Wishpond Technologies Ltd.

thank you everyone for joining us today and welcome to wishpond's 2023 fiscal first quarter financial results conference call my name is jordan bones director of marketing and joining me on the call today are ali tajkinder chairman founder and ceo of wishpond and david pace the company's cfo this call is being recorded we will have a q a 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 Please note, portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of these laws. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors, many of which are outside of Wishpond's control. That may cause the actual results, performance, or achievements to differ materially, from the anticipated results performance or achievements implied by such forward-looking statements these factors are further outlined in today's press release and in our management discussion and 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 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 such as gross profit, gross margin, adjusted EBITDA, annualized revenue run rate, and monthly recurring revenue on this conference call, which are non-IFRS and non-JAAP measures. For more information on how we define these terms, please refer to the definitions set out in our management discussion and analysis. And with that, let me turn the call over to Mr. Ali Tajkandar, Chairman and CEO.

Thank you, Jordan. Good day, everyone. We hope that you are all keeping safe and healthy. We truly appreciate everyone for joining us today. We are very pleased with our first quarter results, which proved to be another strong quarter. Bushman achieved revenues of $5.6 million in Q1 2023, representing a 38% increase over Q1 2022. Driven by the company's continued focus on organic growth and increase in sales activity, and new product in introduction. I'm especially excited with the launch of our new website builder, which is powered by generative artificial intelligence, AI technologies, and was released in Q1. The use of AI technologies is rapidly changing the digital marketing landscape and Wishbone is at the forefront of utilizing these new innovations to provide small businesses with new advantages against larger competitors. We are actively working on developing additional AI powered marketing tools, which we intend to launch in the coming quarters. Additionally, as part of our continued cost reduction initiatives launched in 2022, we continue to monitor our costs and with the intent to optimizing operations and achieving cost saving synergies. As a result, the company was able to achieve positive adjusted EBITDA in Q1 2023. of $209,000, an increase of 147% compared to the same period last year. Our commitment to having a focused mindset and realizing cost efficiency while still achieving growth is what has permitted us to consistently generate positive adjusted EBITDA. Our outlook continues to look promising for 2023, with increasing sales, positive adjusted EBITDA, and improving margins. We continue to experience increasing demand for our products and have not witnessed any slowing down or negative impact due to external macroeconomic conditions. We expect to continue growing rapidly as our sales pipeline remains robust, and we continue transitioning to bundled product offerings to our customers. I will provide additional details on our output 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 first quarter. David.

