NowVertical Group Inc.

presentation and on the presentation materials related to today's earnings press release and financial statements that are available on the company's website investor relations section and at www.nowvertical.com and on the cedar.com website s-e-d-a-r.com i'd also like to remind everyone that all dollar figures discussed today are in united states dollars Leading today's presentation will be Sandeep Madirata, the company chief executive officer, who's also joined by Christine Nelson, the company chief financial officer, and Andre Garber, the company chief development officer. We will break for questions at the end of management's formal remarks. As a reminder, we're only taking questions through the web portal today. If you're listening over the telephone, please access the web link in the company notice for the earnings presentation press release announced last week. With that said, once again, thank you for joining us. And now I'll turn the call over to Sandeep to begin this earnings webinar.

Good morning, good afternoon, good evening, everyone. Thanks very much, Glenn. And I'm very excited to have you all here to present our Q4 2024 and the whole year results. The reasons for the excitement is very obvious. Confident most of you may have already seen the press release. It's been a fantastic quarter and the year. What a journey it's been. And we are here to take you through all of the hard work that's gone in there and the results that we have been able to achieve for Now Vertical. Just as we get into the details of our results before that, what I would do is just as a refresher for all the shareholders that are joining the call today and some of the new investors who may be looking at our story for the very first time and joining the earnings call for the first time. I'll give you a little bit of a background of Nowvertical, who we are, what we do, and how we got here before we get into those numbers and the results for Q4 and the ELD results. Okay, with that, Just a brief background of the market that we are working in. This is the rapidly expanding market of data and AI technologies that's been growing quite phenomenally in the last few years. And the growth rate is only going to be accelerated by all the improvements that are happening in these technologies. What's also happening because of that is there is the increasing challenges and the pressures, especially on the C-suite in these businesses, especially the large enterprises, to gain the benefit from these technologies and deliver the return on investments. Now, the real challenge for the enterprises where it comes from is all the overlapping complexities that the enterprises have. And these complexities are coming from the growing volume of data complexity. How do you embrace these new AI technologies into the business and how do you embed them into the growth for your business? And also the organizational complexities, which are primarily driven by, do I have the right bandwidth and the in-house capabilities to deal with the change and deliver the return on these technologies? And that's exactly where we come in into the overlapping of these complexities and helping these clients solve many of these challenges. We are working with many hyperscalers and also our own proprietary software. And we bring these technologies to our clients to help them transform their data into tangible business value with data and AI. And we do it really fast for them. What this has resulted in is some of these large businesses that are on our portfolio as our clients. 250 clients overall with Now Vertical more than that and the key thing is out of 250 clients majority of them are the enterprise clients and we'll talk about those enterprise clients in some more depth but these are some of the brands that are on the portfolio of Now Vertical and if you look at the customer lifetime value of some of these clients we have created really long-term meaningful relationships with these clients, which is then translated into very high degree of the recurring and reoccurring revenue that we get from our clients. Now, how did we get there? The phase one of now what was primarily focused on growing by acquisitions. And what we have done in a very short span of time between 2020 and 2023, now Vertical has acquired 12 strategic businesses. This is to gain not just the critical mass on the capabilities, but also the critical mass on the revenue. That's what happened until February of 2023. What we then looked at is how do we really get the real value? How do we unlock the potential of growth from the business? And this is when we brought in the one brand, one business strategy for Now Vertical to integrate the whole business. And this is when I was brought in as the chief exec in January 2024. That's another story of when I walked into the office on the very first day, what kind of different challenges I saw in there. I'll also talk about the opportunities and the assets we saw in the business and how we are exploring them and making them work in our benefit. So how did we do on this one brand, one business integration led strategy? First of all, we brought in the right leaders, the right people in the management seat, people who have been running their businesses successfully. These are the people who understand and know the business really, really well. And we brought them to the table and gave them the right voice so that we can change all aspects of the business properly with the right leadership team in the seats. The other thing was while we were analyzing all the 12 acquisitions, we also realized and acknowledged that there are certain acquisitions that are just not fitting into our future vision and the integration strategy. And