Voxtur Analytics Corp.

Welcome to the Vox Store earnings conference call. My name is Hilda and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press 01 on your touchstone phone. As a reminder, the conference is being recorded. I will now turn the call over to Jordan Ross, Chief Investment Officer, Jordan, you may begin.

Good morning, everyone. Thank you for joining us for the Voxter second quarter earnings call, where we will discuss our financial results for the period ended June 30, 2022. Please note that our results were released yesterday, August 29, 2022, after the market closed and can be accessed on SADAR or on our website at voxter.com. Joining me today are Executive Chairman Gary Yeoman, CEO Jim Albertelli, and CFO Angela Little. We will begin with the prepared remarks and then move into Q&A. If we are unable to get to your question, you are always welcome to contact me directly at jordan.voxter.com. Angela Little will begin by reviewing our financial results. After that, Gary Yeoman will outline some of our strategy goals and actions for the first half of 2022 and the most recent acquisitions that we've made of Bluewater. Jim Albertelli will then update us on how we are progressing toward our objectives through organic growth and operational efficiencies. Before we get started, please be advised that some of the information that we will share on this call may contain forward-looking statements. We caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. Further, on today's call, we will report using both IFRS and non-GAAP financial measures. We use these non-GAAP financial measures internally or for financial and operational decision-making purposes. as we believe that they provide a meaningful measurement of financial performance and valuation. These non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with IFRS. To see the reconciliation of these non-GAAP measures, please refer to our press release distributed yesterday, August 29, 2022, and our management discussion and analysis. both of which are available at sedar.com and on our website at voxer.com. A replay of today's call will also be posted on our website. Finally, please note that all references to amounts or currency during today's calls are to Canadian dollars, unless otherwise stated. I will now turn the call over to our CFO, Angela Little.

Thank you, Jordan, and good morning, everyone. To start, I will provide a high-level summary of our second quarter performance, and then I will go into some details and key metrics relevant to Q2 and the remainder of the year. For the quarter, Boxster's gross revenue was $38 million, gross profit was $12.7 million, and adjusted EBITDA loss was $3.9 million. For year-to-date 2022, Boxster's gross revenue is $79 million, Gross profit is $26.6 million, and adjusted EBITDA loss is $6.9 million. Revenue for Q2 2022 reflects a 111% increase over Q2 2021. Year-to-date 2022 revenue reflects a 143% increase over year-to-date 2021. Gross profit for Q2 2022 reflects a 53% increase over Q2 2021, and year-to-date 2022 gross profit reflects a 72% increase over year-to-date 2021. For Q2 2022, approximately 96% of gross revenue was from US sources. And for year-to-date 2022, approximately 97% of gross revenue was from U.S. sources. These percentages are up from 89% in Q2 2021 and 88% for year-to-date 2021, reflecting the company's continued expansion into the U.S. markets from strategic acquisitions made over the past year. Revenue from software and data licenses represents approximately 16% of the year-to-date gross revenue. This percentage will continue to increase through Q3 and Q4 as the company expands product offerings and sales in the valuation, title, and tax technology product space. Additionally, the Bluewater Financial Technologies acquisition will significantly increase our SaaS-based revenues in Q4 of 2022 and going into 2023. The company ended Q2 with cash and cash equivalents of $37 million and adjusted working capital of $19.5 million. During Q2 2022, the company executed new debt covenants with Bank of Montreal Financial Group, further solidifying our partnership and their commitment to our vision and long-term strategy. The company is now fully compliant with all loan covenants and anticipates remaining compliant for the foreseeable future. Moving on to some of the macroeconomics impacting the Q2 and year-to-date results. Throughout Q2 2022, mortgage rates continued to rise, reaching the highest level since 2008 at nearly 6%. This, coupled with housing supply shortages and general economic uncertainties, have resulted in a significant decrease in volume within the primary mortgage space, with particularly significant reductions in refinance activity. Mortgage applications dropped to the lowest level at the end of June, marking the biggest slump in 22 years. Because Boxster's diverse product offerings cross over not only the primary mortgage market, but also HELOC and default servicing, The company is uniquely positioned to hedge against these types of market conditions. This diversity will be further expanded with the addition of Bluewater Financial Technologies, opening the company into the secondary and capital market space. Default volumes have slowly started to return to pre-COVID levels during Q1 and Q2 and are anticipated to continue to rise through the remainder of the year and into 2023. The slower ramp-up is mainly related to borrowers having significant home equity, as well as some CARES Act forbearance programs extending into 2022. Despite the slower default ramp-up, coupled with the significant decreases in the primary mortgage space, Boxster was able to maintain consistent gross revenue and gross profits from Q1 2022 to Q2 2022, which is consistent with the expectations we set out in our Q1 earnings call. As we go into the second half of the year, the focus is on revenue growth, positive adjusted EBITDA, and positive cash flow. The company is executing a cost reduction plan, which includes a reduction of approximately 10% of the workforce across the board salary reduction and a freeze on all discretionary bonus plans for 2022. We estimate a total savings thus far of approximately $700,000 a month to be fully recognized starting in September 2022. Throughout the remainder of the year, we will continue to right-size where necessary for market conditions, and we are looking for additional efficiencies through synergies, consolidation, and process improvement. In addition to the cost reductions, FOXR completed the acquisition of MTE on July 1st. strengthening Boxster's footprint in the Canadian tax assessment market. This acquisition adds immediate positive EBITDA to the company on a standalone basis and will achieve additional cost synergies as we integrate MTE into Boxster's technology infrastructure. We anticipate significant new revenue from our attorney opinion letter product, which is currently onboarding nine new clients. We also anticipate new revenue from tax products in the Canadian market and default processing, default title, and default valuation increases. Additionally, we expect new clients across the board from our continued sales efforts. As a result of all these factors, we remain confident in our original 2022 guidance for gross revenue of $170 to $190 million. With regard to gross profit, our revenue mix has shifted somewhat from the original guidance resulting in lower than anticipated margins for 2022. A higher percentage of revenue has been generated in the valuation space, and the onboarding of new clients and products has been delayed due to market conditions in the valuation technology and title technology space. With the upcoming acquisition of Bluewater Financial Technologies, Boxster will have additional immediate significant margin profits as well as positive cash flow. I will now turn the call over to our Executive Chairman, Gary Yeoman, to provide additional guidance regarding the company's strategic focus for the remainder of 2022.