Pivotree Inc.

Good morning, everyone, and welcome to the Pivotree fourth quarter 2025 earnings call. All participants are currently in listen-only mode. Following the presentation, we will open the line for a question and answer session for analysts. To ask a question, we would ask the analyst to click the icon to raise their hand. Before we begin, Pivotree would like to remind listeners that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on the risks, uncertainties, and assumptions relating to the forward-looking statements, please refer to Pivotry's public filings, which are available on CDAR. During the call, we will reference certain non-IFRS measures. Although we believe these measures provide useful supplemental information about our financial performance, they're not recognized measures and do not have standardized meetings under IFRS. Please see our MD&A for additional information regarding non-IFRS financial measures, including for reconciliations to the nearest IFRS measures. Now we'd like to turn the call over to Pivotry CEO, Bill Bernardo.

Thank you, Peter. Good morning, everyone. Thanks for joining us on our fourth quarter 2025 conference call. With me today, as usual, is Mo Ashour, our Chief Financial Officer. As we normally do each quarter, we've published a CEO letter in conjunction with the earnings results. That's available on our website. It's filed on CDAR, and I'll be covering a lot of that material today. I'm going to start a little differently this quarter as we end the year and talk about the results for the year. I know one of the recurring questions that comes up in many of the conversations I have with investors is, can you explain your business in simple terms? So let me just give you two slides to refresh everybody on what it is we do. I'm going to start by really defining the problem. And the core problem we solve is simple, but it's massive. Businesses lose millions to bad data. wrong specs, missing details, incompatible data formats across their systems. Ensuring enterprise clients have the right data, particularly product data, in the right format, connected to the right systems, all at increasingly AI-powered speeds. That's what we do. We're applying AI not as a buzzword, but to automate and accelerate processes we've managed for years. Today, I'm pleased to say that we're delivering services that are better, cheaper, and faster than ever before. I'm going to try to put this in a little bit more context for you. So when I speak to the importance of having the right data connected to the right systems, really it starts with data is at the core. It's at the core of all enterprise transactions. We start by making this data clean and accessible so that it can be used across the enterprise systems. Now, it's not enough just to have clean data. And this was pointed out by a number of our clients and some of our own business leaders. Clean data alone doesn't solve problems. It's got to get to the right places. And this is really the integration layer. This seamlessly connects data across all of the commerce systems. I know many of you, when you hear the word commerce systems, you think of one or two. There are many systems that complete a transaction. This is the systems layer. And this is where the data is activated to execute commerce functions. So really, when you look at data, where it moves to and how it gets consumed, that's the business we're in. We make sure this data moves to the right places and is consumed effectively by the various systems that lead to commercial transactions. Now, The other really important thing to recognize is what's been changing. These systems have been in place for decades. These integrations have been done for decades. There's entire business models around iPads or integration platform as a service to do integration. What's increasingly changing is every single one of these layers and every single one of these processes is being accelerated, augmented, and transformed by the use of AI. And that's really how our business has been transforming for the last few years. We've tried to simplify how we communicate that message. Really, the other thing you should be clear about are there's two different groups that use these systems in different ways. There are buyer actions that trigger these systems into motion. A buyer looking for a product. They do a product search. You're hearing a lot today about agentic commerce, but most of what you're really hearing about is the product search part. It's an augmented search. It's a gentic search and find. You have checkout and you have return. The long-term future of buyer actions will increasingly start to leverage agents and AI in checkouts and return processes. But a lot of what you're seeing and hearing today on the buyer actions is product search. And the other part of the equation is really the business users. These are our customers, the store associates, all the different systems, users, and definers of processes how they want to access data, how they want to present data, how they want to make data available, ultimately to help with the search and the checkout process. And so, again, we work with both groups, but a lot of our time, effort, and energy is going into automating and improving how we stand up systems, how we integrate systems, and how we get clean data into those systems to improve the processes that you're familiar with today, as many of you are buyers yourselves. So this is what we do. We get the right data to the right place to help perform commercial transactions, and we do it primarily with retailers and business-to-business, particularly in industrial manufacturing and distribution. So how did we do last year with that? Well, a big part of 2025 was getting us into a consistent cash flow production state, and we did $9.1 million of cash flow from operations in 2025. We achieved adjusted EBITDA of $6.7 million. We improved our gross margin by 250 basis points, shifting to a higher revenue mix, higher margin revenue mix. And we added $8.9 million in cash to strengthen the balance sheet. So our primary objective last year was met in spades. We continued investment in managing or in our managed and IP solutions. We refer to those as MIPS. We really began converting core delivery models with AI tools for better, faster, and cheaper service. Our SKU library, which is one of the things we've talked a lot about, it's one of the most advanced AI-enabled processes we've been building for a number of years, but that library grew to 12.5 million SKUs. We added 10.5 million last year. That library is also now equipped with an AI agent for its ability to query data. So think about it as an AI librarian sitting on top of that library. And we introduced Tower Talk, which is an AI layer that was added to our control tower. And that's really been enabling rapid prototyping, solving business problems with data that's in those systems. And the last thing, you know, on our strategy and our transformation last year is we identified long-term growth starts with having a solid base of new logos every year. I would say 2024 was not our highlight. Neither was 23. 25, we really started to see this begin to transform. So we doubled our new logo acquisition in an evolving landscape. And really a lot of that is about customers seeking specific outcome-oriented solutions with the promise of AI. That has really been helping us drive the conversations with new prospects and customers. And the ability to do demos and POC is becoming much more important in building contract and confidence. So, you know, we really doubled new logo, 25 over 24, up to 18 versus 9. And we really started this year off well in the first quarter. So we're seeing this as a trend, not a one-off. So overall, I'm really, really pleased. We've demonstrated the ability to deliver consistent cash flows. We won't step back from that while continuing to make investments in our MIPS and our go-to-market initiatives. I don't think anybody can escape the transformation that's going on in our industries. You have to have available capital to invest in this R&D and the practical application of AI. And I think we're balancing those two quite effectively. So if we look at, again, some of the numbers of 2025 and particularly that last quarter, our Q4 2025 MIPS total contract value bookings, 4.7 million. So 110% quarter over quarter. It's about Slack trailing 12. And the reason I show you the two numbers is because I've been really consistent in my communication about this. It's been volatile, right? We have these big bumps and these dips, you know, as we onboard new customers. But I would tell you consistently when you look at revenue, we're seeing the quarter over quarter and the year over year. This is our growth engine. It's actually starting to outpace our legacy managed services now. in absolute revenue. So again, we're seeing the trends convert, we're seeing MIPS in its relative importance to the business, and we're seeing continued demand in the area, but it continues to be volatile. Again, our MIPS revenue, $4.1 million in the quarter, up 6% quarter over quarter, and up on a trailing 12% despite the bookings volatility. And our Q4 2025 adjusted EBITDA came in at 8%. And we've been fairly consistent in our message around we're really, you know, trending and tracking and managing to between 7% and 10% EBITDA. And we want to continue to preserve the capital. When we see those opportunities to accelerate growth, we want to be able to push that grow button. And we definitely have the capital to do that. And, again, if you've read the CO letter, if you've looked at our financials, we have a nice, healthy cash balance sheet, which, again, was hard work over the course of this year to really take those accumulated cash flows and put them in the bank and make them available for our future growth initiatives. So with that, I'm going to turn it over to Mo to take you through some of the financial highlights.

