Wishpond Technologies Ltd.

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 disclosure of risks and uncertainties. Provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating 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, let me turn the call over to Mr. Ali Tachkander, Chairman and CEO.

Thank you, Pavitra. Good day, everyone. We truly appreciate everyone for joining us today. On today's call, I will first provide some general commentary and details on the progress of our latest product, Sales Closer AI, followed by our CFO, Adrian Lim, who will provide a financial summary of our quarterly results and details on our cost optimization efforts. I will then come back and provide an outlook on our business. Wishbone is an all-in-one marketing platform that is built for helping small businesses with their customer acquisition and increasing sales. We currently serve more than 4,000 businesses around the world, and it's been great to work with them and give them the sales and marketing tools they need to attract customers and grow their businesses. On today's call, I want to focus on two major accomplishments in 2024. First, our commitment to improving profitability and cash flow for the business. And secondly, the launch of Sales Closer AI, our virtual sales agent earlier this year. Let's start with improving profitability. Despite lower revenue levels in Q3 2024, we continue to have a strong focus on profitability and cash flow, having achieved nine consecutive quarters of positive adjusted EBITDA, along with consistent improvements in cash flow from operations. This reflects the success of our disciplined approach to cost management and operational efficiency. I'm pleased to announce that in the third quarter, WishBond achieved adjusted EBITDA of $571,000, an improvement of 79% compared to Q3 of last year. In the third quarter, we also reported an adjusted EBITDA margin exceeding 11%, marking our most profitable quarter since 2022. Achieving double digit EBITDA margins is rare for a software company of our size, and I'm incredibly proud of our team for this accomplishment. Our commitment to cost reduction and operational efficiency has led to significant gains in both profitability and cash flow. During the third quarter, Wishbone also generated $178,000 in positive cash flow from operations. This consistent improvement in adjusted EBITDA and cash flow has been a top priority in 2024, and we remain steadfast in this commitment as we look towards 2025. We continue to have a positive outlook for 2025 with increasing EBITDA and a return to revenue growth driven by Propel IQ sales and a ramp up of sales closer revenue. Moving on to our second major accomplishment this year, the launch of Sales Closer AI. Sales Closer is a platform that features a virtual AI agent that can engage in conversations and presentations in real time through various meeting applications. It can deliver personalized round-the-clock sales calls and product demos 24-7 to engage leads, close deals, and deliver insights in 10 different languages. Sales Closer can also be adapted for use across a diverse range of industries, such as software, SaaS, professional services, education, financial services, travel and hospitality, insurance, and more. Once a customer provides Wishbone with a relevant knowledge base for upload, the custom trained AI agent can conduct sales presentations tailored to that business and can manage the entire sales process from discovery to close with minimal need for human intervention. As a result, the platform allows businesses to automate tasks, scale their sales team and sell globally, all with detailed analytics to enable continuous improvement. Sales Closer is a powerful tool that can transcend the historical constraints that have long plagued businesses, particularly in the realm of sales. These encompass language barriers and time zone disparities when dealing with international clients, as well as the scarcity of time or sales personnel available to commit to sales meetings. Previously, these challenges often led to missed opportunities or slower growth. However, Sales Closer empowers businesses to automate their sales processes, effectively overcoming these obstacles and enabling seamless sales interactions. To accelerate adoption, we are actively exploring new sales outreach initiatives and strategic channel partnerships. An example is our recently announced partnership with RoomView Technologies, a real estate marketing platform with over 220,000 real estate agents who will leverage Sales Closer to enhance lead follow-up and increase sales conversions. This collaboration addresses a significant gap in the real estate industry, where many leads are left unanswered due to limited follow-up capabilities. RoomView's platform generates over 500,000 leads annually, yet only a small fraction of these leads receive timely attention, resulting in missed sales opportunities. By integrating Sales Closer's advanced AI-driven follow-up technology, RoomView's agents can efficiently engage with leads, schedule in-person meetings, and drive successful real estate transactions. Together, Sales Closer and RoomView are poised to transform lead management practices in the real estate sector, helping agents achieve higher conversion rates while improving the overall client experience. Such channel partnerships enable us to access larger customer bases more efficiently and effectively. Furthermore, we're planning a broader rollout of Sales Closer by adding more partnerships, which we expect will play a role in driving Wishbone's growth in 2025. In addition, our monthly recurring revenue or MRR for sales closer is also higher than our current Propel IQ product offering. We are pricing sales closer between $250 a month to $2,000 a month for 16 to 200 hours of virtual agent usage. As customers use more hours, the MRR also increases. We believe sales closer will have a positive impact on our overall MRR in the future. While it's still early days, the feedback from our initial customers on Sales Closer has been incredibly encouraging. Sales Closer has proven its ability to adapt to different customer applications. We have successfully identified certain ideal customer profiles where Sales Closer was making significant impacts in customer businesses. These customers were utilizing Sales Closer in four main ways, sales outreach, lead qualification, customer service, and live virtual product demos. customers using the platform for sales outreach were able to make outbound sales calls to their potential leads. This is exciting for businesses using Sales Closer as they will be able to reduce their hiring costs as well as guarantee consistent quality in all of their outbound sales outreach. Sales Closer can also be used effectively for lead qualification. Typically, businesses will have sales or