we made some tough and difficult decisions, but the right decisions for the business, and we divested from those assets. The most notable asset we divested in May 2024 was Allegiant Defense. And I've done a small video on that, which is available on our website for the reasons of the divestitures. What this has also led to is major performance improvements in our business and a cleanup, complete cleanup of the balance sheet. And Christina and I will spend a lot of time in today's presentation going over the results and the hard work that's gone in to improve the performance of the business and clean up the balance sheet. But overall, just a phenomenal amount of effort relentlessly executing on this one brand, one business strategy in 2024. so what we have got now is we had the collection of businesses that were put together and what we have turned that into and what we have created out of this is a business that's one now vertical one business and what's that allowing us to do now is to help us execute on the organic growth strategy in our enterprise accounts especially and all the growth markets that we are embedded in Our initial short-term, near-term milestone that we have been talking about is the 50 million US dollar revenue run rate and a 10 million US dollar event run rate. That's what we are aiming to get in the near future. So that's a bit of a brief about Now Vertical and how we got here where we are. We are now in phase three, very clearly in phase three, and the whole management team, everybody in the business is executing on the organic growth. Okay, so let's talk about what the strongest quarter in the history of Now Vertical looks like. Very proud to be bringing these numbers here, but I must say, I'll probably keep saying this time and again, this is a phenomenal management team effort and everybody involved in the business as well. Just to look at, you know, what the revenue and the EBITDA numbers look like here for us. This growth has been incredible as compared to 2023. The quarter over quarter growth is, we clocked 10.9 million US in the revenue for Q4 in 24, which is well ahead of our expected growth target that we had, which is 50 million run rate revenue. So we are already at 43.2 million of the run rate revenue after Q4, at Q4. The EBITDA numbers have already surpassed our targets and the goals that we had set, which was $10 million of the run rate EBITDA. This is 2.6 million of our EBITDA number is very strong representation of how much change that we have brought about in the business. So if you look at it from year over year growth, it's just a phenomenal number. But at the same time, what is that percentage of the EBITDA that we have delivered in Q4? That's standing at staggering 24%. Last quarter after Q3, I said, you know, 19% is already best in class. 24% is over the top. And when I came in as a chief exec, this is what I said. I had sold my business to Now Vertical, which was doing 35% EBITDA. Of course, that was in a smaller private company setup. But this is what I said, that this business has got so much of potential to increase the EBITDA and become best in class performance-wise. This is what we have been able to deliver in Q4 and demonstrate that what we said and what we thought is available in the business for the growth potential is actually being executed on. The other numbers here about the gross profit, rock solid, 52%. We said we want to work on 50% gross profit and 20% EBITDA margin, roughly that space, and we are already above those targets. So really strong 52% gross profit But the most important thing is we are properly a profitable business. So that's reflective of, you know, in the net income metric, which is such a massive change from where the business was a year ago. So in 2023, we were incurring losses and now we are properly profitable business with positive net income. That, in my opinion, is just a demonstration of some really healthy positive financial metrics on the business. Year 2024, all these results from Q4 and even Q3, they are all reflecting on our yearly numbers as well for 2024. The revenue has been clocked at 39.4%, which is 21% increase. This is despite we were going through a lot of transformation in the business. So not only we have been able to achieve the transformation, we have also been able to put the growth on our revenue on the table. And at the same time, the EBITDA levels, again, you know, the improvement on the EBITDA has been throughout the year. Quarter over quarter, we have been improving that. And Christine is going to take you through how we have really got there. But the EBITDA percentage of 18% for the whole year is a very healthy metric for our business, our kind of business in our industry. And this is, again, a massive growth over the last year. Similarly, on the gross profit, again, for the year as well, we are clocking 52%, very healthy gross profit margin. We just need to make sure we sustain that, we keep it there, we lock it there, and that's going to be a very healthy metric for the business going forward. And again, on the net income side as well, 1.6 million of positive net income, which is just a dramatic change from where we were as a loss-making business in 2023. All these numbers are excluding the divested businesses. And I just wanted to give you the flavor of apples to apple comparison. This is our underlying business of net of all the divestments. And this is the business that we are taking forward. So these are the real numbers of the business that's carrying forward since Q3 and Q4 last year. So what are the key drivers here for the growth? Where we really brought in that growth in the business? Firstly, big shout out to the management team, the leadership team here who has really