NowVertical Group Inc.

Good morning and welcome to Now Vertical's earnings call for the second quarter of its 2024 financial year. On the call today are Sandeep Mandirata, Chief Executive Officer, Christine Nelson, Interim Chief Financial Officer, Nikhil Tadani from our investor relations firm, Sofit Capital, and myself, Andre Garber, our Chief Development Officer. Before markets opened on the 15th of August, we issued our Q2 2024 results, press release, MD&A, and financial statements, which are now posted on our website at nowvertical.com forward slash financials. This call is being broadcast live on August 19, 2024, and a replay will be available on our website after the call. During today's call, we will make statements related to our business that may be considered forward-looking. These statements reflect our views only as of today and should not be regarded as representative of our views at any subsequent date. These statements are subject to various risks and uncertainties that could cause actual results to materially differ. All figures discussed on today's call are in US dollars and will be on an IFRS basis unless otherwise noted. And we will refer to specific non-IFRS metrics such as adjusted EBITDA. Please refer to the cautionary note in our presentation and to the non-IFRS and other financial measures section of our MD&A for more detail. With that, excited to turn over the call to Sandeep Mandirata. Sandeep?

Thanks very much, Andre, and I welcome you all on behalf of our team from NowVertical. I'm very excited to be sharing our quarter to 24 results with you. Along with that, we will also give you some insights on all the changes that we have been bringing about in the business and some of the key highlights related to our clients and all the things that are happening around the integration strategy that we are working towards. So with that, let me just give a quick refresher for our investors who may be joining our story completely new. And just a reminder to the investors who have been following our story for some time now. This is just about our positioning in the market and what we do. So we are positioned within this artificial intelligence market that's growing rapidly and expanding rapidly in various industries. And this is probably one of the biggest evolutions within the technology industry in the last decades. The challenge here for the businesses is that they all need to adapt these technologies, data and artificial intelligence technology fairly quickly. All of the CEOs and the CXOs are under immense pressure to deliver the return on investments on these technologies in next three to five years and demonstrate that competitive edge. However, the challenge lies in some of the complexities, these large enterprise complex structures within these large enterprises that they have to deal with. One of them being the growing data complexities that has been the case for last couple of decades now with all the digitization that's happening. Every business has been dealing with these growing data challenges. On top of that, we have now got the new artificial intelligence complexities, the technology complexities around it, and you have to put it all on top of the data so that it really delivers the business value to the business. And then you've got the organizational complexities. None of these changes, none of these transformations are easy for any of the organization to go through. And when you are a large enterprise complex business, it's even more difficult. So these are some of the challenges which then result in some failed projects and very underwhelming results from the investments. And this is exactly where now Vertical is positioned and we come in to help. What we do is we help our clients transform data into tangible business value with artificial intelligence. And we do it fast. And the confidence in that statement that we made is coming from all the implementations, all the good work we have done across many industries for many of these large enterprises across the globe. So we have done it many times and we can bring in all of that repeatability, the reusability, the subject matter expertise, and the experience of taking our clients onto that complex data and AI journey. What this has equated for now is more than 250 clients worldwide. And many of these are global brands, household names, large enterprises that you see on the screen here. More than 100 of these clients are enterprise clients, which are really large brands that you would recognize. And many of these relationships with these large enterprises have been for more than three years, five years, and there are clients that have worked with us for more than 10 years, which demonstrate the trust that clients put in our capabilities and the value we deliver to them. What we are working towards now, which is something, the integration strategy that we set ourselves on the path for in the beginning of this year, we said there are going to be these four pillars of action that we are working towards on priority. And this is to turn now vertical into one brand, one business. It's the vision that we are working towards. We have made significant progress in all of these pillars. And if you want to deep dive into any of these progresses and how we have been making those progress, where we stand, There is a webinar we delivered on 12th of July last month. And this takes you through the details of what the progress has been in each one of these pillars. And I was also joined by some of the other leaders from the markets in that webinar. I highly recommend watching that webinar if you want to drill further into the details of where this strategy is right now and what progress we have made. About Q2 results, this is the financial update. I just wanted to share some highlights on the financial metrics. Christine Nelson, who's our interim CFO, she's going to take you through some more details on each one of these metrics. But what we had said in the beginning of the year was that we are going to turn Now Vertical into a profitable, sustainable business. And we are going to turn this into a platform that's going to be then poised for growth in the future. And this is what I'm really excited to present to you, which is the revenue is growing. I'll be slowly in this quarter as compared to the last year, but it's going in the right direction. The profitability is going in the right direction. We have demonstrated 12% EBITDA growth over last year in this quarter. The income from operations, which is one of the key metrics, that's what we said we are going to improve all parts of our business. And this is what is already beginning to demonstrate in our metrics. 191% increase in the operating income as compared to last year. And another thing that I was very well aware of, which we had to keep an eye on, was the liabilities that we are carrying. And I'm glad to announce that we have got 14% lower liabilities now as compared to last year. Some of these metrics, revenue, profitability, and operations, we have already excluded the Allegiant defense numbers from these metrics. And Christine will show you the comparison as well with and without Allegiant and what does that look like. on our metrics. I will also take you through some of the business highlights. One is the unified proposition strategy. Significant work has gone into this area. We have now gone live with our website and we have consolidated our solutions and services. And then some of the key wins, what we are really proud of, I will share some of the client and business highlights there. Just want to remind you that if you want to ask any questions around our performance and specific to Q2, please put them into the Q&A symbol in this webinar. With that, I will hand over to Christine to take us through some of the key metrics in Q2. Christine, you're on mute.

