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spk00: Okay, good afternoon, everyone. Thank you for joining us for the SNP Interactive fourth quarter and full fiscal year 2023 earnings call. I am Azhar Sabharwal, the founder and CEO of SNP Interactive. Joining me today is Jason Garcha, our Chief Financial Officer. Please visit our investor relations site at snip.com for a copy of our earnings press release and detailed financials. They have also been filed on CDAR. We present all financial figures in U.S. dollars unless otherwise indicated. So before we proceed, I'd like to remind everyone that today's discussion may contain forward-looking statements. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Okay, so 2023 was a transformative year for SNP. We've implemented strong controls following an extensive audit at the end of 2022, which notably concluded with immaterial changes. Our stock is actively trading again, and we are back on track with our fiscal 2023 audit, completed on time. More importantly, though, SNP achieved over 24% growth in our top line, thanks to continued investments in our people, markets, and in our products. We experimented with new business models, creating industry first with our loyalty gaming platform, as well as investing in a new line of business, Snip Media. As we approached the end of 2020-2023, we were also able to exit out of some of the low margin proof of concept partnerships that we inherited with the acquisition of Gambit that gave us a lot of learnings about the platform and its user base. While this rate of growth is the highest ever achieved in the company's history, and is the product of the hard work and execution of our entire team. 2023 was a year of investment, and now that we have made these larger investments, we are well poised to return in 2024 to profitable growth. The early signs are evident in our performance in the back half of 2023, which was EBITDA positive. It is worth pointing out to investors that Snip was consistently EBITDA positive through financial years 2021 and 2022 and the back half of 2023. So we know our model has leverage and we can generate a positive cash flow. Now that we are a quarter into the new year, and as we have previously stated, our gross profit margin profile has returned to its historical norm of being higher than 50%, and we will be excited to share our first quarter information in the next four weeks. The filing date is the end of this month of May, so we'll be talking to you guys again then. Our strategic focus in 2023 was on investment, innovation, and expanding our management teams to set us up for the next growth cycle. We made key hires, such as our first ever chief revenue officer and our first chief marketing officer. We built a sales team in Europe and are now adding deeper delivery capability in the region as our book of business continues to grow in Europe. These additions have strengthened our leadership team and are pivotal in driving our strategic decisions going forward. While the margin impact will be visible immediately with our Q1 earnings that we will announce at the end of May, the real revenue impact of our initiators will start to become evident over the course of the second half of this year. As previously indicated, investors should expect a decline in revenues for the first quarter, but focus on our margin story to appreciate our strategy. I will now briefly touch on each of our business segments, starting with the core SNP division. The core SNP business has been focused on deepening and extending our client relationships, which has led to significant milestones recently. Notably, we recently announced record bookings of over 9 million US dollars during the first quarter of 2024. This achievement is a result of the groundwork put in place during the prior 12 months. We feel that we are in the right place at the right time and with the right people, Companies are choosing SNP over our competitors due to the strength of our platform and our strong value proposition. Our pipeline is robust, and we are optimistic that the current trends being observed will continue during the quarters that lie ahead. This is evidenced by recent announcements concerning renewal business with some of the largest household names in global consumer goods. On Gambit, while our pilot programs have been very successful, we decided to end our primary legacy contract due to unattractive economic terms that we inherited in the acquisition. This will allow us to reposition the platform moving forward to focus on higher margin opportunities. This decision is one of the main contributors to Snip's margin improvement year over year, but will put some pressure on our top line in the short term. This business is still in its very early stages, creating a new mechanism of engagement in the loyalty industry takes years, and our team is working hard to build awareness among a variety of use cases. On SNP Media, we launched SNP Media with Bank of America in March. Early indications show performance metrics significantly above industry standards. The conversion rates and engagement levels among customers confirm the strength of our platform. This flywheel allows us to offer SNP Media placement to our CPG customers who want to get in front of Bank of America's 40 million loyalty users. It's worth noting earlier this month, Walmart backed ibotta, Raised about $577 million in its IPO at a $2.7 billion valuation. For those who are not familiar with the company, Ibotta is a free app that gives users cashback rewards when they shop. Ibotta partners with over 2,000 brands and retailers to offer cashback on groceries, clothing, electronics, wine, and more, just like we do. Users can earn cash back at the grocery store or when shopping online. We think the success of Ibotta's IPO is evidence of the growing value of direct consumer engagement and interaction platforms like ours. Ibotta has 3 million active users and 50 million users overall. By way of comparison, Snip's partnership with just Bank of America exposes us to 40 million users. I will now hand over the call to Jason Garcher, our CFO, who will provide a detailed overview of our financials for the quarter and the full year.