business development representatives that are hired to qualify potential leads and ensure they are the right fit before handing them off to a salesperson. Our customers were able to successfully use Sales Closer as a virtual sales development rep to conduct the qualifying round of questions, saving them time and energy. Customer service is another avenue where Sales Closer has proven to be highly effective. By providing the AI agent with a necessary knowledge base, customers can have Sales Closer accept inbound calls and answer questions that normally would be answered by a front desk or sales associate. Finally, Sales Closer has the power to conduct live presentations and demos over Zoom video calls. This has been successful for our software and SaaS customers in particular, as those customers have product demos that are normally carried out by salesperson or account executive. We are targeting specific vertical markets where sales closer can make the most impact, such as auto dealerships software companies insurance companies equipment sales and more. Our pipeline is starting to grow and we're seeing that sales closer has broader appeal beyond the SMB market. In addition to selling Sales Closer to external customers, we see an enormous opportunity to use Sales Closer for our own WishBond sales. I'm pleased to announce that WishBond has begun utilizing Sales Closer for its own purposes in lead generation and sales development, and we have actually closed some sales of Propel IQ using virtual Sales Closer agent and no human interaction. Traditionally, Wishbone has relied on increasing the number of salespeople to drive growth, which has come with its own challenges. Hiring, training, and retaining sales staff is time-consuming, expensive, and inefficient. Furthermore, employee turnover and the need for continuous training also creates additional burdens. This salesperson-dependent growth model posed significant headwinds, slowing down our ability to scale efficiently. Utilizing Sales Closer AI for our own internal sales processes removes these barriers, allowing us to scale without the need for a large sales team. Internally, we have begun accelerating the adoption of Sales Closer by utilizing it for Wishbone's own product demos and sales. Sales Closer is now able to handle most of the sales development legwork, freeing up our salespeople to focus on finalizing and closing deals. Overall, this has enabled our sales team to significantly increase their sales capacity, reducing the need for additional hires. Not only is this more cost effective, as the AI virtual agent is far cheaper than hiring more staff, but it also aids in improving gross margins and enhances our operational efficiency. This implementation has allowed us to streamline operations and reduce headcount. Looking ahead, our vision is to transform the traditional account executive function, enabling businesses to leverage AI-driven sales capabilities. I'm pleased to report that after several months of vigorous testing and improving our virtual AI agent, we are now starting to ramp up our Sales Closer demos. I would like to now share with you some of the success we are seeing with using Sales Closer. Our sales closer agent is now performing at a level that is significantly better than a human counterpart agent. In a recent study, we found that 69% of the people who started the demo with sales closer virtual agent got to the end of the demo and moved on to the next stage of the sales process. This 69% is compared to 38% of people who started the product demo with a human counterpart agent. In the third quarter, we made substantial progress in our internal utilization of Sales Closer. It has actively been conducting sales calls and product demos, and this month we are expecting to do approximately 200 product demo calls using our Sales Closer virtual agent. We have already been using Sales Closer for handling overflow of bookings from live human agents and for geographic areas that we don't currently serve very well. Moving forward, we expect to continue increasing the involvement of our Sales Closer AI virtual agent doing outbound product demos in the early stages of the sales process and having human agents doing the latter portion of the sales process. We expect that utilizing Sales Closer for our own sales will reduce hiring costs and increase efficiencies in the sales process. In the future, we expect to hire additional human account executives to support the increased sales closer activity. Currently, less than 16% of all our product demos are being conducted by a sales closer virtual agent compared to last quarter, where we had less than 8% of the total product demos. Our cost optimization program was initiated at the beginning of 2024 and included reduction in our account executive headcount. From the graph on the left, you can see how the number of sales account executives has decreased over the past year. In Q3 2024, we had 28 sales account executives, which is a significant decline compared to 42 sales account executives we had in Q4 2023. In the short term, this reduction in our account executive team has had a negative impact on our revenue. We have experienced revenue decline in the past two quarters as a result of these cutbacks in our sales team. However, we have also achieved a steady increase in revenue per account executive over the past year, highlighting enhanced productivity and efficiency gains across our sales teams. You can see from the graph on the right that the revenue per account executive headcount has increased from 144,000 in Q4 2023 to 181,000 per account executive in Q3 2024. Going forward, we are not expecting to make any more cuts to our sales team. Our plan is, in fact, to increase the number of account executives in conjunction with increasing usage in sales closures. Our sales closer and salesperson hybrid sales model is highly scalable, allowing Wishbone to increase sales capacity without the proportional increase in costs associated with expanding a human sales team. We believe the combination of highly effective sales personnel with sales closer is the best solution to achieving profitable growth going forward. We expect the increase in our sales team paired with the acceleration of Sales Closer to be a critical growth driver for our business in 2025. We believe Sales Closer has the potential to be a transformative tool for our internal sales team. Sales Closer will allow us to expand our hours of sales coverage and the geographic regions where we can sell Wishbone products. In addition, Sales Closer can handle product demos in the early stages of the sales process, as mentioned earlier. I will provide additional insights into our forward-looking outlook later in the call. For now, I'd like to turn it over to our CFO, Adrian, who will review the financial results for the year. Adrian?

