Zoomd Technologies Ltd.

for Zoom's third quarter 2024 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 subject to risks 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 now turn the call over to Amit Bohansky, 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 regarding our third quarter of 2024 results. Today, I'm going to provide an overview of our achievements for the third quarter, where I would like to share with you the strong performance we demonstrated. From a big picture standpoint, in the course of the last few years, The company has encountered a challenging economic environment, primarily driven by significant macroeconomic changes. These changes had a profound impact on the global business landscape, particularly within the advertising sector, which is the company's primary domain of operation. In response to these challenges, our management team undertook a series of strategic actions aimed at mitigating the impact of the company's financial health and positioning Zoom for suitable growth. To begin with, we made strategic decisions to seize operations in certain business lines and refocus companies' efforts and own technology on core user acquisition activities. This decision was informed by the naturalization and underperformance of several of companies' product development efforts, as well as shifts in niche markets where companies' search engine solutions for publishing operate. We implemented substantial cost reduction measures across various areas of the company, aiming to streamline operation and improve efficiency. We made strong efforts to diversify the company's customer portfolio, both in terms of operational segments and geographic reach, to build a more resilient and robust business model. I am proud to say that the financial outcomes of these strategic decisions have led to significant improvements in our financial results. Although we discontinued federal operations that are no longer aligned with our vision, we succeeded in increasing revenues by 135% in Q3 of 24 compared to Q3 of 23. Since the implementation of these strategic changes, The company's revenue has been consistently growing each quarter compared to the previous quarter with a 20% increase in Q3 of 24 compared to Q2 of 24. Furthermore, despite the substantial increase in revenues, the company managed to maintain a controlled expense structure with operating expenses as a percentage of revenue at 20%, reflecting a consistent decrease and consistent decrease in operating expenses as a percentage of revenue over the past seven quarters. The increase in revenues combined with the modulated operating costs has led to continued improvement in the company's financial results. In Q3-23, our operating loss was reduced by approximately 90% compared to the previous quarter. In Q4 of 23, the company transitioned from an operating loss to an operating profit. The improvement continued in Q1 24 and Q2 24. In Q3 of 24, the operating profit increased by approximately $1 million, compared to the previous quarter totaling of $3.2 million. These measures contributed to a $3.3 million growth in terms of adjusted EBITDA from $0.6 million in Q3 2023 to $3.9 million in Q3 2024, resulting in a total of over $8 million for the first nine months of the year. Additionally, the company achieved a net profit of $3.2 million in Q3 2021, making the sixth consecutive quarter of net profit growth. In terms of cash flow from operating activities, the company increased the cash generated from operating activities by 2.5 million compared to Q3 23, totaling 2.7 million. Following these points this morning, I would like to discuss three important areas for Zoom. These areas are our customers, the development of our product and service offerings, and last year improvements to address market trends. I want to begin with our customer base. We are focusing on growth sectors such as e-commerce, iGaming, entertainment and transportation, and customer product goods. sectors known for their stable growth patterns and elevated profit margins. We have deepened our activity with current customers as well as expanding to new customers. Consequently, our revenues have experienced substantial growth. I would like now to focus on our product and service offerings. Our competitive advantage lies in our comprehensive 360 degrees approach to digital mobile first performance, all focused on achieving goals of our customers. We provide a diverse array of products and services, all focused on digital and mainly mobile performance. We have the ability to provide our customer a holistic range of products and services for achieving their digital performance KPIs. To that end, the company uses a combination of research, development, and acquisitions to improve its offerings. Our main platform is integrated to hundreds of media sources, allowing us to promote customers' digital assets in multiple channels under one system. combining all data points into one point of view. We use a DSP for programmatic media buying. The DSP is integrated to the biggest mobile media exchanges, which give our customers full range and reach for their mobile and web app performance needs. We optimize the advertisers' resources and maximize their advertising budget and efficiency. There is no dependency on any specific media supplier traffic channel. This not only saves valuable time and resources for the advertisers, but also provides enhanced clarity and consolidated insights. Additionally, our platform and products are designed for a user-friendly operation, eliminating the need for a software development kit SDK implementation. In our perspective, positioned as a crucial layer within the ecosystem, the company stands strongly in the industry. Beyond the walled gardens as Google and Meta and etc., the marketing landscape is very fragmented. Zoom enables advertisers to leverage a wide range and various types of media channels. from social programmatic, OEMs, SDK, network, and more. The KPIs are achieved on all channels together, or as a mix. From our inception, our user acquisition services were exclusively tailored to apps. We have since extended our services to include also traditional web and mobile web traffic as well. Finally, I want to discuss the results of the actions we took. Zoom's Q3 of 24 financials include significant improvements across many financial sectors indicators. The strategic refocusing has not only improved the company's financial standing, but has also facilitated better internal alignment of terms and goals. In conclusion, Despite the headwinds faced in the past years, the decisive actions taken by management have already shown consistent improvement in recent quarter, laying a solid foundation for future growth and stability. The company remains committed to adapting its strategies in response to evolving market conditions and opportunities with a straight path. past focus on delivering value to companies' stakeholders. Financial results. Now I will review the third quarter financial results in detail. Revenue. Revenues for quarter were $16.7 million, reflecting a 135% increase compared to the same period in 2013. Although the company discontinued several operations that no longer aligned with the company's vision, company's revenues have consistently grown each quarter compared to the previous quarter with a 20% increase in Q3-24 compared to Q3 compared to Q2-24. Gross Margins Cost of sales for the third quarter were $10.1 million, reflecting a 133% increase compared to the same period in 2023. The increase corresponds to the increase in revenues. Operating costs. As a result of the significant growth in revenues and profitability, some operating expenses have increased. Despite the substantial growth, the company maintained a controlled expense structure with operating costs as a percentage of revenue at 20%, reflecting a consistent decrease in operating costs as a percentage of revenue over the past seven quarters. Adjusted 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 earning before interest, tax, depreciation, one-time payments, and amortization as adjusted for share-based payments, non-recurring operating expenses, and impairment of intangible assets. Adjusted EBITDA grew significantly from $0.6 million in Q3 2023 to $3.9 million in Q3 2024, resulting in a total of over $8 million in terms of adjusted EBITDA for the nine months ended September 2024. A full reconciliation of adjusted EBITDA is available in our MD&A filing. Cash We have $6.8 million in cash on the balance sheet as of September 30, 2024. Q3 2024 was the fifth consecutive quarter of generated cash from operating activities. We believe that Zoom's recurring revenues, in addition to its existing cash and cash flow from operating activity, will be sufficient to meet the company's working capital requirements and the future plans. Overview. Now, for those who may be unfamiliar with the Zoom story, I would like to provide an overview of our business. Zoom has developed and acquire proprietary technology and targets the needs of various segments of the digital marketing industry. Zoomed offers its services globally through its agent and other business partners all over the globe. As such, the company operates in collaboration with hundreds of publishers and global advertisers. The company aims to consistently provide significant added value to its customers. The company's services and technology stack development roadmap focuses on creating technology solutions that seamlessly integrate with a range of digital media sources. Through this integration, the company aims to consolidate these sources, allowing its customers to achieve optimal value for their investment. The primary focus of this effort is directed towards enhancing user acquisition and retention strategies. tailoring them to the unique requirement of each media source on any screen or platform. Furthermore, the company maintains an ongoing commitment to staying attuned to the market dynamics and changing demands of its customers. The company actively evaluates the inclusion of novel distribution media channels into its platform. This adaptive approach to ensure that the company remains responsive to the evolving needs of the customers, contributing to its reputation for a forward-thinking and customer-centric company. The company is focusing its efforts, which are based on long-term trends within the online advertising industry, in line with its basic strategies of providing customers with digital mobile-focused advertising technology products and services for improving their media buying effectiveness, cost and measurement, and maximizing their user acquisition and retention costs. Enabling customers to manage their acquisition campaign budgets on multiple digital channels, screens and platforms, including the social networks, ad networks, exchanges, content discovery platforms, influencers, connected TV, LCTV, all using data-driven KPI-based technology. Providing extra tools and features as part of its offering is essential. in an attempt to simplify campaign management tasks. Such as extra tools and features include Creative Studio editing capabilities for quick adjustments, extra layers of data from app stores, and unique optimization abilities for saving time and resources on campaign management tasks. Before I move to the questions, I want to thank all of 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. Ben?

