Wishpond Technologies Ltd.

Hello, everyone. Thank you, everyone, for joining us today, and welcome to Wishpond's 2022 Fiscal Fourth Quarter and Fall Year 2022 Financial Resource Conference Call. My name is Angelica, and joining me on the call today are Alitash Kander, Chairman, Founder, and CEO of Wishpond, and David Pais, the company's CFO. The call has been recorded. We'll be having 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. Okay, please note portions of today's calls, other than historical performance, include statements of forward-looking information within the meaning of applicable security laws. These statements are made under the State 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 anticipated results. Performance or achievements imply but 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 in 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 in which any such statement is based, except if it's required by law. We use terms such as gross profit, gross margin, adjusted EBITDA, analyzed revenue run rate, and monthly recurring revenue on this conference call, which are non-IRS and non-GAAP measures. For more information on how we define those terms, please refer to the definition set up in our management discussion and analysis. And with that, let me turn the call over to Mr. Ali Tashkander, Chairman and CEO.

Thank you very much, Angelica. Good day, everyone. We hope that you're all keeping safe and healthy. We truly appreciate everyone for joining us today. On today's call, I will first provide some general commentary and an update on the quarter and the full year ended December 31st, 2022, followed by our CFO, David Pace, who will provide a financial summary of our results. I will then come back and provide some commentary on our outlook, And we'll go from there. 2022 was another extraordinary year for Wishbone, as we repeatedly set record financial results. The company had record revenue in the fourth quarter, and we continue to experience increasing demand for our products, even during an environment of uncertain macroeconomic conditions. Wishbone also continues to maintain a strong financial position with a clean balance sheet. Our healthy balance sheet and market position allows us to be in an enviable position to maintain our strong organic growth while investing in R&D to develop and deliver innovative digital marketing products to our customers. We are especially thrilled with our fourth quarter and annual results, which were the strongest in the company's history with record revenue, adjusted EBITDA, and cash flow generation. which one achieved record revenues of $5.9 million in Q4 2022, representing approximately over 23 million annualized revenue run rate, driven by the company's focus on organic growth and successful market positioning. We are also pleased to report another quarter of record positive cash flows from operations of roughly $800,000. We believe that as part of the cost reduction initiatives we launched earlier in the year, we were able to drive profitable growth by scrutinizing all new expenditures with the intent of optimizing operations and achieving cost savings synergies. As a result of these cost optimization efforts, WishBond was able to achieve both record positive cash flows from operations and record positive adjusted EBITDA in Q4 2022. We've now achieve positive operating cash flows for three quarters in a row, which allows the company to invest in organic and inorganic growth initiatives without the need to raise additional capital. Our applicant is strong and positive for 2023 with increasing sales, improving margins, and positive cash flows. We expect to continue to grow rapidly as our sales pipeline remains robust with the launch of Propel IQ, our new next-generation marketing platform, and the introduction of artificial intelligence-powered marketing tools. 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, who will review the financial results for the quarter. David? David, you're on mute.