executed this strategy at an accelerated pace. And that's why we are where we are with such a brilliant financial metrics on hands. but one of the things you know i said when i walked in i saw many different types of challenges but at the same time i spotted the assets and the opportunities that we could unlock in the business and one of the key area was i mentioned about the enterprise grade clients we call them in our jargon we call them as strategic accounts And this is one of the key pillars, if you remember, when I had brought in this one brand, one business strategy, this was one of the key pillars of having the discipline and the focus on growing these strategic accounts. Because there is just so much of headroom and potential that we could identify. And this is exactly what we have done. So just to give you some idea on the metrics here, the top 30 accounts of Now Vertical bring in about 60% of our revenue. So that's quite significant. And hence, the strategic accounts are quite significant for us. In 2023, 2022 and 2023, when there was really little or no focus on growing those strategic accounts, we grew them only by 3% or less. However, when we brought in that focus and discipline and the mindset and the management team sat behind this particular focus of growing these strategic accounts, we grew our strategic accounts, our top 30 strategic accounts by 19%. And that's the testament of what a disciplined focus can do for unlocking all the potential of growth in the business. Not only that, In 2023, there were only three accounts within Now Vertical who were giving us more than $1 million in revenue per year. We have grown that to eight strategic accounts that are now giving us $1 million revenue or more. And there is no reason why we can't do that with all 30 accounts and more. Remember, we have got 100 plus strategic accounts, enterprise grade accounts on our portfolio. So there is so much of headroom that's available. And what we have done in 2024 is proven this particular strategy. And this is working. This is the right strategy for Nowvertical to focus on. And really proud about what management team has been able to deliver with this in this area. At the same time, I just want to mention that this growth in our revenue and in the business is not coming at the cost of our profitability or the EBITDA margins. The EBITDA margin has been growing as well. we have got it to 24%. And if you look at the trajectory of how we grew our EBITDA, that's just quite a phenomenal effort and hard work from the whole team. So we have come to a level which is way beyond the threshold of, you know, this is really an exceptional EBITDA margin within our industry and really glad to have this kind of a performance. This is also underpinned, this kind of an efficiency and the performance improvements that we have brought about to deliver this EBITDA is also stemming from how we are now operating our delivery operations. We have got India and Argentina as our delivery powerhouse, and that's now able to serve all of our clients across the globe, which is now also reflecting in how we are improving our EBITDA margins and profitability in the business. My next challenge for the business is to ensure that we are commercializing our solutions and services properly. These high value solutions and services properly across the business. We are selling some of these solutions and services really, really well in one part of the business. We need to be bringing that to all parts of the business. All of this requires the right kind of investment into the business as well. And I have been around long enough to know this is not a simple path. This is not a straightforward journey. You always want to make sure that you are building the sustainability and the consistent revenue and profit margins into the business and also making it resilient from any kind of storms that we need to weather. over a period of time, any bumps that we see on the road. And what we will be doing is investing some of these profits that now we have put on the table back into the business so that we really bring that sustainable growth into the business and maintain really good profit margins. For me, as coming from this solutions and services background in the data and analytics space, 15 to 20% of EBITDA margin is really healthy business. And our aim is going to be to keep it in that range, strong, robust EBITDA margins in the range of 15 to 20%, but make sure that you are investing the profits back into the business to make it grow further. Some of the other key highlights in the business, what has evolved in the last year. If you ask me one metric that I'm so proud of and that actually infuses the confidence, the biggest metric that infuses the confidence in the business is the management buy-in. And we have been able to see that shift in the mindset of our management team, the confidence they have on the business we have seen the shift of our equity going from 7% to 27% in 2024. And this is just that reflection of, it's not just the reflection of the commitment that the management team has, but they have the belief in the growth of the business. They have the belief in the vision and the future of the business. And this is what we are now, 27% block of the equity within the management team, which is just phenomenal in my opinion. What we also have is we have now integrated our markets quite nicely. So North America and EMEA and Latin America, two markets, that's where we are operating. And it's one unified team that's working together. We all are completely abreast of what's happening in one part of the business. What do we need to do in the other part of the business? How do we need to collaborate and whatnot? And this is the growth