Thank you, Ali, and thank you to everyone for joining us on the call this morning. I am pleased to report that we achieved strong results in revenue, gross profit, and adjusted EBITDA for the quarter ended September 30, 2024. Wishpond achieved quarterly revenue of $5.1 million during Q3 2024 compared to $5.8 million in Q3 2023. The decline in email delivery services revenues from our previously large legacy customer has negatively impacted our revenue throughout this year. This customer's revenues continued to decline in the third quarter and only accounted for $49,000 in revenue for Q3 2024, a decline of $289,000 compared to Q3 of last year. Going forward, we are expecting to report improving results without this legacy customer, who has negatively impacted our growth and our profitability. We do not expect any meaningful revenues from this legacy customer in 2025. The decrease in quarterly revenues also reflects a strategic focus on prioritizing more profitable revenues, a reduction in the sales team size as part of cost optimization efforts, and a transition to utilizing Sales Closer for executing outbound demos. As Ali mentioned earlier, the reduction in our account executive team down to a headcount of 28 had a negative impact on revenue in the third quarter as well. Wishpond achieved gross profit of $3.5 million in Q3 2024 compared to $3.8 million in Q3 2023. Wishpond achieved gross margin percentage of 69% during Q3 2024 compared to 66% in Q3 2023. The improvement in Wishpond's gross margins can partially be attributed to the decline in less profitable revenue from the legacy customer, allowing Wishpond to achieve its most profitable quarter in two years. Furthermore, we expect our gross margins to continue trending upwards as adoption of our Propel IQ platform grows and we begin ramping up sales of our new sales closer solution. During Q3 2024, WishPond achieved adjusted EBITDA of $571,000 compared to $319,000 in Q3 2023, an increase of 79%. We are very pleased to report such a significant increase in profitability despite the decline in total revenue. For the nine months ended September 30, 2024, cash flow from operations was positive $232,000 compared to a negative outflow of cash flow from operations of $208,000 for the nine months ended September 30, 2023. Taking a look at the company's balance sheet, as of September 30, 2024, Wishpond had $1.1 million in cash and debt of $1.3 million from our bank credit facility compared to cash of $1.4 million and debt of $995,000 at December 31, 2023. Wishpond continues to have plenty of capacity on its $6 million credit facility with NBC. Wishpond has solid monthly recurring revenue and a very good visibility of revenue and cash flow. The company is able to continue growing comfortably from its cash flow from operations without the need for any additional equity or debt capital raises. As of the end of the third quarter on September 30, 2024, the company had 58,317,920 fully diluted securities issued and outstanding. As announced last quarter, we have successfully completed all outstanding earn-out payments related to our previous acquisitions. With no more obligations to pay these earn-outs, we anticipate an improvement in our cash balance going forward as the funds that were previously allocated to these payments will now be redirected towards funding our core business operations and growth initiatives. This shift in cash flow management will enhance our liquidity and provide greater flexibility in executing our strategic objectives. Looking at the graph, you'll see the amount of cash that was being dispersed for earn-out considerations over the past year. As you can see, there has been a steady decrease in these payments, reflecting the gradual fulfillment of our earn-out obligations. The graph shows that we achieved $0 in earn-out payments in Q2, a trend that continued in Q3 and led to improving cash flows in the quarter. We remain confident in our ability to support Wishpond's future growth through operational cash flow and our existing credit facility. Any future financings would be strategically allocated toward acquisition opportunities, furthering our growth initiatives. This concludes my financial update, and I'll turn the call back over to Ali.