Oh, I apologize for that. Okay. Thank you, Ali. And thanks, everybody, for joining us on the call this morning. I'm pleased to report that we had very strong annual and fourth quarter results for the year and three months ended December 31, 2022. The financial highlights for fiscal 2022 are as follows. Wishpond achieved record annual revenue of $20.5 million during fiscal 2022, compared to revenue of $14.8 million in fiscal 2021, an increase of 39%. The increase in revenue was primarily driven by organic growth resulting from strong product demand, an increase in sales and marketing activities, and new product introductions. The company also completed its acquisition of viral loops in Q2 2022, which contributed to revenue growth over the past year. The United States remains our largest market, generating approximately 70% of our total revenue in 2022, with approximately 14% and 16% of revenue generated from Canada and the rest of the world, respectively. Wishpond achieved gross profit of $13.6 million in fiscal 2022 compared to $10 million last year, representing an increase of 36% driven by an increase in overall revenue. Wishpond's gross margin percentage was 66% during fiscal 2022 compared to 68% in fiscal 2021. The gross margins were within the company's historical range of 65 to 70%. Wishpond achieved record positive adjusted EBITDA of $648,000 in fiscal 2022, compared to an adjusted EBITDA of $56,000 in fiscal 21. The improvement is primarily driven by higher revenue and continued cost management initiatives and operational efficiencies initiated in 2022. In fiscal 2022, WishBond generated net positive cash provided by operating activities of $1 million, compared to cash burn from operating activities of $1.5 million in fiscal 2021. In the second quarter of 2022, the company implemented several cost reduction and operational efficiencies designed to conserve cash. These changes have resulted in the company realizing more than $1 million in annual cost savings. Our commitment to realizing cost efficiencies while still achieving growth is what permitted us to generate record cash flow and EBITDA in 2022. Our fourth quarter financial 2022 results are as follows. Wishpond achieved record revenue of $5.9 million in Q4 2022, compared to revenue of 4.7 million generated during Q4 2021, an increase of 27%. Revenue growth was positively impacted by seasonality in Wishpond's acquired businesses, the expansion of the company's sales team, and integration of our acquisitions. Wishpond achieved gross profit of $4 million compared to 3.2 million during Q4 2021, representing an increase of 27% driven by an increase in overall revenue. Wishpond's gross margin percentage at Q4 2022 was 68%, which is similar to the gross margin percentage in Q4 2021. During Q4 2022, Wishpond achieved record positive adjusted EBITDA of $687,000 compared to an adjusted EBITDA of $491,000 in Q4 2021, an increase of 40%. Adjusted EBITDA margin was 11% for Q4 2022 compared to 10% in Q4 2021. The improvement is primarily driven by higher revenue and continued cost management initiatives and operational efficiencies initiated earlier in the year. During Q4 2022, Wishpond achieved record positive cash flow from operations of $803,000 compared to $406,000 in Q4 2021. We continue to have a clean and healthy balance sheet. As at December 31, 2022, Richemont had $3 million in cash and short-term investments and no debt. In the prior quarter and at September 30, 2022, the company had cash and short-term investments of $2.7 million. Wishpond has a $6 million secure operating credit facility with National Bank of Canada's Technology and Innovation Banking Group, which remains ungrown as of today. In summary, Wishpond remains in a very strong financial position with a healthy balance sheet, solid monthly recurring revenue, and very good visibility of revenue and cash flow. Wishpond is able to continue growing comfortably from its cashflow from operations without the need for any additional equity or debt capital raise. I will now provide an update on a normal course issue a bid or shared buyback program. On June 15, 2022, the company announced that the renewal of its normal course issue a bid or NCIB was approved by the exchange. During the full year 2022, the company purchased 152,600 common shares under the NCIB for aggregate consideration of $166,570. 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 using some of the company's surplus cash under the NCIB would be in the best interest of the company and its shareholders. The company intends to judiciously purchase shares under the NCIB program based on available cash. As of the end of the fourth quarter of December 31, 2022, the company had 53,705,324 common shares issued and outstanding. This concludes my financial update and I will turn the call back over to Ali.

