Reklaim Ltd.

Here we go. Okay, everybody. Thanks so much for joining this quick Q3 wrap on the quarter. Overall, I think it was a positive quarter, but I'm interested in hearing what other people think as well. So we'll take you through the financials. We'll do a little bit specifically on what's been happening around the product. And at the end, we'll open it up for any questions that you might have. So just for those of you that might be new to the story or are coming to the story for the first time, Reclaim, which was created four plus years ago, was really created to try to give consumers some visibility and optionality around the data profile that they have. The philosophy of this business is quite simple. Every consumer on the planet has a data profile. Nobody has access to that profile, and that profile is powering every business in the world. How can Reclaim democratize that data for these individual consumers and provide them with that transparency and compensation that they deserve? So that's the plan. I think what we've been seeing in the market is that there's been a consistent trend towards more and more towards consumer inclusion. We'll see that in this presentation where we talk about the emergence or the acceleration of privacy and some of the changes that are happening specifically in the market. Okay. So just quickly on the capital structure, um, just as a housekeeping note, all of this information is available at investor relations at reclaim yours.com, including a copy of this recording. So if you want to, uh, if you want to get more information or you want to come back to it, uh, you can definitely find it there. Um, 111 million shares outstanding. There are some warrants, average strike price at 10 cents. Um, About $160,000, $160,000 in cash. Share prices moved over the last quarter. Market cap of approximately 9.4, 9.5 million Canadian. 35% ownership. So quickly, Q3 at a glance. Thanks to Ira and Jewel for putting some of these numbers together for us. So the... The revenue here was up 52% from Q3 2022 to 924,000. Operating expenses down 8% to 734K. Gross margin 80%, which is up 17% from Q3 2022. I think if you actually take a look at the rolling four quarters, You can see that there's some pretty consistent growth of revenue here between Q4 last year and where we are today. One thing, if you actually take our Q3 and you map it, if you take 2023 and you map it to 2022, you would see that Q1 and Q2 were incrementally higher. In 2022, there was a seasonal dip in Q3 followed by a seasonal uptick in Q4. That's exactly what's happening again here. And we expect to kind of follow along in 2023. So revenue of 2.7 million is up 64% from the same period last year. We just talked about the seasonal quarterly decline of 11%. That matches almost exactly to what we saw exactly last year as well. Platform revenue and platform revenue is those platforms that actually host the reclaimed data to power advertising and decision-making for brands and agencies. It makes up 74% of total revenue. It grew by 91% compared to Q3 in 22. Expect that number. That's where we really focus all of our time and energy. Identity revenue, which makes up 26% of total revenue, it decreased by 13%. Expect that trend to happen as well as we continue to focus more specifically on platform revenue. Some of you might ask why, um, simplistically identity revenue is not as sticky. Uh, the sales cycle is longer, um, and we were able to churn at a faster rate by focusing on platform revenue. And so that's what we're doing. Um, again, when you take a look at, you know, the year over year comparison, 6 0 6 last year versus 924,000 this year, which is a 52% growth, um, cost of services has been down, um, 529,000 in Q4 of 22 is now at 187,000. I think what we said in the last quarter is we've got this pretty much streamlined here, so expect this to bump along kind of where it is. We've driven a ton of efficiency sort of specifically out of what we've been doing here. And if you look at the year-over-year comparison again, it's $505,000 in Q3 2022, down to $187,000K, a 63% reduction in cost of sales. Gross margin steady Q2 to Q3 at 80%. Year over year comparison, we've gone from 17% to over 80%. The law of large numbers will suggest that we're not going to kind of grow this to 95% gross margin, but we do think we can continue to maintain this particular margin for quite some time. So quite a healthy margin. We think we can make lots of money if we continue to do that. I think this is the best part, rolling four quarters of net income. This is the second consecutive quarter of profit. We've said this before. We expected Q2 to be profitable. It was. We expected Q3 to be profitable. It was. We expect Q4 to be profitable. We hope it will be, and we expect the year to be profitable. We hope it will be as well. If you look here on the right, it's a pretty big change, minus 675 to 530. Everybody can do the math on that. It's a very different business in 2023 versus 2022, that's for sure. UpX by function, generally speaking across the board, it's down. G&A and salaries down 13%, R&D down 58%, selling down 51% and marketing down 77% year over year. Again, there's only so much efficiency we can get here, but net-net, all positive. Year-to-date comparison, Q3 to Q3, 3.5 million last year versus 1.98 million this year. It's a 45% reduction. So I think we're operating really efficiently as a business right now. The debt reduction, this is something that we've talked about in various different press releases as well as in investor calls. I think you can see that we've gone from 1.6 to 1.2 to 1.1 to 1. I would expect this trend to continue and we continue to sort of chip away at it. The intention is to get rid of this sort of sooner rather than later. The schedule here of 420 in April, 100K in August and 100K in October. Note this 100K in October, it wasn't reflected obviously in the Q3 financial statement because it actually took place in October and not actually in Q3. Let's just quickly jump into what's been happening specifically in the privacy market. So again, the theory here has always been that data which has been amalgamated unbeknownst to the consumers and arbitrage without their knowledge is changing. We said that three to four years ago, it continues to happen. We started this year specifically in the United States really with the first state actually changing privacy laws to force the actual inclusion of the consumer. Here we are nine months later and 12 states have passed new privacy legislation requiring more consumer inclusion and protection with an additional 21 states having proposed this legislation. I said this in the previous quarter. The thing that I think is most important is sort of two things. One is not only is the privacy legislation happening, but it's the reclassification of data being called sensitive. Sensitive meaning that you need to have explicit opt-in, not the assumed opt-in. So