NowVertical Group Inc.

Good morning and good afternoon, everyone, and welcome to Now Vertical's first quarter 2025 earnings call. On the call today are Sandeep Mandirata, our Chief Executive Officer, Christine Nelson, our Interim Chief Financial Officer, Glenn Axelrod from our investor relations firm, Bristol Capital, and myself, Andre Garber, our Chief Development Officer. So after markets closed yesterday, the 21st of May, we issued our Q1 2025 results, our press release, our MD&A and financial statements, which are now posted on our website at nowvertical.com, as well as CDAR+. We are absolutely delighted to be joined by our new and prospective stakeholders and existing shareholders, and proud to share our phenomenal results today. After our presentation, we will be joined by our analysts for a Q&A session, as well as open up questions to the general, time permitting. Today's call, you can flip to the next slide. we will be making 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 result in different results. All figures today, just to be clear, are expressed in U.S. dollars and will be on an IFRS basis unless otherwise noted. We will refer to specifics like non-IFRS measures such as adjusted EBITDA. And with that, let's get to the fun stuff and let me turn over the call to Sandeep Mandirata. Sandeep?

Thanks very much, Andrej. Very excited to be presenting our Q1 2025 results, another great quarter at Now Vertical. So welcome to this forum. Just as the refresher for our existing shareholders and just giving a brief background for the investors who may be tuning in new, just a little of a background about Now Vertical first of all, and then we'll get into the results. where I'll give a bit of a summary about what the results have been for Q1 2025. And then we will also have Christine, who will take you through some of the details of the key metrics and the KPI. And then we are going to have some business updates where we will highlight some of the changes and great things that we are bringing about in the business. So what do we do as a business? We help our clients transform data into tangible business value with data and AI technologies. And we do it really fast. Let me just break it down for you. What do we mean when we say we transform data? All the industries have gone through phenomenal evolution and changes, and they are generating more and more of data. The problem that they face is how do you unlock the real value that's residing or hidden in their data sets? And this is where we come into picture. We help unlock that value for our clients from the data that they have gathered over so many years. What we also specialize in, because data is a very vast subject, and it's getting bigger and bigger, what we specialize in is the customer and finance data. That's where now vertical specialization is. And because of that, you can also already see that our alignment, because of the specialization, is more with the marketing teams, the customer services team, The way we do that is we are laser focused on delivering the business value or the business outcomes for our clients. So we are not just the technologists. We understand the data and the landscape of data in the complex environments of very large businesses. And when I say we are laser focused on delivering the business value, just as an example of the business value, we delivered 9% increase in the subscriber retention of a business called The Economist, which many of you may have come across or maybe the subscriber of already. We also helped a financial services company, Niranka X in LATAM to increase their product activation. They've got multiple products in their portfolio. We helped for one of the products, we helped them increase the product example. One of the technology sector companies, very large business, multi-billion dollar business, we have been working with them and we increase the partner activation or the partner attribution of the leads by 50% or more. These are just some of the examples of the business value and the business outcome we deliver for our clients. And What we leverage is the data and AI technologies, very specific technologies that we bring to our clients. These are the technologies that are right for them and not just things that we believe boxed and we just force on them. So these are the technologies These are the technologies that are not just the generalist. These are not just the technologies that are, you know, you basically bring in very specific outcomes, the business value that I talked about, and you structure, you architect, you transform their technology landscape and the data landscape to deliver those business value. The specific technologies that may resonate with you Google Cloud is one of those technologies, Microsoft Azure. We work with Qlik. Anaplan in the finance area is one of the other technologies. We work with Amazon Web Services. We also work with Snowflake. These are the six key technologies where a lot of revenue is influenced or is directly coming from for Now Vertical. So that's what we do. Who do we do this for is very large enterprise-grade clients. These are FTSE 500 type of businesses, multi-billion dollar revenue businesses in various industries like financial services, media and entertainment, healthcare and pharmaceuticals, retail, e-commerce. We also have some horizontal solutions that are based on, say, the subscription model or the SaaS model for, say, the technology sector or the other sectors as well. These are the kind of enterprises or the clients that we have on our portfolio. We have more than 100 enterprise clients, which we will talk a little bit more about, but more than 100 enterprise clients that are on our portfolio. And that we consider as one of the major assets we have, where we are continuously unlocking the value from. So that's a bit of a background on Now Vertical. The way to look at Now Vertical as a business now, just a little bit of a background, first of all, the phase one, as we call it, of Now Vertical was all about acquisition