Thank you, Ali. I'm pleased to report that we had very strong Q1 results for the three months ended March 31, 2023. Our first quarter 2023 results are as follows. Wishpond achieved quarterly revenue of $5.6 million during Q1 2023 compared to revenue of $4.1 million generated during Q1 2022, an increase of 38%. Revenue growth was primarily driven by organic growth resulting from stronger product demand, an increase in sales and marketing activities, and new product introductions. Wishpond's small decline in revenue of 5% from Q4 2022 to Q1 2023 was not unexpected and is due to seasonality in our business. Last year, we experienced a significant decline in revenue from Q4 2021 to Q1 2022. In comparison, the seasonal impact was much less in Q1 this year due to the acquisition of our loops last year and the launch of Propel IQ. Wishpond achieved gross profit of $3.7 million in Q1 2023 compared to $2.5 million during Q1 2022, representing an increase of 45%. This was driven by an increase in overall revenue. Wishpond's gross margin percentage in Q1 2023 was 66% compared to 62% in Q1 2022. The gross margins were within the company's historical range of 65 to 70%. The United States remains our largest and fastest growing market, generating 75% of our total revenue in the quarter, with approximately 10% and 15% of revenue generated from Canada and the rest of the world, respectively. During Q1 2023, Wishpond achieved positive adjusted EBITDA of $209,000 compared to an adjusted EBITDA loss of $441,000 in Q1 2022. The improvement is primarily driven by higher revenue and improvement in gross margins in our cost optimization efforts over the past year. We continue to have a clean and healthy balance sheet. As of March 31, 2023, Wishpond had $1.9 million in cash and short-term investments, and the company has no debt. The reduction in cash balances was caused in part by payment of earnouts for businesses acquired in 2022, investments in the business, and changes in working capital. Wishpond has a $6 million secure revolving operating line of credit facility agreement with National Bank of Canada's Technology and Innovation Banking Group, which remains unrun as of today. In summary, Wishpond remains in an extremely strong financial position with a clean balance sheet and growing profitability. Based on the company's performance in Q1 and growth momentum, we are expecting to continue delivering strong results in the rest of 2023. 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. On February 28, 2023, The company announced that Gartner Digital Markets, one of the world's leading platforms for business software reviews and research, presented Wishbone with five industry awards, recognizing Wishbone's popularity and performance in the marketing technology space. Wishbone received awards and recognitions from GetApp, Capterra, and SoftwareAdvice, which are operated by Gartner Digital Markets. On March 9, 2023, the company announced the launch of Propel IQ, the company's next-generation marketing technology platform. Propel IQ is the most extensive solution offered by Wishpond to date, combining Wishpond's award-winning software with its recent acquisitions to create one connected platform. In addition to Wishpond's lead generation, email marketing, automation, and marketing technology solutions, Propel IQ includes SMS marketing from Winback, referral marketing from Viral Loops, and sales engagement software from PersistIQ, all integrated together into one platform. With Propel IQ, businesses can manage the complete customer lifecycle on one platform, eliminating the need to pay for multiple marketing and sales tools. On March 30th, 2023, the company announced the launch of its new website builder powered by generative AI technologies. with a website builder small to medium-sized businesses and launch a website within minutes using AI technologies, positioning Wishpond to disrupt the website building process. Wishpond's AI-powered website builder is now available to customers using Wishpond's next-generation ProfileIQ. Given Wishpond's 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. Wishbond has demonstrated disciplined capital allocation strategy, having successfully completed six acquisitions since the company's public listing in December 2020. Our acquisition strategy has been to do token acquisitions of marketing technology companies that offer complementary product solutions to small, medium-sized businesses. Our acquisition targets have all been companies that can benefit from our sales and marketing expertise, and their products and solutions offer great cross-selling opportunities to our core WishBond customers. Our acquisition strategy has worked to date, as this has added tremendous functionality to our product offering, as well as complemented the company's organic growth very nicely. Further to that, on May 3rd, 2023, The company announced that it completed the acquisition of certain assets of essential studio manager, ESM. ESM is a provider of business management software, including invoicing and customer relationship management solutions for small businesses in the services industry. ESM is expected to be integrated with Wishpond's Propel IQ platform this year, and we will provide updates in the coming quarters. Wishpond customers using Propel IQ will then be able to access contract signing, invoicing, and access other CRM functionalities from one single platform. ESM brings over 150 customers who are currently being onboarded to Wishbone family, and we are currently in the integration process for ESM operations. We expect to integrate ESM technology integration with Wishbone's Propel IQ platform in the second half of 2023, and we'll provide further updates in the coming quarters. Management is very optimistic about the company's growth prospects, and I'm pleased to share Wishmont's key goals for 2023. Number one, increase monthly recurring revenue through both organic and inorganic means. Two, scale the size of the sales team to help achieve the company's organic growth profile. Three, remain adjusted EBITDA profitable by balancing growth with increased positive cash flow 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 margins, and increase customer retention and long-term customer value. Wishbone's outlook for Q1 2023 and heading into 2023 remains strong and positive. Wishmont's performance is positive across all of its product lines and for the entire company as a whole. We believe that Wishmont is well positioned for continued growth and profitability. Wishmont expects to achieve record revenue and 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 its sales team and new product introductions. Wishmont continues to experience strong performance across all of our businesses with robust demand for our product. We expect organic growth this year to be in line with the historic range of 30 to 40% per year. We continue to sign up more new clients every day. We are getting very positive feedback from customers on our Propel IQ platform. However, with the training of new sales staff and transitioning sales personnel to the bundled Propel IQ platform, we expect some softness in Q2 and greater revenue growth to occur in the second half of the year. The transition of sales staff to selling the new PropellerIQ platform takes time as sales staff familiarizes themselves with the product and value proposition. We expect to be adjusted EBITDA positive in each quarter going forward. In line with the company's 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 energy. With the launch of Propel IQ, we're expecting higher customer retention rates going forward. Buyers are increasingly signing up for annual 12 month terms. Propel IQ improves the stickiness of our platform and aids in retaining customers for longer periods of time. The bundled pricing of PropellerIQ is expected to result in greater customer satisfaction, less churn, and consequently higher long-term value for customer. Wishpond will continue to invest in research and development efforts to launch new AI-based marketing tools and products. The use of AI technology is rapidly changing the digital marketing landscape, and Wishpond is at the forefront of utilizing these new innovations to provide SMBs with new advantages against larger competitors. We've already launched two AI-based products with Braxy and our website builder, and we're actively working on developing additional AI-powered marketing tools for our Propel IQ platform. We're 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. 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. However, they still need to acquire new customers to keep their business afloat. And so businesses find value in which one's all-in-one consolidated software platform, which costs a fraction of all the individual products it replaces. Furthermore, businesses keeping a close eye on their costs and looking to cut costs, find WishBond as a more cost-effective alternative to an internal marketing resource. WishBond is an effective and affordable 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 flows 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 Wishpond is an elite software company with profitable growth. Technology companies are known to burn lots of cash for many years before becoming cash propositions. It is rare to find a software company of our size that is generating positive cash flow from operations is rapidly growing with 30 40 organic growth and maintain growth margins of over 65 which one is a unique high high growth profitable company and we remain committed to delivering profitable growth in the future which one today is in an 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 Wish Fund whose hard work continues to elevate the company to a higher level. We want to thank our customers who rely on us to help them with their digital marketing needs. Also, I'd like to thank all of you for joining us on this call today. We look forward to providing an update next quarter. And with that, I will now hand it back to Jordan for questions.

