Vitalhub Corp.

Good morning, everyone. Thank you for joining Vital Hubs 2023 fourth quarter and year end conference call. Before we begin, I will read our cautionary note regarding forward looking information. Certain information to be discussed during this call contains forward looking statements, within the meaning of applicable security laws, including among others, statements concerning the company's 2024 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. Also, our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered as a supplement to and not as a substitute for GAAP financial measures. Reconciliations between the two can be found in our MD&A which is available on CDAR Plus and our website. With that, I will hand over the call to our CFO, Mr. Brian Goffenberg, to go over our financial highlights for the quarter. Please go ahead, Brian.

Good morning, everybody, and thank you for taking the time to join us this morning. As we reflect on this quarter and the year as a whole, we have much to celebrate. Our Q4 and year-end results are a testament to the tangible outcomes of our efforts showcasing not only significant growth, but also the effective execution of our strategic initiatives. Moreover, our performance has revealed robust financial health and heightened operational efficiency. This success is underpinned by strategic expansions of our healthcare product portfolio, deeper integration within our healthcare networks, and an extension of our global footprint. Our strategic efforts have clearly paid off, with solid improvements across key financial metrics revenue, annual recurring revenue, gross profits, net income, and cash generation. We anticipate this momentum will accelerate to 2024. Today, I'm proud to share with you the financial milestones we achieved in the fourth quarter, as well as our full year highlights. Total revenue for Q4 23 was 13.6 million, compared to 11.3 million in Q4 22, an increase of 20% year over year. Total revenue for the 12 months into December 31, 2023 was 52.5 million compared to 40 million for the same period in 2022, an increase of 31%. Revenue from term licenses made in support in Q4 23 was 11.3 million compared to 8.7 million in Q4 22, an increase of 29%. Revenue from term licenses, maintenance and support for the year 2023 was 42.3 million compared to 29.4 million in 2022, an increase of 44%. The positive increase reflects the impact of organic revenue growth in the company's suite of products, coupled with revenue derived from acquisitions completed during the year, or the acquisition completed in the year. Term licenses, maintenance, and support represent an important strategic source of revenue given its predictability and recurring nature and represents 83% of revenues in Q4 23 compared to 77% in Q4 22. Revenue from perpetual licenses in Q4 23 was $286,000 compared to $497,000 in Q4-22, a decrease of 43%, and revenue from perpetual licenses for the year 23 was $909,000 compared to $3.6 million in the same period in 2022, a decrease of 75%. Perpetual software licenses are dependent on the types of products sold, and the decrease was primarily attributable to the timing of deliveries of the company's in-touch products, in addition to the unusual high volume March in perpetual license sales of over 2.7 million in the first quarter of 2022. Revenue from professional services and hardware in Q423 totaled 2.1 million compared to 2.6 million in Q422, a decrease of 2%. Professional services and hardware revenue vary depending on the timing of hardware deliveries and the progression of customer projects. The decrease is primarily attributable to the deployment of the ongoing customer projects and the timing of delivery of hardware. Revenue from professional services and hardware for 2023 was 9.3 million compared to 7 million for the same period in 2022, an increase of 33%. The increase during this period is primarily attributable to the deployment of ongoing customer projects, deliveries of hardware, and additional service revenues from the new subsidiary. Additional annual recurring revenue, or ARR, which we formally refer to as annual contract value, totaled 44.6 million at December 31, 23, compared to 42.6 million in September 23, representing a sequential increase of 4.6%. A significant part of this growth, 1.9 million, or 5%, or annualized 21.7%, was organic, reflecting our focus on sustainable growth. Gross profit and total revenue in Q4 23 was 83% compared to 82% for the same period last year. The increase was primarily due to higher term licenses maintenance and support revenue with recurring revenue representing 83% of revenues in the quarter compared to 77% in Q4 22. Gross margin on total revenue for 2023 was 82% compared to the same number in 2022. Operating expenses in Q4-23 totaled $7.6 million compared to $7.3 million in Q4-22, an increase of 4.2%. Operating expenses in 2023 totaled $31.4 million compared to $25.1 million in the same period last year, an increase of 25%. The increase is due to higher sales and marketing expenses for conferences and exhibitions and R&D expenses for for acquisitions completed in 2023 and previous years. However, it is important to note that we continue to experience significant reduction in operating expenses as a percentage due to increasing operating cost synergies with operating expenses dropping to 56.2% of revenue in Q4 23 versus 65% in Q4 2022. Net income before income taxes in Q4 23 was 2 million compared to a net loss of 656,000 in the equivalent prior period, an increase of 2.7 million year-over-year. Net income before income taxes for the year 2023 was 5.3 million compared to 1.3 million in the same period last year, an increase of 308% year-over-year. The increase for the quarter and full year was primarily attributable to the significant increase in revenues from organic growth and acquisitions coupled with an ongoing effort to reduce costs and gain operating cost synergies. Net income after tax in Q4-23 was $939,000 compared to a loss of $338,000 in Q4-22, an improvement of $1.3 million. Net income after tax was $4.5 million compared to $1.2 million in the same period in 2022, an increase of 275%. EBITDA in Q4-23 was $3 million compared to 470,000 in Q4 2022, an increase of 536%. For the full year, 2023 EBITDA was 9.9 million, compared to 5.2 million for the same period in 2022, an increase of 82%. Adjusted EBITDA in Q4 2023 was 4 million, or 29% of revenue, compared to 2.5 million, or 22% of revenue in Q4 2022, an increase of 62%. The increase was primarily attributable to the higher recurring revenues of 11.3 million in Q4-23 as compared to 8.7 in Q4-22. Coupled with an ongoing effort to reduce costs and gain operating cost synergies for the full year of 2023, adjusted EBITDA was 13.3 million, or 25% of revenues, compared to 9.5 million, or 24% of revenues for the same period in 2022, an increase of 40%. The increase was primarily attributable to the higher recurring revenues of 42.3 million for the year ended December 31-23, as compared to 29.4 million in the equivalent prior year, coupled with an ongoing effort to manage costs and gain operating cost synergies. Capital from operations before changes in working capital for 2023 was 11.2 million, compared to 7.1 million for the same period last year. Cash on hand at December 31, 23 was 33.5 million compared to 17.4 million at the end of 2022. In comparison to Q3, 23, the cash on hand increased by 3.7 million and we have no debt. With that, I'd like to have a call over to Dan for an update on the business.

