Wishpond Technologies Ltd.

Thank you for joining us today and welcome to Wishpond's 2023 Fiscal Third Quarter Financial Results Conference Call. My name is Jordan Bones, Director of Marketing, and joining me on the call are Ali Tachkinder, Chairman, Founder, and CEO of Wishpond, and David Pace, the company's CFO. This call is being recorded. There will be a question and answer session at the end of the call, which will be limited to analysts only. I trust that everyone has received a copy of our financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from CDAR.com. 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 those laws. Please refer to today's press release and in our management discussion and analysis for our discussion on risk and uncertainties. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans related to the future. We do not 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 is required by law. We use terms such as adjusted EBITDA, annualized revenue run rate, and monthly recurring revenue on this conference call, which are non-IFRS and non-GAAP measures. For more information on how we define these terms, please refer to the definition set out in our management discussion and analysis. And with that said, let me turn the call over to Mr. Ali Tajkinder, Chairman and CEO.

Thank you very much, Jordan. Good day, everyone. We hope that you are all keeping safe and healthy. We truly appreciate everyone for joining us today. We are pleased with our third quarter results in which Wishpond achieved positive adjusted EBITDA for the fifth quarter in a row, demonstrating our commitment to profitable growth. Wishpond's cost optimization efforts over the past year have contributed to the company's continued positive adjusted EBITDA profile. The first nine months have been a period of transition in which we launched Propel IQ, the company's next generation marketing platform. And then we trained and restructured our sales team to sell this new bundled product offering. This has resulted in slower growth in 2023. However, we are now experiencing an acceleration of Propel IQ sales and have thus resumed the expansion of our sales team. Some key data points for Propel IQ include, over the past two months, we averaged over 3% month over month growth in MRR, driven by increased sales of Propel IQ. Propel IQ now accounts for approximately 15% of our total revenue in the quarter. Thus far, we have observed the bundled Propel IQ offering have significantly less churn than selling single products, resulting a significantly higher lifetime value per customer. Propel IQ is also a higher margin product with lifetime value or LTV gross margin expected to be over 80%. We have now started adding approximately five new salespeople per month who are entirely dedicated to growing Propel IQ sales. In addition, Wishpond is leading the innovation and development of AI powered marketing tools. We are garnering the significant interest for our AI product, including AI website builder, Braxi AI ad manager, sales email AI, and soon to be launched sales closer AI. We maintain a positive outlook for the remainder of 2023 and look forward to 2024 with renewed optimism based on our continued sales growth and improving cash flows. We expect our accelerated hiring of new sales resources will drive growth in 2024. Our outlook continues to look promising with increasing sales, positive adjusted EBITDA, and improving profit margins. We are experiencing increasing demand for our products as we continue transitioning to the bundled Propel IQ product offering and leveraging our suite of AI marketing solutions. I will provide additional details on our outlook later, but first I would like to turn it over to our CFO, David, who will review the financial results for the third quarter.

Thank you, Ali. I'm pleased to report that we had strong Q3 results for the first three months ended September 30th, 2023. Our third quarter 2023 results are as follows. Wishpond achieved quarterly revenues of $5.8 million during Q3 2023 compared to revenue of $5.5 million in Q3 2022. Revenue growth was primarily driven by stronger product demand and increase in sales and marketing activities and new product introductions. Growth in Q3 was lower than expected due to the need to train our sales executives and transition them to sell the new bundle Propel IQ platform. Revenue growth was also negatively impacted in Q3 by a decline in sales to our largest customer, which happens to be a client who uses legacy non-Propel IQ products. As in Q2, we saw a decline in revenue with this customer who contributed 13% of WishBond's total revenue in the year-ago quarter, which was approximately 6% of Q3 2023 revenue. This customer is experiencing some challenges in their own business, which has resulted in a lower revenue for WishBond. However, on the positive side, we have a diverse customer base with no customer concentrations. Wishpond achieved gross profit of $3.8 million in Q3 2023 compared to $3.6 million during Q3 2022, representing an increase of 5% driven by an increase in overall revenue. Wishpond's gross margin percentage in Q3 2023 was 66% compared to 66% in Q3 2022. The gross margins are within the company's historical range of 65% to 70%. The United States remains the largest and fastest growing market, generating 77% of our total revenue in the quarter, with approximately 11% and 12% of revenue generated from Canada and rest of the world, respectively. During Q3 2023, Wishpond achieved positive adjusted EBITDA of $319,000 compared to positive adjusted EBITDA of $593,000 in Q3 2022. We continue to have a clean and healthy balance sheet. As at September 30th, 2023, Wishpond had $910,000 cash and short-term investments and no debt. The reduction in cash balances during the quarter was caused in part by payment of an earn out for prior acquisition, capitalized R&D costs related to investment in the business and changes in working capital. Wishpond generated $225,000 in positive cash flow from operations in Q3 2023, compared to cash outflow of $208,000 in Q3 2022. The reduction in the company's cash balance in Q3 2023 was due in part by earn out payments of $101,000 in the quarter. The company's remaining earn-out obligation of $202,000 will be paid in this fourth quarter. Wishpond has an ungrown $6 million secured revolving operating line of credit with National Bank of Canada's Technology and Investment and Innovation Banking Group. I will now provide an update on our cost reduction strategies. Wishpond has ongoing cost optimization efforts and operational efficiency improvements. By leveraging the power of our AI products, we are seamlessly automating various processes and lead generating activities. As a result of these efforts, we have been able to minimize any increases in headcount since the beginning of the year, which is starting to have a positive impact, enabling us to absorb the cost of bringing on new salespeople while increasing our adjusted EBITDA each quarter. We are committed to maximizing resource allocation and driving sustained growth. As a result of these cost reduction efforts are declining earn out payments, increasing revenue and improving cashflow from operating activities. We feel confident that Wishpond can continue to fund the growth of its sales team and new product launches from cashflow from operations. From time to time, we may dip into a line of credit for short-term working capital requirements. The cash flow generated by the company will continue to be reinvested in the business and allocated in a disciplined manner to accelerate organic growth, future acquisitions, or share repurchases. Before I turn the call over to Ali, I would like to provide an update on the NCIB. On June 27, 2023, the company announced that its notice of intention to make a normal course issue a bid, or NCIB, was accepted by the exchange. During the nine months ended September 30, 2023, the company purchased 32,000 common shares under the NCIB, for an aggregate consideration of $18,528. We made no purchases under the NCIB in Q3 2023. The Board of Directors of Wishbond believes that the recent market prices of the company's common shares do not properly reflect the underlying value of such shares, and that the purchase of the shares would be a desirable use of corporate funds in the best interest of the company and its shareholders. Hence, we will be optimistic in purchasing shares under the NCIB program as we generate more cash flow from operations while balancing the company's other cash requirements. I would like to point out that over the past several months, members of our senior management team and board of directors have purchased shares on the market. In summary, Wishpond remains in a solid financial position with growing revenue and profitability. Based on the company's outlook and growth momentum, we expect to continue delivering strong results for the rest of 2023 and into 2024. This concludes my financial update, and I will turn the call back over to Ali.