Snipp Interactive Inc.

Good morning and welcome to the Smith Interactive First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. Following the company's prepared remarks, we will open the call for questions. Please note that today's call is being recorded. Before we begin, I'd like to remind everyone that today's calls contain forward-looking statements within the meaning of accessible security laws. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks and uncertainties, please refer to our public filings available on Stata and our Investor Relations website. We do not undertake any obligation to update any forward-looking statements made during this call, except as required by law. Good morning, everyone, and thank you for joining us. We entered 2025 with positive momentum, and I'm pleased to report that our first quarter results reflect a strong and steady continuation of that trend. Revenue grew 37% year over year to $6.4 million. Gross margins expanded to 60% and we delivered a fourth consecutive quarter of positive EBITDA, a 0.9 million improvement over the same period last year. Perhaps most notably, we generated 2.3 million in operating cash flow, the highest quarterly total in our company's history. These results speak directly to the strength of our model as we focus on high-margin, platform-driven solutions, which can improve financial performance, not in isolation, but as the natural result of growing customer demand and disciplined execution. C1 revenue growth was among the strongest we've seen in several years and we are very pleased with how the year has started. That said, I want to be prudent in managing expectations. While C1 is a positive data point, we know that C1 in year-over-year growth will be valid across every quarter. As we move through the year, growth may normalize somewhat as we lapse certain client implementations. That said, we are confident that 2025 will show healthy top-line growth relative to the prior year. As it relates to bookings, I want to be upfront that the current environment does create a bit more unpredictability at the quarter-to-quarter level. Some client decision-making is taking a bit longer and we've seen some shifting of campaign timings which makes it difficult to fully forecast bookings with precision for any single quarter. That said, when I step back and look at the full year, our pipeline remains very strong, price retention remains excellent and the underlying drivers of the business are intact. While we may see some quarter to quarter variability, I remain confident in our ability to deliver healthy growth on a full year basis. The reason being that the key driving force behind our business today is our value proposition which continues to resonate in the market. Our platform continues to gain traction across promotions, loyalty rebates, and our new offers score up. Additionally, we're gaining critical momentum with SlipMedia, where we are building a differentiated channel that combines media delivery with closed-loop attribution. While feedback has been positive, SlipMedia remains in its early stage, and as previously guided, we do not expect it to contribute meaningfully to revenue until the back half of the year. We are working on a major deal for this product that should have materialized will allow us to break into a large number of manufacturers and retailers simultaneously. More on that as that deal cycle materializes. In the meantime, our core business is capturing market share and growing as reflected in our booking backlog, which increased 17.9 million this quarter, a 16% year-over-year increase. This backlog provides strong visibility in the future annualized revenue and underscores the strength of the current relationships we are continuing to build. We are not just winning individual deals, we are establishing recurring multi-program engagements aligned with our long-term strategy. We also continue to maintain a strong knowledge of the closing quarter with 5.8 million in cash and your debt. With consistent EBITDA, strong and positive cash flow and a great backlog, we have the financial With that, I'd now like to turn the call over to our new Influencer for Malcolm Davidson. I am proud that Malcolm is joining us at this very moment. His experience will allow us to bring him to our finance team for a more detailed look at financial jurors, Malcolm.