and growth from acquisitions. We went public in July 2021 on Toronto Stock Exchange venture. And we have acquired 12 businesses, some really great businesses delivering phenomenal value to the clients across various countries and geographies. We acquired these 12 businesses and gained that critical mass in the business. driven primarily by acquisitions. And I came in through one of the acquisitions that I sold my business when I sold my business to Now Vertical in January 2023. And that's when I came to Now Vertical. I was brought in as the chief exec in January, 2024 to run this one business, one brand strategy that was driven by integration and organic growth in the business. So now the way you would look at Now Vertical is we have created that foundation already in the business. We are no longer those 12 acquisition and fragmented business. We have started with those collection of 12 businesses And what we have created out of that is a business, one Now Vertical. That's our foundation now that we are working with. And one of the key things as a change that we brought about in the business when we integrated the business was this operator first model. What that meant is we brought in some of the most successful leaders that came to Now Vertical from the acquisitions. We brought them to the right seats, the right positions in the leadership team, in the management team. And they are the people who are now running the business. And I'm one of them, like I said, which I was brought in as the chief exec of the business in January, 2024. So that's the foundation we are working with. Now, what are the opportunities we have created in the business as what we consider as the growth drivers in the business. So one of the things I mentioned was the 100 enterprise clients that we have. That's one of the key assets in the business. And there is so much of headroom for us to keep growing within those enterprise accounts. And it's becoming more and more possible and more feasible because we have now integrated ourselves as one business. So earlier, when we could only sell one solution or one service to our client, now we can offer them a much wider, a much more comprehensive set of solutions and services on data analytics and AI for our clients. So that's one of the key growth drivers we have in the business. We are also embedded in the key growth markets We are not seeking a new market. We have already embedded in the geographies like the U.S., in the U.K. That's within our North American and India market. And then Brazil and Argentina, which are, again, growth markets within LATAM markets for us. So these are the four countries that we are considering as the growth market. present large enough target addressable market for us to keep growing within. So we don't have to look for a new market. Really, there's so much of potential for us to keep growing in the existing markets. We also have high value client contracts. Some of our solutions that we deliver to our clients, they are so high value, their contract value for us could be somewhere in the range of, say, quarter million to half a million, even more than a million particular solution. That availability of high value client contracts is such a growth driver and asset for us, which we are amplifying further. The other part is the operational scalability. Now, many businesses struggle to scale. Even if they have one of the best products, one of the best solutions, one of the best services, what they fail to do is scale their growth and their operations. And this is another thing that we have already sorted. And as an integrated business that has become even more powerful, and we call it as our delivery powerhouse, which consists of our team in Argentina and in India. that presents such a nice elastic and scalable delivery model for us that we can, even if we get a $5 million contract tomorrow, we can very quickly scale to support that or start billing. The enabler for us, which is another growth driver and a brilliant opportunity for us, is the expertise and the relationship that we are developing and nurturing with our technology partners. or the Microsoft Azure and Qlik. We are already enhancing our relationship phenomenally, and I'll cover some of those updates in the business update section. But the other technologies as well, which we will also get into is the Amazon Web Services, very strong expertise there. Snowflake is another one. We were some of those early partners of Snowflake and we have done some phenomenal work with that software and Anaplan as well, which is very specific, you know, connected planning type software, which brings the right forecasting for large enterprises to fruition. So these Technical expertise around the technologies that we are partnering with and how we are nurturing these partnerships is one of the key assets and the growth drivers for us, and it presents phenomenal opportunities. Just to give you one specific insight, 60% of our revenue in 2024 came from our top 30 accounts. And we grew our average contract per year in the top 30 accounts per client to $724,000. This was just phenomenal growth and the testament of our focus and the discipline that we brought about in the enterprise accounts that we call as strategic accounts, the top 30 clients that we focused on. How do you encapsulate that into three things. We are focused on the account integration, which is all about scaling our existing enterprise clients, these strategic accounts that I mentioned. And you can already see how that is already delivering results, and we'll talk about that more. That's one of our key pillars of our strategy, which we can keep working on for years to come. The other pillar is the partnership integration. So the technology partners that I talked about, we are working towards nurturing these relationships in ways that it becomes a very scalable revenue channel for us and very reliable revenue channel for us over a period of time. And it not only gives us that revenue with the technology partners too. One of the other pillars