discussion. I'm meeting with my management team all the time. We are discussing growth. We are discussing how do we evolve the strategy? How do we unlock more and more potential in the business? We are bouncing off all the ideas as that one unified team. And this is going to be resulting in certain changes that we bring about in our trajectory of growth in the business in the coming quarters. Technology partnerships, we recently announced we are premier partners with Google, which is the highest tier of the partnership within Google. And as we know, only 3% of the partners really get there. This is really a big feat that we have been able to achieve. And we are now bringing that partnership relationship across the whole business. Google is one example. We are also working with Microsoft on Azure platform. We are working with Qlik. We are one of the top three MSPs of Qlik in Brazil. So that's really one very good credential that we have. Snowflake, AWS, and Anaplan, these are the other technologies. So these are six technologies that I mentioned, which bring in about 60 plus percent of our revenue right now, which we absolutely intend to grow further in the coming quarters and years. Solutions and services focus. We are building this solutions and services culture in the business. We are underpinning all of our products and our own software within our solutions and services so that they become more valuable and can offer bigger benefits to our clients. That's the shift, which is also now bringing in one catalog of solutions and services, which are really high value for our clients. They impact the businesses in massive ways. And this is something that we are going to be amplifying in the near future as well. Strategic accounts, I talked about. I talked about only the top 30 accounts. We are now expanding the focus from top 30 accounts to top 50 accounts within Now Vertical in 2025 to bring in even more accelerated organic growth. And you will see some of the results coming up in the next quarters as well. But these are the areas where we are going to be investing into the business, some of the profits back into the business so that it brings in that sustainable growth and give us more profit in the future. With that, I will hand it over to Christine to take you through some details of the financial metrics.

Thanks, Sandeep. And hi, everyone. I just wanted to start off briefly by mentioning our segment note, which is in our financial statements and our MD&A. You'll notice that we made a change from prior quarters and prior years. So previously we were kind of breaking out our P&L and our segment note by the individual acquisitions that we were doing. And as Sandeep mentioned, you know, one of the biggest focus in this year was integrating the business. So we have integrated all of our markets. We've restructured management. We've amended SBAs to align with our strategy of one brand, one business. You know, our client offerings are consistent globally. And so we have updated our segment note just to be aligned with how we are managing the business and how we're looking at it internally. So now you'll just see, you know, operations, right? So you will no longer see those individual acquisitions that we used to have, because we were really just not managing the business that way. So just wanted to start with that. Now we'll go into the revenue performance. And as you can see, we've had consistent revenue performance growth year over year. So we went from 5.7 million to 10.9 million year over year. That's excluding our divested businesses. So that's an increase of 94%. Even including the divested businesses, we had an 8% increase in revenue going from 10.1 to 10.9 million this year. Now, it is important to note, you may remember in Q4 2023, we We had an unusually low quarter due to the devaluation of the Argentine peso in that quarter, which resulted in a 2023 year-to-date revenue. So just wanted to note that. So not only do we have our year-over-year growth, we can see that the revenue performance of the company is consistently improving quarter-over-quarter. Even in Q4, which as we've mentioned before, we do have a bit of seasonality in Q4 when many of our clients actually shut down their businesses for a couple weeks in December. So normally we would kind of expect a decrease in Q4. We were able to buck that trend this year. and actually saw an increase in Q4. So we're incredibly proud of that. And this growth in revenue quarter over quarter, this consistent growth is a testament to management's commitment to focus in our strategic account growth. It's also related to, we also had quite a strong year for our reseller revenue as well. So now we'll talk about EBITDA performance, which is very similar to revenue. We're seeing an increase quarter over quarter throughout the year, not only in the dollar value, but in our EBITDA margin as well. So we've gone from 0.5 million in Q4 2023 to 2.6 million in Q4 2024. That's excluding the divested businesses. It's a 420% increase. And we also, even including divested businesses, we went from 0.8 to 2.6 million year over year, a 79% increase. This is a really important measure for us, not only EBITDA, but the EBITDA margin. This is a key metric. that all of our management teams and our markets are working towards. We're always working towards a best-in-class EBITDA margin of about 20%. You know, the industry standards range from about 15% to 20%, and you can see we've now hit that for the last three quarter. We have hit our targets. And this, of course, is a direct result as our increase, obviously, in revenue is contributing to this. as well as that move to the operator-first model, which we have spoken about before, but it's really allowed us to