an assumed opt-in would be that cookie notification that you see on the websites that you accept all. explicit notification is a requirement by individual companies and brands to tell you that they are taking your data, using your data, and you have to explicitly consent to it. That is the sweet spot of Reclaim. That's what we're really good at. And I think what we've been finding is that General market data is now being increasingly reclassified as sensitive personal information. And when that happens, those companies or brands that have historically used that data in the past have to venture into the market to find a new supplier. This is where Reclaim stands to benefit from it. So we update this every quarter. I would suggest if you are interested in seeing more and more trends specifically around the market, this quarter in the mdna i actually put probably at least a dozen individual links to various different articles that are being written specifically around how the privacy legislation is changing and how the oems namely google and apple are reducing the actual signals that are actually leaking into the market those signals are fuel to power actually um advertising with less signals. Again, individual brands and agencies have to find those individual companies who can provide those. That's where we actually think we can kind of benefit. Just quickly on sort of consumer product roadmap from a consumer value point of view in Q3, we introduced a couple of different things, a storefront, which gives consumers more visibility on how they can redeem their compensation. We introduced a VIP status. I think what we've been finding is when you see the general KPIs or metrics around our product, we have what's called a disappointed score or a favorability score of close to 60%. Typically, if you have a number that's over 40%, you have what's deemed to be product market fit. So to have 60% as a consumer facing product is absurd. It's an exceptionally high number. So the individual consumers that are inside of this product are voting, are upvoting reclaim saying that we are giving them what they want. That's good because obviously it reduces churn in the individual product and it actually facilitates more referrals into the individual product. In Q. Four. There's a couple of things that are happening. I mentioned this notion of reclassification of data and spi. Cannabis is a perfect example of this in the United States. Cannabis data was actually viewed as being general market data. It's now been reclassified as health care data, and as health care data. It requires two things explicit opt-in as well as a HIPAA flag. So a HIPAA flag is more disclosure that you are actually you as a consumer are sharing this information. You should see this in the product within the next couple of weeks. My personal belief is that we're probably the only product in the world that is actually surfacing an actual HIPAA flag. And you'll see this manifest specifically into some of the actual verticals that we're tackling from a sales perspective. We think the big pharmaceutical companies who have a requirement to use data that have an explicit opt-in are increasingly looking at individual companies like Reclaim to actually help them actually facilitate that. Other things that we are bringing back into the product, we are venturing a little bit back into privacy. So breach notifications, you'll see these manifest specifically in the product. We're not changing the UX, but rather when you log in, if that email has been hacked somewhere online, we will notify you and we will take you through an automated flow by a chat bot as to whether or not you want to update that or change that. Expect more information to expect more product development specifically around that. Lastly, we actually did this specifically in kind of Q3 is that the UX change or the changes specifically around the product to improve the user experience is now complete. And last but not least, we've automated the individual crypto redemptions for individuals that want to be paid in crypto and they're no longer having to wait. We think that that's also going to manifest really well. Just one other quick slide before we actually take some questions. People ask me, what about blockchain? What about security? What about AI? My point about AI is we've been doing AI since we started. So I appreciate that it's very buzzy right now and everybody wants to talk about ChatGPT. But you'll see here in the middle image that AI is throughout this entire product. So we do bug detection in the app using a company called Sentry. um code detection of unprotected passwords we use via github cost monitoring and anomaly detection by amazon spark clustering and sizing by amazon fraud detection bot detection we use we use large language models for writing really all of our consumer facing information as well and all of our frontline support is via automated chat bots which is actually ai The other thing too, which we believe is that we do believe that blockchain is part of the future really of data. And so for us, what we've been building is incrementally building more and more products that actually support this. I think the crypto redemption is a good example of that. What we look at in the market is there's a huge disparity between those companies that are in the blockchain world and those companies that are in the traditional data world. We see Reclaim as the company that can bridge those two individual worlds. So expect increasingly more behind the scenes work on that. And then last but not least, um security is is top of mind obviously for us why because with data everyone is a target um data breaches are now a daily occurrence with individuals and so we've been increasingly building more and more security and data breaches and data breach technology specifically into our product we do see This idea of providing that information and reconciliation to consumers if and when their data has been breached and what to do with that data once it's been breached as an opportunity to expand the individual products. So I would also look for more of that in the future. So with that in mind, I was a quick spin through the financials. Happy to take any questions that individual people might have. And if there are no questions, I'm happy to let everybody jump.

i guess i can ask a question what's the seasonality from uh q4 to q1 like just looking at that bar chart will we see a big drop from q4 then or

You'll see, so typically the most, the highest quarter is Q4. There's usually always seasonality in Q1, although last year our Q1 was higher than our Q4. So if you look at our Q1 this year, it was actually higher than our Q4 last year, which if you have a higher Q1 than you have Q4, it bodes well for the entire year. So Q1 and Q3 tend to have a little bit more seasonality than Q2 and Q4, but Q4 by far and away is the, is by far and away like the biggest quarter.