spk03: Thank you, Atul. Revenue for 2023 was $30.55 million compared to 2022 when we reported $24.66 million, which is an increase of 24% year over year. Revenue for Q4 2023 was $7.96 million compared to Q4 2022 when we reported $7.04 million, an increase of 13% year over year. The company recognized negative EBITDA of approximately $1.9 million during the 2023 fiscal year versus positive EBITDA of approximately $22,000 in the 2022 fiscal year. However, the company recognized positive EBITDA of approximately $32,000 during Q4 2023 versus negative EBITDA of approximately $694,000 in Q4 of 2022. Our EBITDA significantly improved during the second half of 2023, where we recognized approximately 65,000 of positive EBITDA compared to negative EBITDA of approximately 413,000 in the second half of 2022. Booking's backlog stood at 13.6 million as of December 31st, 2023, representing an increase of 14% from December 31st, 2022, which was at 11.9 million. Booking's backlog represents a number of different signed contracts and with multiple types of revenue representing the SNP product portfolio. Every contract signed each quarter will add to this growing backlog. SNP defines bookings backlog as future revenue from existing customer contracts to be recognized in future quarters. Bookings get translated into revenues based on IFRS principles, and the bookings backlog reflects how revenues in future quarters are steadily being booked today. This revenue gives the company better revenue visibility each quarter. Also note that cash at the end of 2023 stood at 2.9 million with accounts receivable at 2.1 million and the company continues to be debt free. I would now like to hand the call back over to Atul for some closing remarks.
spk00: Thanks, Jason. So looking ahead into 2024, we are optimistic about leveraging our investments from 2023. We anticipate these efforts will begin to materialize prominently in our financials, starting with the upcoming quarters, excited by the breadth of opportunity in front of us. We look forward to sharing information in multiple areas from An upcoming partnership with one of the world's largest retailers, to launching new clients in new industries that we've never operated in before, to our onboarding and SNP media of an additional large bank towards the end of Q2, as well as a non-bank publisher. This will further increase our potential audience size for that new business line, making it even a more powerful solution for our clients. So a lot of good things coming down the pipe. for the business. As we continue to innovate and expand strategically, our commitment to drive sustainable profitability has never been stronger. So if you had to leave this call with three things, here are the three things I would leave you guys with. One is our SNP revenue mix is shifting back to its historical higher margin profile. In the short term, our top line will be somewhat pressured from the ending of the Gambit proof of concept relationships, but our gross margin as a result will exceed 50%. This level of gross profit contribution will enable the company to generate positive EBITDA and add to a solid balance sheet over the course of 2024. At the same time, point number two is our backlog. Snips backlog and pipeline of new business is the strongest that it has been in several years. This is based on the industry mix quality of customers and types of revenue we are signing up. We are winning really meaningful deals with some of the biggest names, not only in consumer brands, but also in diversified markets like construction. So look out for more announcements in this area. Lastly, the industry in which we operate is finally gaining traction and momentum from an awareness and valuation perspective. I really encourage everybody to go look at Ibotta's stock. The continued acceleration of technology into the global loyalty and promotions marketplace have helped transform rebate and couponing companies into highly sophisticated, scalable data platforms with loyalty engines that detect and discern meaningful data in real time. The attractiveness of this multi-billion dollar industry grows more each year, and we expect consolidation among players, both large and small, to pick up steam in the upcoming years. Okay, so we're going to go into a Q&A session. We heard investors last conference call saying that, you know, we should open it up for everybody to ask questions. We really did receive a ton of questions last time since our stock had been halted. So we're going to try something today. You can either ask a question on chat or put your hand up and we'll unmute you to ask the question, your digital hand. So hopefully you guys know how to do that. So yeah, if any questions, happy to take them now. Either via chat or if you put your hand up, Jason will unlock you to ask a question.