Thank you, David. I would now like to share with you some recent business highlights as well as our recent product launches. On November 2, 2022, the company announced that Lloyd Lobo had joined as Board of Directors as an independent director and member of the Audit Committee, effective November 1, 2022. Besson Lobo replaced Arundar Mahal, who resigned from the Board, effective November 1, 2022. On December 1, 2022, the company announced that its fully-owned subsidiary, Brax Technologies Ltd., launched Braxy, a new and easy-to-use AI-powered advertising solution for businesses. The company began cross-selling Braxy to its current base of more than 4,000 customers and believes that its customers can deploy the solution along with other Wishpond online marketing solutions to increase their conversions and sales. On March 9, 2023, we announced the launch of Propel IQ, Wishbone's next-generation marketing technology platform. Propel IQ is our most extensive platform offered to date, combining Wishbone's award-winning software with its recent acquisitions to create one connected platform. In addition to Wishbone's AI-powered website builder, lead generation email marketing automation, and marketing technology solutions, Propel IQ includes SMS marketing from Winback, referral marketing from Viral Loops, AI-powered Braxy from Brax, and sales engagement software from PersistIQ, all integrated together into one platform. With Propel IQ, businesses will be able to manage the complete customer lifecycle on one platform, eliminating the need to invest in additional marketing and sales tools. ProfileIQ offers customers an easy onboarding process, which includes creating a marketing plan tailored toward the business's specific goals, where Wishbone's team helps set businesses up in the right direction before handing over the software to business owners. This ensures that the SMBs are set up for success from the beginning and can quickly start seeing the benefits of using ProfileIQ. Furthermore, we will continue offering professional marketing services as well so that businesses who need assistance with additional tasks such as graphic design, copywriting, ads management, or SEO can simply access these services at the click of a button. Propel IQ allows WishBond to truly capture the most value out of its acquisition. We've successfully integrated all five acquisitions and connected the products across the businesses. to implement new product selling capabilities. Additionally, our development team has worked hard to build out the platform completely, incorporating features such as single sign-on capability and a unified dashboard for all the products in the platform, which we demoed at our recent investor day event. We are also introducing generative artificial intelligence or AI technologies in this platform, beginning with the AI website builder, which will revolutionize the way SMBs are push marketing. And we're thrilled to be at the forefront of democratizing this change. Propel IQ is the future of Wishbone, and we believe that the platform will give us deeper integration into the client's business and marketing systems, increasing our customer retention and long-term customer value. Moreover, through the Propel IQ platform, we expect to further increase wishbone margins. Further to our launch of Propel IQ, on March 30th, 2023, we announced the launch of our new website builder, which is powered by generative AI technologies. The website builder leverages the latest generative AI technology to analyze user inputs and automatically generate website designs that are tailored to the user's specific needs. To create a website using the website builder, entrepreneurs and business owners simply enter a few details about their business, and the system's AI algorithms will generate high-quality content and imagery using the information provided. The website builder further allows users with the ability to edit and refine their website using AI technologies, including the ability to translate the website into multiple languages. This is truly a groundbreaking product because it allows people who are not tech savvy to create high quality professional and marketing optimized websites within minutes. Users can cut down on significant development time and save thousands of dollars on programming, design, and copywriting services. Furthermore, we are very excited that the AI-powered website builder marks the first introduction of generative AI technologies on Wishbone's Propel IQ platform. The use of AI technology is rapidly changing the digital marketing landscape, and Wishbone is at the forefront of utilizing these new innovations to provide SMBs with new advantages against larger competitors. I believe that artificial intelligence technology truly has the potential to disrupt much of the way people and businesses operate. And I firmly believe many AI applications are here to stay and will revolutionize the marketing industry. They're actively working on developing additional AI-powered marketing tools for our ProponIQ platform. There are numerous use cases of AI in marketing that we intend to launch and include in our products. For instance, an AI-powered email responder that can be used to generate responses to customer inquiries. AI can be used to generate personalized content for newsletters, websites, emails, and SMS messages. AI can help small businesses provide more background information on the leads in their prospect funnel. And AI can be used to produce professional-looking promotional videos that would otherwise cost a lot of money for the SMB to produce. These are just some of the exciting development work that is taking place at Wishpoint. We are in a very fortunate position to be able to lead the charge in applying AI to marketing applications and to provide our clients with powerful tools that will help them grow their businesses more efficiently and profitably than was ever possible in the past. Management is very optimistic about the company's growth prospects, and I'm pleased to share Wishbone's key goals for 2023. One, increase monthly recurring revenue through both organic and inorganic means. Two, significantly scale the size of the sales team to help achieve our organic growth profile. Three, remain adjusted EBITDA profitable by balancing aggressive growth with increased positive cashflow from operations. Four, invest in research and development so that we can continue to launch new AI-powered products and services to increase long-term value for our clients. Five, leverage the Propel IQ platform to further accelerate the company's growth, improve margin, and increase customer retention and long-term customer value. Which one's outlook for Q1 2023 and heading into 2023 remains strong and positive. Wishpond's performance is better than ever and extremely positive across all its acquisitions and for the entire company as a whole. Wishpond is well positioned for continued growth and profitability. Wishpond expects to achieve record revenue in cash flows in 2023. This is driven by organic growth from ramping up sales of the company's new Propel IQ bundled product offering increasing the size of our sales team and new product introductions. We continue to experience strong performance across all of our businesses with robust demand for our products. We expect organic growth in 2023 to be in line with historic range of 30 to 40% per year. Our organic growth rate does not show any signs of slowing down. and we are getting more new clients than ever before. We do experience lumpiness and seasonality, so the organic growth rate can vary from quarter to quarter. Last year, we experienced a significant decline in revenues from Q4 to Q1. However, with the launch of Propel IQ and the subsequent acquisition of viral loops, which has less seasonal sensitivity, we expect lesser impact in Q1 2023 compared to Q1 2022. We expect to be adjusted even a positive in each quarter going forward in line with our focus on profitable growth. Wishbone will continue to scrutinize all discretionary expenditures across the organization with the intent of optimizing operations and achieving cost-saving synergies. The company is reviewing strategic acquisitions again. Given Wishbone's strong balance to the management's successful acquisition track record, We are once again looking at acquisition opportunities and building our acquisition pipeline, which consists primarily of small token acquisitions. Wishbone has demonstrated disciplined capital allocation strategy, having successfully completed and integrated five acquisitions since the company's public listing in December of 2020. Our acquisition strategy has been to do token acquisitions of marketing technology companies that offer complimentary product solutions to small, medium-sized businesses. All our acquisitions have been cash flow generating companies that can benefit from our sales and marketing expertise, and their products and solutions offer great cross-selling opportunities for core Wish 1 customers. Our acquisition strategy has worked to date. and has added tremendous functionality to our offering, as well as complemented the company's organic growth very nicely. With the launch of PropellerIQ, we are expecting higher customer retention rates going forward. Clients are increasingly signing up for annual 12-month terms. PropellerIQ improves the stickiness of our platform and aids in retaining customers for longer periods of time. The bundled pricing of Propel IQ is expected to result in greater customer satisfaction, less churn, and consequently higher customer retention. Which one is recession resilient? The business has felt no impact due to recession, inflation, supply chain, or other macroeconomic effects. In an economic slowdown, companies often reduce or freeze their budgets on their in-house marketing and sales staff or on individual fragmented marketing solutions. However, they still need to acquire new clients to keep their business afloat. And so businesses looking to cut costs, find value and wishbones all in one consolidated software platform, which costs a fraction of all the individual products it would replace. Whether more businesses keeping a close eye on their costs or looking to cut costs, find WishBond as a much cheaper alternative to an internal marketing resource. WishBond is an effective, low-cost alternative that is thriving in a recessionary environment. WishBond can continue to fund the growth of its sales team and new product launches from cash flows from operations without having to raise additional equity or debt capital. The cash flow generated by the company will continue to be reinvested in the business and allocated in a disciplined manner, which may come in the form of future acquisitions, share repurchases, or to accelerate organic growth. In closing, I want to reiterate that Witchpond is an elite software company with profitable growth. Technology companies are known to burn lots of cash for many years before becoming cash flow positive. very rarely do you find a software company of our size with over 23 million dollars in annualized revenue run rate that is generating positive cash flow from operation and is also rapidly growing with 30 to 40 percent organic growth and maintains growth margins of over 65 percent wishbone truly is a unique high growth profitable company and we remain committed to delivering profitable growth in the future We do not believe the company's current share price is warranted. We believe the general capital market conditions are the primary cause for the weakening in our share price, and small cap tech stocks have suffered the worst in this market correction. Despite the poor stock performance over the past year, I strongly believe Wishpond has never been in a better position than it is today. Wishpond today is in a very enviable position with a growing customer base, increasing revenue, broadened product offerings, clean balance sheet, and positive cash flows from operations. I'm extremely proud of what we have accomplished, and I'm excited with our future plans. Finally, I want to thank all the employees at Wishpoint whose hard work continues to elevate the company to higher levels. We want to thank our customers who rely on us to help them with their digital marketing. also i'd like to thank you all for joining us today on this call please note we recently voted on investor day including presentations from senior management team and product demonstrations of our new profile iq platform and our ai powered website builder you can view a replay of investor day video under events in the investor relations section of our website We look forward to providing you an update next quarter. I will now hand it back to Angelica for questions.