is our capability integration, the technology expertise. That has been built over many years. That technology expertise was existing existed in different areas of our business. What we are doing is now bringing all of that together within that integration strategy. And we are now democratizing that capability, the technology capability across our business. This is already happening. And like I said, you know, I'll talk about that again in the business update section. And just to give you one context on the technology partners and the revenue from the technology partners and what it means for now, every dollar that is spent on the cloud platform by our clients, every dollar they spend, we get about six to eight times of the on that cloud dollar spend. And that's the scale that we are, that's the growth and the scale that we are aiming to achieve and get that, you know, enhance our share in that pie. So that's just one of the key insights about what kind of opportunity really lies in front of us in this technology partnership. Our short-term goals. Near-term goal is what this whole thing translates into is achieving that 50 million US dollars revenue run rate and a $10 million EBITDA run rate. That's a near-term goal, which also must have a composition of very rich, that revenue streams by bringing in different solutions and services from one part of the business to another. And that's our near-term goal These are just very small numbers for the potential that we are unlocking in the business and the potential that relies here. This is just a near-term goal that we are focusing on so that we can really prove to ourselves that this kind of a growth with an integrated business is absolutely possible. And this will mean a lot for our confidence and how we unlock the further opportunities and the value in the business. This is all about our very sustainable organic growth engine. I have not even talked about the inorganic growth channel, which is absolutely going to be on the cards in the coming times. But what we believe in is always crawl before you can walk, walk before you can run, And what we are doing right now in the business is all the transformation we have gone through in the last 14 to 15 months, we are ensuring that it's buried properly. It's stabilized very nicely and we are able to deliver the organic growth with this engine. Once that's done, we will absolutely be reigniting the inorganic growth channel, which presents another avenue of growth. And that's why I keep saying this business has got unlimited growth potential. This is what we are unlocking in the business continuously. And hopefully this is going to be reflected in the results that you're going to see shortly. So what's our performance overview and the KPIs? Some of the key ones I will go through. The most important ones, what's our revenue? 10.4 million this year, which is 23% year-over-year growth. Absolutely phenomenal. Very pleased with the whole management team, everybody in our whole team that has been working towards and growing in the same direction with us. 10.4 million as a US dollar revenue distribution. businesses um you know so this is this is pure numbers of the business that we are today and we are comparing with apples to apples of our last year also so 41.6 million of us dollar run rate already achieved in revenue and on ebitda very pleased Very pleased to see another quarter where we have got 2.5 million of the revenue, well above our expected margin of the 20% as the target that we have set or the goal we have set for ourselves. This is the second quarter where we have delivered 24% EBITDA margin. That's the consistency that we are bringing into the business. Once again, the 10 million US dollar run rate of EBITDA achieved in another quarter. Last year, last quarter as well, we had surpassed the 10 million EBITDA level. We haven't done that again. So very pleased with this consistency of the growth and the KPIs that we are bringing to our shareholders. Our gross profit is rock solid at 50%. If you remember, I have been saying that our goal is to be better than the best in our industry with 50% of gross profit and 20% of EBITDA. And we are consistently delivering that. So gross profit of 50% with 5.1 million US dollar gross profit, which is 15% increase year over year. Very critical metric, which is income from the operations is very positive, very profitable. That's 1.5 million US dollars. And we are no longer a loss making company. That's the consistency that we are delivering in the business. That's how the business should be. That's what we said. We are going to be bringing this consistency and sustainability with organic growth that's driven by profitability. That's exactly what we are delivering time and again. Just to give you the context of how we have evolved in the last few quarters, and you have to appreciate that this is the management team completely changed, completely new management team that has now spent five quarters in business and we have been able to deliver as a management team five consecutive quarters of consistent year-over-year growth. That's just phenomenal. Three consecutive quarters with $2 million plus EBITDA. That's the consistency. That's growing. And three consecutive quarters of 19% EBITDA margin. And that's very important because this is way better than the best in class EBITDA that our industry has. And that's why we are just mentioning this to you that this business and the growth we are experiencing. And like I said, very important metric for us when we came to the seat as the management team is the positivity. come from the operations. This is all phenomenal work from all of the management team and everybody in the business that has been working so hard. This transformation was not easy and we are continuously delivering on this growth and consistency completely heads down on that. And so pleased, so proud of the management team to be bringing these results to our shareholders. With that, Christine, if you could please take us through some in-depth KPIs here.