Thank you, Michelle, and good morning, everyone. I'm excited to join this interactive team with the intern CFO. This is a pivotal time for the company, and I'm personally thankful for this opportunity. I'm looking forward to leveraging my experience in financial reporting and regulatory compliance to lead this continued growth and to help drive long-term value for its shareholders. I'd like to first address a topic that I think understandably has been top of mind for many shareholders, the prior audit delays and the periods where our stock was temporarily halted. These were clearly unfortunate events, and we recognize the frustration they created for our investors. As we discussed, the core issues were primarily around legacy internal processes and rigorous constraints with our finance function, challenges that became more evident as we've grown. I've taken concrete steps to address these challenges as evidenced by a quick turnaround on our timely Q1 financials. The mandate for our financial team is very clear. We must be timely, accurate, fully buttoned up in our reporting processes with appropriate control, well ahead of our filing deadlines. I'm committed to building a more robust finance infrastructure going forward that reduces the risk of these re-experiences and these types of disruptions. The added delays did not result in any material changes to the financials. However, it has exposed the need for a more rigorous approach to documenting and scaling our financial processes, which I will focus all my energies on to begin with, to ensure we don't have these types of delays in the future. My first goal for SNF is to ensure our finance team continues to scale up with the growth of the business and can absorb the speed of innovation into its financial accounting systems and related processes. As Atul mentioned, we're very pleased with the financial results we delivered in the first quarter, and I'd like to take a few moments to walk through the numbers in greater detail. Revenue for the three months ended March 31, 2025, with $6.4 million, up from $4.7 million in the same quarter last year, an increase of 37%. This growth reflects higher contributions from our core platform clients, as well as early revenue recognition tied to new program launches. Growth profit for the quarter was $3.8 million, resulting in a gross margin of approximately 60%. compared to 54% in Q1 of last year. The increase in margin is a result of continued improvements in our revenue mix and cost efficiencies across the business. Turning to EBITDA, we reported positive EBITDA of 0.3 million for Q1 compared to a loss of 0.6 million in the prior period. This March, a $0.9 million improvement year-over-year and represents our fourth straight quarter of positive ETH. Moving to the balance sheet, we ended the quarter with $5.8 million in cash, up from $2.7 million at the end of Q4. Importantly, operating cash flows for the quarter was $2.3 million, our strongest quarterly performance to date. We also saw continued reduction in accounts receivable, from $3.4 million at the end to $1.4 million as of March 31, improving our overall working capital efficiency. Combined cash and AR stood at $7.2 million, essentially flat compared to year-end, but with a much cleaner AR profile. and bookings backlog, which represents contracted programs that have not yet been recognized as revenue of each $17.9 million compared to $17.3 million at the end of December. This provides clear visibility into future revenue and demonstrates strong customer engagement across our product suite. Overall, we remain focused on maintaining financial discipline while continuing to invest in areas that are driving long-term growth. With that, I'll turn the call back over to Atul for closing remarks.

Thanks, Asim. So, guys, in summary, we're off to a strong start in 2025, delivering profitable growth, expanding the reach of our platform, and deepening engagement with major brands across few verticals. We look forward to the redemption of trading on the exchange and have submitted all requested documentation as of last week. We're now literally just waiting for the exchange to respond. So, I would tell you my guess is I'd give the viewers a surrendered allow for training. Nothing's holding up, you know, holding them up per se. I guess it's just their process. So, you know, we should hear from them pretty soon. Malcolm's first job today after this call is to call them again just to, you know, push them to approve the title. So with that, let's move to Q&A. You know, again, as with Q&A on these calls, you can either chat on the chat and, you know, ask the question or put your hand up and I will try and unmute you to do that. So we have the first question on chat comes from AP. Hi AP, can you explain why there's no fairing in Canada yet? Well, I just said what I have to say, which is, you know, we're waiting for the exchange. As soon as we hear from them, as soon as they turn us on, we'll be back on. It should be very soon. I'm pretty sure. Okay, the next question is from Daniel Rosenberg. Hey, Dan. I owe you an email. I'm sorry. I will call you right after this call, maybe. But go ahead. Let me unmute you. Yeah, there you go.

Hi. Good morning, Atul. Thanks for taking my question. My first one comes around the cash flow from operations. As much as it's spent in the quarter. I was just wondering if you could elaborate on what, you know, accounts receivable, that Jeff did, and mentioned the quality in your prepared remarks. Just any seasonality in there, or one-time things that happened, and how we should think about it moving forward.