Thank you, Adrian. I would now like to provide a quick overview of our overall AI initiatives. 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. 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. Wishbone has launched several AI tools for marketing and sales, including the AI Website Builder, Sales Email AI, Braxi's AI Platform, and our most recent launch, Sales Closer AI. These components are a part of our expanding AI product suite, which represents our vision of a comprehensive suite of end-to-end marketing, sales, and customer service-related AI-powered marketing tools tailored for our Propel IQ platform. These tools are being crafted to provide an automated end-to-end marketing pathway, seamlessly guiding users from lead generation to sales closure and thereafter to customer support and service. By leveraging our automated tools, clients can efficiently scale and nurture their businesses in a cost-effective manner, thereby fostering growth and success. These are just some of the exciting developments that are taking place at Wishmont. 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 pleased to introduce our company's key goals for 2025. One, accelerate organic revenue growth and increase monthly recurring revenue. Two, achieve positive adjusted EBITDA in each quarter in 2025. Three, increase utilization of sales closer and internal sales processes to drive sales of Wishbone's own products. Four, accelerate revenue growth of sales closer to external customers. And five, improve margins, decrease churn, and increase long-term customer value. We are also feeling optimistic about the economic conditions heading into 2025. As a reminder, the majority of our revenue is generated in the United States. Entering 2024, there was a great deal of uncertainty in the macroeconomic environment as inflation was high, interest rates were high, and we were also entering an election year for the United States. Looking ahead into the next year, the fundamentals of the U.S. economy look stable. There is record low unemployment. Inflation is now under control. Interest rates are down. And it is generally a more accommodative environment, which should benefit Wishbone's product sales to small, medium-sized businesses. So we feel very positive as we head into 2025. Our strategy for 2025 is to achieve profitable growth. EBITDA generation and improving cash flows were the key focus areas in 2024, which we delivered. Now we can once again start to focus on revenue growth. With a lower cost structure and increasing pipeline of sales closure and Propel IQ sales, we are optimistic about Wishbone's performance for 2025. Wishbone expects to achieve record revenue in 2025. Our aim is to return to our historic growth rates of upwards of 30% annual in 2025. This is driven by ramping up revenue of Sales Closer and continued growth of Propel IQ bundle product offerings. Wishbone continues to experience a strong demand for its products. I'm especially optimistic about the potential of Sales Closer AI, which truly has the opportunity to be a game changer for our customers. We expect to further improve adjusted EBITDA and cash flows in 2025. In line with the company's focus on profitable growth, WishBond will continue to scrutinize all discretionary expenditures across the organization with the intent of optimizing operations and achieving cost-saving synergies. WishBond remains focused on disciplined cash flow management while we continue to invest in AI-driven growth initiatives. We are expecting higher gross margins and lower customer churn rates in 2025. The elimination of a legacy customer over the past year has had a negative impact on our revenue, but has resulted in improving our profit margins. In addition, Propel IQ is having a positive impact on our gross margins as customers 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 Propel IQ is expected to result in greater customer satisfaction, less churn, and consequently higher customer retention. Wishbone can continue to fund its growth 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, primarily in new product introductions and ramping up sales and marketing. Overall, we remain focused on optimizing our cost structure, enhancing profitability, driving cash flow generation and returning to sustainable growth. In closing, I want to reiterate that Wishbone 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. It is rare to find a software company of our size that is generating double-digit EBITDA margins. Wishbone truly is a unique, high-growth, profitable company, and we remain committed to delivering profitable growth in the future. Wishbone today is in an enviable position with a growing customer base, increasing revenue, broadened product offerings, and positive EBITDA. I'm proud of what we have accomplished, and I'm excited with our future plans. Finally, I want to thank the entire team at Wishbone 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 needs. Also, I'd like to thank you all for joining us on this call today. We look forward to providing an update next quarter. I will now hand it back to Pavitar for questions.