With that, we will now open the call to questions. Just a reminder that questions will be limited to analysts only. The first question is from Jason Zanderberg of PI Financial. Let's see if we can... Okay, please go ahead, Mr. Zanderberg. Perfect.

Can you hear me okay?

Yes.

All right. First of all, great quarter. Just wanted to just talk about your cash position. So, you know, I see that cash dropped slightly in Q1 and that we explained that that was due to, you know, some earnouts. What I wanted to ask is how confident are you that you can generate cash the remainder of the year? Knowing full well that you do have a $6 million secured LLC to back you up, I just wanted to get your outlook in terms of cash generation for the remainder of the year.

Yeah, for sure. Good question, Jason. So the cash drop, as you mentioned, for a number of reasons. One that I want to add a little bit more color on. is deferred revenue, for example, at the end of Q4 was higher because we had some larger customers who prepaid for usage of the platform early. And in Q1, we didn't have that, even though they were continuing with the services, but they weren't prepaying. So some of that deferred revenue you see coming down in cash collection wasn't as much in Q1. And the second element of it is air and outs that we paid in cash, knowing that where we believe the value of the stock is, you know, didn't make a ton of sense for us to use stock for the air and outs, even though we have that at our discretion. Going forward, Hamed Nademiya, What we see right now is that our cash free free cash flow generation capability is quite strong. Hamed Nademiya, We are seeing that we are in a balanced state where I don't see you know in the in the rest of the year or needing to tap into the line of credit or continuing operations and I do that. We are balanced, and we're going to have continued increased cash flow put on the line. So right now, we don't have a concern with that. But obviously, we have the line of credit available as well. We obviously don't want to use that for operations, but use that for acquisitions or other things that might come our way. David, anything you want to add?

Ali, I think you covered it off. Primarily, the cash decline is due to working capital differences, deferred revenue in this case. A little more polar in terms of the earn out. The good news is we've pretty much cleared all the earn outs. There's literally only one quarterly installment left. that we intend to pay, that we have to pay in July. So after that, we're free and clear, at least with the current six acquisitions that we've made. So again, just in terms of looking into the future, we don't expect earnouts to be a use of cash.

Fantastic. If I could ask another question, just more housekeeping. I just wanted to get a number on sales execs at the end of the quarter. how many did you hire during Q1? That would be great.

I don't have an exact number, but I'll answer it in a way that hopefully gets to the heart of your question. So we haven't really aggressively increase the size of the sales team because we've been in this transition from selling point solutions to Propel IQ bundled offering that we can see is becoming very successful. You know, when it's rolled out, retention is much better. But happiness is great. We have been in that transition period and our effort has been mostly on training and making sure that that transition happens successfully. it would have been quite difficult to increase the size of the sales team at the same time that that transition is happening. And I expect by end of Q2 for that to be completed, and then we accelerate adding more people to the sales team in the remainder of the year.

