Xtract One Technologies Inc.

Good day, and welcome to the Extract One Technologies Fiscal 2024 Fourth 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. Please go ahead.

Good morning, everyone, and welcome to the Extract One Fiscal Fourth 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, 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 supplemental 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. The supplementary financial measures are defined within the company's file, management, discussion, and analysis. Today's call may also include forward-looking statements that are subject to risk and uncertainties, which 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 the 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 annual consolidated financial statements, management's discussion and analysis, and earnings press release issued October 24, 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. Please go ahead, Peter.

Well, good morning and thank you very much, Chris, and thank you to all of our shareholders who have joined us today on this call. It's a great way to end the end of our best year ever with record results across almost every one of our financial metrics and targets and beating, in general, all of the analysts' estimates for the performance of our business. As Karen will review later, we reported record annual revenue of $16.4 million, which is more than four times of what we reported last year. I'm also very pleased to report that we ended the year strongly with $5.6 million of revenue coming from Q4 loan, and I believe that we are very well positioned for further growth as we head into fiscal 2025. Given the strength of our bookings backlog, excuse me, I'm so sorry, for further growth as we head into fiscal 2025, particularly given, in my mind, the strength of our bookings backlog, Across almost every metric, whether it was revenue, profitability, reduction of burn, and managing OPEX, we exceeded our targets. Next, let's talk a little bit about innovation. It's been our mantra here at X-TRACK 1 to always lead with innovation and deliver answers to some of the customer's most compelling problems. That's a core principle at X-TRACK 1. And while we've consistently iterated and improved upon our screening solutions over the years, In the past 12 months, we've announced two major new products that are delivering incremental value to our customers. The first of these is Extract One View, a SaaS-based product for fleet management and analytics across the entire portfolio of Extract One Gateways. This has gotten great response from the customers and provides them a lot of tools they need to further use digital innovation to streamline and optimize their business operations. Most recently, we also announced our next generation product, Extract One Gateway. This new product offers bidirectional object identification and identifies weapons in environments with a medium volume of personal belongings. We'll talk about this a little bit more in detail later in this call and how this product is significantly increasing our market share as well as the size of the addressable TAM. We also onboarded many new customers during the year, including five professional sports teams, multiple school systems, and six new healthcare networks, and a handful of Fortune 100 companies. We accomplished what we set out to do a year ago and continue to execute on a business strategy that is designed for customer expansion, technology leadership and innovation, and cash conservation at the same time. I believe our investors are now coming to realize what we've said all along, that extract one is on its way to becoming a premier security systems provider whenever and wherever large groups of people need to pass in and out of venues in a secure and rapid manner. Most compelling to me and what I'm most proud of is we set ourselves some milestones, we share those with the analyst community, and we'd be able to deliver and exceed on those milestones. And that's something I think gives us a lot of credibility in the market and something I'm personally proud of. Needless to say, however, we're also very happy with other accomplishments throughout fiscal 2024, and we're excited about how the future prospects look as we accelerate into fiscal 2025. I'd like to turn to slide five here and provide a little bit of additional color on the Extract One Gateway and the impact that we believe it will have on our growth going forward. We specifically designed Extract One Gateway in response to customers such as schools who told us about the laptop problem as they defined it. These are organizations and facilities where visitors regularly carry numerous personal items like laptops, tablets, inflated water bottles, binders, and other items in a large backpack, bag, or briefcase as they enter into a facility. One gateway is unique in that it has the ability to rapidly assess potential threats in these cluttered environments, in the backpacks, in the briefcases, without the need to separate items, stop the screening process, execute unnecessary acrobatics, such as holding laptops above the head or purchasing x-ray machines, or doubling the customer's complexity with complex bag searches. The whole point of frictionless screening is to allow people to enter into a facility, just walk right in, without all this extra security disadvantage. The next generation solution that we deliver here caters to each venue's unique security requirements, And it's particularly advantageous for places like schools, convention centers, and workplaces where the average individual is walking in with the backpack or the bag with the laptop. This is where the bulk of those entrants have large amounts of clutter, like tablets, chargers, binders, eyeglass cases. On the slide, you can see a picture of the gateway along with the estimated size of the end markets where we anticipate that we will be playing into with this product. I can say with confidence and specifically based on the feedback of customers who have paused certain purchases of competitive products that they begin to engage with one gateway and that they're telling us it is a game changer for their business operations or their school operations. We're already receiving requests for proposals from a wide variety of new potential customers and that is elevating our presence in those target segments and target markets and creating a positive impact and more momentum as we begin entry into fiscal 2025. The solution has a unique ability to differentiate between potential