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spk01: Thank you for joining us for the SNP Interactive second quarter 2024 earnings conference call. I am Atul Savarwal, founder and chief executive officer 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, 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. So let's get into our second quarter 2024 summary and key developments. the second quarter of 2024 marked a period of record achievement for snip interactive underscored by the highest sales which we measure as bookings in our company history our continued focus on refining our revenue mix and enhancing our margin profile is yielding tangible results positioning us well for sustained growth and profitability during the second quarter our revenue mix continued to shift towards higher margin business which is a testament to our strategic focus on securing more profitable contracts. This has contributed to a significant improvement in our overall margin profile, aligning us more closely with our long-term financial objectives. Our bookings backlog through the first half of 2024 reached the highest level in the company's history, reflecting not only the success of our sales efforts, but also the strong demand for our platform across various industries, from leading consumer product brands to financial services. This backlog provides a solid foundation for continued revenue growth in our core SNAP business and profitability as we progress through the remainder of the year. So let's now focus on our strategic focus and achievements. Our strategic initiatives remain centered around three key areas. improving our revenue mix expanding our high margin core business and driving innovation through our platforms here's an update on our progress in each of these areas number one improving revenue mix we have continued to shed unprofitable revenue streams focusing on contracts that align with our gross margin threshold of 50 or higher This disciplined approach is evident in our improved margins and has been a key driver behind our strong margin performance this quarter. The shift in our revenue mix is a critical component of our strategy, ensuring that we not only grow, but do so profitably. Number two, expanding our core business. Our core SNP business remains strong, with momentum continuing to build as we secure larger and more impactful contracts. Our record bookings number is reflective of this momentum. Additionally, we continue to deepen our relationships with key new partners, including Walmart, where earlier this year we were onboarded as a Walmart Connect preferred partner. Our pipeline is filled with marquee brands, and we are increasingly recognized for our ability to deliver scalable, high-impact solutions across diverse industries. During the first half of the year, we hit the pavement attending Parts to Purchase, the Retail Media Summit, CRMC, Loyalty 360, the Shopper Summit, and the Grocery Summit. These events are important parts of the sales process, ensuring that we stay in front of industry leaders and clients, showcasing our leadership and subject matter expertise, especially as our industry is consolidating and there are market share opportunities for us to capitalize on. number three driving innovation through platforms innovation remains at the heart of our growth strategy particular particularly through our snip media and gambit platforms customers appreciate not only the reliability of our platform and speak to market they recognize our ability to also deliver a truly differentiated solution let's start with snip media our unique cashback office platform continues to gain traction within our first client bank of america And conservatively for its 40 million customers, SNP's CPG offerings have become a top-clicked grocery tile within Bank of America's loyalty program, highlighting its growing influence. Looking ahead, we are excited about the upcoming launches with PNC Bank and over 85 regional banks in the second half of this year. Over time, we estimate this will grow to over 200 regional banks. These partnerships will further expand our customer audience and enhance the value we offer to our roster of CPG clients. Moving on to Gambit, our Gambit loyalty gaming platform, having undergone strategic realignment, continues to be focused on finding new customers that align with our profitability goals. As discussed in the past, after sunsetting one, and I repeat, just one legacy low margin contract, we are now focused on higher margin opportunities within Gambit. We are having conversations across a variety of customer use cases, and we'll keep you updated if any of these potential contracts materialize. In the meantime, and for modeling purposes, total reported SNP revenues will remain pressured through the end of the year until we lap our strategic realignment of Gambit in Q1 2024. Both Gambit and SNP media businesses were investments we have funded internally. We named these projects Moon and Mars for a reason. They represent immense opportunity for our shareholders, but they're not without risk. The opportunity for both these projects has been clearly visible. With Gambit, the massive end-user interest was clearly demonstrated with the massive surge we witnessed in users exchanging their loyalty points for sports bets. We successfully also demonstrated an economic model with Dave & Buster's that had a 50% plus margin profile. But as with first-to-market initiatives, it's not always a straight line to success. The contract with Swagbucks, as mentioned, was an inherited contract that did not have any economic value for us. While with the latter with Dave & Buster's, for no fault of Gambit, we were impacted by Dave & Buster's other initiatives in the world of cash-based wagering that is completely unrelated to Gambit's non-cash wagering model. With SNP Media, one can measure the potential opportunities simply by looking at the caliber of banking partners we have attracted and who have allowed us to integrate our platform into theirs. It's not every day that Bank of America and PNC Bank would allow a small company like SNP to hook into their banking platforms to test something entirely new. With all groundbreaking ideas, converting new and untested opportunities into sustainable, profitable business is never a guaranteed outcome. But if you are successful, it can lead to outsized returns. To mitigate risk, investors should take comfort that we are working these opportunities very diligently and in a very disciplined way, more importantly, to ensure that they add value to our core business and not in any way a distraction for us on any front, both operationally and financially. So looking towards the outlook for the third quarter, as we look ahead, we are poised for a strong third quarter with expectations for sequential revenue increases in our core SNP business and continued margin improvements. As we have stated in the past, our elevated backlog indicates that the company's profitability will scale in the second half of the year when our largest clients are spending the majority of their annual promotional advertising and loyalty budgets. We are very pleased with our progress in repositioning our revenue mix and expect the core SNP business to scale given our new hires this past year driving incremental margin and a sustained path towards EBITDA profitability. While the exiting of the low margin gambit contract might be making it noisier for investors to appreciate our underlying performance for 2024, our strategic initiatives combined with the strong momentum from recent contracts gives us confidence that we will deliver another year of record revenues within our core SNP business. We're committed to driving value for our shareholders and are excited about the opportunities that lie ahead. I'll let Jason now make a few comments about our financial results. Jason.
