Zoomd Technologies Ltd.

Good day and welcome to the Zoom Technologies first quarter fiscal year 2026 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would like to turn the conference over to Ben Shamsan from Investor Relations. Please go ahead.

Thank you for joining us today for Zoom's first quarter 2026 conference call. With us on the call, representing the company today is Amit Blahensky, Zoom's founder and chairman, and Savika Adler, Zoom's CFO, is also available for questions. At the conclusion of today's prepared remarks, we'll open the call to questions. Please note that follow the operator's instructions to ask questions at the end of the call. 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. Note that all figures on this call are presented in U.S. dollars as are Zoom's financial statements. 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 now 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 pleased to speak with you today regarding our first quarter 2026 results. As you know, we recently announced the launch of NCIB, under which we may purchase up to approximately 10% of our public flows. We believe the current market valuation of Zoom does not appreciably reflect the strength of our balance sheet, our long-term business prospects, and the strategic initiatives currently underway and the strategic position we continue to build in the market. With approximately $22.5 million in cash, no bank debt, and continued positive operating cash flow, we believe we are in a strong position to continue investing in growth initiatives while also executing on the capital allocation strategy. Importantly, The NCIB provides us with flexibility. We will remain disciplined and opportunistic in how we approach share repurchase while continuing to prioritize long-term value creation for our shareholders. As discussed previously, Two major customers implemented changes to their operating models, reflecting ongoing adjustments in customer acquisition strategies and KPI measurements as part of a broader shift in digital marketing landscape. We continue to actively work with both clients following these changes, maintaining our position as a trusted partner, supporting their long-term growth objectives. With one of these clients, visibility regarding the timing and extent of the potential recovery remains limited. With the second customer, we are seeing growth and remain optimistic that anticipates the trend and will continue. We believe the current period reflects an ongoing transition in customer activity mix rather than a fundamental change in our long-term growth strategy. We also continue to expand and diversify our customer base. During 2025, we expanded our presence across North America and Europe, adding more than 20 new clients across the iGaming, fintech, and e-commerce verticals, including Silver Social and Sportybet. Based on the typical revenue ramp-up cycle, management expects these customers to wins to contribute more meaningfully during 2026. These customers on board continued approximately 30% of our company's revenues during the quarter, supporting the company's transition forward a broader and more diversified revenue profile. We believe these developments support the operation of a healthier, more diversified, and resilient long-term revenue base. As part of our growth strategy, we continue to advance strategic partnerships that should accelerate revenue growth alongside the collaboration with E2. We initiated an additional partnership during the year, currently in POC stages, focused on expanding capabilities across a broader range of digital and multimedia distribution channels. We are expanding the resources dedicated to these initiatives and we believe they will contribute over the coming quarter. During the quarter, we implemented a series of cost alignment measure designs to better align our cost structure with current activity levels. These measures included, among other actions, a reduction of approximately 20% of companies' workforce across multiple departments, as well as additional expense reduction in operating expenses. These measures were primarily focused on operational efficiencies and are not expected to impact the company's continued investment in growth initiatives, business development, and technology capabilities. Now, I would like to turn to our products and service offering as it is important to investors to understand our competitive advantage and why clients are coming to us. Our competitive edge stems from our comprehensive 360-degree approach to digital performance with a mobile-first focus, all designed to help our clients achieve their goals. We offer a wide range of solutions tailored to digital and mobile performance, enabling us to deliver a holistic suite of products and services that drive measurable results against our client digital performance API. Zoom utilizes a combination of research and development, acquisitions, and methodologies to improve its offerings. One of the core strengths in our transparent, direct, and intensive client communication, unlike many of our industry peers, we don't operate through agencies. We work directly with our clients, engaging with the chief revenue officer side of the organization. The relationship positions us not only just as a vendor, but also as a trusted advisor. The depth of this engagement fosters a long-term partnership, significantly reduced churn, and creates strong opportunities for revenue growth within our existing client base. This approach enables a real-time campaign management without delays, and even while simultaneously handling multiple campaigns across various geographies. This unique approach positions us as a semi-human, semi-automated command and control platform, effectively combining advanced technology and strategic insights. We closely monitor and respond not only to shifts in clients' strategy, but also to broader macroeconomic changes beyond the client's direct control. As a result, we empower our clients to swiftly adapt market fluctuations maximizing their impact and driving significant customers globally. Our main platform is integrated into hundreds of media sources, allowing us to promote customers' digital assets on multiple channels under our one system. We use the DSP for a programmatic media buying. The DSP is integrated into biggest mobile media exchanges, providing our customers with full range and research for the mobile web and app performance needs. We optimize the advertisers' resources and maximize their advertising budget and efficiency. There is no dependency on any specific media supplier or traffic channel. This not only saves us valuable time and resources for the advertisers, but also provides an enhanced clarity and controlled insights. Beyond the walled gardens, such as Google and Meta, the open marketing landscape is fragmented. Zoom enables advertisers to leverage a wide range of various types of media channels from social programmatic, OEMs, SDK networks, and more. Their KPIs are achieved on all channels together as a mix. I will now review the first quarter of 2026 financial results in detail. Revenue. Revenues in quarter 1-26 were $6.9 million, a 62% decrease for U-125, reflecting the continued impact of operating model changes implemented by two major customers. Growth margins. Gross margin in Q1-26 was 34% compared to 44% in Q1-25 driven by changes in customer mix. Variations in gross margins across periods remain within our representative profitability range. Operating expenses. Total operating expenses for Q1-26 were $3 million, a 6% decline compared to Q1-25. During the quarter, we implemented cost optimization measures designed to better align our cost structure with current activity levels. These actions included reduction of approximately 20% of the company workspace, alongside additional expense reduction initiatives. As many of these actions were implemented during the quarter, most of the expected savings are anticipated to be reflected in the beginning of Q2 26th, And these sections were primarily focused on efficiency improvement and are not expected to impact to any of the company continued investments in growth initiatives, business development, and technology capabilities. Adjusted EBITDA. Adjusted EBITDA is used as a primary performance measure for the company's management to ensure it has the right structure to support future growth. We define adjusted EBITDA as an earning before interest tax depreciation and one-time payment and amortization. It's adjusted for share-based payments and non-recurring operating expenses. Adjusted EBITDA in Q126 was negative $300,000 compared to $5.2 million in Q125, primarily reflecting lower revenues. A full reconciliation of the adjusted EBITDA is available in our MD&A filings. net income net loss for q126 was 0.5 million dollars compared to the next income of 4.8 million dollars in q125 in line with the factors explained above cash position and cash flow cash flow from operating operations was 0.6 million dollars in q126 as of march 31 26 the company had a cash balance of $22.5 million and no bank debt. Before we move to the Q&A, I would like to thank all our employees for the hard work and dedication, as well as our investors for their continued support.