Thanks, Brian. I'm just going to formally just highlight a few things and talk things and hopefully flesh out some things with questions. But again, thanks to everyone for great support. It's hard to believe we're already in March for 2023 and what we believe is starting to shape up as a great 2024 as well. So thank you, everyone, from a shareholder base that's continuing to support us. In Q4, we continue to see what I like to believe is the validation of our engine or our business model with our continued success of added organic growth across those product lines that we've learned to expect to continue to have growth into. So we started to see the impact of the shrewd rollout for the command centers across the UK that was announced previously in Q4, and we expect that to continue into, I'm sorry, in the end of 2023 and then into 2024. We're still seeing great impact of our tree product in our Canadian base as it continues to accelerate as the leading product for community electronic records in Canadian marketplace. The oil product in our Hong Kong base continues to expand in usage, and we're getting contributions from a lot of our other business lines as well in respect to that. So it's definitely more of a diverse addition that we're starting to see as we go. We continue to look at innovation in a cost-effective way by Using our Sri Lankan-based innovation lab as effectively as possible, it really has turned into be a great asset of the company and for our ability to compete in these markets with innovative software in a cost-effective fashion. And that group has grown up to over 167, 170 people at this point in time. I think it started when we first started with 22. So we've really done a great job of doing that. It's also interesting that we completed an acquisition previously, about a month ago, with the Bookwise acquisition in the UK. And we are starting to see more substantive acquisition flow into our pipeline in a more realistic base. And we are starting to see a lot of these smaller SaaS base or other base companies that really don't have access to capital markets starting to look for acquisitions as a strategy for strategic initiatives. So we are starting to see that working its way through the system. Finally, we thought that would happen in 2024. And we think we're positioned and working hard to get our share of those acquisitions as they continue to do. Our cash continues to grow. You know, we continue to add cash. I don't know, close to like a $4 million rate per quarter at this stage in games. and we're excited the way the engine is working on all cylinders and we're looking forward just to continue to expand as we continue to move forward. And I'm open to any questions.