Wishpond Technologies Ltd.

Hi and thank you everyone for joining us today and welcome to Wishpond's 2022 fiscal third quarter financial results conference call. My name is Angelica and joining me on the call today are Ali Tashkander, Chairman, Founder and CEO of Wishpond, as well as David Pais, the company CFO. This call is being recorded. We will be having a question and answer session at the end of the call. which will be limited to analysts only. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from cedar.com. Sorry. Please note, versions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable security laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors, many of which are outside of wishbone's control, that may cause the actual results, performance, or achievements to differ materially from the anticipated results. Performance or achievements imply such forward-looking statements. These factors are further outlined in today's press release and in our management discussion analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, except if it's required by law. We use terms as gross profit, gross margin, adjusted EBITDA, annual revenue run rate, and monthly recurring revenue on this conference call, which are non-IFRS and non-GAAP measures. For more information on how to define these terms, please refer to definitions set out in the management discussion analysis. And with that, let me turn the call over to Mr. Ali Tashkander, Chairman and CEO.

Thank you very much, Angelico. Good day, everyone. We hope that you're all keeping safe and healthy. I truly appreciate everyone for joining us today. We are very pleased with our third quarter results, which proved to be the strongest quarter in the company's history. Wishbone achieved record revenue of $5.5 million in Q3 2022. representing approximately $22 million in annualized revenue run rate, driven by the company's continued focus on organic growth and successful integrations of its acquisitions. I'm especially proud of our team for the cash flow performance in the third quarter, with the company generating about $700,000 of positive cash flows from operations. As part of the cost reduction initiative launched in Q2 of this year to drive profitable growth, WishBond continued to scrutinize all new expenditures with the intent to optimize operations and achieve cost savings synergies. As a result, the company was able to achieve record positive cash flows from operations and record positive adjusted EBITDA in Q3. WishBond has now achieved positive cash flows from operations for the second quarter in a row. a tremendous accomplishment allowing the business to further strengthen its balance sheet. Consequently, WishBond can continue to invest in organic and inorganic growth initiatives without the need to raise additional capital. Our outlook continues to look promising for the fourth quarter and into 2023, with increasing sales, improving margins, and positive cash flows. We continue to experience increasing demand for our products and have not witnessed any slowing down or negative impacts due to external macroeconomic conditions. Our outlook remains positive as we head into 2023 with increasing sales, positive adjusted EBITDA, and positive cash flows. We expect to continue to grow rapidly as our sales pipeline remains robust and we begin to introduce bundled solutions to our customers. I will provide additional details on our outlook later on the call. But first, I would like to turn it over to our CFO, David Pace, who will review the financial results for the third quarter. David.

Thank you, Ali. I'm pleased to report that we had very strong Q3 results for the three months ended September 30th, 2022. Wishpond achieved record quarterly revenue for $5.5 million during Q3 2022. compared to revenue of $4 million generated during Q3 2021, an increase of 38%. Revenue growth in Q3 2022 is attributable to the company's expanded sales team, new product introductions, and acquisitions. Wishpond achieved gross profit of $3.6 million in Q3 2022 compared to $2.8 million during Q3 2021. representing an increase of 31%, driven by an increase in overall revenue. Wishpond's gross margin percentage in Q3 2022 was 66% compared to 69% in Q3 2021. The gross margins are within the company's historical average of 65 to 70%. the United States remains our largest and fastest growing market, generating 68% of our total revenue in the quarter, with approximately 15% and 17% of revenue generated from Canada and rest of the world, respectively. During Q3 2022, Wishpond recorded positive adjusted EBITDA, of $593,000 compared to an adjusted EBITDA of $204,000 in Q3 2021. The improvement is primarily driven by higher revenue and continued cost management initiatives and operational efficiencies initiated in the latter half of Q2 2022 that are expected to result in more than $1 million in annual cost savings. In Q3 2022, Wishpond generated net positive cash provided by operating activities of $671,000 compared to cash burn from operating activities of $134,000 in Q3 2021. I would now like to provide some additional commentary on our recent cost reduction and optimization initiatives, which resulted in record cash flow generation for the company. During the second quarter, the company implemented several cost reduction and operational efficiencies designed to conserve cash, which have resulted in the company realizing more than $1 million in annual cost savings. Some of the key cost cutting initiatives were We reduced the company's legal fees, professional fees, and corporate development expenses. We implemented a hiring freeze in most areas of the company. We implemented a number of optimizations and workflow improvements that allowed us to maintain our sales and customer acquisition costs while revenues grew. We implemented AI, or artificial intelligence technologies, to run certain campaigns, thereby eliminating manually labor-intensive processes and costs. We consolidated some of our subscription and software costs across all our acquisitions and also optimized our AWS and cloud storage costs. Our commitment to having a focused mindset and realizing cost efficiencies while still achieving growth is what permitted us to generate record cashflow and EBITDA in the third quarter. The company's financial success is predicated on increasing our revenue while running the business cost effectively. We continue to have a clean and healthy balance sheet. As of September, 2022, Wishbone had $2.7 million in cash and short-term investments, and the company had no debt. Wishbone has a $6 million secured revolving operating line of credit with National Bank of Canada's Technology and Innovation Banking Group, which remains undrawn as of today. In summary, Wishpond is in a very strong financial position with a healthy balance sheet, solid monthly recurring revenue, and very good visibility on revenue and cash flow for the current year. Wishpond is able to continue to grow comfortably from its cash flow from operations without the need for any additional equity or debt capital waste. I will now provide an update on our normal course issue a bid or share buyback program. On June 15, 2022, the company announced the renewal of its normal course issuer bid, or NCIB, was approved by the exchange. During the third quarter of the company, the company purchased 22,500 common shares under the NCIB for aggregate consideration of $17,685. The board of directors of Wishbond believes that the recent market prices of the company's common shares do not properly reflect the underlying value of such shares and that the purchase of the shares would be a desirable use of corporate funds in the best interest of the company and its shareholders. Hence, we will continue purchasing shares under the NCIB program in the coming months. This concludes my financial update and I will turn the call back