I want also to thank you for joining us today for your continued interest in Zoom.

Before we conclude, I'd like to say that some of you are already in direct contact with me, but I am always available. Feel free to reach out directly over email or WhatsApp at any time. Thank you again for your time, your support, and your continued trust with us.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. The first question comes from Martin Toner from ATB. Please go ahead.

Martin Toner Can you raise your voice?

Martin Toner Yeah, hold on one sec. Apologies. Thank you very much for taking my question. Amit, can you comment on the status of the customers whose relationship has been disrupted? What progress have you made to restart them and do you have any timelines for when that will happen and when they can return to their previous revenue levels?

So we have Actually, two main clients that made those shifts, actually in their measurements, those clients are active with us and we are serving for them as trusted advisors. They already allocated the changes they needed to do, and one of those clients already started gradually to increase revenues with us. In fact, we are very optimistic with the work with that client. We can't share more information, but it will be reflected in the next coming quarters regarding that client. For the second client, visibility is still limited as we can't know yet the speed that they will come back, but we are working with that client to work in that process. We believe it will take not more than a couple of quarters until we go with them to the expected levels.

And by grow, do you mean grow from previous levels or return or get close to previous levels?

We can't share that information as there are even more developments with them on additional business models that we are working with them as part of our services. If we excel for them in one specific model, we are now asked to help them in some other models. application acquisitions and other type of marketing processes as well. So we can't tell yet if it will be the same size, higher size, but there's no doubt that it looks good and it will be reflected soon.