Thanks Bill. I'll start with an overview of our bookings. MIPS and Professional Services total contract value bookings were $13.7 million. It was down modestly compared to Q3 and flat on a full year basis. MIPS bookings were 4.6 million in Q4. Again, as Bill describes, 110% sequentially and relatively flat for the full year. This segment continues to be lumpy due to the contract terms we get, the size of contracts relative to its current scale. Many of these Q4 bookings, are long-term in nature and should add more line of sight to future MIPS revenues. Nearly half of these bookings were leveraging AI delivery methodologies and models, and they were on three-year managed service terms. The professional services bookings were $9.1 million, down 25% compared to the high that we saw in Q3 of 2025, relatively flat on a full-year basis. This sequential decline is primarily a comparison effect against a strong Q3. Q3 included 12-month contract terms, which extended our average term length relative to what we typically see. Legacy managed services bookings were 0.4 million in 2004, and we continue to see this cohort of customers transition away, especially from Oracle ATG. So we will remain focused on new logo acquisition and account expansion to build multi-year relationships, leveraging the recent momentum we've had from our marketing efforts, which has yielded growth in our new logo category. Shifting to revenue, total revenue was 14.9 million in Q4. It was down 4% sequentially and down 3.4 million or 18% on a year-over-year basis. Of that 3.4 million year-on-year decline, as expected, legacy contribute 2.4 million of that decline as that segment continues to be a smaller portion of our overall business. The remainder of the decline is related to our professional services business is down 1.8 million and largely due to project completion across some of our commerce and data implementations. MIPS revenue was 4.1 million in Q4, representing 6% growth on a sequential basis and up 22% compared to prior year Q4. The key driver to sequential growth is the additional output we delivered within our SKU build offering. We delivered a higher volume of SKUs faster than initially expected due to the automation tools and the methodology we've been applying to help customers meet their business objectives faster. You can expect the transactional portion of our business will contain some volatility based on our customers' demand, and as importantly, readiness to ingest the volume of SKU data as we're able to produce and connect it to their systems. We continue to invest in both enhancing our capabilities and our go-to-market within our MIPS category to scale this segment. Moving to profitability, Q4 margin was 46%, up from 44% the prior year, and maintaining the trajectory we've been on to support our commitment to improve profitability. This was delivered through our investment in technology to drive NIPS revenue growth with stronger and improved margins. Looking at the chart on the right, Q4 adjusted EBITDA was 8% of total revenue or $1.2 million and for the full fiscal year was $6.7 million or 10% of total revenue. We delivered this improvement in 2025 through stronger gross margin production and stronger operational discipline following the restructure we executed at the end of 2024. Net income continues to be positive through each of the quarters in 2025, with Q4 delivering half a million. As a reminder, Q2 included 2.3 million. It's related to the sale of WMS, so we've adjusted that on the screen here. The sequential change also to highlight between Q3 and Q4 is primarily to FX benefits that we received in Q3. I am pleased to say this outcome is translating to cash generation as I'll outline on the next slide. So on the balance sheet as Bill described, we had a mission of setting up a stronger balance sheet for 2025 and we've done that. We ended the quarter with cash of about 12.8 million, an increase of 1 million of cash in Q4. Core operating activities generated about $1.3 million of that cash in Q4. Working capital had a positive impact on cash of $0.3 million. Overall, working capital remains healthy with no concerns. The business is operating cash flow positive while continuing to make the necessary investments to grow our business. As a reminder, we've got no debt. We still have access to our credit facility with National Bank of $8 million plus additional access through accordions to support any future investments. I'll turn it back to Bill now for a closing summary.