So, you know, with accounts receivable, it's just, like, when you look at your portfolio of shares, and when the market drops, everything starts moving up. You don't know which one share actually caused it. It's just growth with our clients, you know, with more business being sold. You know, it directly reflects the bookings backlog. It isn't any one view, which is a good thing that's causing this bump. There probably is some seasonality that's reflecting in that number, but it's not material. So, I don't really have a straight answer to you. It's just, you know, the nature of our business as more clients sell, you know. You know, the interesting part there is that because we are in an environment where no one really knows what's really going to happen, everybody's hedging in some ways. And, you know, with our Q2, for example, you know, it's not that they're not going to do business. They just don't know what type of business they're going to do. So if the market goes into recession, which is one of the questions that an investor has asked me to address today, right, we get a certain product mix that reflects recession-based tactics, right? In the market, not during a recession, you know, you get a different set of, you know, marketing tactics that reflect a non-recessionary kind of marketing cycle. Right now, no one really knows which way to invest into these tactics. But a good part for our businesses, they have to invest in these tactics. What you see in their accounts receivable is really probably client hedging thinking that a, you know, recession is coming. and giving us more short-term type programs that we have to launch on our Snippet platform, and SmithWaters, for example, you know, which is a good product for this type of environment, and those short-term programs result in, you know, more capital having to be deployed by them upfront, because you've got to put them in market. But they might switch those around, you know, if things change or their confidence changes over the interim. So, it's a period of real flux for us. Q2 is an interesting quarter. You know, when we see clear signs for recession, I never worry because our business, the mix product mix changes. When you're coming out of a recession, it's also good, you know. We're pretty much, we're not impacted so much by those kinds of business cycles. Seasonality definitely affects our business because, you know, obviously Q4 has more, you know, more types of promotion windows, you know, Christmas, New Year's, Boxing Day, Thanksgiving. something looking backwards, right? But these clients have to do things across, you know, there are about 80 promotion windows in a year, Mother's Day, Father's Day, Super Bowl Sunday, back to school, Halloween, etc., etc., right? So, you know, they're probably thinking about more short-term elements to their business right now just because they can't plan in a way that you could if you actually had more confidence about, hey, our industry is going down, you know, is the market going to go into recession? Is the inflation going to start showing up again in a big way? Except for a second. Sorry, Dan, I don't want to sit down with you. I just actually don't, you know, no one knows.

No, I understand the short-term dynamic that helps bypass some things. Anything to hire you? You know, if you were to think about the next 12 months, the next 24 months, if we're kind of normalizing for any short-term cycles like this, hopefully you get back to kind of the normalized world. I'm just wondering if you could help us think about the drivers of growth as you see them. If you have a number of new product launches, you have a core business that seems to be gaining traction, just if you could segment the growth avenues that you have That'd be helpful.

Yeah, so look, our strategy is actually quite simple. You know, to articulate it in a line, it is you land and you expand with existing clients and you land as new clients in new industries on the other flank of the strategy. You know, that's why Bali invested in the company. That's why we've gone off to companies like Sinclair Media and become a pretty big client of ours. We don't do much work in the media business, for example, right? 15,000 banks, the financial media networks that we created. So, the land will expand, right? And that's been the strategy and it continues to be the strategy. So, with existing clients, it's obviously selling them more products and getting more into their marketing mix, but also working with them geographically in different parts of the world. So, we've been investing in Europe, for example. We've now got people in the UK, we've got people in Germany, we've got people in France now, recently. You know, we're starting to even look at some of their programs in a better way in Asia. Again, same clients, land and expand, right? Both in products that we sell them, SNP offers, SNP media. If you have a SNP wind client who now wants to do loyalty, sell them SNP loyalty. If you have a rebate platform, sell them rebate. You've got all these different programs so that they can come to one enterprise provider have a universal view of the data, you know, that drives their machine learning, their AI strategy, et cetera, et cetera, right? Global expansion, you know, as I just talked about, taking those same clients, the Nestlers and the Cervogs of the world, the Procter & Gamble and working with them in multiple markets, right? And then there's the new markets, right? Like, going after new industries and that's really the simple articulation of our strategy and we're razor-sharp in doing that and nothing else. To the extent that we want to add an inorganic layer to the business, if there's the right opportunity at the right time, we have cash in the balance sheet, we have no debt, you know, we'll execute that. But it has to be something that's transformational. I don't need stuck-in acquisitions for skills or tech. I have that in-house now.

Hey, appreciate that, Tyler. I think if I could just double down on, I mean, you mentioned your RFCs. That's certainly an opportunity and understandable. I was curious about the product space. You know, as you think about new markets, what are kind of the leading ways that you're penetrating into a new account? And then, you know, what things have you seen in terms of that expand portion gaining traction in terms of driving the growth as you see it going forward?