spk03: Yeah, just to let you know, if you are logged in via the URL link, there should be somewhere on your screen where you can say reaction. And in the reactions section, there is an item that says raise hand. That's what the tool is referring to. The other option is if you also are logged in through the URL, you can type your question into the chat. And those are the two mechanisms that are available to you. Okay, Atul, I have one question from a number starting with 546 that I will unmute.
spk00: It will help if you can just introduce yourself just so we know where you're calling from. That would be great.
spk02: Hey, Atul, this is Josh from Breakout Investors. Sorry, I didn't get my name in there when I copied and pasted it incorrectly. Just wanted to see if you can give a little bit more color commentary on where you see things heading from a SNP media perspective in terms of the opportunity size and maybe trying to reference that in terms of what that mix of revenue will look like compared to the core business in the coming months and years ahead.
spk00: Right, so a few different questions. Thanks for that. Okay, let me... Let me, let me start at the top, right? The opportunity. For snip media actually is more think of it this way. The world of couponing and in the U. S is all. It's 1 of the few industries that is analog based. So 1 could think of it as, hey, can you actually digitize the world of couponing just to give people a sense of how that works? I think it's a 30Billion dollar market where. People print out pieces of paper and walk into retailers and give it to them, who then put it in a bag, ship it to El Paso, Texas. It gets weighed, and then there's a third party that actually settles it between the brand and the manufacturer and the processor. So a lot of inefficiency. Our fundamental solution is, hey, you get an Apple Wallet or a Google Wallet barcode that you just scan and check out, and it settles in real time. That's it. Now, Snip Media's underpinning is that technology platform that we've built. The world of advertising today, if you think of the second piece of this to think through is like banks like Bank of America, PNC Bank, Chase, Wells Fargo have massive audiences. Why? Because we all have bank accounts, right? But these audiences have never been tapped into by the Cokes and Pepsis and Kelloggs and Procter & Gamble of the world. Why? Because a bank only knows that you walked into a store and bought something at the store. They fundamentally don't know what you bought inside that store, right? So why would a Kellogg's or a P&G try and target the audience of the bank if they can't tell them that someone bought their product? Very simple hypothesis, right? We can at Snip, and that's the technology platform, right? It solves for two different things. One is it solves for bringing the couponing industry in America into the digital age, which is the market in itself. Forget Bank of America or any of the banks. But that same solution also solves for a manufacturer, all of our Fortune 500 type clients that we've been working with for a decade, to be able to target an audience they've never targeted before with an offer that they would love to target them with. So, The size of that market is undefined. The revenue opportunity there is undefined because we are the first in the market to do it and bring that audience to this group of advertisers who are the highest spending. It's a trillion-dollar industry, the ad tech market, right? So that's what we are sitting at the intersection of and hoping to exploit. I will give you a better sense of... Revenue and, you know, for this business in the coming months, only because we just started, we have one distribution partner, which is Bank of America, which is still a massive audience. Brands are trying it. For those of you who are Bank of America clients, please open up the Bank of America deals page in the app and have a look. And that will evolve over the course of this year as we get better targeting capabilities, more brands try it and like it. But guess what? This business is hedged in itself because we're also launching. We're already in market, actually. I can send you guys a link of an example of a Cheez-It coupon, which is all digital now. And it's the same infrastructure. So, sorry, long answer, but I hope that gave you some color on the opportunity here.
spk02: If that helps a tool, and then maybe just to expand on some of the other comments you made about you guys kind of being the first to market with this type of product. When we look at the other competitors in the space, Ibotta, Cardlytics, et cetera, is it still your firm belief that those guys are not approaching the same level of kind of SKU level based opportunities that you guys are going after right now? And is that kind of what differentiates you from them at this point?