Thanks, Ali. With that, we will now open the call to questions. Just a reminder, the questions will be limited to analysts only. The first question is for Jason Sandberg of PI Financial. Please go ahead, Mr. Sandberg.

Thanks for taking my question and congratulations. David and Ali on a great quarter. I just wanted to drill down on customer behavior, if I could. So you mentioned you don't see any impact of potential recession and so forth, but I just wanted to know if there's any change in terms of just the way that the customers are behaving in terms of longer sales cycle? Are they, you know, are they tending to look for a, you know, a lower cost solution or are they still willing to open the pocketbook and spend for premium service?

As of right now, we haven't felt or noticed a negative impact in terms of lower willingness to pay, or longer sales cycle or lower demand. So as of right now, no, it has actually remained steady. In fact, I think one thing that has been interesting though, is that with inflation, a lot of other services have increasingly become more and more expensive. We haven't really raised our prices for some time, and there has been more innovation happening as well. So if anything, actually our services have become cheaper in comparison. which is obviously a growth opportunity as well for us.

That's a great comment. I'm going to ask another question. Just wanted to get an idea in terms of the size of your sales team. You mentioned that you want to continue to invest and increase that size. If you could just remind us what the number of sales reps you had at the end of the year, maybe what you have currently right now, and what's the sort of target for the end of this fiscal year?

I think end of last year, it was roughly around 40 account executives. And right now, I think it's around 45. So we didn't increase it that much from the end of last year to now. Now we're accelerating and our plan is to get to 70 to 80 by end of the year. The reason that we didn't add a lot of account executives from end of last year to now has been that as we were ramping up and rolling out propel iq and nailing really what the you know what the demo structure should be and nailing our training programs internally and resources and uh you know all of that we wanted to make sure that our sales team is fully equipped and and doing well and our account management team on the onboarding side of propel iq everything is in place uh before we add more headcount on the sales side and now that's uh that's what we're in the process of doing

Okay, great. I will cycle back in the queue. Thank you, Jason.

Thank you, Jason. The next question is from Gabriel Leon from Beacon Securities. Please go ahead, Mr. Leon.

Hi, everyone. Thanks for taking my questions and congrats on a successful year. A couple of things. First, just going back on the cost side of the equation, Ali, you talked about potentially doubling the size of the direct sales rep team this year versus last year, while still maintaining sort of positive EBITDA over the course of the year. So how should we think about EBITDA margin and operating leverage in calendar 23 relative to the sort of 3% you reported last year?