Awesome. Thank you. Can you talk a little about the World Cup? Does the status of these customers affect the potential for you guys to do some revenue during World Cup and just talk a little bit about the potential for that event for your revenue.

So for the takeoff World Cup, we did several relevant partnerships with different sports betting and other type of providers that are having different applications that we are promoting for them. The World Cup reflection will be somewhere between Q3 and Q4. It's always with a delay from the moment there is any type of payment. And we are expecting to enjoy some of that.

Awesome. That's great. Thanks.

Talk a little bit about some of your new customers. How long do you think it will take? for them to ramp to significant levels? And I'm thinking of like similar to levels of some of your other most important clients, like say like a million dollars annual revenue run rate. How long does it take to get a new customer to that level of revenue?

So first of all, we continue to see healthy activity in the pipeline across multiple verticals and geographies. Similar to what we saw during 2025, we do see a lot of opportunities across segments such as e-commerce and entertainment and crypto and fintech, alongside continuing expansion into additional geographies. As always, pipeline takes a couple of months from a client to receive substantial revenues, but a client that spends about $1 million It's from the moment that it starts with us, it will take roughly about 10 months to a year until a client like that becomes significant.

Perfect. That helps a lot. Okay. Can you talk about, so like with your workforce reductions, would you be profitable at the current revenue level, like Q1's revenue level?

Flickr will take this answer.

Okay. Those reductions won't impact our growth. The measures which were taken are mainly focused on improving efficiency and adjusting the cost structure to current activity level. The workforce reduction was done across multiple departments as part of the broader efficiency process. We didn't reduce expenses related to tech, business, or growth. So it will take a quarter or two we will see the fully influences of those numbers on the bottom line together with our growth.

And I'm guessing after the impact of that reduction at, say, a 10 million quarterly run rate, revenue run rate, Zoot will be profitable?

Listen, if we're talking in terms of EBITDA, we are in a negative EBITDA of $300,000. If our gross margin is something around 30%, 35%, it means that in extra $1 million of revenues, we are breakeven. So you can make the calculation. It's not a big guess. And if we're looking at the new customers that just joined, which Amit was talking about them, we are optimistic.

That's great. Last one for me. What level, what amount of cash are you guys comfortable having on the balance sheet? Just kind of wondering how much of the buyback you guys are comfortable with.

Our, yeah, so our run rate without any revenues, just the burn is something around almost $1 million per cube. As we saw, with minimal revenues, with a minimal growth of the current revenues, we are break-even. We feel really comfortable with our cash balance at the day since we have more than $20 million that are held in short-term deposits. We have also a credit line from the bank of $3 million that we're not using it, but it's open credit line, so we feel comfortable. really comfortable with our current balance.

Super. That's it for me. Thank you for taking my questions.

Thanks, Martin. Thank you very much. If you have a question, please press star 1. I can turn the call back over to Ben for additional questions, please.

Thank you.

Thank you. We have some additional questions that were sent to us via the webcast. Amit, at what pace do you expect the new customers to ramp going forward?

Typically, it takes one or two quarters for new customers to move through onboarding, optimization into more meaningful scalings. The pace then can vary depending on verticals and geos and KPIs, different industries and different countries, and also depend on customer maturity. We generally prefer to stable and control scaling rather than pushing aggressive growth too early.

But it takes usually about two quarters.

Okay, thank you. We have another question regarding customers. What does the pipeline of new customers look like, and can you provide some specificity there?

So we continue to see expansion in the pipeline across multiple verticals in different categories, e-commerce, entertainment, crypto, fintech. Those categories are growing rapidly. and we could fill that also within those categories in different new geos that are opening. As always, pipeline and conversation timing can vary, but we continue to onboard new customers and expanding existing partnerships.

It looks good.

Okay, thank you. Operator, I don't think we have any more questions.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Amit Bohensky for close remarks.

Amit Bohensky Thank you all for joining us today for your continued interest in Zoom. I'd like to say that many of you are already in direct touch with me and for everyone else, please feel free to reach out whether by email or WhatsApp. Thank you again for your time, your support, and your continued trust in us.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.