Okay, great. And if I could just ask one more question, in terms of the viral loops contribution in Q1, just trying to delineate the acquired revenue growth versus the organic revenue growth.

that's possible uh david uh when was viral loops acquisition completed so the viral loops acquisition was completed april 1 of last year so we you know we didn't have the benefit of that revenue in q1 of last year right but then generally speaking we haven't really been breaking out the revenue of each of these divisions and more so jason looking forward you know since we've actually integrated all of these in a propel iq

you know more so it's going to be a bundled sale so breaking it you know i guess especially going forward breaking it out won't make a lot of sense i i think i think what we do see though what we continue to see is that that organic good profile of 30 to 40 percent is still holding um so i think if you look back at viral loops what their revenue was when we acquired them and subtract that, or, you know, you can make certain adjustments to that. You'll see that close to 30% was silver organic growth. Sure.

Okay. Thanks very much. Okay. The next question is from Gabriel Lung from Beacon Securities. Please go ahead with your question.

Gabriel, you're on mute.

Sorry about that. Hey guys, how are you doing? Hi. I just had some questions around the, I guess the retraining of sales staff around Propel. Ali, how is this being done right now? Is it being done sort of batches within the sales team or are they all doing it all at once and hopefully everybody's done by the end of Q2? No, it has been cohorts.

And so, you know, Most of the training is already done. That's not really where the problem is or where the challenge is. It's that after you finish the training, then you also have to do the ongoing coaching and make sure that people are successful. And a lot of people are now becoming successful, but it's still what you usually, what we're seeing and what you usually see is that as you're transitioning, you dip first a little bit before people's, you know,

closing and all of those things get back to normal levels so so we're we're getting there i think that's why i do expect by end of june for us to be there i'm just curious um you mentioned this being done in sort of cohorts what sort of results or what have you sort of seen within you know i guess the first cohort that's uh that's done their training what sort of results have you seen on the back of that and You know, we've talked about Propel potentially, you know, resulting in sort of longer term contracts. I know it's obviously early, but any signs of success from that perspective?

Oh, absolutely. So for sure, we're seeing the contracts that are longer. And for sure, we're seeing that the earlier account executives who've nailed it are quite happy, actually, with the product offering. It is really a no brainer. in terms of the value proposition and comparing it with any competitors in terms of the value, in terms of the cost, in terms of everything that is built into it. And their closing rate also is, those who are paying a little bit earlier, their closing rate and average deal size are comparable to what we had with the individual point solutions or what we call reform 1.0. So we know that it works quite well. And then on the account management side, the other thing that is quite exciting is that It takes us less effort, less services to help or less people help to manage these accounts. So it is higher margin and better retention and longer term contracts as well. It really gives the best of all worlds.

Any sort of feedback from from potential customers in terms of pushback on the platform itself? Is there anything holding customers back from actually deploying sort of the full suite? Is it just really just maybe a cost thing?

No, I mean, nothing more than usual that, you know, obviously when you're talking to different people, they might have different reasons for going or not going ahead with the platform. But for most part, their reaction has been very positive. And, you know, the challenge has been whether it is portrayed the right way. And that goes back to training. So people who are properly trained and now up to par, their success rate is great. And people really, they get it. They look at it like, wow, this is amazing. It takes care of everything I need. I've never seen anything quite like this anywhere else.

Gotcha. I just want to clarify two points you made earlier, Ali. So you said because of the retraining and transition, you might see a dip. In Q2, do you mean a sequential dip or do you mean a dip in the usual 30% organic growth?

So what we frankly expect is that Q2 numbers would be an increase over the current Q1 numbers. So no, I'm not talking about a dip over what we have. I think more than likely it will be close to or similar to or in the vicinity of our Q4 numbers, which was 5.9 million. So no, it's going to still go back to the growth, but I guess it's not going to be at the growth level that we ourselves have set out for ourselves. And I think it's, you know, the way I would look at it is that we're revving up, right? Like you have to kind of sometimes, you know, rev up the engine and then you can accelerate. And that's what's going to happen in the second half of the year.

Gotcha. And just one last thing, is your plan still to, take your sales rep count to about 70 to 80 by year end. So there's obviously a big push sort of in that Q3, Q4 in terms of hiring. That's correct. Okay, gotcha. Awesome. Thanks for the feedback and congrats on the progress. Thank you. Great questions.

And the next question comes from Nihal Opadjia. Go ahead with your question, Nihal.

Hey, Ali. Hey, guys. Congratulations. Hi, Nihal. Congrats on a strong quarter here. You know, with another quarter gone, has the onboarding of customers from legacy products to the Propel IQ platform gone as expected? And has there been any surprises in terms of resistance from the customers to transfer over?

