Destiny Media Technologies Inc.

Good afternoon, everyone. Thank you for joining us on today's webinar. Before we begin, I'd like to announce that we will be referring to today's earnings release, which was sent to the news wires earlier this afternoon. I'd also like to remind you that this conference call could contain forward-looking statements about Destiny Media Technologies within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current beliefs and expectations of management and are subject to risks and uncertainties, which could cause actual results to differ materially from those forward-looking statements. Such risks are fully discussed in the company's filings with the SEC and CEDAR, and the company does not assume any obligation to update information contained in this call. During the webinar, we will discuss certain non-GAAP financial measures, The non-GAAP financial measures are presented in the supplemental disclosures and should not be considered in isolation of, or as a substitute of, or superior to the financial information prepared in accordance with GAAP, and should be read in conjunction with the company's financial statements filed with the SEC and CDER. The non-GAAP financial measures used in the company's presentation may differ from similarly titled measures presented by other companies. A reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures can be found in the earnings press release. Also, I would like to mention that following the presentation, there will be a questions and answers session during which you can submit questions by selecting the raise hand icon at the bottom of your screen. Your question will be called in the order that they are received and at which point you'll be prompted to unmute your microphone before speaking. With that, I'd like to turn the call over to your host, Fred Vandenberg, Chief Executive Officer.

Hi, everyone. Welcome to Q2. Year-to-date revenue was up 4.9%. For the quarter, it was up 3.3%. This is a little bit less than the growth we've seen in the immediately preceding quarter or the growth over the last couple of years. But we've seen some very positive signs for growth in our customer acquisition strategies. And we think this will result in positive long-term sustainable growth. Our independent customers represent about 50% of our revenue on average. In Q2, that's a little smaller of a percentage because of the demand, seasonal demand. But in that group... Total customers are up by 4.4%. New customers are up 8%. And then there's a modest increase in the number of releases. And there's a 2.6% increase in customer retention. We've also seen an improvement in sales conversion rates and the speed of conversion. What we have also seen is a 4% drop in the average spending per release. We think that the majority of that is caused by discounts that we've put in place. These discounts were part of our overall checkout feature that we're building. We had to standardize those discounts across the platform. The demand in this context is pretty inelastic, relatively inelastic. So we're probably going to address this going forward and modify the adjustments and how they're calculated. Expenditures are up 18.2%. The majority of that increase is, well, more than actually that increase is due to one-time non-repeating legal expenses of 230K and some non-cash amortization expense increases. That's offset by some reductions in salaries and wages that... The majority of which are long-term repeatable. There's going to be some increases associated with as we add some more staff. We've created this schedule in the slide to show kind of another non-GAAP measure where we've adjusted net income to deduct all the capitalized costs that we've incurred in the period, add back the amortization, add back the one-time cost of the litigations, and add some other non-cash expenses. And just to show you what our real cash flow is, longer-term cash flow, And it shows a net margin of about 9%. That gives a sense of where we're at, given the loss. Our long-term business strategy is really to achieve sustainable, accelerated revenue growth through new market acquisition, gaining market share in new territories. And to put that into real specific terms, We're really trying to leverage our customers and users to grow Plan P. If you look at Plan P, it's akin to a social media platform, but in the music promotion space. And if we make the right investments in the platform, we can help get our users to drive growth. Now, what we did in the quarter is we released a feature called Invited Connection. We plan to build on this and try different things to get recipients to drive that growth. If I was to draw a parallel here, it would be something like LinkedIn, where, you know, in the beginning of what in LinkedIn's existence, they were a platform to post your resume and that sort of thing. It's evolved and now it's evolved into a lot more. We have a vision of doing similar things and building on the invited connection. Our priority here really is to drive revenue growth so we can invest more into revenue growth. The more users we have on the platform, the faster we can grow. We also added some new features into our list management process. Our list management group really is actively maintaining our recipient lists, which is the products we sell. Our lists are really a significant driver of our overall value proposition. They are 200 percent more active than our best customer-owned lists. So we do the job a lot better than our customers can. And how we maintain these lists is through proprietary processes that we've developed over quite a number of years. This is just a change to help make that group a little bit more efficient. And with this change, we are looking to leverage that group into adding more recipient recipients and recipient types to essentially broaden our product line. As well, we made some SEO improvements and with those list and management improvements, we're working on acquiring new recipient types. As far as our customer acquisition investments go, From a platform perspective, the main thing we're working on is the self-service checkout. So this will allow us to really scale. And earlier in this year, we released a self sign-on. During Q2, we released full service checkout. So really what we split our independent customers into two types, full service and self-service. The full service customers require more staff involvement. Our staff prepared the release and that we've added the checkout feature there. If done well, We think that this will open many doors to grow independent use in new territories. And at the same time, concurrently, we're investing into a lot of marketing improvements. We restructured the website last year and we continue to improve the site score. We get higher SEO rankings, so search terms that are relevant to us get higher and higher rankings, and we're going to continue to do that. The site speed is a lot higher, and now we're working on preparing for a global expansion with the website. MTR is the new radio tracking software. That is growing quite well. February was our, so the last month of the last quarter was our highest month in revenue and that, you know, we continue to see really good improvements in customer acquisition, customer retention, revenue growth. But it's still a small product because it's currently only tracking single songs and where we'll see the real growth is when we can sell to larger customers that will track more songs. And we have to build out the ability for those customers to pay, but also to add features that will allow them to manage multi songs. And that we're looking towards later on in this fiscal year to add those features. And with that, I will turn it over to questions.

Great, thank you, Fred. So if you do have a question, please use the raise hand option at the bottom of your screen and your question will be pulled in the order that they are received. If you raise your hand, please ensure you have access to a microphone. And if you wish to retract that question, please just click that raise hand icon again to lower your hand. Your camera will remain off once prompted, but please do unmute your microphone before speaking. Looks like we do have one raised hand from LJ Goldstein. Do you want to unmute your microphone and go ahead?