Yeah, so I'll share my thoughts. I think David should also add some color on it from his point as well. Actually, in fact, David, you might want to take it first and then I'll fill in.

Sure, Ali. So thanks for the question, Gabe. You know, in terms of our EBITDA margins, you know, I noted in my comments that the Q4 EBITDA margin was like 11%. And that was really good. And like, we were quite happy about that. But Going into 2023, we're projecting anywhere from 5% or 6% all the way to 9%, 10%. And I know that's a large range for you, like, you know, if you want to just stay anywhere between 5% and 10%. I know that's a large range, but at the same time, there's a lot of uses of cash that, you know, we can spend on every day, whether it's developing new AI products, whether it's, you know, increasing the size of the sales team, like you point out, and so on. But it also depends on how fast we accelerate revenue. So, you know, in some of our investor decks, we've talked about our LTV to CAC ratio, and it's anywhere from 3.4, 3.5 as to 1. which obviously means we have a little bit of runway to spend money on growth initiatives, especially sales growth initiatives, and still generate positive cash flows. So, you know, I think I gave you the longer answer to the question. The short answer is we're going to be judicious, as Ali mentioned in his remarks, and we're going to be very careful how we spend our cash. And at the same time, keep an eye on the bottom line.

Yeah, thank you. Exactly. And the only other comment I would make is that I think longer term, I don't see a reason why our EBITDA margins wouldn't be above 20%. But for the current year, 5% to 10% is probably what we're going to aim for or what we're going to see given all the growth plans that we have.

That's helpful. Thank you. And just as it relates to Propel IQ, Are you able to share with us any early data points you've got in terms of what the pipeline is looking like for that particular product as it relates to the type of customers that you're seeing and the sort of bite size, dollar size that you're seeing with the pipeline for that product?

um i think what we've seen so far um indicate a few things one is that we're seeing early uh very promising early signs of significantly higher retention rates um monthly subscriptions are lower but there's also setup fee but all in all uh ltb for uh propel iq seems to be quite a bit higher than the, you know, the packages we've sold in the past. And what's also very interesting with Propel IQ is that if you think about the previous packages that we sold a lot of the $500 per month, you know, it was kind of that was more or less what we would actually get from that deal from that, you know, subscription. Now with Propel IQ, there's multiple layers to it. One is that It is higher LTV just for the base software package. But on top of that, you can also have upsells for extra services for three months, six months, whatever the clients need to help them, you know, get wrapped up in certain aspects of marketing. So that actually pushes it even higher. And the other element, the third element that is also very, very interesting in that is that there's usage-based pricing built into it that we didn't have before as well. That, you know, Propel IQ base package comes at, let's say, a thousand leads included for $300 a month. And then above that, you would pay more per lead. So we already are seeing clients that maybe the base package is $300 a month and their lead overage cost would be more than $2,000 a month. So some of those dynamics are going to be quite helpful as we ramp up and push Propel IQ further.

Patrick Corbett- gotcha thanks that's helpful and just one last question for me i'm here for David on the revenue side, I guess, the two part question first do you have a guesstimate of what the organic revenue growth would have been. Patrick Corbett- For Q4 I guess that would be stripping out sort of went back into viral loops as the first thing, and the second thing is you kind of talked about it, but. Patrick Corbett- Should we expect any sort of quarter over quarter seasonal impact going from Q4 to Q1. Or do you expect there to be a sequential decline, or do you think it'll be flat, maybe options given the strength of seeing in the business?

So in terms of U4 and Viraloops and Winback, first of all, Winback is a very small acquisition. Viraloops is a little larger, but if you recall when we announced Viraloops, it did about $800,000 in annual recurring revenue. So if you look at our $5.9 million quarter and you divide up the $800,000 in EnviroLoop's revenue by four and add a little bit of growth rate, I mean, it's not a huge component. So my response to you is it's mainly organic growth. Yes, there is a little bit of inorganic, but it's mainly organic. And in fact, going forward as we get more into Propel IQ and so on, first of all, we never broke down these individual subsidiaries in the past. We certainly don't intend doing that going forward. And the main reason being is we always intended to integrate them. And as you integrate them, it sells more as a bundle. And then you start focusing a little less on on what the individual group's revenues are. So I would actually focus more on the overall growth rather than any independent unit growth.

I think the second part of Gabriel's question, just as a reminder, David, was going from Q4 to Q1 and what we expect in those seasonality.

Yeah. So there, you know, obviously between Q3 and Q4, we had a little bit of a benefit. So we obviously saw some growth. Our Q1 numbers, you know, we haven't put out our numbers. We haven't finalized them either. And we typically don't give guidance. But, you know, so maybe I should maybe pause there and just say we're not giving guidance, but, you know.