We will now open the call to questions. Just a reminder that questions will be limited to analysts only. Analysts, please use the raise hand function on Zoom. First question is from Gabriel Young of Beacon Securities. Please go ahead.

Good afternoon and thanks for taking my questions. Ali, can you just talk a little bit more about what prompted your team to consider cutting the sales team by effectively half over the past year? Was it an issue around the personnel or did you see more of an issue around the demand environment that prompted the cuts?

uh no definitely not because of demand in fact demand has been great and uh we've had to actually bring down some of the demand generation that we've done because there's oftentimes not enough account executives to handle them the reason has been mostly because we wanted to you know in in most environments and especially in sales you always have the 80 20 where 20 of the team brings 80 of the sales And when you're in an environment where cash flow really matters and that's a priority and we want to make sure that our cash balance does not go down and in fact actually goes up and we're on solid ground, making sure that every salesperson on their own right is profitable became doubly important. So You know, that meant that with a lot of the sales team members, we worked closely with them to help them improve performance. And some of the team members didn't pass the threshold that we needed in terms of a high functioning sales team. The other part of it also is that we were in an environment where we didn't want to add more account executives to replenish the natural churn of employees that might happen because our focus was on optimizing costs and having positive cash flow. And making sure that we increasingly focus on sales closer as a means of delivering these sales results. Now, heading into the next year, though, you can expect to see an increase in the headcount again. So, you know, it wasn't we didn't mean to. consistently and indefinitely shrink the size of the sales team as a permanent effort. So a lot of our growth plan next year does rely on still increasing the headcount, but in a way that we will have to make sure every person on the team on their own right is doing the best they can. And in fact, within the organization, the new hires would be focused on the higher value products That might be purchase IQ, propel IQ, might be sales of sales closer itself. That is a high value ticket item. And initially at least use sales closer more for the smaller package sizes and expand from there.

Gotcha. So if I sort of look at what you did this quarter, I think 5.1 million and compare it to last quarter, 5.8 or so, even after factoring the legacy customer, the decline of revenues there quarter over quarter of about 100 grand, it was still a pretty meaningful drop in terms of revenues. Would you attribute that primarily to the reduction in sales reps quarter over quarter or was... Was there some higher than expected churn or was it just you deciding to cut some unprofitable revenues from the portfolio?

It's been a bit of all of those, right? Definitely we're not thrilled with the decline in top-line revenue, right? We would have wanted to have the improvement in cash while maintaining the top-line revenue. But there have been certain revenue segments, for example, that larger customer, that were not profitable revenue. right so that that that definitely is part of it and and we've had certain you know headwinds that we've dealt with as well and you can also obviously expect from quarter to quarter you know it's never a straight line i think what we've shown over the past 10 years is a disciplined approach where every year we've grown every year for the past 10 years the company has grown Unfortunately, this year might be an exception to that, but not an exception that we want to see going forward. And really now the focus is, okay, we are in a solid place cash flow wise. That doesn't have to keep us up at night. We can now focus on reaccelerating growth and hit it out of the park.

Maybe just one last thing. Of the $5 million in quarterly revenues, would you say there's any percentage of that that you would consider still unprofitable that you likely won't renew?

No, I don't think we're substantially going to cut any more portions of the revenue. I think a lot of that already is done. Yeah, I don't think so. Adrian, do you have a different take on that?

No, I think that's right. I think we've already kind of established what we feel is a profitable basis now. We've largely replaced the legacy customer drops, and that was one of the major contributions to that increase in profitability. So now we can renew our focus in 2025 to increase the revenues in top line again.

Gotcha. Thanks for the feedback.

