Xtract One Technologies Inc.

Good day and welcome to the Extract One Technologies fiscal 2024 second quarter earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chris Witte, Investor Relations Advisor. Please go ahead.

Good morning, everyone, and welcome to the Extract One Fiscal Second Quarter Conference Call. Joining me today is the company's CEO and Director, Peter Evans, and CFO, Karen Hirsch. Today's earnings call will include a discussion about the state of the business, quarterly financial results, and some of Extract One's recent milestones, followed by a Q&A session. This call is being recorded and will be available on the company's website for replay purposes. Please see the presentation online that accompanies today's discussion. Before we begin, I would like to note that all dollars are Canadian unless otherwise specified and provide a brief disclaimer statement as shown on slide two. Today's call contains supplementary financial measures. These measures do not have any standardized meanings prescribed under IFRS and therefore may not be comparable to similar measures presented by other reporting issuers. These supplementary financial measures are defined within the company's filed management and discussion and analysis. Today's call may also include forward-looking statements that are subject to risks and uncertainties that may cause actual results, performance, or developments to differ materially from those contained in the statements and are not guarantees of future performance of the company. No assurance can be given that any of these events anticipated by the forward-looking statements will prove to have been correct. Also, some risks and uncertainties may be out of the control of the company. Today's call should be reviewed along with the company's interim condensed financial statements, management discussion and analysis, and earnings specialties issued on March 7th, 2024, available on the company's website and its CEDAR Plus profile. And now it is my pleasure to introduce Peter Evans, Chief Executive Officer of Extract One. Peter?

