Zoomd Technologies Ltd.

Good day and welcome to the Zoom Technologies fourth quarter and full year 2020 update conference call. I would like to turn the conference over to Ben Shanzian with Lithum Partners. Please go ahead. Thank you for joining us today for Zoom Technologies fourth quarter and full year 2020 update conference call. With us on the call representing the company today is Amit Bohansky, Zoom's founder and chairman. At the conclusion of today's prepared remarks, Amit will answer some questions that were sent to us by investors and other questions we think are relevant to investors as well. Before we begin with prepared remarks, just a couple of comments. Today's call will contain forward-looking statements that are based on current assumptions and subjects to risk and uncertainties that could cause actual results to differ materially from those projected. and the company undertakes no obligation to update these statements except as required by law. Information about these risks and uncertainties are included in the company's filings, as well as periodic filings with regulators in Canada and the United States, which you can find on CDAR and Zoom's website. Today's discussion will include adjusted financial measures, which are non-IFRS measures. These should be considered as supplement to, and not a substitute for IFRS financial measures. Finally, today's event is being recorded and will be available for replay through the webcast information provided on the press release. With that said, let me turn the call over to Amit Bahansky, founder and chairman of Zoom. Amit, please proceed.

Thank you, Ben, and good morning to all of you. We are excited to speak with you today for our fourth quarter and full year 2020 conference call. Some highlights. As a general reminder, especially to the first-time listener, Zoom offers a digital user acquisition advertising management platform that enables companies to unparalleled control over the management of online and mobile ad campaigns. We have two main unique selling propositions. First is our proprietary search data engine that provides intelligent guidelines for way more targeted and highly personalized advertising campaigns. We do this via collaboration with world's top publishers around the world who use our on-site search engines to analyze user queries and provide invaluable user intent analytics that improves our advertising relevance to the promoted products and services by orders of magnitude versus other solutions. Our second unique selling proposition is the unification of all relevant ad technologies into a single platform. We act as a layer on top of the advertising and user acquisition ecosystem integrated with more than 600 media sources into one unified dashboard that offers advertisers unparalleled control for managing all new digital customer acquisition campaigns using a single platform. By unifying all these media sources onto one system, Zoom saves advertisers significant resources that would otherwise be spent consolidating data sources and managing multiple, separate campaign systems. Zoom enables maximizing data collection and data insights while dramatically minimizing resources spent on the exercise. Our superior data and platform concept has translated to strong ROI and KPI results for our clients, achieving superior conversation rates that translates into significantly higher monetization. In simple words, we enable customers to acquire more customers and make more money per advertiser dollar spent than using other alternatives from our potential competitors. Today, I'm going to provide an overview of our achievements and challenges for the fourth quarter and the full year of 2020 and provide you an update on the opportunities that I believe we will drive the growth in Zoom going forward. Despite the obvious challenges of 2020 related to the COVID-19 pandemic, I am glad to say that Zoom is a stronger company today than it was a year ago. The hard work of our entire team has positioned Zoom well for revenue and profitability growth in 2021. We are happy to report that the pandemic effect on Zoom Financial was really minimal, resulting with only a 6% decline in year-on-year revenues. While already in the first quarter of 2021, we have seen a massive market recovery in our business, and we are able to confidently project a 30% to 40% increase in our revenues for 2021. In January 2021, we announced the launch of our self-served SaaS campaign management platform. This platform, using very little human intervention, will unlock our capability and capacity to attract and service more customers. As a service-based company, we expect to enjoy stronger growth margins, as the real estate for the ads will no longer be part of the cost of goods sold. We believe the industry has been waiting for a platform like this, and the COVID has only accelerated this need. In February 2021, we announced the acquisition of Performance Revenues, a leading international mobile marketing and influencer company. We are excited about the great set of clients that Performance Revenues has, including private and public traded companies from all around the world, including names such as Sony and Platica. We believe that this acquisition represents a tremendous cross-selling opportunity for Zoom, especially in Japan, when we currently do not do much business. This acquisition is expected to have a direct positive revenue growth impact, on our financials. All this, the SaaS platform launch and our aggressive M&A strategy are strong growth drivers that provide a basis for our 30% to 40% growth projection for 2021. We were happy to see in the fourth quarter that we have achieved 33 growth margins, the highest margin in the last two years that validated our expectation for market recovery and got us closer to an EBITDA break-even. I want to thank you. I want to thank to all our employees for their hard work and their dedication, as well as to our investors who have supported us. With that said, I will answer some of our investor questions and some more questions that may be of interest to our investors.