You know, for us, gaining traction in new markets with our clients is a function of putting people on the ground. because we already globally approve vendors for these clients, right? It's not like I have to worry about building a reputation. I mean, you do have to do a little bit of that, but the goal is open for us to do it if I was getting mixed investments to service the team locally, right? And that means putting a salesperson, putting a project manager, an account manager or two. It's not a huge investment, but, you know, it's a people investment in those markets so that they actually have local support for what they need. So, you know, that's really the key, but then the key to that is finding the right people, training them up, you know, there's a lead time to all of that stuff. So, it takes six to eight months to get good people up and running, you know, and then, you know, you've got to factor in walking the corridors of these companies. They know who we are, they know of us, they have good references from us, from their colleagues overseas. But then they have to data center their planning cycles. Remember, we're not selling a widget that gets bought today and sends in tomorrow, right? The program takes anywhere from three months to six months to plan out, get retail approvals. You know, sometimes you've got to print stuff. There's a whole bunch of stuff that has to happen for these programs to hit your retail store, whether it be your e-commerce store or whether it be your physical store. So there's a lead time there. And I think, you know, we want You think Europe can do as big a business for us as the US market is? After all, it has many people in the market that day. So, it's a really good opportunity for us. So, let's, you know, yeah, we've got a few global clients now and we're really excited about ramping that part of the business. But, we want to make sure we do it profitably and not just blow up money doing it, you know. I don't mind being a break-even business, but I don't want to spend all this money to build out an overseas operation without the right people, right management, because it could just use up all of our cash.

Great. Lastly for me, just an update on the banking initiative that you've been pursuing for the last 12 months or so. Can you give an update there on the traction you're seeing opportunities, challenges, anything that you appreciated, and I'll pass the line. Thanks.

Yeah, so our banking relationships are really good. Bank of America and TNC Bank are the two big institutions that we are now integrating with, and our media product is available in their apps as part of their CardLink offerings. we continue to build on those relationships and getting deeper with them. Other opportunities for other products in our business are starting to show up. Sorry, did my, I think my, can you guys hear me all right?

Yeah, we can hear you.

