Adcore Inc.

All right. Let's get started.

Once again, thank you. Good morning, and thank you for joining us.

Earlier this morning, Adcore released its Q3 2025 financial results. Today, we will be walking you through those results and provide an update on ongoing company initiatives.

You might see some familiar faces on the call today. You'll see myself.

I'm Nick Campbell, Head of Investor Relations here at Adcore. Joining me is Omri Brill, Adcore's CEO and Founder; and Amit Konforty, Adcore's CFO.

The agenda for today, before we begin, we'll go some forward-looking statements, you should be aware of while listening to this call, followed by the CEO opening remarks and then the CFO financial highlights. And finally, we will conclude with Q&A.

If you do have a question during this call, please use the submit a question feature in Zoom, and we will get to those at the end of the call. Before we begin, I will give everyone a moment to review these statements.

Just please bear in mind when you're listening to the call today, the management team might be using forward-looking statements, which are inherently uncertain in nature. All right.

Very good. And with that, I will pass the floor to Omri for the CEO opening remarks.

Omri, the floor is yours.

Thank you, Nick, and good morning, everyone. It's our pleasure to be here today to discuss the company results for Q3 2025 and obviously, the 9 months of 2025 as well.

So we have some high-level management, I would say, comments regarding the results, also some new initiatives that I would like to share with our shareholders regarding what's new during the quarter. And I think there's a lot to discuss.

So let's dive into it and start reviewing the results. Okay.

So high level, when we look at Q3 2025 results, I would say a few things that are jumping to everyone's eye. A, we saw like good growth coming from the EMEA region, up 25% year-on-year.

APAC continued to grow 7% year-on-year. And basically, we see tremendous momentum coming from this region.

This is actually been offsetting some of the softness we saw in North America. So 2 regions that are moving up, one region that basically is moving down.

But all in all, I would say we are more or less doing okay. And another thing that worth mentioning during this quarter that we saw like a significant improvement in the cost line items.

R&D down 10% year-on-year, SG&A down 12% year-on-year and actually adjusted EBITDA improved 56% year-to-date. In general, I would say, when you look at the 9 months results, they are looking far sharper and like give us like looking ahead of 2025, like with more optimistic.

I would say one more thing that investors need to take into consideration that the big quarter Q4 is literally happening right now. So we still have a lot to show up in 2025.

So I think like 9 months looking good, 2025 compared to '24, especially in the bottom line, adjusted EBITDA grew a lot, 56% in the 9 months compared to the previous 9 months in 2024, and this is a lot to expect from Q4 this year. So just high-level numbers.

Obviously, Amit will discuss it in more detail. Top line revenue, 7.6% compared to 7.8% -- sorry, $7.6 million in Q3 2025 compared to $7.8 million in Q3 2024.

It's a slight decrease, but I would say more or less the same. Gross profit, $3.1 million in Q3 2025 compared to $3.7 million in the previous year.

Again, a slight decrease, but because of cost went down, so adjusted EBITDA is actually not too bad. And when we look at quarterly gross KPIs, this is something we take into mind and say gross profit, $3.1 million.

Again, you can see that is in line with the previous quarter in 2025 and Q4 should be far stronger. Cash and cash equivalents actually grew by 8% year-on-year.

So all in all, I would say, more or less a solid quarter. Just to sum up quarterly highlights, EMEA revenue grew by 25% year-on-year.

APAC revenue grew by 7% year-on-year. Cash and cash equivalents grew by 8%.

R&D expenses actually down 10% represent now 6% of total revenues, 7% in the previous year. SG&A down 12% or $376,000.

And again, that's 12% decrease year-on-year. If you look at the 9 months in 2025, then we can see adjusted EBITDA almost $0.5 million compared to $310,000 in the previous year, again, up 56% year-on-year.

That's a big improvement. We have a reduction in net loss in 2025 compared to 2021 from $1.26 million in 2024 -- sorry, 2022 to $1.075 million in 2025.

Gross margin are more or less the same, 44% this 9 months 2025 compared to 45%. And again, R&D expenses are actually down, representing 7% of total revenue compared to 8% of total revenue.

And trust me, we continue to invest heavily in technology. So it's not like we took our foot from the gas.

We're just doing stuff more efficiently, and I think Amit will talk about it in more detail as we move along. And we talk about some goals that we would like to achieve.

And I can say, definitely, we are on track for 6 straight quarters with positive adjusted EBITDA, definitely on track to AI-driven and innovation. And basically, the other growth, it's TBD, but we need to see that we have a good finishing of Q4 in order to see if we can meet these goals or not.