spk00: Thank you, Atul. Revenue for Q2 2024 was $4.8 million compared to $7.5 million for Q2 2023, a decrease of 36%, and revenue for the first six months of 2024 was $9.4 million compared to $14 million in the comparative prior year period, a decrease of 33%. As Atul mentioned earlier, this revenue decline in both the three and six months ended June 30, 2024, was expected and tied to the sunsetting of a single pilot contract that SNP inherited from the Gambit acquisition. Gross margin for Q2 2024 was 64%, a significant improvement from the 26% in Q2 2023. Gross margin for the first six months of 2024 was 59%, which is also a significant improvement from 26% in the comparative prior year period. EBITDA for Q2 2024 was positive $11,958 compared to an EBITDA loss of $873,552 in Q2 2023, representing an EBITDA improvement of $885,510. EBITDA for the first six months of 2024 was a loss of $587,783 compared to an EBITDA loss of $1,973,329 in the comparative prior year period, representing an EBITDA improvement of $1,385,546. Our bookings backlog stood at $17.2 million on June 30, 2024 and representing an increase of 23% from June 30, 2023. Cash at the end of the second quarter of 2024 was $5 million, and the company continues to be debt-free. I will now hand over the call back to Atul. Atul?
spk02: Atul?
spk00: Yes, it looks like Atul is experiencing some mic issues. Just give that a moment.
spk01: Jason, can you hear me?
spk00: I can just now, I just hear you.
spk01: That's so strange. Okay, so guys, those were our formal comments. So we'll open it up for questions if you guys can hear me now. Sorry, I don't know what happened there. But yeah, you can either put your hand up or you can post a question in the chat.
spk02: Jason, you can hear me, right?
spk00: Yes, I can hear you, yeah.
spk01: Okay, so it doesn't look like we have any questions coming up right now. So, yeah, I guess if you guys have no questions, we will speak to you on the next conference call. But feel free to get in touch with us, either on our investor email, or you can call my cell phone, text us, and we'll try and get back to you as soon as we can. Just for those commenting on the comments after Jason, actually, I was just summarizing that, you know, we'll open it up for questions now. Those were the extent of our formal calls.
spk02: Okay, thank you, everybody. Appreciate the time.
