NowVertical Group Inc.

Good morning and welcome to the now vertical first quarter 2026 results conference call. My name is Glenn Axelrod with Bristol Investor Relations. I'd like to thank everyone on the call for joining us with this webcast this morning. Before we get started, I want to remind everyone to read the company disclaimer and forward-looking statements that you can find on page 2 and 3 of today's 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, at now www.nowvertical.com, and on the cedar.com website. All figures discussed in today's call are in U.S. dollars and will be an IFRS basis, unless otherwise noted, and we will refer to specific non-IFRS, 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. Today's presentation will be led by Sandeep Mandirata, the company chief executive officer. He was also joined on this Zoom by Christine Nelson, chief financial officer, and Andre Garber, chief company development officer. We'll break for questions at the end of management's formal remarks. During the question and answer session, we will take questions from our covering analysts over the Zoom audio and all other questions from our listeners through the webinar portal and Q&A chat box. I'll remind our covering analysts to use the raise your hand feature within the portal to ask a question. Thank you again for joining us. And now I'll turn the call over to Sandeep to begin this earnings call.

Thanks, man. And welcome everyone to this call. The way we will run this call today is I will give a refresher, just a background of now vertical for our investors who are joining you to this story. I will then give you some growth drivers specifically of Q1 and the specific KPIs that we have been measuring for the last many quarters. I'll then hand over to Christine, who will take you through all of the financial results of quarter one, 20.6. And then I will take you through some specific success stories of Q1 before going into Q&A. With that, let's dive into what NowVertical does. At the core of NowVertical, we transform data into business value with AI fast. By fast, I mean these are measurable outcomes, short time to value and repeatable delivery. We operate across North America and Kenya as one market and LATAM as another, serving enterprise-grade clients in financial services, technology, media, retail, energy and some of the other sectors We leverage the six foundational technology pillars that you see on the screen, the likes of Google Cloud Platform, Microsoft Azure, Amazon Web Services, Snowflake, Anaplan, and Qlik to deliver these solutions and services to our enterprise-grade clients. This diversity of the geography, sectors, and technology gives us resilience and multiple growth vectors. That foundation translates into a clear operating model. Today, 83% of our revenue comes from solutions and services and rest from products and reselling off the licenses. Within that solutions and services space, the geographic mix is 65% of that solution services revenue comes from LATAM and 35% comes from Northam academia. Very importantly, this overall operating model, it performs with discipline. We are delivering over 50% gross margin and over 19% EBITDA margin. We delivered 19% EBITDA for the full 2025 year. Another important aspect is, which is equally important in my opinion, is the quality of that revenue base. Approximately 70% of our revenue comes from our top 30 strategic accounts, which is quite significant, with an average lifetime value of $5.2 million. These are long-term enterprise relationships, exactly the kind that compounds over time for us in revenue. And we are deliberately narrowing our focus. Our energy goes into strategic accounts and a curated set of emerging accounts where we can build that same depth, chasing that high value, high quality revenue that actually moves the needle for us. Our delivery capability is anchored in cost-effective LATAM and India-based capabilities. And overall, this is an operator-first model with 27% of the equity of the business owned by the management team. And we are invested properly in the business. This is how we win in the market. And the most important development this year is that we are glorifying it. We win on three things very specifically in our market against our competition and the value that we offer to our clients. The first is we connect the customer and the finance data directly to revenue outcomes. This is critical for us and for our clients. This is where the highest value enterprise problems sit. And this is exactly where our expertise is the sharpest in combining this customer and finance data to proper revenue outcomes for our clients. Second, we start small, prove the value fast, and then scale. So our typical engagement with any of this net new enterprise client will begin with a $50,000 to $150,000 pilot. which is run over, say, six to eight weeks, typically. And what it does is it delivers a very measurable return on investment. What that does is it then helps us, once that value is proven, it helps us then expand company-wide. That becomes a multi-year relationship that's built on demonstrated value. And the third differentiator and how we win in the market is we leverage AI to deliver for its speed and efficiency. Our agentic AI solution can automate up to 60% of the data engineering work, which is where the most of the brute force or most of the effort goes in any of these data programs. These are not just slogans. These are live examples. If you look on the screen, there are three different accounts that we have mentioned. A $1 million per annum revenue financial services strategic account for us, where we are generating $1 million revenue from them. Another media and telecom strategic account, where we are generating $2.5 million revenue per annum from them. and just a recently acquired commercial goods emerging account, as we call them, and giving us $200,000 revenue per annum. All of these examples are running exactly the same playbook on its way up. We are making this scalable now. We are now Unlock AI. That's going to be our delivery framework that codifies these patterns and how we win. This is a critical shift from wall of products to repeatable platform. That's the background and how we win in the market, just as a refresher. Let me bring you to Q1 specifically. Before we get into the reported revenue line, I want to set the context with the three key drivers that are actually reshaping this business. And this is something that we have been communicating for many quarters since we brought in this one business, one brand strategy to the forefront. So the first one is our top 30 strategic accounts grew 9%. And as a share of its overall revenue, it's now 73% of our overall revenue. What this showcases is our most valuable revenue is becoming a larger part of the mix. Second is the Google Cloud revenue. That grew 84%. It's now at 2.7 million in this quarter. And the share of this revenue is now 27% up from 13% in the last year, this quarter. This is our highest growth, highest quality channel, and it is now scaling for us. The third is the integration revenue. That grew 58%, with the share rising from 11% to 19%. What this showcases is both our process and the delivery engines that we are leveraging across the business is working within the markets as well as across the markets. With that, I will hand over to Christine to walk us through the financials. Christine?

