Destiny Media Technologies Inc.

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 everyone 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 CDER, 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 filled with the SEC and CEDAR. 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 questions will be pulled 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.

Thanks, Michelle. Today we have myself. As Michelle said, I'm the Chief Executive Officer of Destiny, doing business as Plan B. Along with me, we have Asel, is our Chief Financial Officer. Asel will be talking about significant components of our financial results. And we have Jen, who leads our strategic accounts. Jen will outline some of the achievements we made in the sales and marketing area The first thing I wanted to talk to you today about was the modernization of our platform. We undertook a process to move away from the PC application several years ago. The basic features of that were done a few years ago. And in the recent past, we've made two significant achievements that have resulted in the retirement of the older platform. The first was we transitioned our client, our largest client, to the online platform. We did that in April of 2023, so it's a little older now. That transition went flawlessly. but due to the quantum of the data and the historical catalog of the world's largest record label, we maintained redundancy of that platform until this year. Also, internally, we have a very sophisticated list management system, which is essentially the core of what we sell to our customers. We made many upgrades to that system and we were able to retire that component as well. So we were able to achieve cost savings of not maintaining two different platforms. The result of these investments are really the cost savings in the three main ways, reduction of platform investments, but also we made a lot of upgrades that make the list management maintenance more efficient, plus our client processing systems are more efficient. This is a pretty big deal for us. The other investment that we announced back in August was the launch of Castor and Castor+. Now, essentially, Castor Plus is the old Castor that's the sending side of Plan B, and Castor now is the self-service component. This investment really helps us in three main ways. It allows us to sell at scale so customers can self-sign up and distribute content without any Plan B staff involvement. This also allows us to more easily set up trial accounts. This is an important thing to know and even important for our own staff to be aware of. This is really essentially the best way to sell. Our platform is – the value proposition of our platform is not an easy one to explain. So the best way to sell it is to get people in it, see how easy it is, see how effective it is, see the information relayed back. and really just become hooked. It becomes an indispensable part of their workflow. Customers in our industry are hesitant for change, but with this we can get them in the platform and trying it out. Also, it allows us to more easily set up reseller arrangements, whether it's white labeling, OEM, or partnership arrangements. agreements. There are several label management services companies where they provide more enhanced distribution in a lot of different ways. Plan B really is regarded as a leader in radio, you know, that reputation helps us in that avenue, and we can partner with those label services companies to effectively increase our channel distribution. And now with Caster, it's a little bit more easy to achieve that reputation. We made a lot of improved sales and marketing capabilities. I'll let Jen really touch on those, but it's probably worth mentioning because it's a pretty significant change. The last – sorry, not the last thing, but the profitability – We are a B2B company in a niche business. We have a very strong position in that niche. We've had some success in growing, but it's at a rate of a little less than 10% while we modernize our platform. We have the largest record label as a customer. We've modernized the platform and improved our sales process so we can continue to target revenue growth while reducing costs and improving shareholder value. METR, in early fiscal 2022, the board of directors wanted to pursue an adjacent business to grow and diversify a revenue base. This led to the launch of METR last year. Meter fits into a fast-growing radio tracking and analytics market. We've seen research reports where this market is in excess of $3 billion, and we believe that we could target a portion of that as a complementary business opportunity. When we pursued this, we had a targeted approach given our size and cost profile where we only started tracking air plays for customers that would track at a smaller scale, and we started that in the United States so we could get some real market feedback and assess our success. We had validated this need. It was an unmet customer need for our smaller customers, and that is ultimately who forms our customer base right now. This is a relatively low cost entry into the market, into a very large market, with a short payback period if we achieve certain targets. And when I say low cost, it's really a low cost to the size of the market. The company spent a little less than $600,000 in direct costs in developing MTR, which is a larger expense for a small company, but... It was a big opportunity. It is a big, big opportunity. Since that investment, competitive solutions have emerged, including Apple's free service. Apple's free service does pose a little bit of a drag on our sales. but anybody who's really commercially interested in growing their music presence is probably looking for more details. Certain customers that are really cautious can use this for free. We have not achieved our sales yet, sales targets, and we're operating at small loss. We do have repeat customers, though, and we're exploring ways to expand our sales approach and target markets. We're expecting to do ad tracking, an ad tracking trial in early calendar to 2026. We're targeting larger volume sales where this is where you get synergistic sales with Plan P. Our sales team can target the same customers with two different products. There's also a lot of other value areas. ads with Meter. We are attracting more customers for PlayMPE because of Meter. So it's not just that we're selling Meter to PlayMPE customers. We are selling PlayMPE to customers of Meter. We do also have advantages in that we're providing both the distribution services and the tracking, which really provides some interesting and valuable data points. We see insights of how customers are using PlayMPE and how that results in their airplay tracking, the numbers, so we can provide some really valuable insights to improve their results. We're just trying to figure out how to monetize that information. And it also proves out the value of PlanP. You know, we've always known that PlanP was an effective distribution tool, but now we can really draw the line between the distribution and the airplay. Lastly, I want to be clear on this one because I think maybe some comments I've made in the past have not been. We resolved our litigation in October. There's an outstanding claim against the company. The judgment was in our favor and we were awarded costs. Those costs have not been reflected in the financial statements, but we'll be We expect them to be a reasonably large number, and we'll pursue them. And with that, I will turn it over to Asel.

Thank you, Fred. I will walk you through our financial performance for fiscal year 2025. So we'll start from the revenue. Revenue overall was up by 2.3%, and it is 2.6% if we look at the constant currency basis. The major label side was up by 149,000, which is 6.8% for the year. while independent label revenue segment declined by 75,000, which is 3.4% decline. And decline occurred despite the increase in the number of total customer customers, which was up by 7.4%, as well as the increase in new customers, which was 11.8%. The total number of releases stayed relatively the same, but what we see is the average spend decline by 10% per customer or 3.2% per release. We believe that there are largely kind of three factors that affected that, first being the general economic conditions, second being the volume discounts we gave early in the year. Total was approximately $52,000. These discounts were intended to encourage larger sales, but the expected uplift didn't materialize, so the structure has now been revised for fiscal 2026. And the last one is that for the period of time we had reduced sales staffing, which has since been addressed. And meter revenue, still less than 1% of total revenue, but it is up by 345% versus last year. Final points to note about revenue is that it is largely denominated in U.S. dollars right now. It is 91.8% in U.S. dollars. And now let's move on to the expenses and overall results. Cost of revenue, as you can see, declined – oh, sorry, was up by $76,000, which is 12.5%, mostly meter-related data hosting and processing fees. The operating expenses increased by approximately 751,000, which is 20%. And mostly the drivers are, as you can see, amortization, which is non-cash, amortization of the software capitalized in the previous years of 364,000, one-time non-repeating litigation-related costs of 249,000, One-time recruitment costs of $28,000 and MITA-related operating expenses of $61,000. As a result, adjusted EBITDA was down by $375,000. And turning to the liquidity, the cash balance was pretty strong, $1.12 million. A slight change versus last year is just the timing of our AR collection that cleared just a couple of days after the year end. And the company continues to operate with no debts or any other material capital expenditure commitments. So that was all for the financial results, and now I'll pass to Jennifer to cover sales and marketing portion of today's call.