Thank you, Amit. Can you elaborate more about Zoom's advantage over the competition?

Zoom combines a solution that is combined from two pieces. We have one piece that is dedicated for publishers, which are content providers, and we have one piece that is dedicated to the ecosystem of the advertisers. Having those two legs, one at the publishers and one of the advertisers, allows us to have a better advantage in the accuracy of the budget planning. At the publishers, we are using an on-site search, a patented technology that was written and invented by Zoom, helping us to understand the intent of the audiences at those publishers. With that said, this data, help us to better target and do a better media buying, and using the second leg to take this data and to be much more accurate in the budget planning using that knowledge of the intent. Our advertisers platform is connected to many sources that allows us to better understand which are the relevant audience for the particular customers that we are serving.

Why is the ROI for Zoom customers so high?

The ROI for our customer is high because the combination of both advertisers and publisher system are synchronically working, and they are allowing us to better govern and better position the budget planning in a way that it will be more accurate. We don't do an A-B test trying to understand where is the right audience. We have better machine learning and other algorithms that take the intent information from the publishers, allowing us to better target the audiences. And by doing that, saving money in understanding where is the right source to place the budget plan for media buying. By doing that, we save money and the ROI goes up.

Great. That's helpful. Let's talk about COVID-19. Which customer verticals were most hurt, and how did that impact your business?

COVID-19 was indeed a surprise to all markets, especially our market in the field of sports betting and sports gambling got hurt. As you know, there were no sports events. as well as other industries that demanded outdoor or entertainment versus the fact that there were other industries that went up dramatically like e-commerce, like insurtech, like fintech. Those type of industries got actually a stronger positioning during the COVID and in a way compensated for the pain that the other industry has suffered.

Great. What are some of the signs of market recovery that you're now seeing?

So first, in terms of online and sports betting, we are starting to see an increase. The markets are going back. We are very optimistic that this year will be different soccer and other sports games as well as Olympics that is coming and others as well. From that end, we see that this type of industry is recovering. And then from all our sectors and the increase of budgets by our clients, we can see that the market is starting to come back to its previous position and advertising is going up again.

That's great. 30% to 40% revenue growth, that's your projection for 2021. Where do you see most of that growth coming from?

We see that growth in some of the main sectors like e-commerce and fintech. Many of the remote services are continuous to strive and to grow. Some of those budgets are from increasing budgets from our current clients, and some of those budgets are coming from new clients that we have in our clear pipelines.

Great. In the MD&A, you talked about potential M&As. Can you elaborate what type of companies these are? What are the expected synergies and benefits to the business and the financials as you look at these companies?

Looking at the vision of Zoom as becoming a unified platform for media buying, it has a presence at publishers and advertisers, we do see our organic growth continues as we are projecting. However, we would like to continue to grow also unorganically and wherever we will find a company that has potential collection of customers that we can add immediately that have a complementary solution that we can adjust to our system. And by doing that, increase our offering or the amount of our clients That's a company that we will take a look and consider to acquire. This year, we are looking at potential companies that we might acquire that will add more to our list of prestigious clients as well as to our offering in advertising and publishing.

Great. Thank you. And finally, what do you expect in the market, the ad tech or the market, market tech market here in 2021?

The market is evolving and changing. There is a very big consolidation. There are a lot of privacy issues that are happening with Google, Facebook, and Apple as well. Our system as a system that governs the entire media buying ecosystem that sits as an additional layer on top of all of that is not affected from those changes and actually creates an opportunity for advertisers to have a much more clear view and transparent way to understand where their dollar spend goes to. We believe this positions us with our SaaS solution in a better way and as a better proposition than other alternatives.

Great. Thank you, Amit. And many thanks to everyone for participating on today's call. We look forward to hopefully speaking with you all again shortly.

The conference has now concluded.

Thank you for attending today's presentation.