So -- but I would say the results telling the story, telling the story of, I would say, the future of the current present of Adcore and maybe even the past because it's already happened in Q3 2025, but definitely it doesn't tell the story of the full story of the future of Adcore. And I think a lot of the future of Adcore is about technology and about innovation and Proposaly, I would say, is the spearhead of this effort.

And there's a lot going on in Proposaly, and we would like to share some of it with you. And obviously, this was a big launch in Q3 2024 of 2 initiatives that are Proposaly related.

We have all new marketing website for Proposaly and all new blog for Proposaly as well. So if you go to Proposaly.io, you can see the marketing website.

We can visit it in a second and have a first glimpse of it and also the all new blog, a lot of interesting article about Proposaly. And let's see some examples.

So let me start from the beginning. So that's the new marketing website.

You see this is also a different brand identity for Proposaly. It's much more modern, much more, I would say, cheerful and young and basically a new slogan, work less, win more.

Win more is basically the main slogan of Proposaly. This is the goal.

This is the mission to help businesses win more clients. So this is what Proposaly is all about.

So that's obviously the banner. We can go down and see what within -- like what you get within Proposaly.

So obviously, you get engaging presentation. You will get tailored proposals.

You will get an add-on and upsell feature built in within the application. You can do online signatures like you can do online payments as well from within the app and obviously, ongoing project update.

So a single link sent to the client. Your client will get all of that.

So the presentation, the price quote, being able to select or change their price quote and add add-ons, make an online signature, approve the agreement, making a payment and get the project, everything within what we call the client portal. So it's much more than just, let's say, a price quote or nice PDF sent to the client.

Basically, it's everything that the clients need in order to close the deal and basically support the deal, not only closing the deal is within this client portal. And that's a game changer.

There's no other app on planet that offering the same value proposition. And that's something that is important to know about Proposaly.

We look at, let's say, an existing problem, which is one of the biggest problems of, let's say, traditional sales workflow, but come up with an all-new solution. And this is like a game changer of like our business should do workflow or sales workflow in 2025, 2026 and beyond in the era of AI.

So we listed some of the AI capabilities of the system as well. You can see like we mentioned, Proposaly like the team workspace, which is the business portal, more like a CRM and the client, this is the proposal sent to the client, but actually online website.

And like the different teams that can benefit from Proposaly, whether it's leadership team, sales team, marketing team, legal team, HR, finance, all different team types that can benefit from Proposaly. And also, we listed like some sample proposal made in Proposaly sent to clients.

And you can see like an example proposal for vacation house in Greece, for example, a construction, a roofing installation in California, for example, for a family, whether it's a clinic treatment plan, aesthetic clinic, a marketing agency offering or whether it's Alpine ski vacation. And actually, if we have time, we can view one presentation like this not a presentation, a proposal sent to a client.

So this is like when we send it, we send a link to the client, the client get a link, click on it, and this is what you're going to see. We can also decide whether you need to log in in order to see it or can you just view it like that or maybe log in on action.

But basically, this is the intro, I would say, slide looking very nice, like who don't like ski in slope. So it looks nice by definition, I would say.

And then when you scroll down into the presentation, you can see on the right side, you can see a summary bar with the current cost, some kind of what's including in the package, for example. And you see some, let's say, gallery, image gallery from the resort itself, for example, look very nice.

Again, about the resort, maybe the location of the hotel, the specific location of the hotel, how far away is it from the slopes and everything you need to know about your package, also the agenda, for example. All of this being customized from Proposaly back end.

So it's not like a template you need to go and basically just put the data or images or text, like everything is customizable. You can decide which slide you want to use, what slide type, what content to create and it's like creating this type of proposal would like for somebody that know the system can take minutes, not hours or anything like that.

It's pretty easy. We have AI to help you to do it.

This is like a countdown slide. So you see you have 92 days before the vacation started.

So it's pretty exciting, like it's less than 100 days. So there's a lot to wait for some other supporting slide.

And this is where it's getting interesting. We can see like you can select the best package, for example.

So you can select whether you want it for 4 guests, 5 guests or for 6 guests and different price per guest, for example. And then there is an upgrade options that you can choose whether you want to upgrade your room, health insurance maybe to add, equipment rental.

So it is a lot of, let's say, or maybe ski lessons as well. So everything is baked into the system.

I don't need to go out. I don't need to try to go now to rent the car from different places, the rent the car or rent the gear from a different location.

Everything is within the system. There is a payment summary, how much are going to end up paying.