threats and everyday items, and most uniquely, specifically identify the type of item that is passed through. This is a gun. This is a knife. This is a laptop. This allows security to have a smooth and secure entry experience for all the patrons. In particular, we've also seen some incredible excitement in the school sector, where it seems that we have unlocked the solution to the widespread problem and concerns about laptops causing alerts that are carried in children's backpacks. This would previously have 100% alert time or alert issue for the customers, and we've solved that problem. We believe this market segment has the potential to be one of our largest growth drivers in the coming quarters, and in short, we believe that the OneGateway will provide the best weapons detection capability in the market today. without the need for secondary screening, without the need for x-ray machines, and without the need for other complex operational gymnastics to bypass the laptop problem. Our promise of a non-invasive walk-writing experience is now delivered to these new market segments. The OneGateway further unlocks additional market potential not previously considered in our business plan or our addressable markets. By uniquely identifying objects, OneGateway can not only address the ingress and the concern about weapons, but address other use cases, such as a distribution center where they wish to alert on weapons entering into the facility, and they wish to alert on stolen electronics that are leaving this facility, where we've been told by some major retailers that as much as $10 million per year per distribution center is lost due to theft. This creates a great opportunity for us as a business and a great ROI and outcome for our customers. This not only underscores our leading position in the industry also as an innovator, it also illustrates that we're continuing to use that innovation to deliver better solutions and enhance efficiency and streamline security processes for improving the everyday lives of our customers. Let's now turn to slide six, where I want to remind our investors some of the many new customer wins we've announced. During the last year, the total contract value of new bookings was about $30 million. or about double from what we did last year. In Q4 alone, the $5.5 million in new bookings was running at a pace of about one new customer per week, about 10 total new customers, and five existing customers that significantly expanded their deployment with our technology. We onboarded new customers across several market verticals, including professional sports, live entertainment, education, healthcare, and others. In Q4, about 60% of our total contracted value of new bookings actually came from customers outside of sports and live entertainment. We started with the folks on sports and live entertainment, but the market segments were not willing to wait for us and pulled us into these other segments. Most interestingly, about 50% of our new business came from new customers in the school environment, and this occurred prior to our announcement of the OneGateway. We've seen that over the last four quarters, the proportion of our customer base outside of sports and live entertainment has been gradually increasing as we continue our manufacturing ramp and our marketing activities to support those activities. Last year, the vast majority of our customers were in sports and live entertainment. And fiscal 2024, to me, was the year that we firmly expanded and established ourselves in other market verticals. again with about 50% of the bookings for the year coming outside the sports and live entertainment marketplace. This was, of course, a result of societal trends, increasing the need for security in some of these other markets, and the investments we made in business development, marketing, and selling activities into those market segments where we showcased our technology to a broader array of customers. It's also due to the expansion of the investment that we've put into our channel partners, that are now promoting and selling our technology within their network of their customers. Most recently, I'm also very proud to say that we announced three new very exciting wins with the Rocket Mortgage Fieldhouse, the home of the Cleveland Cavaliers, with the Ameribank Arena, the home of the Florida Panthers, and UBS Arena, the home of the New York Islanders. These locations are all facilities that take a high focus on security first. And when they do, that's where Extract One always leads. They were also facilitated in part by our recent DHS designation award, which we announced last quarter. We're very excited to be selected by these professional sports teams and to continue to engage with other NHL, NBA, and MLB teams who are very focused on the correct way to secure their venues with our best-in-class AI solutions. As we begin fiscal 2025 and as we get momentum in towards the end of this year, We're very well positioned for continued growth and improved bottom line results. And I'm very pleased we're going to be able to continue to deliver some very good and aggressive growth rates. Given our current backlog, our demand dynamics in the marketplace, and our technology superiority, we're seeing a very active pipeline of opportunities, which I expect to continue. Our latest product offering, One Gateway, makes us much more confident than new fiscal year, and we think it will be another great year of continuing accelerated growth. just as fiscal 2024 was vastly better than the year before. As we've said in the past, the company continues to make progress towards profitability and to expand the top line and keep a tight handle on our expenses. The math is easy, and it tells the story of the journey towards profitability. We're very excited by the future and the potential it represents, and we did what we set out to do, which is something that, again, is very, very pleasing to myself and the rest of the team at Extract One. We focused on quadrupling our sales, expanding into new markets, serving new market segments, establishing ourselves as a key player in those segments, and executing on an operating plan that will result in higher production, higher delivery, and higher profitability with unparalleled customer satisfaction. These are the things that we consider our mantra for the business and things that we will continue going forward. Right now, I'm going to turn it over to Karen, who can provide a much more detailed discussion on our financial results. Karen? Please take it away.