spk00: Okay, so let's talk about Ibotta and Cardlytics separately. Ibotta has an app. They own the user of the app. The success or failure of their business comes from people downloading the app and using the app. That's 3 million active people today on an audience of 30 million probably registered profiles, right? That is not of competition to us. Why? Because I'm not trying to target their users. So for a manufacturer like staying with the Kellogg example, If you went to the iBorder app to talk to those 3 million people, those 3 million people are in the iBorder app looking for coupons. They are couponers by definition. Couponing is margin destruction for people who are anyway going to buy a product. So our audience is a banking audience. They're not in the banking app looking for coupons. They're in the banking app to operate their daily lives. The bank wants to be of value to them. So it's a very different... Audience, it's a very different quality of audience that we attract right in through our distribution partners. And that is the audience that Cardlytics is going after. But what Cardlytics does is they only provide offers in those apps, which they have been for years. So we know it's an established market and people do use offers inside banking apps. Why? Because Cardlytics is who Cardlytics is. And Cardlytics provides offers from retailers. No one has provided SKU level offers. offers. The simple example is Carlytics and the bank can say you walked into Walmart and spent 300 bucks at Walmart. They can't tell you what you bought inside Walmart. Snip can. So very different businesses. And I wouldn't even call them competitors, actually.
spk02: Thank you. Appreciate that caller.
spk03: Cool. And we have a question from Sam McCobin.
spk01: Hey, Sam. Hi, can you hear me? Yeah, we can. Okay, brilliant. Yeah, Sam McAuligan also from Breakout Investors again. I had a quick question as well about Snip Media. You mentioned in the press release that you were pleased with some of the promising early results. So I was just wondering, obviously, I know you can't go into too much detail, but I was hoping you could give us some color on, you know, what kind of, metrics were you kind of hoping for in the sense of, you know, are you pleased with kind of the number of active users there are, or is it more like the users that are active are, you know, engaging, you know, more deals than you expected or something like that? I was just wondering if you could give some more color on, you know, what type of results you were pleased with in regards to that. In regards to that.
spk00: Okay, great question. Thank you, Sam, for asking that. So let's start at the top. First question to ask ourselves when we launch a new business. There's a reason why we call the media business Mars within the company, right? Because we're shooting for Mars, not the moon anymore. Will people... choose to snip offers or select offers to keep it simple when they see them right are you interested in seeing a bounty or a tide or a you know ely coffee offer for buck off inside your banking app that's the first hurdle to cross hey are you interested right in the same user experience that since we've brought up cardlytics offers up within their banking partners apps The first metric was to see how many thousands of people will actually clip an offer at the SKU level versus the retailer level. So that has been a resounding success so far based on the exposure of the offers in the app, which is that one tile inside Bank of America among maybe 20, 30 different retailer offers there. that when you click on our SKU level offer tile, it opens up a bunch of offers at the SKU level. That was without any marketing from Bank of America. Bank of America should start marketing SKU level offers over the course of the next few weeks, actually. As well, as it's a function of the number of offers you have in there. So, on day 1, we launched with a few generic industry offers by any soda by any cookie package. Why? Because we also collecting data. Oh, and by the way, we own the rights to that data. Um, so, so very, very interesting. Negotiation that resulted in that, but the idea was, hey, let's launch with some generic offers saying you could go into any store and buy any soda or go into a store and buy any milk. Right? um so for the number of offers that we launched which was just a handful it was six or seven offers to start with you know in the in the live rollout to the entire audience and it was placement of one little tile in the corner with no marketing the number of people that actually clipped that offer was beyond our expectation so that's the first metric The second metric was how many people actually did the holy grail of walking into a store and actually redeeming it, right? And at that level of redemption, right, which is what the industry calls attribution, right, we actually add double the amount of a traditional coupon from a redemption rate perspective. So I'll have more formal metrics for you guys as we roll in more offers. So part of the color here is that it's a chicken and egg thing. As we get more offers from brands are saying, Oh, this is cool. We're going to, you know, throw some of our couponing budget at this and some of our media budget at it because we can hit two different budgets. Right. And as those offers start rolling in bank of America, we'll start marketing them because revenue for bank of America to, to their, to their user base through the same way they market, um, bank of America deals, um, And that'll result in, you know, we need to get to some steady state of offers and steady state of marketing in these distribution channels before the metrics really evolve. But what we see today is I think we are double a physical coupon industry redemption rate, which is huge. If you think of a Velasas or somebody sending in direct mail coupons to you that you go redeem versus this media, right? We're doing really well.