spk01: Ah, one question just came in. Can you discuss SNP media developments? Yes, absolutely. So we launched with SNP media in Q3. Oh, sorry, at the end of Q1 in March. And since launching SNP, If any of you are Bank of America customers and have access to the Bank of America app, you'll see the Bank of America deal section in the app if you have a credit or a debit card with them and a bank account, a savings or checking card. In that tile, you will see a bunch of different offers. The tile that is the grocery tile is run by SNP. It might have been renamed in the last few weeks to Back to School. Two people operate those tiles. One are card-linked offers offered by the likes of Cardlytics. The other are grocery deals offered by us. Since launching, we have been the most active tile in the banking app. So Bank of America has been extremely excited by that engagement of the user base and the feedback they've got. So we are pretty happy about that. And as with anything new, it's a chicken and egg game that we are trying to break, which is, you know, the more people use the tile, the more the brands will want to engage with us. And the more the brands would want to engage with us, the more people will engage with the tile because there are more offers. So we're pretty excited, you know, and our sales team is pretty excited now because we have at least part of that equation building up pretty nicely to take back to our CPG clients. At the same time, we're launching with Triple very soon. Triple is a PNC Bank initiative. And we are launching with a third distributor who I can't name for confidentiality reasons that's taking us to the regional banking network of America. So as you know, the American banking system is split into the national banks, and then every state has a whole slew of banks and credit unions. So through that integration, we will be able to put offers in front of 85 regional banks to begin with, but the entire network's about 200-plus banks. So we continue to build on the publisher side. The bigger the audience, the better it is, because the greater the exposure for a national product like Kellogg's Corn Flakes or Coke or Pepsi. And, you know, it's pretty rapid. I mean, it might seem slow to investors, but we only started this business last year. And to be able to integrate with banks, with banking companies, platform security, get through all those compliance initiatives, do the actual tech integrations, which are not trivial. You know, we're making really, really fast progress. So we're very excited about that. Yeah, so the next question, again, is from you, Jeremy. Can you discuss the $6 million Walmart engagement deal? Yeah, so that deal got papered in the second quarter. We received $6 million of cash from the client sitting in our bank account. The program was run in the second quarter. The fruits of that program – As you can see from our revenue, it has impacted our revenue. It didn't perform as well as the client expected it to when they compared it to the last two years. But the reason for that is actually because our fraud prevention at SNP is so strong. And it's a very interesting case study where had it performed as well as it did last year, we would have been plus 10 million of revenue. But because our fraud protection is so good, we didn't recognize all the revenue because we kicked back a lot of fraud. We kicked back so much fraud that our client, which is one of the big CPG companies that advertises through the Walmart platform, Realize that there was so much fraud last year that no one actually caught that it's become quite a sticky affair for the vendors before us that were doing this. So suffice it to say this, that our relationship with this client now has deepened quite a lot. We've saved them a lot of money. And yeah, we did get the deal. We did get the cash. It's still sitting in our bank account earning interest. It didn't convert completely into revenue, but we are in conversations on how to use it over the course of the next few quarters too. So that's on the Walmart engagement, the six million, the question of what was that six million Walmart engagement deal. Can you please comment on the – just so you guys are clear, too, we haven't taken any cash that's sitting in our account as part of our cash balance right now in the numbers that we gave you because that's not really cash that we have access to that we can use. The interest we can. Okay, so moving on, can you please comment on the BOA, the Bank of America – I'm sorry, offer redemption rates, conversion rates of those who click on a tile and actually make a purchase to qualify for the offer? you know great question andre i am not at liberty to share those details and honestly i don't know if they'll make sense to you guys either because there's no basis of comparison um but suffice it to say this right that we have a a double digit percentage um incremental rate of engagement than competing tiles in that that have been in the app for ages because you know card linking has been something that's been going on forever and with the banks right so i don't know if that answers your question but um yeah those are proprietary figures that the publisher has that we have to that we can that we share with clients under nda Yes, any other questions great. Bring them. I mean, please feel free to ask.
spk02: Okay, can you can you discuss the.