Thank you, Chris, and welcome to all of our investors, analysts, and customers who are joining us for today's call. Let's start with our first slide in the presentation. It's an exciting time to be in the business, and I continue to be incredibly bullish about the future of the company and look forward to what will certainly be a record year for Extract One. The key highlights of our second fiscal quarter are as follows. First, this was another solid quarter for the company. Our Q2 bookings are typically seasonally light with the holiday season through November and December and new budgets being applied in January. However, despite this, we still achieved significant year-over-year growth and we continue to demonstrate momentum in the marketplace and in all market verticals. Looking ahead to the second half this year, we're expecting a continued ramp in both bookings and revenue throughout the second half. Secondly, as we continue our expansion into several market verticals, where we are in the early stages of growth for that specific vertical, we're thereby opening up new TAM opportunities and further growth acceleration for the company. Our qualified pipeline of sales opportunities stands at around $86 million of highly qualified opportunities and is well diversified across all key verticals where we participate, which is laying the foundation for further success of the company in the future. Finally, the company continues its focus on cost-effectively scaling the business. This means selectively making investments in the right places to fuel aggressive long-term growth. It also means looking for ways to increase our customer engagement and win new contracts in a more highly efficient ways. As a result, we've made the decision to invest in a new and revitalized channel sales program, which I'll touch upon a little bit later. Moving to the next slide, I want to provide further color on our business momentum and go-forward strategy. We're focused on continuously scaling the business and continuously scaling the company. and this quarter was another period of sound operating execution on our business strategy. Since we first began commercializing our Smart Gateway product, we've booked over $33 million in business, including $14.7 million in the first half of this fiscal year. Despite Q2 being a seasonally softer quarter, as we mentioned earlier, we still posted record results on a year-over-year basis, adding $5.1 million of new bookings, four times higher than the second quarter of fiscal 2024. Sorry, fiscal 2023. My apologies. I'm pleased with the results so far in 2024, and as I look ahead into the balance of the year, there are several indicators that our performance during the next two quarters will be momentous. Historically, the second half of the year has been stronger than the first half for extract one, as it aligns better with the buying cycles of some of our key customer segments, such as sports and live entertainment and schools. The first group typically looks for security solutions heading into the busy summer event season and certainly for sports venues that make investments during the off season for their professional sports teams with a view of having that technology in place before teams return to play. Schools and colleges similarly make decisions during the spring and summer season prior to the return of school for its students in the autumn. In addition, we're expecting to receive an award from the Department of Homeland Security in the very near future with Smart Gateway becoming an approved technology under the Safety Act. I know this is top of mind for many of our investors and has been a long process throughout. And I'm very glad to say after ongoing conversations with the DHS as recent as this week, we believe the award is pending. While we are already far down the sales cycle with numerous professional sports teams, this award will be a final checkbox needed for many of them to satisfy the requirements of those customers and get those orders in the door. I'm also very pleased to report that the security requirements for NHL teams to deploy our solution has been completed. Needless to say, everything we know indicates that we're set up for a strong finish to the year. Let's move forward to the next slide, please. Demand for our solutions continues to accelerate, and I'm very pleased with the new customers we've added and those that we've been able to announce during the quarter. As previously mentioned, we're not able to announce every customer, but those who are pleased with our solutions and have a policy that allows us to announce, we will. We welcome several additional sports and entertainment customers, including KC Stadium in Kansas City, home for the Kansas City Current Soccer Club, and the first purpose-built stadium for women's professional soccer. We also added the HEB Center, home to the Texas Stars and the Austin Spurs, the minor league affiliates to the NHL's Dallas Stars and NBA's San Antonio Spurs. We're also excited to be working with the Baird Center of Milwaukee, the largest convention center in Wisconsin. Convention centers pose an interesting new challenge in terms of security, as these facilities hold much larger scale events with a different demographic of attendees, and will often host multiple events at the same time, each with their own unique security requirements. The smart gateway provides unique flexibility and a solution that can meet these diverse needs for these different types of audiences and demographics specific to a convention center. We look forward to working with the Baird Center and see this relationship as validation of our capabilities. This will also serve as a springboard for the company's entrance into these types of markets, such as the convention center vertical market. where we are uniquely qualified to address such high volume challenges. At the same time, our expansion to other markets continues to be successful and growing, such that in Q2, over 50% of new bookings came from outside our core sports and entertainment markets. In fact, we added customers within education, healthcare, the public sector, and manufacturing, including a Fortune 500 company that is a leader in biotechnology. The demand for frictionless screening systems shows no sign of slowing down, and to the contrary, such applications are widely becoming and rapidly becoming a top priority in the markets, where previously we did not see them as important. Our ability to successfully serve customers across multiple market verticals positions us well for accelerated growth in each of those verticals and opens up the market for much larger sales, as organizations look to invest in the safety of their employees and their guests. We will continue to take a pragmatic approach to expanding our operations, being very selective about the markets and customers that we do engage with, and we will act on opportunities that align with our business plan and goals to reach profitability. Moving forward to the next slide, I'd like to talk a little bit about our sales strategy and how we plan to grow the top line even faster, as well as manage our costs in a very pragmatic manner. Over the last several months, we've been making strides to improve the smart gateway to create a much more out-of-the-box experience to allow for fast and easy deployment and serviceability without the annoyance of calibration, as an example, on a daily basis for our systems. Our systems are simple to use, simple to deploy, and simple to maintain. These changes have enabled us to move into the next phase of our growth strategy, which is leveraging channel partners. We're actively onboarding selected partners who will promote and sell the company's solutions on its behalf, allowing us to increase our penetration across North America and, in fact, globally in a cost-effective and scalable manner. I'm pleased to say that we're already starting to see early success for our first few partners that we've selectively chosen, who collectively are responsible for about 20% of all new bookings in Q2. Our channel sales strategy involves engaging a network of specifically selected regional partners who possess a unique understanding of their respective local markets and focus on specific targeted vertical markets. And we're motivated to carry, and are motivated to carry, promote, and support our solutions. We're working with partners who serve a diverse array of industries, including education, healthcare, and various public sector organizations, and who are able to provide their customers with first-line support and bring cost-effective and cost-efficient scale in terms of developing the pipeline, closing business opportunities, installing and supporting the solutions to their customers. While we will continue to sell direct to end customers for specific market segments, and in doing so, collecting invaluable feedback, which helps us continue to shape our product roadmap and drive further market-specific innovations. We are excited to be taking this next step in our evolution, and see the partner channel sales accelerating to top-line growth going forward for the company. At this point, I'm going to turn it over to Karen to provide a more detailed discussion of our financial results for the quarter.