spk01: Very useful, Kala. Thanks. Thanks very much for the answer.
spk00: Jason, I think we have something.
spk03: There's some questions in the chat as well, Atul, for you to address.
spk00: Okay, so question number one from Breakout Investors from Florida. Hey, Florida. Cross-margins going forward. Could it continue to climb to exceed historical highs? You know, on the core business level, I would say, yes and and that's so let's let's let's break it down by mother earth which is our core business right the more we sell long-term recurring loyalty rebate you know promotion um hubs so to speak type of deals the better our margin is on those right um versus short term you know you put up a program for two weeks three weeks and it goes down right but there's The simple way to understand that, which is the historical business of ours, is some of these programs do go viral, and when they do go viral and you have millions of people redeeming a $5 gift card, that impacts my margin, but it's more business for us, right? So I think one of the things that the accountants made us do last year was calculate our revenue recognition in a way that was more SaaS-based as opposed to you know, when you deliver a project, you recognize the revenue. So I think our gross margins going forward, I mean, there's all this potential for it to exceed historical highs, but then if I have one program, say, back to school that goes crazy in a year, you know, our margin could get hit because suddenly the redemptions were really high. But that's a good thing because then the clients are going to be happy and they're going to keep coming back to us. So I don't know. I guess I'm not giving you a straight answer here because On a product mix perspective, yes, but on a promotions business perspective on programs that do actually catch fire, no, because we don't control it. So that's the way I just summarized that. Okay. Any thoughts in moving towards a NASDAQ listing? yeah you know i think it was unfortunate what transpired for us in 2022 with the audit um we had these great plans to take it forward um into the nasdaq so we now you know now that we've had a two-year run with this auditor and we want time this year and i think we will You know, we've never been late in our life except for that one time. And it didn't result in any material changes. I think now we will plan. I don't have plans as of right now. There are many balls in the air that we are exploring. But the minute we do find a efficient and economically feasible mechanism to move to the NASDAQ, we will. The intention is there, for sure. Okay. Next question was, how does OPEC scale with revenue? So that's interesting, right? That's where the leverage comes in. Our biggest operating cost, if you look on our financial statements, is really people. The platform in itself is not a huge cost anymore. We've made those investments. We bought Gambit. We took some of Bali's investment and put it into the product. So now it's an incremental delivery capability, as I mentioned in my formal notes, right? That we do have to add, you know, delivery capability in different markets, different regions as we grow more business. But we've got a model there that scales pretty nicely with a lot of leverage. So I'm not really worried about OPEX cost scaling with revenue scaling. What does the market for strategic acquisitions look like? You know, I'm not even thinking about it right now only because we don't have a currency. other than some of the conversations that we've been having that we had to put on hold when our stock stopped trading. again it's a question of like currency right i bought us trading at eight to ten times their revenue or something like that our stock is trading at probably less than one times forward revenue um i don't have a currency right now but the market is there for taking um you know our core business is growing well but our acquisition is not you know if if we do any acquisitions right now just to just buy customers and get customers and new industries that we don't service you know customers and like take for example the media industry i have I have one big media client, and that's a whole world of, like, promotion marketing, loyalty marketing. So it's an exciting market. To add an inorganic strategy to our company is very feasible. I actually have a nice list of companies that we keep track of, but I don't have the currency right now. And we don't want to do stupid deals that dilute us for no reason. Yeah, so that's the questions. Okay, I think the next question is from Francois. What about the Bali's relationship? How's it going? Any exciting development to be announced soon? So Bali sits on our board. The relationship is great. I think Bali's company is undergoing a lot of change. I think they had a privatization offer recently that came out. And we've had a few good deployments with them. we really don't you know we're a tech vendor to them so when they decide to do something they will call us right so far they've rolled out i think three four properties um they've been quite focused from my last catch-up meeting with them on their chicago business and their new casinos out there um so i don't actually have a positive or negative outlook on the relationship the relationship is in place um you know When they decide to do something, they will call us. And again, from a client perspective, Bali's is one of our smaller clients, if you think about it. It's a strategic investor, absolutely. It's a market that we don't really operate a lot in. Their deal with us expires in... They have a three-year deal with us that expires next year in April. They also have the option to... with