Sure. Thanks, Sandeep. We'll start off with the revenue performance. So we went from 8.4 million in Q1 2024 to 10.4 in Q1 2025. a 23% year-over-year increase, which we are absolutely over the moon proud of. This is a huge increase completely from organic growth. So this is us building consistency off the revenue growth we saw throughout 2024 to reach this 10.4. And it's also really representative of what a positive impact this change in strategy has been. Q1 2024, huge change in management. We're shifting strategies. We're focusing on the integration of all the acquisitions, the operator first model. So huge, huge change here in 2024. And so we've continued to build on that consistency and that growth to get to 10.4. So really proud of this metric. And it really just is a representation of all that hard work that we've put in over that past year. A couple of the key strategic shifts that we did was that focus on the enterprise and the strategic accounts. So really focusing on increasing our account value with those clients. And we, everyone, now we're not just, you know, one acquisition is focusing on this. We're one business, one brand. Everyone's sharing the same goals. We're aligned across all markets, across the globe. And these results really speak for itself on the execution of these strategies. So we're going to continue in the future to focus on those strategic accounts, focus on our enterprise clients, as well as also deepening our technology partnerships and, of course, account integration, which is going to be scaling our existing enterprise clients globally as well. Next, we'll talk about EBITDA, which we're just really proud of. I mean, this is just huge, huge for us. This increase of 119% year over year from 1.2 million to 2.5 is absolutely fantastic. We're incredibly proud of this. This hits a few metrics for us, a few targets, right? So it's hitting a $10 million EBITDA run rate. it's also exceeding our target of 20% EBITDA margin. Industry standards are generally between 15 and 20%. We're targeting 20, so hitting 24% to start off the year is fantastic for us. How did we get here? So, you know, previous slide, I spoke about our strategies with our strategic accounts, enterprise clients, increasing those, those account footholds. And then as well, of course, the operator first model, which I've spoken about before, you'll hear me say it again, but it really allowed us to reduce our overhead costs. So big focus, we started looking at all of our costs, both in the market, at corporate as well, the beginning of 2024, to reduce wherever we could. And moving to that operator-first model really allowed us to do so by capitalizing on the existing expertise that we had in the markets. And so really our admin costs, we're looking year over year, a $1 million decrease. And about half of that was actually corporate costs. And these kind of aren't like one-time decreases, right? Like this is a sustainable admin cost level that's going to be able to provide consistency going forward and help, you know, help increase our profitability going forward with consistent admin costs. And then next we'll go to income from operations. So this is obviously another one we're incredibly proud of year over year going from a loss of about point 1 million to a gain of 1.5 million. You know, this speaks to speaks volumes about. how successful the strategic shift has been over the past year and all the hard work that everyone has put in. We didn't put the number on here, but I just would like to say that this is a 1,253% increase year over year. It's also the fourth quarter we've had positive income from operations, just going to show that consistency that the change in management and the strategic shift that has had throughout this past year. And once again, this is also a direct result from the things I've spoken about previously, reduction in costs, the increase in revenue, the increase in profitability on our gross margins, all directly related to this amazing year-over-year performance. Next, we'll talk about debt, something else that we've really been working hard on and reducing our overall debt. So our reference to debt here is actually including a few things. It's including our institutional long-term debt, It's including our convertible debt and any acquisition related liabilities as well. So like deferred consideration, that type of thing. So if we're looking at, you know, the progress that we have made in, you know, from beginning of 2024 to, you know, end of Q1 2025, which is not a long time, we're going from 28.1 to 15.6 million. I mean, this is absolutely incredible, incredible progress. um and for the business for the business cash flow you know just it's absolutely fantastic um and even in q1 we were able to reduce this by a further eight percent but 1.3 million and we were able to do that make these you know significant changes within this quarter a couple different ways we obviously continue to make cash payments for our acquisition liabilities we are continuing to make our you know our debt principal payments to reduce our long-term debt As well as the prior shareholders of Apertrend, we reached additional settlement with them. So they agreed to settle about $800,000 of deferred consideration that would have been payable in cash, mostly the beginning of 2026. They agreed to settle that for shares. So that is a huge, I mean, that's just a huge win for us, a huge win for our cash flow, and also obviously reducing our debt as well. So overall, if we're looking at our debt to EBITDA ratio from beginning of the end of 2023, we're looking at five times and now it's about 1.5 times. I mean, it's just an absolutely fantastic improvement that we've been able to make and something we're really proud of. And we're continuing to work on this as well going forward. Back to you, Cindy.