drastically reduce our costs, focusing on capitalizing on the existing expertise that were already existing within the markets. So not only reducing, say, corporate overhead, but also we were able to reduce admin costs in the markets themselves, capitalizing on expertise, you know that are existing globally and we're capital links and when we're integrating we're able to capitalize on those costs next we'll look at operating performance. So we're going to be looking at a few metrics on this slide but we're going to start with admin expenses so just really speaking to them that previous slide. that move to the operator first model has allowed us to drastically reduce costs. So going from 4.9 million in Q4 2023 to 3 million in Q4 2024, that is a 40% decrease, almost $2 million, a decrease in costs. So this has been a huge focus of management's this past year is to reduce our overhead costs, reduce costs wherever possible, make us more efficient, And the ability to do that, to do this in this, this increase, this, sorry, this decrease in costs has speaks to the commitment of both corporate and the markets of that move to that operator first model. And this is one of the key factors that we're seeing an increase in the EBITDA margin. And this, this really important to highlight here that our reduction in admin costs has not come at a cost to our operational performance. As you can see, admin costs are consistently going down and our gross margin, which of course does not include any admin, it's just revenue and cost of sales, is increasing. So it goes to show that this decrease in admin costs is not only allowing us to sustain our operating performance, it's allowing us to improve our operating performance. And it shows that going forward, we can handle this lower admin overhead run rate and still perform well and still meet our growth targets. And you can see that this is obviously the reduction in costs is hitting a direct impact to our income from operations where last year we had a loss of 0.8 million. This year we have a gain of 2.7. Next, I'm going to talk about our reduced debt. So as Cindy mentioned previously, you know, one of the big focus was to improve the balance sheet this year. And what we've really focused on is reducing our debt. So what are we looking at? What is the debt in this picture? This includes our long-term debt that's held with banks, our convertible debt, And any consideration owing to prior shareholders that were related to the acquisitions that we've done over the past few years. And when they say the liabilities for the acquisition, it's just the cash liability. So you'll see that we have about $1.4 million of equity payable on our balance sheet. That's excluded from the $16.9 million here as that was settled in shares. And it's already been settled in shares in Q1 2025, as mentioned in our financials. So we started the year with about almost 29 million of debt, and we ended it with about 17 million. It's a 41% decrease. So how do we get here? How are we able to do this? So there's three things. Number one, we had cash flow from operations this year, which is absolutely fantastic. We had 2.8 million of cash flows from operations that we were able to generate. Number two, we have the Allegiant sale. Total consideration was about 12.5 million. However, this year we realized about 7 million of that in cash inflows, the remainder of which is deferred consideration that will be received over the next couple of years. And number three is the amendments of the SPAs, which were really key to not only reducing and improving our debt position, but also to that one brand, one business, um model that we previously spoke about so with the amendment of the spas we were able to do two crucial things number one lock-in earnouts so previously um with associated with these acquisitions we'd have burnouts you know you know a business would meet a certain ebitda target and they would have a earn out based on that. And so you'd see the liabilities fluctuating year to year, quarter over quarter, based on how well these individual businesses are doing. So this year we are able to lock all those earn outs in So they're fixed, which helps us manage our cash flows. We know when they're going to be due. There's no fluctuation in the balance sheet quarter over quarter. And number two, the prior shareholders who are currently in part of our management team agree to take settlement in shares, which is a big reason you saw that increase in management buy-in that Sandeep just presented as well. And so these three things helped us reduce our debt this year. They allowed us to pay down $3.4 million in cash for acquisition-related consideration. We paid down 5.5 million in long-term debt payments. So about 2.7 of that was the Allegiant debt that we paid on the close of the Allegiant sale. The rest are principal payments. We issued about 1.4 million of shares related to those SBA amendments. And then there was some revaluations related to those SBA amendments as well. So this huge decrease has had one huge impact, an improved leverage ratio. So we have gone from a debt to equity, sorry, a debt to EBITDA ratio of about from five times to 1.6 times. Sandeep, you just maybe go to the next. Thank you. And so this improved leverage ratio has put the business in a much better spot to handle our debt. And we're now in a very strong position to service our debt using our operational cash inflows. However, it is important to note, we do have the convertible debt that's coming due in October, and we are continuing to explore options to even further reduce our debt burden. But overall, we are so incredibly proud of the work that we have done on our balance sheet this year. And I'll hand it back to you, Sandeep.