher sales and marketing costs and higher depreciation and amortization. The decrease in share-based compensation is attributable to forfeitures from a reduced workforce, a general decrease in share-based grants. The decrease in G&A costs were primarily due to lower salaries and benefits from our cost containment initiative. The increase in sales and marketing is mainly due to higher revenue for the period and the variable commission costs that consequently increased, as well as higher marketing costs from enhanced brand development, partly offset by lower salaries and benefits. The increase in depreciation and amortization is attributable to a higher asset base from capitalized salaries. Q2 2026 operating expenses as a percentage of revenue was 37.3% compared to 58.0% in Q2 2025 and is down primarily as a result of the increased revenue the cost containment initiatives the company has undertaken. Q2 adjusted EBITDA was $2.0 million compared to a loss of $1.0 million in the prior year period. This was primarily attributable to higher revenue from brand placement and technological enhancements and lower operating expenses from cost containment initiatives as previously mentioned. Net income for the second quarter of 2026 was $19,000 compared to a loss of $5.8 million in Q2 2025, representing the first quarter since Q4 of 2024 in which we returned to positive net income This year-over-year change reflects the higher EBIT I mentioned, as well as the higher foreign exchange gain, lower severance, and share-based compensation expenses. Net foreign exchange gain was $0.7 million for the quarter compared to a loss of $1.5 million for the same prior year period, largely due to the U.S. dollar strengthening against the Canadian dollar in the current quarter as compared to the prior year quarter. Effective December 31, 2025, the company commenced a normal course issuer bid, or NCIB, purchased for cancellation up to $3.8 million of its outstanding common shares. As of June 30, 2026, 686,558 shares had been purchased and canceled under this program at an average price of $0.85 per share, totaling approximately $0.6 million. The NCIB remains open and can continue until December 30, 2026, or until we reach our target repurchase limit. The company did not purchase any shares in the second quarter to conserve cash in preparation for potential acquisitions. It may do so in the future. End of the quarter with $33.7 million in cash versus $43.8 million as of December 31st, 2025. Cash was down in this period primarily due to investments to enhance our product platform, timing of working capital, common share repurchases, and lease payments, partly offset by a foreign exchange gain on cash and cash equivalents. Compared to March 31, 2026, cash was lowered by $3.8 million primarily due to timing of working capital, investments in our platform, payments on leases, partially offset by cash from operations before working capital and the effect of foreign exchange on cash and cash equivalents. Excluding the impact of working capital timing we generated positive cash from operations in Q2. Turning now to our balance sheet, we ended the quarter with $33.7 million in cash, no debt, positive adjusted EBITDA, and maintained our strong balance sheet to support our long-term strategy. We are taking additional steps to find further efficiencies in our business, improve upon our liquidity, and to improve our financial flexibility, pursue selective, strategically aligned, and creative acquisition opportunities that expand our capabilities and enhance shareholder value. continue to see attractive opportunities and more rational valuations and will continue to evaluate them, the disciplined approach as we move through 2026. As of June 30th, 2026, the total number of outstanding common shares stood at 52,481,173 compared to 51,602,090 as of December 31st, 2025. This increase reflects the exercise of vested equity instruments, partly offset by shares repurchased in Q1 of 2026. Shares on a fully diluted basis stood at $55,409,730 compared to $55,800,361 as of December 31, 2025. This decrease relates to forfeitures and lower grants associated with the reduced workforce, partly offset by the increase in common shares. Our insider share ownership stood at 35.2%. In conclusion, we were happy with our second quarter 2026 results and looked to build on this momentum. We continue to see strong performance in our exchange service line, while managed and self-service lines showed stable improvement from the same prior year period, reflecting the impact of previously implemented strategic initiatives beginning to materialize. Operating expenses decreased year over year as a result of our cost containment initiatives. We're partially upset by higher variable costs from the increased revenue. Investments made in product development and platform upgrades during 2026 and the latter part of 2025 position us to support revenue growth efficiently. We continue to look for opportunities to improve operational efficiency and remain disciplined with our capital allocation. As we continue to scale the business, we believe the company is moving in the right direction and is well positioned for the future. With that, I'll now turn the call back over to Tal for closing remarks.