Snipp Interactive Inc.

Let's start. Malcolm, just checking again, you can hear me all right?

I can hear you perfectly.

Okay. Good morning. Welcome to the SNP Interactive first quarter 2026 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 call contains forward-looking statements within the meaning of applicable securities 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 CIRA and our Investor Relations website. We do not undertake any obligations to update any forward-looking statements made during this call, except as required by law. On the call with me is Malcolm Davidson, our interim CFO. I will walk through the highlights of Q1 2026 and our forward outlook, and then Malcolm and I will take your questions. Before I get into the numbers, I want to set the frame for everything I'm going to say this morning in May. I told you that 2025 was a deliberate transition year for SNP and that 2026 would be the year we did the operational work to get to an EBITDA inflection in 2027. Q1 is consistent with that plan. The transition is on track. The leading indicators are pointing in the right direction and we have added one new chapter to the story, which I will spend a meaningful part of this call on. and that is the speed at which we are now integrating AI across every part of the business. Let me give you the numbers and start by addressing the soft side of the quarter directly because you'll have already read the release. Revenue in Q1 2026 was 5 million compared to 6.4 million in Q1 2025, a decline of approximately 21%. The decline reflects the same macroeconomic headwinds we described on not only the make-on, but also on previous calls. This impact of tariff-driven brand budget caution and general macroeconomic uncertainty resulted in continued program timing deferrals coupled with a softer consumer spending environment. Those headwinds have lag effects, especially on our short-term promotions business, and that can be seen in the lower recognized revenue for the first quarter. If anything, the uncertainty in client decision-making has intensified, but at the same time, we continue to sell well into our long-term recurring clients who have existing multi-year programs with us, as is evident in our record backlog. In a nutshell, clients with existing long-term recurring loyalty and rebate programs continue to double down on their investments, while other clients that run programs against promotion calendars continue to be more conservative in their decision-making of when to spend. EBITDA in Q1 2026 was a negative 0.3 million compared to positive 0.3 million in Q1 of the last year. That is a swing of approximately $600,000 and it is almost entirely driven by the revenue decline I just described. Importantly, the gross margin percentage was essentially flat, 59% in Q1 2026 versus 60% in Q1 2025, which tells you The underlying platform economics are intact. This is not a margin compression story. This is a revenue timing story. And let me name the cost-discipline numbers next to these soft revenue numbers because they matter. Salaries and compensation are down approximately 6% year-over-year. Campaign infrastructure costs down 20%. Marketing costs down 36%. Travel down 58%. The cost actions we implemented in late 2025 are now visible across the P&L. We said we would tighten the cost base and we did. Now I want to spend a moment on the single most important number in the release. Our bookings backlog at March 31st, 2026 was 20.6 million. The highest first quarter backlog in SNF's history. Up 15% year over year and up 13% quarterly. sequentially from year end. Let me put the 20.6 million into context because the headline number alone does not do it justice. First, 20.6 million is more than four times the revenue we recognized in Q1 2026. That is contracted future revenue signed on the balance sheet and all its way into the revenue line over the coming quarters. Second, this number reflects signed customer contracts only. It does not include global commitments. It does not include letters of intent. It does not include pipeline opportunities. We make this disclosure choice deliberately because we want our backlog metric to mean exactly what it says. Contracted future revenue, nothing softer. Third, the backlog is up year over year and up sequentially in a quarter where revenue went down. This is the fingerprint of a business doing exactly what we said it would do in May. shifting from one-off campaign revenue into multi-year contracted relationships. The strategy says it should. Our deferred revenue tells the same story. Deferred revenue at the end of Q1 was 6.9 million, up 1.4 million from year end, a 27% increase in one quarter. That is a leading indicator of revenue. that is already contracted and being earned through service delivery. Moving on to the balance sheet, cash at the end of Q1 was $6.1 million compared to $3.4 million at year-end. That increase reflects the net proceeds of the senior secured convertible debenture financing we closed in February, led by Shen Capital. This is the strongest year opening cash position SNP has had in years. It funds the operating plan. It funds the AI investment that I'm about to describe. And it gives us strategic flexibility on top of that. I told you the bookings backlog is the most important number in this release. Now let's focus on the most important strategic initiative inside SNIP right now. And it is something that I have been personally spending a meaningful portion of my time on since the May call. We are aggressively applying AI to every aspect of our business. I want to be specific about what that means because the word AI gets used very loosely on earnings calls. On the sales side, we're using AI to actuate the responses we deliver to client RFPs and to deepen the quality of those responses. We're using AI to demo our receipt validation capabilities live in front of prospects in ways that were not possible six months ago. The feedback from clients has been nothing short of excitement of the capabilities we have demonstrated, especially around fraud mitigation. On the product side, we're using AI to dramatically compress the time from idea to prototype. Engineering tasks that used to take weeks now take days. That speed will show up in our pipeline and the responsiveness of our service offering. On the operational side, we are planning on using AI to streamline how we deliver campaigns, how we process receipts at scale, and how we manage the lifecycle of every program we run. On the engineering side, while we're already using AI to write code, review code, test code, and ship code faster, the fundamental productivity gains of the engineering organization are yet to flow through to our financials. If we execute on this AI integration the way we are planning to, and we are moving hard and fast, By the end of 2026, Snip will be a meaningfully different company when measured from the perspective of cost structure. That is what is going to drive the EBITDA conversation in 2027 more than any other single line item cost action we take this year or in past years. I want to be careful here. I'm not putting a specific dollar number on this call. We will tell you what the AI transformation is delivering when we can point to it in the P&L, not before. Thank you to understand that this is the central operating priority of the company right now and it's happening in real time. Let me give you the forward picture in plain language. The macroeconomic environment is what it is. We do not control client budgets and we are not going to forecast our way out of the macro on this call. What we control, the cost base, the AI integration, the discipline execution against backlog, the deepening of customer relationships, we are executing on quarter by quarter. Backlog continues to grow. Multi-year contracts continue to anchor the forward book. Deferred revenue continues to convert into recognized revenue on schedule. The cost actions taken in late 2025 are flowing through the P&L. The AI investment will start to compound. Q1 is consistent with the path to inflection we described in May. The leading indicators, backlog, deferred revenue, cash position, cost trajectory, all moving in the right direction, the lagging indicators revenue and EBITDA will follow because that is how this kind of business works. Let's move over to Malcolm for his comments, Malcolm.