Newtopia Inc.

Good afternoon and welcome to the Newtopia, Inc. Third Quarter 2022 Earnings Call. All participants will be in 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 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Kimberly Asterkin, Investor Relations. Please go ahead.

Good evening, and welcome to Newtopia's third quarter 2022 earnings conference call. Joining me today are Jeff Ruby, Founder and Chief Executive Officer, Colin Swenson, Chief Financial Officer, and Laura Dodo, Chief Growth and Operating Officer. Please note that today's call is being broadcast live over the internet. and will also be archived for both telephone and online listening upon completion of the call. Details on how to access the replays are available in the company's third quarter press release issued this afternoon and can be found on the investor section of Nootopia's website at www.nootopia.com. Before we begin, let me remind you that certain matters discussed during today's call or answers that may be provided to questions during the Q&A portion of the call could constitute forward-looking statements which are subject to certain risks and uncertainties related to Newtopia's future financial and business performance. Actual results could therefore differ materially from those anticipated in such forward-looking statements. Newtopia is under no obligation to update any forward-looking statements discussed today, and investors are cautioned not to place undue reliance upon these statements. The risk factors that may affect results are details in Newtopia's periodic results and registration statements, which you can access via the CDAR website at www.cdar.com. Also, please note that all figures stated on today's call are in Canadian dollars unless otherwise noted. I would now like to turn the call over to Jeff Ruby, founder and CEO of Newtopia. Please go ahead, Jeff.

Thank you, Kimberly. and thanks for everyone for joining us today on our third quarter 2022 earnings conference call. I'll begin today's call with an overview of our financial performance and operational highlights for the quarter. I'll then turn the call over to Colin Swenson, our Chief Financial Officer, for a more detailed discussion of the third quarter results and outlook. Lara Dodo, our Chief Growth and Operating Officer, will conclude today's discussion with commentary on our overall growth trajectory. Newtopia continued to make progress during what was a challenging third quarter in which many macro conditions have changed. We do, however, see momentum as we head into the final months of 2022. For the third quarter, revenues totaled $2.7 million, up 5% sequentially. Year-to-date revenues of $8.1 million were consistent with the first nine months of 2021. As we improve our service ratio efficiencies, gross profit margin improved to 55% for the quarter, up from 50% in the prior year period, and 47% in the second quarter of 2022. On a year-to-date basis, gross margin totaled approximately 50% compared to 48% for the same period last year. Engagement numbers remained strong, with the total number of engagements reaching 113,100 participants for the first nine months of the year, up 13% compared to the prior year period. These levels of engagement bode well for the remainder of the year and even more so looking into 2023. Still, we do not necessarily run our business nor expect growth on a traditional quarterly basis as we are tied to our clients' implementation and benefit cycles, which take place seasonally throughout the year. Case in point is a larger implementation in Q3 of 2021 that did not repeat in Q3 of this year. Colin will speak to that further later on in today's call. Engagement and revenue figures can therefore fluctuate based on these implementations rather than necessarily every 90 days when we report our results. We continue to demonstrate industry-leading participant retention and low churn rates. Case in point, 70% of our participants remain engaged after 12 months, and 58% remain engaged after 24 months. For clarity purposes, engagement rates represent participant retention. When we incorporate innovative behavioral economic design into our offering, the stats are even more impressive. at 86% engaged after 12 months and a remarkable 83% engaged after 24 months. The more engaged our participants, the more effective our platform is in reducing costs and generating value-added revenue for our clients, while at the same time helping to prevent slow and reverse chronic disease for our participants and help them live their best lives. As we discussed on our last call, Nootopia is sitting at an inflection point. In the third quarter, we moved even closer to the finish line in negotiations with a new set of health plans and employers, and we expect our enhanced platform, when rolled out across our entire client base, will enable us to fully capitalize on these opportunities. That said, macroeconomic conditions remain challenging, and so we have taken a deeper look at the efficiency of our business model. In some ways, you can say that we've had a shift in our mindset. For the past several years, we've been operating as a health tech growth company, obsessed with generating the highest quality outcomes for an ever-expanding set of innovative health insurers with our sights set on profitability down the road. That is clearly no longer acceptable, and accordingly, we must hold our operations even more responsible by reducing our costs and drive for greater efficiencies while maintaining quality outcomes in order to reach profitability quicker. As such, Commencing in the third quarter and throughout the fourth quarter, we are eliminating costs that do not drive successful business development, as well as those that will not enhance our margins or our operational efficiencies. In other words, we are making cuts to our expenses to push our business toward profitability sooner. With the launch of our new technology platform, we will naturally see cuts in our technology expenses. Over time, That platform will also help drive efficiencies in our tech-enabled service ratio of inspirator to participants, getting us closer to our goal of one inspirator to 350 or more participants. Nonetheless, we want to get a jumpstart on bringing these efficiencies to our operations. Rather than wait for the platform alone to drive those improvements, we are redesigning utilization models while proactively making cost cuts. Keep in mind that one of Newtopia's significant differentiators is our tailored, one-on-one coaching efforts. We are not a one-size-fits-all solution. With that said, none of the expense reductions we are making will in any way hamper the quality service we provide our clients or our participant base. Colin will speak to these cuts and the associated cost savings shortly, but I want to highlight this strategic reset, which is truly focused on driving margins, efficiencies, and profitability for Newtopia. we are eliminating only those costs which aren't translating into wins for the business and look forward to the benefits these actions will bring to our operations over the coming quarters. As we look to simplify our expense structure, we will continue to actively pursue new wins for the business, both by expanding our client base as well as growing organically within our current portfolio. Just post-quarter end in October, we expanded our relationship with one of our current Fortune 50 clients, and began rolling out the Neutopia platform to their employee base in a major new geographic region. The reports from our clients so far have been positive, with new participants enrolling daily and welcome kits being actively sent out. This expanded relationship will help drive our fourth quarter revenue, as well as serve as a harbinger for a strong 2023. Additionally, as we further demonstrate engagement and outcome success to clients, we expect continued growth within our very large addressable market the vast majority of which is untapped. Speaking of demonstrating validity, we recently announced that Newtopia's Alternative Diabetes Prevention Program has received the highest full-plus recognition from the Center for Disease Control and Prevention. While Laura will discuss this honor in further detail shortly, I'd be remiss if I did not express how thrilled we are to have received this recognition. It is a true testament to the sustained success of Newtopia's approach to preventing, slowing, and reversing type 2 diabetes through highly personalized habit change. I'd like to congratulate our entire team for all of your hard work, without which Newtopia would not have received such an honor. Overall, Q3 was a solid quarter. We are confident our business is building momentum But we are also cognizant of the fact that we must initiate strategic actions to streamline our cost structure and push the business toward improved efficiency, margins, and profitability. Thus far in the fourth quarter, key metrics, including new participant registrations, are trending well, and we remain optimistic in the strength of our pipeline. With that, I'll turn the call over to our CFO, Colin Swenson, to speak to our third quarter results. discuss these strategic cost cuts further and provide some context on our outlook for the remainder of the year. Colin, over to you.