No problem. Thank you for the questions.

Next question is from Daniel Rosenberg of Paradigm Capital. Please go ahead.

Hi, good afternoon, Ali and Adrian. My first question was around the sales closer. You provided some interesting data around just effectiveness. I was curious, what do you think is driving the better than expected performance on a sales closer compared to a human counterpart. Uh, when you mentioned, I think it was 69%, uh, looking to move forward with the process or, or seeing the demo through. Um, yeah, if you could just elaborate on the factors there.

Yeah, I think that's a very good question and it's an important one, right? Imagine if you could replicate your absolute best team member. That's what we're seeing with AI. So the 69% that we talked about is not what we started with. Just like a new hire, At first, maybe it was 5%, 10% of the calls going to that successful next step. But we worked on that the same way you work with a new hire. Oh, these parts of the presentation are too long-winded. This is not exciting enough. We should handle some of these questions better. But the major difference with AI is that once you make those tweaks, it sticks and it stays. And you can make sure that it is the best practices that are consistently call after call happening.

Okay, good to hear. And then do you think those kinds of metrics hold as you start to experiment with external customers? What are the kind of early signs you're seeing as you work through your first partnership?

It's a good question. I think it really depends on the use case, the size of the deal, the need of the client. Some of the things that we've seen that are, we saw it in some of our studies, but I also, yesterday I saw some other company do a study that had similar results as well, is generally people's willingness to talk to AI is far greater than a lot of people anticipated in the past. And what we actually see now is we're seeing more people want to interact with our AI agent than human agent. And around 80%, so that number actually, as we gather more data, is more than we at first observed. Around 80% either prefer AI or are okay with it. And at first it didn't make sense to me why more people should prefer to talk to AI than human. Then we started, you know, looking at some of those results, seeing that the reason is, you know, someone says, oh, do you have a salesperson that speaks French? And we don't, let's say. Or, hey, you know, I'm not available at the times that you're proposing for the demo. Can you make this other time work? AI is okay with that. The human is not okay with that. So a lot of those elements are things that I think are quite transferable from us to our customers uses as well. That, you know, for example, we're talking to a large retail chain and they were saying majority of their inquiries actually come after hours where they usually don't even have sales personnel to handle calls or inquiries. Right. So that means that, yes, we do expect for them to also have these results. But at the same time, it is also dependent on the quality of the agent that is set up. Again, similar to a hire, and if you give it the right knowledge base, and if you train it the right way, and all of those things. And that's why we're now getting more hands-on with our customers to make sure that they set up the agent the right way.

Okay, great. And then it sounds like it's complimentary to the current sales team in terms of qualifying leads and starting that dialogue with a potential customer. So I'm wondering how you think about that. the actual account executives. In the past, we put out some targets around hiring. And so now that it looks like you're kind of trying to position back to the growth stage, do you have any targets for number of account execs, how that scales?

Yeah, we do, but I'm reluctant to share that because some of that, you know, obviously you have to kind of tweak it as time goes on as well. Our hiring of account executives, the plan is still aggressive for next year. It's significant, the increase. So we're going to actually go doubly on this. We're going to go, if there was no sales closer AI agent, it would still be aggressive growth target just by the hiring of the AEs that we're doing. But now with sales closer, that means that we can put even more fuel in the fire. And the other part that I see is not just selling Propel IQ. One of the things that I've been really blown away by, and it happens more and more, is by the interest our clients are showing for sales closer, for using it for their businesses. you know, getting on some sales calls where for 40 minutes you're on a call and 35 minutes of it, the prospect is singing the praises and saying, have this, have transformative. This is for their business. I've never seen that anywhere. And, and getting a lot of inbound inquiries on our website without any outbound reach or anything like that. And the marketing of sales calls, we're just starting it. So that means that

a lot of the hires will actually will be for sales closer too for for selling it for enterprise environments or larger deals and and so forth as well okay uh thanks for that and when you think about the growth for next year um i'm curious and i know it's early days of sales closer but your thoughts on what portion of that will come from this product versus the core um or uh propel iq business uh that was previously your core uh yeah yeah um majority of the account executive hires for next year are earmarked for sales closer for selling sales closer

That's just because we're seeing larger deal sizes. We're seeing better margins. We're seeing more value and all of that. So I think for 2025, sales closer will become meaningful portion of our revenue. What exactly that portion is, I would be hesitant to share.