There are other opportunities starting to show up with these banks for other products, but really the key is, you know, they're monetizing their audience is a massive untapped opportunity many people are chasing us, not just us, some very large billion dollar valued, you know, um, companies in our space, um, have been chasing this opportunity for a while, um, you know, so, we think we need to work with, with new platforms that have unmonetized audiences in the financial services sector. I think we launched one called Benu recently, you know, they go after, um, they go after an audience of EBIT cards in the US, which are basically food stamp cards that the government distributes. It's basically free money that if we can put offers in front of that audience, it'll drive more usage of our offers product and of our financial media network product, right? We're also expanding into credit unions. I think we have maybe 85 live right now, and there'll be about 250 eventually. So we solved, I think we solved quite nicely the piece of the puzzle around building a nice audience that can be valuable to brands that brands have not been able to monetize in the past, right? Now we've got to get the brands on side and that's the next step of breaking the chicken and letting go. But our banking relations have been great. Okay, I'm going to move on. Let's scroll up, lots of questions here. So, one from Mukul, with the strong cash positions, are there plans for dividends, share repurchasers, or, I think a lot of work about strategic, I guess, acquisitions, I think. Yeah, so, look, we're not going to spend cash distributing money. Think about it, we're just a 20 million plus business. We want to build this into a large, you know, the opportunity is very large here, so reinvesting our capital back into growing the business is really the goal here. In terms of share repurchases, if there was a reason to do it, we'd do it. We'd do it in an instance, for example, if we were shipping our story to the U.S. market and wanted to list the company on an address, we'd have to repurchase, you know, we'd have to roll back the shares, you know, repurchase the rollback to do that. But we're definitely not right now using the capital to repurchase shares in any form or fashion. The next question is from Charles B. The 132 working capital deficit, how do you plan to meet their obligations or raising funds? I mean, we have upwards of 4 million on our balance sheet right now, so I'm not sure I understand the question, Charles. Yeah, we have capital on... The question was, with the $132,000 working capital deficit in Q1, how do you plan to meet near-term obligations without raising funds? I don't think we need to raise funds. Deferred revenue is not something we can be too different to until we deliver the program, it converts into revenue, and the program goes live, and they're all in flight, so that deferred revenue automatically converts into revenue or has to return it. So yeah, I'm not worried about the deficit of working capital. I don't even think we have one, actually. The next question is from Sky. Do you have any plans to market the company or do other things to increase the market value of the company for shareholders? Yeah, so look, the first step of this is to get a new CFO. We have done that. You know, we do want to market the company. I think we have a story to tell and we do plan to, you know, work with a PR and IR firm to facilitate that. We haven't chosen anybody yet, but it's definitely part of the first host plan to work on a strategy to do so. Okay, the next question is, the company has no debt. Does management plan to leverage this back position or into your share buyback? I think I just answered that. In terms of back positions, again, nothing on the horizon. Many opportunities, but nothing imminent. We continue to evaluate, you know, opportunities as they arise, but we've got to do the right opportunities at the right times. Right now, you know, with that exit story going, organic business is going quite nicely. If something good comes along, that can be transformational for the company. Of value to shareholders, we definitely consider it. Okay. Next question is from Ray. Given increasing focus on data and advances in data science, how is the picture of first-party data collection capabilities? And in fact, the name is a scalable competitive advantage. Okay, good question. Look, the key to all of this data science AI ML is actually to begin with the data. If you control the data and if you generate the data, the next step of that is what can you do with the data, right? Right now, the data sets that we have are unique data sets. We generate the data. We create the data. The data is what the AI engine that a client wants to use needs for it to be effective. Without the data that we generate, those engines are completely and absolutely useless. Without our machine learning, those engines can't do anything. So, as long as we keep doing more and more programs, we can generate more and more data that's relevant. So, you know, we're not in any way adrift from all of this. In fact, our AI capabilities, arguably, which is an area we definitely are investing in as we speak, you have to all go try it on our website, There's a little chatbot there. It's an agentic AI agent built with a partner. We launched it a few months back. It's fantastic. It's really, really worth playing around with it and asking them all sorts of questions. Arguably, it's not good. It's not better than my first one. I shouldn't say that, but it's quite an interesting evolution of the data that we generated to teach it how to answer things. So, this is pretty good about where we are in this new age. The whole, you know, when we started this company, it was all about building out a solution that can personalize offers for a human being. It was, you know, if you look at, go back and see the movie Minority Report, you see Kung Fu's walking down a mall and, you know, the LCD panels while he's walking down the corridor of the mall before he enters Gap recognize who he is and start speaking to them based on their past history. That's the future we are enabling. We have the data layer on it. The rest is easy. If you have the data, you can do lots of great stuff. Okay, next question. Do you still have aspirations to be acquired? I mean, look, I don't wake up in the morning thinking, hey, I wish I could get acquired. I wake up in the morning thinking, you know, how do we basically make more money from SNF? If you do the right things around building your business, eventually you'll either be acquired or, you know, you'll end up acquiring a lot of companies that continue to grow your strategy. So the simple answer to your question is, of course, I have aspirations to be acquired, but it's not what we're building towards. We're building a company that adds shareholder value, right? What happens along the way will happen along the way. The next question is, can you talk about how you're thinking about near-term cash management, especially with deferred revenue, not again in working capacity, school-looking sites, etc.? I'm a little confused by this set of questions because, again, deferred revenue for us, 99.99% converts into revenue. So, you know, our near-term cash management is build