I think, you know, some of the customers were transitioning over. Some of the customers, we might actually let them continue in the package that they signed up for, because you have to remember that, you know, they had, certain pain points and needs and they might have come in with those expectations and it's not always straightforward to say you signed up for this here's another alternative can you migrate we do that sometimes we don't you know necessarily do that all the time and we grandfather them i think it's more important it has been more important for us to offer to new clients than migrating existing clients and and uh with um risk challenges that might come with that.

Gotcha. No, perfect. And then can you talk about, um, with your plan on increasing, um, you know, hiring with the, uh, sales team, how long does it take from hiring an account executive until they're fully ramped up?

The training usually takes two to three weeks. Um, and then after that they're on the floor and start selling in the first, uh, Kaveh Khoshnood, A couple of weeks after that they should have one or two one wins under their belt and really by the end of the three month term. Kaveh Khoshnood, Promotion period, we have fairly good idea of how they're performing. Kaveh Khoshnood, And they should start hitting their normal quotas that that we expect from establishes. Kaveh Khoshnood, Perfect.

And then maybe if we can talk about the product roadmap here in terms of other AI solutions, can you talk about what we can expect being launched in the coming quarters?

Yeah, there's several things. I mean, one that we mentioned before is AI powered email responder. that you go into your inbox, especially as a salesperson, and you have a whole bunch of emails, it actually helps you respond to them. And you don't have to spend so much time on every single one. It learns about your business and everything you've done. That's one that is quite interesting. We might do things related to AI-powered live chat. We're experimenting with it right now. There are also opportunities for us to help with generating the content of newsletters that go out with AI, as well as generating the content of app and emails as part of Persons IQ platform. And a lot of these functionalities, first, we do them internally for our own purposes and gaining efficiencies. And when we see that they're working really well, then we productize them. So we're doing a lot of those things already for our team, or we're rolling them out for our team already.

Perfect. And maybe just two more from my end. With Propel IQ, has there been a shift regarding the size of the customer you're now able to track, given that it is such a comprehensive platform?

Not yet, because we're still going for the same ICP, you know, ideal customer profile. And, you know, that has been the determining factor in terms of the size of it. But you're right, I think, I think, ultimately, this is a platform that skills quite well, so we talked about small medium sized businesses, because they have specific needs they're under there is so many of them, and we have a profitable way of onboarding them. But really, ultimately, nothing is stopping us from selling to larger customers either. And for sure, that will be part of what we're going to explore. And what's really interesting about this and our pricing with Propel IQ is that the pricing and our revenue generation also scales with that, right? So if it starts with $1,000 upfront fee and $300 a month, and now you're a larger business that has, instead of 1,000 leads in the database on Wishbone, you have 50,000, you might end up paying us 25 hundred dollars a month because of that lead overage right now, you start sending invoices to your customers and people start paying for those invoices. Now, a percentage of that payment is through the platform. Percentage of that payment is going to come to us as well. So increasingly, we're going to work on usage based on success based pricing as well with win back the same as well. One of the things that we're experimenting with right now is well, let's collect the percentage of the revenue that is recovered, like shopping cart abandonment, all of those things. If someone actually, you know, ends up making $10,000 extra revenue through the use of Winback, well, we'd like to make $1,000 of that. And so those are some of the things that we're working through and makes it more interesting to serve the mid-level of the market as well.

No, that's fantastic. That's great, Khalil. I appreciate that. And then one last one from my end. Can you talk about your M&A pipeline? What type of robotic gaps are you trying to fill through M&A? And then maybe some of the characteristics beyond the economics of the business that you're looking for? Because, you know, it's kind of clear with your ESM talking that there might be other things than just scale that you're looking for.

Yeah, so we're becoming more active and looking at acquisition opportunities. I think there's a few things. in terms of acquisitions that we're looking for. Initially, at least right now, because our own cash balance is lower than it was before, it's going to be more smaller token acquisitions similar to ESM. more cash rich businesses that we can then take on debt and it makes sense to take on debt to make those acquisitions um the other element would be you know i think the market conditions we don't know how long it's going to stay depressed like right now but at some point i think when there's an inflection and the price of the stock makes sense, then we would like to, you know, do a raise and do more aggressive acquisitions as well. So that, you know, the path from here, you know, let's say, I don't know, 23 revenue run, 23 million revenue run rate or whatever, 200 million becomes a shorter one and more, uh, uh, a faster accelerated growth. So that's, that's kind of the way we're looking at acquisition, uh, strategy and, um, And as we add more cash from operations, which we're very actively working on improving free cash flow generation, then we can actually use internally generated cash flow for acquisitions as well.