Thank you, Amit. We have some questions for you. First, can you speak more about your customers? Which are the growth areas that you're seeing? What gets you excited?

Over the past year, we have strategically focused on high-revenue business segments such as e-commerce, iGaming, and fintech. Additionally, this year, we've seen significant growth in the entertainment sector. In terms of geographic growth, Europe and APAC have historically been our core regions, and they continue to perform strongly. Moreover, we are experiencing an able expansion in North America, supported by both U.S.-based clients and global customers targeting the North American market. This regional growth complements our broader business strategy and strengthness, or our market presence.

Thank you. We have another question for you. You posted operating costs as a percentage of sales at around 20% in the third quarter, which is very impressive. Can this be sustained and how is the company preparing for potential market changes that may impact future results?

Well, achieving 20% in the third quarter reflects a disciplined approach we've taken to manage costs. Over the past few years, we've consistently optimized our expense structure, ensuring we remain agile and diligent in managing what's within our control. This focus on cost management has been a cornerstone to our strategy. This metric reflects both how we manage cost and how our revenue performs. So it's important to touch on both. On the revenue side, while external factors like seasonal trends, macroeconomic conditions, shifts in client budgets can influence revenue cycles, we deliberately diversified our customer base across multiple sectors and regions. This diversification helps to mitigate some of the volatility inherent in the individual markets or industries. While it doesn't eliminate all external risks, it positions us to adapt more efficiently to changing conditions. So while we can't guarantee that 20% will be exact figure every quarter, it's the combination of these efforts on both the cost and revenue sides That ensures we maintain a healthy margin and a strong bottom line. By staying focused on strategic execution and adaptability, we're confident in our ability to navigate future challenges and continue delivering value to our stakeholders.

Okay. Thank you. We don't have any more questions at this time. So with that, I want to thank everyone for joining us on today's call. Thank you.

Thank you