I think to the extent that we've already shared, and I can reiterate, is that Q1, we have a little bit of headwind when it comes to seasonality, but we expect it to be not like Q1 of last year. Q1 of last year, I think the dip was relatively large. We expect it to be, you know, you know, more, yeah, maybe I shouldn't say more, but, you know, not as pronounced as it was last year.

No, totally get it. Thanks for all the feedback and congrats again on the year. Thanks. Thank you.

Thank you, Mr. Leon. The next question is from Nihal Padhaya from IA Capital Markets. Please go ahead.

Hey, guys. Congratulations on the quarter end of the year amidst a challenging macro backdrop. Ali, one of the questions that I had was, you know, you're looking at M&A again. I was just wondering if you would consider tapping into your credit facility to, you know, facilitate an acquisition. If, you know, if you saw something that was suitable, what are your thoughts on, you know, the use of that credit facility? And then my second question was in regards to gross margins with Propel IQ and other cost initiatives. When do you think we could see margins past that 70% threshold? And then what do you think a long-term sustainable margin model is?

Yeah, great questions. You know, let's start with the second question. With Propel IQ, what we're seeing is that we expect margins to be significantly higher. You know, now I would be hesitant to give specific numbers right now because some of it is obviously a dynamic situation and, you know, it will take some time because we're going to have a mix of clients that are on older packages and as we're selling more of the new Propel IQ and, you know, what that looks like, it could take some time. uh but you know i think i think long term and i don't know exactly what long term in this context would end up being but long term i don't see reason why our margins wouldn't be above 80 and you know we're putting all of our efforts in that direction and and and so far based on what we're seeing from propaganda that seems to be quite achievable um so so uh we'll go with that uh Your first question, can you remind me again now if we're good after the second one? No problem, Ali.

I was just wondering if you would tap into your credit facility to facilitate. Yeah, I mean, Emane.

So again, they were opportunistic. So if there's a deal that on cash flow basis, it looks so good, that it's a no-brainer for us to tap into LIDAR credit, we would consider it. uh but we would never tap into line of credit uh for something that on a cash flow basis wouldn't be amazing and also we would i think be more on the cautious side you know i think i think these days you can you know look around and see a lot of businesses that are in big trouble and usually it has to do with debt so from that point of view we are more debt averse than maybe some of the other companies but again you know if the deal is such that It's a no brainer and, you know, good margin of safety.

Yeah, for sure. Perfect. Thanks. And then maybe one last one. You spoke about the product roadmap and the use of AI. And then once you launch some of these tools, would it be fair to say that you're potentially positioning yourself to compete within the enterprise and larger businesses within that SMB segment?

We do. I mean, for sure. For sure. And already, as I mentioned previously with Persist IQ, for example, we're selling to a bit larger clients. And now as part of Profile IQ, now they're being exposed to the whole platform. So I think we're going to see some of that. But still, our DNA, first and foremost, is serving entrepreneurs and small businesses. And that's where we see the biggest gap in the market. And the competitors that we have, a lot of them are serving the enterprise environment. And I think it's quite advantageous for us to have a blue ocean of millions of SMBs that we can serve and have very sticky offering for them that integrates into their business processes. So from that point of view, I think that will continue to be our bread and butter and our focus. But when you say SMB, obviously it's a big range. So I think we're going to probably move around in that definition and there will be some larger ones that will be part of the package as well. Perfect.

Thanks, guys. Ali, David, fantastic quarter. I'll pass along. Thank you very much.

I think the next question is Daniel Rosenberg of Paradigm Capital. Go ahead.

Thanks. Good morning, Ali and David. My first question was around the outlook that you provided. And so you gave a positive outlook, but highlighting that it'd be driven by both organic and inorganic growth. Around the inorganic, I was just curious how you envision the pipeline growing, understanding that it's just ramping up now. But any characteristics around size of what you would like to see in that pipeline or capabilities of what you would like to see in that pipeline?

