Snipp Interactive Inc.

Thank you for joining us for the SNP Interactive first quarter 2020 for earnings conference call. I am Atul Savarwal, founder and chief executive officer of SNP Interactive. Joining me today is Jason Garcha, chief financial officer. Please visit our investor relations site at SNP.com for a copy of our earnings press release and detailed financials, which have also been filed on CDAR. We present all financial figures in U.S. dollars unless otherwise indicated. 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. The first quarter of 2024 was a pivotal period for SNP as we continue to execute our strategic plan, aiming at enhancing our revenue mix and improving gross margins. As anticipated, our revenue for Q1 2024 was $4.7 million, down 29% from Q1 2023, $6.6 million. This decline was expected and tied entirely to the sunsetting of a single pilot contract inherited with the Gambit acquisition. By exiting this pilot contract, our gross margin significantly improved, rising to 54% from 26% in the same period last year. Despite this reporting decline, our EBITDA loss for Q1 2024 was 0.6 million, a notable improvement from the 1.1 million loss in Q1 2023. Our bookings backlog stood at 15.4 million as of March 31st, 2024, up 12% from 13.8 million on March 31st, 2023. We ended the quarter with 4.2 million in cash, and the company continues to be debt-free. Our strategic initiatives are centered on three key areas, improving our revenue mix, expanding our high margin core business, and driving innovation through our platforms. Here's how we progressed in each of these areas. Let's start with improving our revenue mix. We have been focused on sharing unprofitable revenue streams while securing contracts that align with our gross margin threshold of 50%. We have more MMR programs today than at any other time in our company history. This strategic shift is evident in our improved gross margins and the increased proportion of revenue from our core business, which grew by 29% year over year. Our efforts to reposition our revenue mix are paying off, setting us on a path towards sustained profitability. On expanding our core business, Our core SNP business continues to deepen and extend client relationships. We have strong momentum and have secured multiple large contracts, including the largest in our company's history, with the leading global food and beverage company recognized in over 50 countries. This contract alone is forecasted to generate over $6 million in revenue during the third quarter. Also, we were one of the three companies selected earlier this year by Walmart to execute programs tied to Walmart's retail media network. The recent record win of $6 million that we mentioned in our earnings release came via this channel, one that should continue to provide new opportunities going forward, as well as lock in our existing clients who want to leverage the power of Walmart's media. Additionally, we've secured several seven-figure deals across diverse industries, bolstering our sales pipeline recently with new marquee brands and new industries. These contracts underscore the strength of our platform and our compelling value proposition. While we would love to announce all these program wins, given the strategic nature of these programs for our clients, it becomes difficult to do so as it would amount to Snipp giving away our clients' future plans to their competitors. These plans fundamentally tied directly to our clients' tactics, tied to their market share, pricing, new product introductions, and more, depending on the program type they're utilizing the Snipp platform for. As such, we are limited in what we can tell investors when we win these programs. On the third plank of driving innovation through platforms, let me spend a moment touching on the innovation we are driving. First, our SNP media platform was launched in partnership with Bank of America and is demonstrating strong early performance. With high engagement levels and strong conversion rates, we're excited about the prospects of SNP media given the early metrics that we are seeing. We have both our inside and outside SNP sales teams working hard to evangelize this new market offering and bring CPG clients to SNP Media. As with any innovation, clients have to be first marketed to, after which they will pilot the offering before including it in their regular spend cycles. At this stage, we are very much in the marketing phase of the clients. We've been very receptive to hear about yet another innovation that Snip is bringing them, as well as the initial data on performance metrics of Snip Media. Over time, you will see more pilot clients coming on board, and this will be directly reflective of the number of offers available in the Bank of America app to begin with. In addition to focusing on bringing in new clients, we are also focusing on expanding the audience to which our clients can place offers with. While Bank of America was our first large publisher, we are continuing our partnership conversations with other financial institutions and are on the cusp of having another large institution teed up to launch with Snip Media by the third quarter. This will further expand Snip Media's audience to over 60 million eyeballs. As we talked about last month on our year-end call, Snip Media is unique because it is the only product in the market that allows CPG brands to bring specific SKU-level offers to banking customers. This proprietary Snip technology also enables Snip to disrupt the $30 billion couponing industry that is predominantly still paper-based in North America. On our second platform, let's talk about Gambit. To remind everyone, Gambit is the only technology that allows players to gamble with different forms of loyalty points rather than with cash. Recently, some of you might have seen multiple news coverage about Dave & Co Busters, one of our early clients for Gambit. As a trailblazer in this space, they've attracted a lot of attention to the loyalty gaming space, including regulatory and political. We view these developments as positive from the perspective of moving the loyalty gaming industry forward. The sooner our clients get comfortable with the free-to-play nature of our sportsbook that is validated by regulatory bodies, the faster their adoption will be. So entering this next phase of broader awareness among stakeholders in this industry is exciting for us. As with all disruptive innovations, the path forward will not necessarily be a straight line, but we continue to believe that the loyalty gaming industry is still in its very early stages, and we are working hard to fine tune the business model to make it not only economically viable to all parties, but also steer clear of any political and regulatory hurdles. Economically, today, Gambit is a 41% margin business in its first quarter without the legacy hangover of the contracts that came with Snip's acquisition of Gambit. We know there are many companies and industries that are looking to bring new loyalty innovations to their members, and using their loyalty points to wager is certainly an innovative and unique offering from Snip. Economically, we now have the model, so now we are working hard to expand this to new clients. Looking out through the remainder of 2024, we are optimistic about leveraging our investments and expect these efforts to materialize in our financials, especially in the back half of the year. Our strategic initiatives and recent large contracts position us well for sustained top-line growth and profitability. The loyalty and promotions marketplace is gaining traction and valuation driven by technological advancements, To no one's surprise, our Fortune 500 customers are coming to us to help them reach their end users as the laws regarding consumer privacy are getting tougher and more strict. And just as importantly, since many investors have also asked us about AI, yes, we do use AI within our receipt engine in multiple different ways. One example is to help our customers fight promotion fraud. Given the amount of data we collect, we have multiple users of AI within our business and have multiple features around AI in our product roadmap that we will be releasing over the course of the year. From an industry perspective, we expect continued industry consolidation with Snip well positioned to capitalize on these trends. Our robust backlog and strong pipeline of new business combined with our focus on high margin contracts will drive our growth trajectory. We anticipate continued margin improvements in the upcoming quarters with profitability scaling in the second half of the year when promotional activity is typically stronger. The momentum from our recent contracts will carry us forward, and we are confident in our ability to achieve our financial targets for the year. We would hope our investors leave this earnings call with the following three key takeaways. One, gross margin improvement. Our revenue mix has shifted back to our historical higher margin profile. While our top line was pressured by the end of one Gambit legacy contract, our gross margins now exceed 50%, enabling us to sharply improve our EBITDA and strengthen our balance sheet. Two. Our robust backlog and pipeline are delivering not only in frequency of deal flow, but also in magnitude, as evidenced by the large deal we disclosed in our earnings press release. Simply, our backlog and pipeline of new business are the strongest they have ever been. We're winning significant deals with major brands across diverse industries, reflecting the robustness of our platform and our strategic positioning. The changes in customer privacy laws and our increased adoption of AI around receipt and promotion execution help put us in a unique position as we talk to our Fortune 500 customers. And three, Snip Media has marquee customers in the early stages of adoption. We're building out an ecosystem, aligning all of our partners, and finalizing all of the pieces that will allow for significant expansion in the quarters that lie ahead. This is an opportunity that we are excited about and look forward to sharing more updates on in the near future. I'll hand this over to Jason now to talk briefly about our financial results.

