Zoomd Technologies Ltd.

Good day and welcome to the Zoom Technologies third quarter 2021 update conference call. I'd like to turn the call over to Ben Champsion with Latham Partners. Please go ahead.

Thank you for joining us today for Zoom's third quarter 2021 update conference call. With us on the call representing the company today is Amit Bahansky, 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 subject 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 a 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 in the press release. With that said, let me turn the call over to Amit Bohensky, founder and chairman of Zoom. Amit, please proceed.

Thank you, Ben, and good morning to all of you. Some highlights. Today, I'm going to provide an overview of our achievements for the third quarter of and provide you an update on the opportunities that we believe will drive the growth in Zoom going forward. The hard work of our entire team has positioned Zoom well for revenue and profitability growth in 2021 and beyond. Q3 is the fourth consecutive quarter of growth in both revenue and adjusted EBITDA, achieving a revenue record per quarter of $16 million and a record revenue growth rate of 141% year-over-year. Our strong revenue growth is coming from two fronts, securing new clients and increasing our share of user acquisition budget within our existing clients. I will discuss each of these avenues separately. First, with regard to new clients, over the past year, we have focused on diversifying our client base by securing new customers in sectors such as e-commerce, iGaming, gaming, and fintech. A list of our top clients now include names such as Tony Entertainment, eToro, and more international brands. We have also extended our geographic footprint into well-going geographies such as Latin America and Asia. we have been successfully in providing these new clients increased channels of distribution for their apps, ultimately driving user acquisition. Our user acquisition platform has been integral in enabling these clients to manage their multiply campaigns through a single system, allowing for greater time savings and efficiency with real-time control. Our Macy's data platform which analyzes hundreds of millions daily events, has enabled our customers to grow greatly with limited additional resources, giving the ability to scale immediately by demand. With regards to our existing customers, they are increasing their user acquisition budget with us as they are seeing strong returns on their investment. We are seeing increasing allocation of advertising budgets in our platform and services. This is a testament to our unique technology, which is driving the key concept of our platform, which is multiply media integrations, all user acquisition campaigns under one place, saving precious time and having clear visibility of all media sources. While we are happy with our current pace of growth, we believe that a good opportunity for revenue, margin, additional client audience valuation extension is our self-serve SaaS product. In H1 2021, we announced the soft launch, which is a design partner phase of self-serve SaaS-based campaign management software. During Q3, we successfully finalized the design partner phase, embedding and implementing all important product insights taken into our partner. During the next month, we plan to onboard the first bunch of clients. From that milestone to fully publicity and open product to all. Executing the company's vision of automation and centralization via Salesforce products. These products will unlock our capacity to attract more small and mid-organizations and customers. Before I begin with my remarks regarding the details of our record third quarter, I wanted to take a step back and provide everyone a bit of an overview on our business. Zoom offers a mobile self-user acquisition platform integrated with a majority of global digital media channels to app owners focused on user acquisition to more efficiently manage ad budgets and deliver them paying customers and growing ROI. In addition, we provide a site search engine to publishers which also provide us valuable data. We have two main unique selling propositions. First, is our search data. Not only the quantity of the data that we have, but the quality. Because we also get our data via on-site search queries coming from our publishers, our queries are intensive, but we are not doing much guessing. Our second unique selling proposition is our platform. We act as a layer on the mobile media ecosystem, integrating and unifying hundreds of media sources into one unified place, offering advertisers a user acquisition control center for managing all your customer acquisition campaigns using a single platform. By unifying all these media sources into a single platform, Zoom saves advertisers significant resources that would otherwise be spent operating multiple advertising systems, consolidating data sources, thereby maximizing data collection and data insights while minimizing the resources spent on the operation. Our data platform concept has translated to stronger ROI and KPI results for our clients. And now, I will turn your attention to some highlights for the third quarter. The third quarter was another record quarter for Zoom as we achieved revenue growth of 141% year over year and 43% growth compared to Q2 2021. We are also focusing on the bottom line as we achieved $1.6 million in an improvement in adjusted EBITDA compared to minus $1.9 million adjusted EBITDA in Q3 2020, an improvement of $2.5 million and more than $5 million for the nine-month period ended 30 September 2021, compared to the same period in 2020. We generate $1.7 million in cash closed for operations compared to minus $1 million cash flow in Q3 2020. I want to remind investors that we are a young company, publicly traded for about two years. And in our short life, our technology and products have been positively recognized by the industry. It is our belief that our growth prospects are vast. And with more time and marketing, more companies will come to learn about our value proposition. Now let's speak about financial results. I will review the third quarter of the financial results in detail. Revenue. Revenue in the third quarter increased in 141% year-over-year to $16 million. The increase in revenue is primarily results of onboarding of new clients in recent months, growing existing accounts and the company's expansion into gross geographies such as Latin America and Asia. In addition, deployment of new services and features combined with the integration of our latest acquisition has generated strong revenue growth during the quarter. On our previous calls, we noted that we have being successful attracting new clients in growing sectors as e-commerce, iGaming, gaming, and fintech. Our recent engagement demonstrates that the value and high returns on user acquisition investment that we provide on our clients. While we are enthusiastic about our ability to recruit these clients, our goal is to expand and grow these relationships which are currently And at an infancy level, our new clients are in industries that are experiencing robust growth. During Q3, Apple released iOS 15 with further strict privacy limitations and ad tracking restrictions. We are seeing minimum effect on us as our platform business logic is built in a model where we are indifferent to which integrated media sources we should piece or plus amounts. We aren't tying up to any leading media giant. We are getting a bigger portion out of the budget. Close margins. Close profit margin was 29% compared to 31% for the same period in 2020, reflecting the typical lower margin achieved by starting phases of new client relationships. As for the R&D, research and development expenses for the third quarter were $1.2 million, a 27% decline compared with the same period last year. The decrease in research and development expenses mainly reflects the basic completion and launch of the company's SaaS product that during the quarter we capitalized roughly $0.4 million of R&D expenses. It is our view that capitalizing a portion of the R&D expenses in common industry practice within technology sector. SG&A, selling, general, and administrative expenses for the third quarter were $2.5 million, a 31% increase year over year, reflecting the expenses brought from the performance revenues acquisition, as well as increase in sales department bonuses as part of the significant growth in revenue. EBITDA. Adjusted EBITDA is used as a primary performance measure by the company's management to ensure it has the right structure to support future growth. We define adjusted EBITDA as net loss less than depreciation and amortization and share-based payment. We are pleased to have achieved a positive EBITDA of $1.6 million versus negative $0.9 million in Q3 of 2020. The increase in adjusted EBITDA was primarily attributed to strong revenues. We achieved an increase of $5.2 million for the nine-month end of September 30, 2021, compared to the same period in 2020, and anticipates a continuation of adjusted EBITDA's strong profitability. A full reconciliation of the adjusted EBITDA is available in our MD&A file. Cash flow wrap-up. We have $3.2 million in cash on the balance sheet as of September 30, 2021. In addition, we had trade receivables of $10.7 million versus $4.6 million for the same period last year. Given our expectation to remain adjusted EBITDA profit in 2021, we feel comfortable with the current cash balance. And now for some concluding remarks. We remain excited about our prospects for revenue growth in 2021. steaming from increased budgets from our current clients, bringing on of additional clients, new products, new customers required via our recent acquisition of performance revenue, as well as potential for further M&A activities. We are also happy that we have turned dividend and cash flow positive in 2021. I want to thank to all our employees for their hard work and dedication as well as our investors who have supported us. With that said, I will answer some of our investor questions and some questions that may be of interest to our investors.