Perfect. Thanks, Ali. Thanks for answering my questions. I'll pass it on. Thank you, Nihal.

Thanks. The next question is from Neil Bakshi of Canaccord.

Great. Good afternoon, Ali and David. Congratulations on the results. Thank you, Neil. The first question, just to clarify, the earnouts that are left to be paid, David, was it about $600,000 or so then that'd be paid out in July and past?

So specifically in Q1, we paid $371,000. Right. And if I'm asking about this current quarter, we actually did an installment earn out to Barloops. That was about $330,000.

so if you're totaling the two yeah it adds up to seven hundred thousand okay um great and then uh just a question with respect to um i guess the the esm acquisition um you know nice to see you know it's kind of small tuck in that that fits in well with the the product portfolio you're looking to build with propel iq just wondering if you provide more kind of detail on I guess the rationale of prioritizing ESM versus other deals in the pipeline was a kind of a pain point you saw internally from talking to customers. Just maybe walk us through a little bit more about why ESM now.

Yeah, the reason ESM was interesting was that we were looking for this type of functionality. So, you know, back office functionality, invoicing, payment links, that kind of thing. And the reason it is important is that, you know, we see that already with ESM, their churn is really low because it's the kind of thing that when it's, you know, embedded into your business, you know, that's your back office. You don't want to go anywhere. So that was important. But also very important is that one of the points I made earlier, I think increasingly into the future, our revenue is not going to be just from the subscriptions, but also usage-based, access-based feeds. And ESM, with sending more invoices or percentage of payments received through those invoices, contract signing, all of those things really contributes to it. And also it is the local service based kind of businesses. It's not a category of businesses that we have a huge penetration with, and this actually makes it stronger and possible for us to gain more customers in that vertical. So all of those things, and we were able to, you know, find an opportunity that just price wise made sense, technology made sense, you know, it just checked all the boxes.

Great. I appreciate that. And I guess just one more question before I pass the line, just with respect to kind of the organic growth outlook in this kind of macro environment, I understand it hasn't been affected. So just to clarify, you're seeing potential deal cycles in Propel IQ to this point that's actually been just as robust or quick as the current or the legacy platform. I guess I'm just wondering, Is that alongside your expectations or a bit ahead of expectations when you first launched Propel IQ back late last year?

I think more or less consistent with our expectations. We knew that is a very strong offering and something that is quite compelling to people. But when it comes to change management and training and all of that, and humans involved uh yeah i think uh it always takes longer than you expect uh so that part of it i would say we we wish it would have been even faster uh but we planned for you know what we're seeing right now uh this kind of period and they'll transition

Right. One more question just came up. I'm thinking about the expectation for record cash flows for this year, I assume on an annual basis. If you look back in the last couple of years, some pretty strong cash flow generation on an annual basis. But let's say a million was what you generated last year. Is it fair to expect then on a full year basis that you know, CFO should exceed around a million or so, or how should we look at it compared to, I guess, 2020 was a real standout year for Wishbond?

I'll say a couple of things and then David actually, I think would be better positioned to answer that question. But what I would say is that, you know, one thing we didn't really touch on much, we touched on a little bit in the slides, was cost savings. Last, you know, Q2, we did a lot of effort, you know, a million dollars of cost savings annually, And right now, over the past month and a half and even continue to now, we're continuing to do a lot of those efforts as well without loss of functionality, optimizations, tightening things up, consolidations, renegotiating contracts, all of those things. So immediately, we're seeing our cash flow generation capability has improved quite a bit. And I don't think some of what we're going to see, we have to wait for Q3 or Q4. I don't think so. I think we're going to see some of the results of it in Q2. But David, please correct me if I'm wrong or add any other color that you might want to.