Thanks, Sandy. Hi, everyone. So revenue was $12.3 million this quarter, which was a 12% decrease over $14 million in Q2 2023. Now, specific reason for this decrease was the divestment of Allegiant Defense. which we sold in May, 2024, and had a gain of 3.5 million on our income statement. And also the divestiture of Affinio Social, which happened in May of 2023. So you'll see on the next couple of slides, both including those two businesses and excluding them. So just in order to compare apples to apples, we've presented figures excluding them. So you can actually see, okay, what's going to be a more realistic view of a run rate going forward. So excluding Allegiant Defense and Athenio Social, our revenue went from $9.3 million to $9.4 million in 2024, which is a 2% increase year over year. So that $9.4 million is what we're considering our base run rate that we're going to be building off of going forward as we continue to work on our organic growth. Next we'll talk about adjusted EBITDA. So adjusted EBITDA is one of the most important metrics that we use internally by management to measure the successes of our business units. These figures are also all disclosed in our MD&A and along with a reconciliation of exactly how you get from EBITDA to adjusted EBITDA. So please refer to that for more details. But year over year, we've had, we're seeing everything's turning in the positive direction. So we're including Allegiant and Affinio. EBITDA, adjusted EBITDA increased by 18% from 1.5 million in Q2 2023 to 1.8 in 2024. And then excluding those, so basically comparing apples to apples. you're looking at 1.4 million in 2023 to 1.5 million in 2024, which is a 12% increase year over year. And so everything is turning in the right direction. We're also really happy to see the overall EBITDA percentage margin increasing as well. So 11 and 15 in 2023, up to 15 and 16% in 2024. which is closer to where we want to get to in the future. So we're really proud of these metrics and just goes to show the hard work that we've been putting in. So next I'll talk about operations. On the left, we're looking at operating income. So this is, you know, revenue, gross margin and after admin expenses. So we've seen an increase of 125% from Q2 2023 of $0.3 million to $0.7 million this quarter. And if you're looking at, now when they're not presented on this slide, sorry, if we excluded Allegiant and Affinio from operating income, you would actually be seeing an increase of 191% from 0.2 to 0.4. And then on a year-to-date scale, we're looking at last year, we had a loss of 0.7 million. And this year we have a gain of 0.9 million, which is a 226% increase year over year. Now, a major reason for this increase in our operating income is a reduction in admin expenses. So quarter over quarter, year over year, we decreased by 10% going from 6.5 million to 5.8 this year. And then on a year to date scale, we decreased by 14% going from 13.9 million to 12 million in year to date for the six months ended June 30th, 2024. Now this is reducing our overhead costs and our min expenses has been a major focus of management with our objective to move to an operator first model. Now you've heard me say this before, but we have amazing talent in all of our local markets around the world. And so we've just been focusing on capitalizing those and reducing our overhead corporate costs as much as possible and just utilizing the talent that we already have within the business units. And these decreases in minute costs, we're very proud of and we're going to continue to work on on reducing these further and making the business more efficient. Okay. Next, I'll just briefly touch on our liabilities. So as Sandeep mentioned, another focus that we are focusing on is improving our balance sheet. And going from June 30th of last year to this year, we had a 19% decrease in our overall liabilities. Now, a big portion of this, of course, is due to the divestment of Allegiant Defense in May 2024, which allowed us to reduce our long-term debt. and improve our balance sheet position. But just in general, we just wanted to show our focus is definitely on improving our balance sheet as well. And I'll hand it over to Sandeep, who will speak briefly about the improvement in our deferred acquisition liabilities. Thank you.