Thanks, Sandy. We'll start with revenue. So revenue was $9.7 million this quarter, down from $10.4 million year-over-year due to a decrease in the Brazil license and maintenance resellings. However, when you set that $9.7 million alongside the last three quarters, 8.2 in Q2, 9.1 in Q3, 9.7 in Q4, what you see is a company that is back to consistency. We've grown our revenue by 18% over the past four quarters, and we've now held $9.7 million for two consecutive quarters, even considering the seasonality in LATAM and Q1. And that consistency matters. It tells you it's just not a one-quarter result, it's a trajectory. Within that top line number, the mix is improving in exactly the way we want. As Sandeep mentioned, the account revenue grew 9%, integration 58%, GCP 84%. So the story here is both consistency and quality, revenues holding strong, and the composition of that revenue getting better each quarter. Now turning to profitability and EBITDA. We delivered $1.8 million of EBITDA in Q1 2026 with an EBITDA margin of 18%. exceeding the industry standards of 15. We are proud to keep delivering best-in-class EBITDA margins despite the new investments in our commercial engines, which we started making in 2026. The $1.8 million of EBITDA is down from $2.5 million in Q1 2025 due to that decrease in Brazil reselling that I previously mentioned. While Q1 2025 did have some one-time credits received, which reduced corporate costs in that period, this was actually offset by our new investments in our commercial engine, which started in Q1 2026. Now, while there was a decrease year over year, we have brought consistency back to our profitability with $1.8 million of adjusted EBITDA over the past three quarters. We have been able to be consistent in that, in part due to the strong gross profit margin we have, which ranges from about 48% to 50%. as well as managing our administrative spending. Now turning to cash and the slide I'm proud to present. So we're looking here at our operating cash flows. So we've increased our cash flow from operations by 3.4 million to 1.6 million in Q1, 2026, compared to 1.7 million used in cash flow from operations in Q1, 2025. This is a meaningful shift and one that reflects a strong collections corridor and improved working capital management. This improvement in operating cash flow directly supports the balance sheet strength that we discussed last quarter. We are moving from a company that was managing liquidity closely to one that is generating cash. And the balance sheet tells that same story. We ended Q1 with $4.4 million in cash, and Q1 2026 is our second consecutive quarter with positive working capital. We had $1 million in positive working capital this quarter, or $2 million if you exclude deferred revenue. This is a 97% increase over Q4 2025 positive working capital. And when you compare to last year, in Q1 2025, we had a working capital deficit of $7.2 million. So this shows a dramatic turnaround. We also reported positive net income this quarter. Our first is 2024 when we sold Allegiant. The positive net income is a direct result of the operational improvements and revenue quality we've been building towards. It was driven in part by $1.1 million in income from operations and a reduced cost of capital thanks to the debt recap we did with HSBC UK in Q2 of last year. On leverage, our net debt to TTM adjusted EBITDA ratio stands at 1.8, a manageable level that gives us balance sheet optionality as we look ahead. In short, we have cash. We have positive working capital, positive debt income, and our leverage is under control. The strategies that we put in place two years ago have been reflected both in our revenue KPIs as well as our balance sheet. This is just a fundamentally different financial position than where we were a year ago. Thank you, everyone, for joining, and back to you, Sandeep.