no no equity changing hands to actually for us to we've already built out a platform for them so we can build operate and transfer it within this next year if they pay us 10 million dollars um you know it's really up to them to make that decision uh we had done a similar deal with a large bank in europe like maybe four years back where we built operated and then transferred over the assets so they could take it in-house um so that's sitting on our books if they wanted you know it'll be a nice um event for us because it's a non-dilutive financing in some ways but the relationship is great um the you know they they they are they're a paying client right now but we're not obviously one of our largest clients um but yeah they're one of many big you know important clients for us so andre um can you please contrast media with chase media solutions specifically ah good question so chase media solutions is a really nice press release that i read i have no other information about it We know they're not doing skew level based offers. At least not what we found. Snip Media, I think, guys, I'm going to repeat this, but fundamentally what you need to understand is a bank only knows that you went to a store to buy something. They have no idea what you bought inside the store. Chase Media provides today, I'm a big time Chase card user, all of their offers are in their app today are no different than the offers that Bank of America, Wells Fargo, any other banking or credit card company provides you. They're all from e-comm and retailers. Chase Media, their announcement is interesting because all of these banks, it gives you an indication of what the banking industry is thinking, have realized that they have these massive number of users that is an audience that they can monetize. So everybody is going to start thinking about, hey, how do we monetize our audience? You have offers in the app, which are retailer offers, and their media solution is, it's not a threat to Snip, it's a potential client, but Chase Media would compete with Bank of America's media, which would compete with all of the other banks' media, you know, to go out and get as many advertisers to come and advertise to the audience. Not something that we are you know um involved with that's their media business going out to to you know the world of advertisers now if they wanted to go to manufacturers they'd have to use someone like us and we are the only ones who have the solution as far as we know today in the market which allows them to attract into their media solutions clients who are manufacturers that sit on a shelf Otherwise, no Kellogg would go to Chase Media if Chase can't tell them that someone bought their product. They'd go to Walmart. They'll get offers from Walmart, from e-com clients, et cetera, et cetera. So Snip Media is essentially, just to simplify this, we offer up the ability for the banks to go open up a market of advertisers that traditionally they could not talk to because they don't have the ability to resolve problems a transaction at the SKU level or know what you bought when you went to a store to simplify this. All they know is you went to a store, which is not enough information for the largest advertisers of the world who need to know if you bought their product, which is sitting inside the store. So if you go look at your credit card bill, you'll only see, I went to Safeway and I bought so much worth of stuff. No idea what you bought. We enable that second piece of what you bought, which allows them to then attract advertisers. I don't know, does that answer your question? I guess Andre is, yeah, on chat. Okay, Google recently reported, yes, thanks, Andre. Okay, so Sam, Google recently reported increased ad spending in Q1. Have you seen a similar kind of increase in spending in your core business? So our core business is not linked to advertising spend, right? We live after the ad, right? So if you think of Snip, what does Snip do, right? Snip takes your ad, right? You might place, you know, if you think about traditional media, television, print and radio, if you think of Google, Facebook, Instagram, clients are spending all this money trying to get awareness. Snip does not operate in the world. Our traditional business does not operate in the world of awareness. Our traditional business operates post-awareness. Did you actually go buy something? Right. So that's what we enable. So Google's ad, Google's announcement of clients spending more money on advertising is actually not linked to our business in any way because we work off advertising. Now, of course, if people are spending more on advertising, you could make a case that hey maybe they also want to track purchase but there are many reasons why people go spend money on advertising when the ad markets decline our business also does not decline so you know it it just depends on what the use case is for why people are creating awareness for their product there are many reasons for it um so you know when when the economy you know our business is kind of hedged because even when the economy turns Clients spend a lot more money with us in some ways because now they need to market their product in a tougher environment. They might reduce their ad spending but increase their shopper marketing spend, right? So, yeah. Any more questions? Okay, I think we don't see any hands up and no more questions in the chat. Look, thanks, everybody. We look forward to talking to you in about 31 days, to be precise, 32 days. And, yeah, thanks for calling in. Have a great day. You guys are very sweet, man. All you clappers. Take care, guys. Bye-bye.
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