Okay. Interesting stuff. Thanks for all the color. I'll pass the line. No problem. Thank you very much.

The next question is from Gianluca Tucci of Haywood Securities. Please go ahead.

Hi, guys. Good afternoon. Ali, I think you mentioned that you expect, and I think Dan touched on this in his question as well, but I think you mentioned that you expect a record year in terms of revenue growth next year and historical growth rates could come back. I'm just wondering if that could be unpacked a bit for us, given all the moving parts here. Like, do you envision a smooth line to get there or is it going to be more back halfway at this point?

um i'll share some of um i'll share some of my uh brief thoughts but i'd like adrian to chime in on this um generally nothing ends up being smooth uh linear line that's that's that's the reality of life right uh but uh our hiring plan is more front end heavy because we know that it takes some time for the new hires to become productive. And if you hire them later in the year, you might not really see the effect of them in the revenue. Right. So I think, you know, what we expect is, you know, to start seeing the efforts barefoot starting in Q1 of next year, but there will be an acceleration of it as more of these new hires become productive throughout the year. But Adrian, please share your thoughts.

Yeah, I think Ali pretty much covered it there. It's not going to be a perfect straight line from this point through, but we do expect that now that we've established that profitable basis that we can reinvest. But that reinvestment, as Ali said, takes time. So I think starting in Q1 2025 and forward, we're expecting to see some growth on the top line and then going back to our historical growth rates of about 30% year over year by the time that we get to the end of the year of next year.

Okay, that's good color. I appreciate it, guys. And then secondly, on seasonality, are we to expect any change on the company's historical seasonality because of the increased use of AI in your business and the increasing use of AI in your business?

Adrian, go ahead.

I think it's early to tell whether or not that's going to have an impact on seasonality. But so far in the past year, the seasonality impact has decreased a bit. But historically, Q1 and Q2 have been a little bit of a slower quarter. So we expect probably some of that to still trickle through in 2025. So that's kind of our initial view of that. Okay. Thanks, guys. I'll pass the line.

Next question is from Firuz Yaqiev of Canaccord Genuity. Please go ahead.

Good afternoon. Thank you for taking my question. So I just wanted to ask about the margins. So this quarter's 11% EBITDA margin is certainly impressive. Do you see it as sustainable or do you expect it to inch down a little bit given the expectation of additional headcount growth?

So in terms of EBITDA margin or profit margins?

EBITDA margins.

EBITDA margins. Yeah, I think we definitely want to keep our EBITDA margins around this level. But I don't think it's reasonable to expect every quarter is going to be 11% because as you rightly mentioned, We are investing in more headcount as well. But the models we've done have shown that it's not going to be a load that is going to be too hard to tolerate for us. So, you know, profitable growth. And I think, you know, let's think about it another way, which is even though margin is one thing, cash flow is another thing, right? we want to have positive cash flow every quarter. So that kind of dictates certain, I just said even the margins, probably around 7%, 8%, something like that, to achieve positive cash every quarter. Adrian, tell me if I'm misspeaking here.

Yeah, that's right. And I think something that I would just add on to that is there is some seasonality as well in terms of expenses. So things like audit fee expenses, they typically tend to hit the P&L in Q4 through Q1 and Q2. So that will have some impact in terms of adjusted EBITDA margin. But what we do expect is a plan of hitting positive adjusted EBITDA for the continued quarters in 2025.

Thank you for the additional color. Also, we noticed the revenue decline was primarily in the US subsegment and it also corresponded to higher margin revenue mix. So just looking at the two markets, US and Canada, are you seeing better pricing on the Canadian side versus the US? And have you historically been able to generate better margins in Canada?

No, I think it's been more or less, as far as I've seen, more or less has been the same. If anything, I think U.S. affordability has been stronger than the Canadian counterparts. No, I think it's more or less the same.

And something I'll just add to that too, is in our legacy customer, that was a large contribution to us based revenues regionally. And so with that decline year over year, I think it was about 290,000 that did have an impact on that mix between us, Canada and the rest of the world too.

Right. I see. Thank you very much.

I'll pass the line. Thank you very much for the questions.

No further questions from the analysts. We now pass the call back to Ali Tachkander for closing remarks.

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

Thank you.