Yeah, so first of all, let me clarify. I think the outlook that we gave that we expect 30-40% growth had to do with organic growth. because with acquisitions obviously it's always difficult to know which ones will end up being the ones that you execute and what their contributions will be so we're saying we expect very positive outlook and record revenue and profitability this year just organically forgetting about acquisitions now coming back to the you know subject of acquisitions Right now, all things considered, our cash balance, let's say the 3 million and our own growth initiatives, doesn't leave a large room for us to make larger acquisitions because we also want to be very careful what happens in the market. We don't want to be at the mercy of external factors. Because of that, I do expect that next year acquisition will probably be on the smaller side unless the equation changes in a way that will make sense. And I think in terms of our capital allocation strategy, the way we're thinking about it is that we want to further reduce our costs, accelerate sales aggressively, when possible, actually do more active share buybacks, and to a point actually at some point maybe it's not you know today but at some point get to a point where we're producing enough cash flow that we can even make more and more acquisitions through the cash flow regenerating ourselves you know or or when it uh when it is warranted based on the share price uh race on to to make more acquisitions i so i think the short answer is that we're gonna walk before we run in terms of further acquisitions this year it's going to be more cautious uh exercise than maybe two years ago

Gotcha. Thanks for that. And then on the rapid sales acceleration that you mentioned, could you share how the sales team, how you envision it growing, whether it be by geography or sales type, just to kind of understand the dynamics of how you're building that team?

We are still focused on North America, mostly. I mean, now we're selling some to European countries as well, for sure. So I think it's going to be, again, adding more sales development reps and account executives serving the same geography. And in terms of the verticals, e-commerce continues to be a large focus for us. B2B businesses is going to be an increasingly important audience for us as one of the fastest growing ones. And we're diversifying and adding more verticals. A lot of local service providers and those types of businesses are being added as well. So our sales acquisition is actually quite diversified and it's going to continue to be like that heading into the rest of the year. I think e-commerce is very important, but as a percentage of new outreach, it might start becoming smaller.

Okay, thanks. Lastly, for me, I was curious around AI. Obviously, it's early days, but it's nice to see you putting tangible products and features already in market. I was wondering, as you think about the future, how big a part of Wishpond do you think AI becomes? Is it too early to say, perhaps, but any thoughts around how you see AI as a part of Wishpond in its future?

I think it's huge. And already we're seeing that, you know, it's helping in multiple fronts. So one, in terms of back office and our own internal resources, we're using AI very actively to find cost efficiencies. And we're actively every day doing that and improving on that. So that's something that we're going to continue. In terms of our product offering, you know, we saw the AI website go there. And as we announced initially, It's been available to all the PropellerIQ clients and everyone else that wants to have access to the free version to be able to test it out and see a more limited capability. would need to be part of this wait list. And already we're approaching about 2000 businesses that have signed up to be on that wait list to get access to the AI website builder, which we're going to release in the coming days to the public, actually, slowly at part of that wait list. And just thinking about that, Not only is it a very important capability, but it's also a very important marketing channel for us, right? So you can think of all of these businesses that we can actually bring on board. You can think about it in terms of, let's say, Apple. Apple's turnaround into becoming, again, such a major player in the market started, again, with iPod and iPhone and iPad and all that. And then people, as they got more comfortable with those capabilities and those products, Then they started actually buying MacBooks and all of those things again. And to some extent, the free version of the AI website was going to do that for us. That's one side of it. The other side of it is these capabilities actually give abilities to small businesses that otherwise they would have to hire in for and pay a lot of money for and take a lot of time on. And those are very appealing for our clients and to our own internal resources. So I think it is something that is going to be an increasing focus for us. We're going to continue innovating in anything AI. And initially, I think we're going to do some of these more siloed approaches of AI website builder, email responder with AI, newsletter creation with AI and all that. And at some point, you can actually expect Fadi Bardawil, Ph.D.: : Even deeper Ai integration, where we have billions and billions of data points from you know millions of leads. Fadi Bardawil, Ph.D.: : From all of our clients from SMS messages they send the email this and all the browsing history, the video from the landing pages and websites that they want. Fadi Bardawil, Ph.D.: : That all of those and become part of the Ai algorithm to help our clients have a more personalized front to their clients that would be more likely to convert them and turn into. a profitable undertaking for them. So yeah, it's going to be a major focus for us. It's priority one in terms of our product development.

Thanks and congrats on a strong year. Thank you very much.

Okay, the next question is from Neil Bakshi of Canaccord. Please go ahead, Mr. Bakshi.

Right. Congratulations, Ali and David, on the strong finish of the year. I guess the first question I had is with respect to, you know, with AI becoming, as you've spoken about, it's really kind of become a core focus for the company. I'm wondering if it has in any way shaped some of the some of the kind of evolution of the M&A pipeline for the coming year as you look to kind of talent acquisition or product acquisition. Just wondering how it fits into kind of that pipeline of potentially smaller deals, but looking at teams that have been leveraging it more so than others in a very burgeoning space. Um, it's a good question.

I mean, uh, I, I think each opportunity we look at them in their own light and obviously, um, we, you know, in an MNA opportunity, we look for several things. We look for them being profitable, uh, you know, serve similar kind of customer base, uh, you know, for us not to have to overpay for them and the strategic value. But, you know, ultimately we want to have, you know, we want an acquisition that It gives us a multiplier effect that with them we can grow faster than we would have otherwise been able to do. And AI would put a checkmark around that in a lot of cases that, yeah, it would help you grow faster. But it doesn't mean that it would be the only criteria. So I think, you know, we'll see. We'll deal with them one at a time based on the opportunities. It would make the deal probably sweeter, but I wouldn't say it's a requirement.