and execute on projects that come our way and deliver to us clients, what they've contracted us to do, and what they've paid us a little bit for upfront. And that's really the focus, right, of managing cash is continue to deliver on what we sold. Because that is a profitable business. Okay, the next question. Can you comment on the potential contribution of Smith Media to the stabilization of the projected audience of 150,000? It just depends. Can you comment on the potential contribution of Smith Media if it were to stabilize at the projected audience of 150 million? Does the success depend on reaching an audience size threshold? Okay. So the contribution of Smith Media is something that I can't forecast right now. Only because it is something that doesn't exist in the market other than with what we've built and implemented. What I can say is this. The paper coupon industry in the US is a $30 billion market. Flip Media takes an analog industry and converts it into a digital age. That vertical of couponing is where I am trying to capture market share on. Using the audience of the banks that have been untouched. So, its potential contribution for a business should it tap on with the manufacturers is quite sizable. At one end of the spectrum, one should think of this as a standalone business in itself, now that we've funded the technology. But it remains to be seen at what stage we can build this into, you know, that type of vertical which is a standalone business on its own. Success for that business at this stage doesn't depend on reaching the audience size, which is the second part of your question. We've done that. Success now is solely tied to getting brands to try it, understand the data coming out of it, and embed it into their ongoing couponing strategies. That's it. Because the audience that we have is a very quality audience. It's basically people who have bank accounts. which are normal people. No bots, no fraud, none of that. So, yeah. Okay, the next question is, is AI going to have any effect on your business going forward? I think I just spoke about this. So, we drive the data that an AI engine needs. So, yeah, it's going to have an effect on our business because now it makes us more valuable because these engines need more data. And in the output of these AI engines, look, AI is a really broad term. there are many, many different elements of AI that are going to help any business. From reducing customer service costs to, you know, shortening the sales cycle to improving efficiency of training your employees. I mean, I can go on about how we're planning to use AI in a staged and varied manner. But is it going to affect our business from an existential perspective? Absolutely not. It's only going to help us. I mean, I could go on about you know, I feel that's poetic about the use of AI in our business, but probably best to have a call one-on-one on that. Okay. The next question was, what companies are you directly competing with for business? I think the easiest way to answer this question is for you to just look up InvestedX because, you know, at one level, we have many different products that are vertical industries in themselves. Marketing and promotions in Nordic industry historically has evolved as an industry of verticals where each is a different vertical and if you wanted to do different types of programs you'd be calling different vendors to do it. We took a horizontal approach to this business saying let's build an ERP type solution that can span multiple verticals that a client like Nestle has to play in for their marketing tactics. The reason we got into all of these big companies as a small penny-cut company was because we offered them one vendor that can do all of these different solutions instead of having these grants go out and having to procure from multiple different companies and manage multiple different relationships. So, at one level, we don't actually have a lot of competition at the horizontal ERP level single client looking for multiple types of tactics. But at a vertical industry level, yeah, we're not, you know, competing with all the loyalty guys who just do loyalty. All of the text messaging guys will do just text messaging. All of the sweepstakes guys will do just sweepstakes. So, yeah, that's how I think about competition. But there's a great slide in our investor deck that outlines the competition and how to think about it. Okay, next question is, what is the company's strategy for listing on more prominent exchanges? Hey, Canada is a great exchange. But yes, we do want to bring the story to the American market. Again, you got to do it in the right way. Part of that is getting accounting systems and processes mature enough to be able to do quarterly audits. We also need to be PCOAD certified, and so, you know, all of this also requires investment, right? So, we've had a few different conversations with various banks. Quite a few of them are interested in bringing us to the U.S. market. There are different formats of doing that, through a merger with a stack, you know, through a direct listing, et cetera, et cetera. Each has its own pros and cons. Each has a different timeline. But I think the first order of business is, let's make sure we never have a delayed order again. Let's make sure we can file our quantities, order the quantities correctly. We don't need to do it for the Canadian exchange, but you will have to do it if you come to the US. You know, we're putting in automation in our finance department. We're moving to a single unified financial solution that's tied to our booking engines. We now have a new CFO onboard. You know, we're making the steps necessary so that if and when we do switch over, the infrastructure supports it. And then it's a matter of making the investment in detail. It will cost a lot more money to be public in the U.S. It will also cost a lot more money on the audits. you know, it's a million dollar expense or more to make the switch over. So, you have to think about that carefully, you know, when you think about strategy. Okay. Does your company have offices or does everyone work from home in some capacity? So, we, from the time we founded this company, we have only had dev offices. We had an office in Cork in Ireland, we have a very small office in Vancouver, which is actually a shared space. But yes, all of our people have always worked from home. And we will never change that because it's a small, tiny stuff company. I don't want to be restricted to a certain location to find people. It gets expensive. I want to find the best people I can afford anywhere in the world. And we stayed true to that from the day we started this company. The reason why during COVID, our operations were not impacted one bit. But yeah, this was not, you know, a strategy that was taught by COVID or anything. We just had this strategy from day one. Okay, so I think that answers, I hope I never miss anybody. I hope I didn't miss anybody. I'm sorry if I did. I just have a lot of questions here. But appreciate everybody's time. Thank you. We will talk to you via press releases. Promise you will start communicating a lot more. And, you know, yeah, if anyone has any questions, feel free to reach out, email us, call me. Yeah, we're available to answer questions. Thanks. Take care.