Thank you, Atul. As mentioned before, our revenue for Q1 2024 was about 4.7 million compared to 6.6 million for Q1 of 2023, a decrease of 29%. But as indicated, this decline was expected and linked to the sunsetting of a single pilot contract from the Gambit acquisition. However, our core SNP business saw its revenue increase a very healthy 29% year over year. Gross margin for Q1 2024 was 54%, a significant improvement from 26% in Q1 2023. Also, our EBITDA for Q1 2024 was negative at about 600,000, but this is a significant improvement compared to Q1 2023, where we recognized an EBITDA loss of about 1.1 million, representing an EBITDA improvement of 500,000. Our bookings backlog stood at $15.4 million on March 31, 2024, representing an increase of 12% from March 31, 2023, and our cash at the end of Q1 was about $4.2 million, and the company remains debt-free. I will now hand the call back to Atul for some closing remarks.

Thanks Jason. Let me close by thanking all of our hardworking team members for their strong execution and helping Snip deliver meaningful growth in our core business, as well as the margin improvement. I would also like to thank all of you investors that have followed the company over the years. We have close to 50 people on this call today, which might just be a record. As we continue to look for ways of unlocking shareholder value, we continue to explore multiple paths to an uplisting of our shares to a more formidable exchange. We think that an uplisting will help foster investor and customer awareness, improve trading liquidity, and narrow the valuation gap between us and our U.S.-listed peers. At this time, we cannot provide a timeline for when an uplisting might take place, but be rest assured, we are investing the time and energy to find the optimum path to do so. As we move forward, our commitment to driving sustainable profitability has never been stronger. We are excited about the opportunities ahead and look forward to sharing more details in the coming quarters. Once again, please be mindful of the seasonality of our business. Similar to 2023, our current backlog, which is amongst the strongest in the history of the company, dictates that profitability should be weighted towards the back half of the year when the promotional calendar amongst our customers is typically more robust. With marquee partners and customers from a variety of industries, such as Walmart, Bank of America, Bali's, and over seven of the top 10 CPG companies in the world, having already validated the effectiveness of our platform, we are energized by the prospect of future big wins from household names. I think that marks the end of our formal comments. Let's open it up for questions. You guys want to just raise your hands or in the chat, ask us any questions that you might have, and we'd be happy to address them.