Okay. And then just a question with respect to, you know, you mentioned a bit about the seasonality impact not being as pronounced for Q1, but just from an MRR perspective, is it fair to say that kind of the run rate of 23.6 million entering the year, should we see kind of a bit of a Maybe a small drop down or just kind of look, I know you've talked about on a month over month basis, you know, improvement in Q4 or Q3. Should Q1 still be a little bit of a drop down over Q4 or just wondering how we look at that kind of annualized recurring number in the context of the seasonality? I'll let David answer that.

So, Neil, yeah, you know, I think the overarching point is we don't typically give guidance. We like just as in last year, we did see a little bit of a dip, but it's not a significant dip. I think Ali mentioned that the dip wasn't as much as we saw last year. But when you're looking at the entire year, you know, you're looking at twenty six, twenty seven million dollars. If you look at last year, if you look at our quarterly revenue last year, Q1, Through Q4, you know, each of Q2, three and four showed growth over Q1. There's nothing, you know, right now in, you know, in the forecast that makes us think otherwise for 23. So we fully expect between Q1 and Q4 of this year, we're going to see growth in each subsequent quarter. If anything changes, obviously, you know, that we can't foresee right now, then we'll deal with it at that point. But Q4 is like, you know, sorry, Q2 just started. You know, there's nothing that seems to concern us on the horizon. And, you know, I think we would stick by a forecast at this point. It's really not our forecast. It's yours.

Right. OK, very good. I'll jump back in the queue. Congratulations once again. Thank you. Thank you.

the last question is from christian screw of aid capital please go ahead hi good morning and thanks for taking my questions now the first one i'll ask today is on the migration process to propel IQ it sounds like it's being sold to new customers as you know the new wholesome propel IQ product but for some of your older Legacy wishpond customers do they have to migrate over is there a like a migration process there that your social team is working through and does that represent an upsell opportunity maybe um you know as you cross that bridge

Um, it is, uh, it is a interesting opportunity for us for off-sell and cross-sell, uh, but it is not super straightforward in all honesty, because, um, you know, that, that client that got, you know, not propelled IQ, uh, was presented something different. And that's what they agreed and that's what they liked. And, you know, maybe their circumstances mandated that, you know, that's the approach that they want to take with us. Um, and, and because of that, to a large extent, you know, we look at them case by case, but we're not actively trying to migrate all of them to ProfileIQ. And instead we're kind of looking at, well, the new businesses that we're onboarding, that is the best opportunity for us to increasingly put all of our sales resources on pitching and selling ProfileIQ. But there's definitely some opportunities in the future.

I understand. And then a related question, maybe more broadly across all offerings. Do you expect more growth this year to come from new logos, new business? Or do you see a big opportunity to expand within your existing customer base? Which one do you think is larger and maybe more achievable?

Yeah, for sure. So, I mean, I think it's going to be mostly from new logos. And as I mentioned before, that was, I would say, one of the shortcomings of the old model that we had, that regardless of how much access you have with the platform and so forth, you would still continue to pay the same. And the packages, a lot of times, had a lot of difficulties that left it, you know, in a difficult situation for optimal opportunity, because a lot of things were already crammed into it anyway. Propel IT packages, you know, we already see, as I mentioned, those cases where, you know, some clients that are starting at $300 a month are already going to a place where they have to pay $2,000 a month based on usage and the number of leads and so forth. There's going to be some element of paying as a percentage of the payment that they're collecting through WishBond and so forth. So I think, you know, I don't know to what extent we're going to see that in 2023, but in the future, we're gonna get in a place where a larger and larger percentage of the revenue growth will come as a function of the existing client doing well and bringing more leads and, you know, continuing with the business or off-selling and using some of the extra services that we have. One example of that, that we've already rolled out and has been great also is, you know, Propel IQ, for example, If someone is using it and they say, well, I want to actually advertise and bring more businesses in, then Braxy would be something that they would pay additional fees for that. And that has been a very easy upsell opportunity for us as well.

That's all helpful, Khalil Ali. Congrats on the launch of the new platform. And thanks for taking my questions this morning.

Thank you very much, Christian. Thanks.

Thank you. So there are no further questions. I'll now pass the call back to Alitesh Kander for closing remarks.

Yeah, thank you very much. Once again, I want to thank everyone for joining our call today. Thank you, the analysts, for your questions. Everyone, please stay safe and healthy. We look forward to providing more updates this year. Thank you very much.