spk01: Oh, sorry, Sandra, I had a follow-up question. Thank you for your comments on fraud. Can you comment on how much of an issue this is with other clients? So fraud is just powerful to cause, right? I mean, it's just become a crazier world with the launch of all of these AI tools. It's an issue with every client, but it's not an issue at SNP because we catch it. So... However, when a client moves from vendor A to vendor B, and vendor B has fast superior technology, vendor B being snip, they realize the amount of wastage that they've had in the world of vendor A, who might or might not have known that there was this happening because they control the program soup to nuts. So remember, a client like Coke or anybody else, they're not in the business of running promotions. They're in the business of, you know, their products and selling selling their products and building their products right so they trust partners it's like it's like your auditor right you trust your auditor to have your financials accurately um audited so there's a lot of space here for vendors to play a game um and let stuff through that is fraudulent and you know one would not know unless you already audited the campaign and the users carefully It's not something that, you know, clients are set up to do. And we're not the kind of company who wants to actually cheat clients just for the sake of making revenue. It'll eventually karma, you know, karma always comes around. So, yeah, it is an issue. I mean, fraud is an issue. You know, data hacks are an issue. I'm sure, Andre, half your information is on the web and the dark web. If you want, I can share some websites where you can put your phone number in and see how many times it's been leaked or your social security number. That's not going away. It's only going to get worse, and it's a whack-a-mole. You have to play the game, right? It's a whack-a-mole strategy where as it pops up, you have to tamp it down, and then you have to be more proactive than reactive in managing fraud in today's world, right? So, yeah. Okay, Jeremy had a question. Can you discuss the competitive landscape of banking ads? So, Jeremy, this is a good question, but... It's broad. So let me try and break it down. We're not in the world of advertising and doing ads inside banking apps. Just so you know, we don't banks will not allow banner ads to be placed inside their ads. That is the bigger banks. Right. We are in the world of offers. Right. So an offer means that, hey, I want to add value to your life, Jeremy. I want to give you cash back or give you something for buying my product. Right. It's a full circle from making you aware of an offer and then actually, you know, measuring your attribution, which is your purchase and giving you something for making that purchase. A pure ad stops at just telling Jeremy, hey, this exists. It doesn't go beyond that. Right. So we're not in the world of advertising. Right. So I have no clue about the competitive landscape of banking ads because we are not in the world of just communicating something to you. And not doing anything off of that, right? If I were to take your question as, you know, the competitive landscape of banking offers when it comes to CPG offers, it's an easy answer because no one else does it today. We've created this industry. We're number one in it when it comes to SKU-based, which is, you know, an individual product-based product. offer in a banking app. To date, the world of banking apps has only been able to give you offers to go fill gas and get 5% off or go to McDonald's and get 2% off or go to Starbucks and get 10% off. They haven't been able to give you an offer which says, hey, go buy a six pack of Coke to get two bucks off. Because banks don't collect the data. They don't have access to the data from a Walmart or a Trader Joe's or a Safeway or whoever it is, right, or Home Depot of what's sold inside the store. They only know that you went to a store to buy something. They don't know what you bought inside the store. So there is no competition right now because we are first to market when it comes to SKU-based offers. Okay, questions from Florian. Can you talk about your operating leverage going forward, EBITDA margins, et cetera? Yeah, so like we've said, right, like we expect our EBITDA margin to stay in the 50% range. We're not going to juice our revenues um for this at the cost of sacrificing margin and profitability um so so just that so operating leverage is really you know whatever we do is based on that our entire model around gambit snip media is based on you know generating that margin profile like i've always talked about and we're ruthlessly disciplined to making sure that occurs and you know the minute we feel that that is not something that is doable in an economic model we stop doing that initiative I mean, we also reject clients who want to do deals with us that don't meet a margin profile today. So unless it's a very good strategic reason. So there's a lot of leverage built into that. Okay. Now that you are EBITDA positive and have a lot of cash, would you consider buybacks? You know, buybacks is an interesting question, right? I mean, we do discuss it at the board level. Let me just put it this way. It's not something that we... we have said we're 100% going to do. Also, you know, we've just got back to EBITDA positive after two or three quarters of losing money. So let's play out a couple of quarters and let's see how our core business's growth and how Snip Media and Gambit materialize, you know, and we can have this discussion again, I guess. But it is not something that we've ignored. You have brought it up in the past and, you know, we definitely... actively consider it. Can you comment on your business relationship with Barley's? Is that growing? So Barley's is one of 100 plus clients of ours, and our business relationship with all of our clients are amazing. The relationship with Barley's is not growing, but it's not declining, partly because they've gone through an immense amount of change themselves. They've gone from being a NASDAQ listed or a New York Stock Exchange listed public company, I can't remember which one, to a privatized company. They've been sharing non-core assets. They've been, you know, focusing on their core business. So right now they've just reached a level of, I would say they're about to, they're not yet, but they've just reached a level of stability from what I can see in their own business where they can now focus on strategic initiatives since being privatized. And we are in that conversation with them. But as of right now, it's not growing, but not declining either. Percy has a question. Where do you see yourself in three years from now in terms of revenue and possible net profitability? You know, we don't give – I'm going to cop out on this question because we don't give forward focus. We have two extremely risky businesses in our portfolio in Gambit and Snip Media. They're first to market. They're industry leaders. They're literally creating new industries around them. Like I said in my formal comments, it's never a straight line. and the plans constantly evolving based on how things materialize. They could be huge blockbusters for us to the