Sure, Ali. No, you know, absolutely correct. So we have focused a little bit more on cost savings, Neil, more recently, like April and May. In addition to that, I mean, there's this two levers, right? I mean, there's the revenue lever that will help you generate more cash flow. And then there's a cost lever that also if you save on your costs, you're going to generate more cash flow. So Ali kind of touched on the, you know, the cost saving element of that. And on the revenue line, I mean, if you go from 5.6 million and we grow from there, if, you know, just very simple look, if you take a look at our quarterly growth, In 2022, right, from Q1 all the way to Q4, and you look at the cash flow as if we start spinning off, you know, each quarter as the revenue grew, our margins also increased and our bottom line improved. And we expect that to happen this year as well. So we expect Q3 and Q4 to start building and all the foundation be built in Q1 and Q2 with Propel IQ. And then you're going to see more cash flow from operations spinning up from revenue growth in Q3 and Q4.

We definitely currently expect cash flow generation this year to be record numbers, and adjusted EBIT also to be record numbers. So I don't see a reason to doubt that currently. Great.

Okay, great. Thank you. I'll pass the line.

Thank you, Neil.

And our last question is from Christian Zagrow of 8 Capital.

Hi, good afternoon, Ali and David. Congrats on a stable Q1 to start the year. The first question I'll ask on is on Propel IQ. Do you go to market with any point solutions anymore or do you go to new customers with the full Propel IQ platform and it's kind of an a la carte? That's the way I've come to think of. new customer conversations. And then the follow-on there is, is it almost entirely monthly or annual contracts, like getting them onto a subscription program right away? It sounds like the offering and pricing model is a little dynamic, which is good. But maybe just unpack what's commonly sold and what customers subscribe to.

Yeah, I mean, majority of what we're increasingly selling is the bundled... Excuse me. bundled offering for Propel IQ. But still, we do have some point solutions that are being sold based on customer needs or based on inbound interest that might come, right? If someone is finding, let's say, wind back to shop for marketplace and all they want is just wind back, we'll sell them that. But it's becoming all of those point solutions are becoming smaller part of our sales efforts. Samim Ghamamiya, And so yeah and generally we are pushing for annual terms and that's actually for propel IQ is a requirement for not doing anything you know below the 12 month terms and that's working well now with the Ai powered website builder. Now we have an opportunity to also use that as a premium offering to get people in the door and playing with the platform. And then when they're more serious and they want more functionality, which is Propel IQ, then we would use that as a lead generation channel for us and get them on a demo and sell the rest of the platform to them.

That's great. That's a lot of helpful context, Ali. Similar question, the customer support, training, implementation, any hands-on work? I guess the legacy product would have had a fully managed solution, but how do you price out or sell your services now? Is there tiered, you know, we'll get you off the ground all the way to unlimited support? Like, how do you price and sell that to customers?

So the base package is... You know that thousand dollar upfront fee is for the onboarding and that's where we're most heavily involved. With this rebuilding their website on wishbone or installing things or copy of the content or imagery all of that. that's where we're really involved and then after that when we pass it on to them, we have a lot of you know we walk. Hamed Nademiya, People through the platform and how to use it and we give them a lot of resources like training videos and courses on wishbone academy. Hamed Nademiya, And all of those things and then, if they want, they can always come to us, whether that onboarding specialist or someone from our support team to help them. Hamed Nademiya, So that's you know our involvement. ongoing is quite limited from that point of view. But what we do still do in the first few months of someone being on Propel IQ is still touch base with them at least on a monthly basis, kind of as a marketing consultation, Okay, how are you using the platform? Do you have any questions? These are some opportunities I identified for you and then pass that on to them. So that's one part of it. The other element of it is that if someone wants to use a service on the marketplace and say, all right, this is great, but I still want you guys to actually help me with coming up with outbound sales methodology for my business. Can you do it all? And for me not to do it, then yes, we have these what we call flex plans that generally would be for three month terms or six month terms. So we don't want it for the annual term. We actually, you know, we want that as a bit of a project to help them and then pass it on to them again. That, you know, could be as low as an additional $300 a month or as high as an additional $1,500 a month, depending on what their needs are. And we can help them through that period and You know, but, but ultimately they are in the driver's seat and they can decide to what level they want those services and, you know, and, and, you know, we're there to support them.

Thanks for that. No problem. One, one stop shop, which is the original value prop. It's all there. Thanks very much for taking my questions.

Thank you, Christian.

There are no further questions. So I'll pass the call back to Ali Tajkandar for closing remarks.

Oh, it's good. Thank you very much. Okay, so, in closing, I want to thank everyone once again for joining our call. Thank you to the analyst for your insightful questions, and for your continued coverage and support. Everyone please stay safe and healthy. We look forward to providing more updates this year. Thank you.