extent that they could be transformative, like I said in my formal comments, but they could also be, if we don't look at them very carefully, a drain on our cash if we don't manage it carefully. From a revenue perspective, I would just We are building a business that grows 15 to 25% a year profitably. That's our core. And that's what we plan to be. And, you know, if we do better than that, which is what we want to do, we have the sparks to enable, you know, a moon or a Mars landing. I know some of my investors hate me saying that, but sorry, that's the name. We have no choice but to call them that now because they stick. If any of those occur, we'd be in a, a beautiful place. But if they don't, we'll still be in a great place. So yeah, that's what I would say about three-year planning. Daniel, can you please provide an update on Gambit? Yeah, so Gambit is, so what metrics should I give you on Gambit? Gambit right now is back to stage one, looking for profitable clients. We have a lot of opportunities with clients that Even our clients who are looking to restart with us in some ways, but we just don't have an economic model with them that they can agree to. Dave & Buster's, I don't want to spend too much time on Dave & Buster's, was a great client, could be a great client. It's unfortunate what they went through. No fault of ours. We're just the unfortunate collateral damage that happens when clients get overly aggressive in a very regulated industry. So let's just leave it at that. So right now we are back looking for good, high-paying clients that we can create a fair economic model with. We have great inroads into... a few different places right now. I don't want to name names and get people excited, but, you know, it remains to be seen, right? The Gambit businesses earn out ends at the end of this year. You can safely assume in your model that none of it will get paid out. We haven't given up hope yet on Gambit. So, you know, we continue to pound the pavement. And we've got some good conversations happening that could quite soon materialize into, you know, great, great opportunities for us. We've had some obstacles along the way, not because of our own doing, but just because of the market and, you know, our clients, you know, what they want to do in a new industry. But, you know, that's to be expected. But yeah, that's where we are on Gambit. Florian, in the past, you've talked about various ways to get on the NASDAQ considering the market cap, et cetera. Are these plans on hold? None of our plans are on hold. We've explored and gone down the path You know, with our eyes wide open, we don't want to make a stupid decision here. We do have an asset that is an asset that can generate EBITDA. It does have leverage built into it, even in its core business. We just don't want to give it up for nothing for the sake of going to the NASDAQ. Right. So we've explored SPACs. We've had people approach us to do listings from scratch. Again, all of this takes time, energy and money. Right. And we want to focus on building our business. So, you know, at this point today, you know, unlike other conference calls, we've always had a few balls in the air when it came to moving out of the Canadian Stock Exchange and moving into a U.S. exchange. But today we don't have one, and it is summer coming to an end. You know, but none of those opportunities that we have explored very deeply have actually materialized because they just weren't in the interest of shareholders. So our plans are not on hold at all, but there's nothing active there right now. Next question, are you eyeing acquisitions or are you busy enough with Mother Earth, Moon, and Mars? If you lovely investors would give us a currency to go acquire companies with a stock price, we would definitely look at it. Like I said in my formal comments, the market is consolidating our biggest competitors have actually been rolled up into larger companies and we are benefiting a bit from great people that we can now you know from the industry industry veterans come in and work for us our chief revenue officer is a great example of that um so there's a lot of opportunity but we don't have the currency um you know between sorry just in terms of what your question stream right like from Buying back our shares to making acquisitions. I mean, let's be real. I'm a 20 million revenue company making EBITDA, just about making EBITDA right now. So, you know, with a stock that's less than, you know, half my revenue. So, like, yeah, I mean, there's not much currency I can do, I can work with to make an acquisition right now.
spk02: OK. That started off slow, but any more questions, guys?
spk01: Plans to attend conferences or other communication methods. I mean, let me do an informal poll here. What conferences would you guys like us to attend? ROI from attending conferences so far has been negative. Just honestly, they cost money. Again, they cost time. And we just haven't done many of them because they're really not returned much for shareholders. So continuing to spend money on those aspects of communication really haven't worked. but you know i'll deflect to you guys right you tell us what where would you like us to be and you know we look at those conferences carefully i get it you know we've done ld micro a few times um yeah but you know some of the banking conferences we've been invited to and on the other side been given a term sheet saying hey let us raise you money and pay us six percent for it and then we say no then we don't get invited to them again so again we're a penny stock right i mean You guys tell us if it's going to impact our company positively and give shareholders higher value, we'll be the first people on that plane to get to the conference. I am happy to do a breakout investor call every month. Yes, it's 415-595-7151. Yeah, I'm typing it right here, guys. We have nothing to hide here. That's my cell phone. Someone just asked me if they could give me their cell phone, so here it is. Text me, call me.
spk02: We'll respond. Any other questions?
spk01: Okay, thank you, everybody. My cell phone's on the chat, so if you think of something, please feel free to reach out. Thanks. Bye. Jason, we good?
spk00: Yep, I'm going to shut everything down right now.
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