Obviously, this agreement, I need to accept it, so I can see the agreement. You know like for the vacation, for example, everything done online and obviously make the payment, paying now, pay in 30 days, I can pay in installments, for example.

Again, everything baked into this client portal. Q&A, for example.

So all of that look like million dollar, but trust me, it didn't cost the business that just prepared this presentation million dollar and send to the clients. So also think from the business side, think from the client perspective as well, this has looked nothing less than astonishing.

And this is being done with proposing and ready to send to the client and for him to sign to view it, to sign it, to pay, to choose the upgrade and to continue basically any relationships that he would like to continue with the company can be done from this client portal. So if in the future, you need another addition, I can add it to the client portal and I can go ahead and pay for it, for example.

Okay. Second thing that I would like to discuss is the new blog.

So you can go online to blog.proposaly.io. And basically, there's a lot of new content, a lot of articles that our staff wrote about Proposaly.

I think what should be interesting to shareholders is basically there's a lot of articles that compare Proposaly to potential competitors, let's say, for example, Proposaly best sales any book or Proposaly reference wheeler, for example. So you can see our Proposaly is positioned, our competitors are positioned within the market and what is the value proposition that we bring to the market as well.

Very interesting. I encourage everyone to go online and start surfing the blog and see which articles they like and would like to be more educated about Proposaly.

So I think between the marketing website, Proposaly.io and the blog website blog.proposaly.io, you have a lot to be -- to learn about Proposaly, and I think that's a game changer because we talk about it up until now, but now we can actually learn about it, see to yourself, see different proposal and you get a different or better understanding about what is the true value proposition of the system. So next topic or next thing that is new in Q3 2025.

We discussed in detail in the last earnings call, the magic that our studio can create using AI for motion videos, right? So we can create motion videos that look like commercial grade.

They are ready for Super Bowl, but actually cost $3,000 for example -- sorry $300,000 to produce them. And that's a big change.

That's a game changer. And what we did right now, we opened an all new AI studio page under our adcore.com website.

So you can go to adcore.com, go to marketing solution, click on AI creative studio, and you can see the different videos that we created for our clients, for potential clients, and we continue to update this page and adding more amazing video as we move along. But it doesn't matter almost which video you selected, trust me, there are nothing less than amazing.

So that's a big, big game changer and all of them you can find online in adcore.com as well. Last but not least of what's new in Q3 2024.

Actually, 2 weeks ago, we had an event to open a community bicycle park in the South of Israel, what we call field park that's in Kibbutz Ruhama in the South of Israel. And Adcore was one of the initiators of this park.

We donated money to this project. We've been part of this project.

And basically, we are very proud for what this project is all about. You can see this project construction undergoing in the bottom image and how beautiful it looks now that everything is ready over here on the left side, you can see a farm track where you can ride bicycle.

On the right side, you can see an area for skateboarding. This is ready to use for the kids of this specific Kibbutz and the entire area.

And again, this is part of who we are, our committed to our communities, and this is something we are very proud of. So again, it's a moment to be proud, to be thankful that we can be part of such an amazing project as well.

And I know it's a big transition between talking about all this new and exciting stuff and what basically the comparables look like. And again, like if you look at the comparable and the current share price $0.24 as of yesterday, then I think there's a lot of upside, right?

450% almost if you look to gross profit -- sorry, EBIT to EBITDA, almost 100% upside. So I think I didn't sell a single shares up until now from the time we went public, and I'm still the biggest believer.

I mean Adcore is doing good and we're doing great in the future. And I think like you will see that this company is not about just talking.

Every day, we work very hard in building the future of this company, a future for ourselves and for our shareholders to be one of the most successful technology company out there, especially in Canada, there's not a lot of technology company, and I think Adcore can shine in this specific market as well and be like a big or a success story about the technology company like operating from Tel Aviv, Israel, from Canada, from Toronto, Canada as well and be very successful, very big success story. I think that concluded my part, my remarks.

We covered some remarks regarding the results, like I mentioned, Q3, there's like some very positive things like the growth that we saw in, for example, the EMEA region and APAC region, like the reduced cost as well. 9 months, if you look at 9 months, it's even stronger, 56% adjusted EBITDA growth.

And I think that tell you even a better story about 2025 and the way the company is positioned. But I think maybe the most important thing is to understand it's not about what's happening now or even a bit in the past because it's already Q3 like was a quarter ago.

It's about the future of the company and the future of the company is bright. There's a lot of new technology development going on.

I think there's a lot to be excited about in 2026. With that, I will move it to Amit.

So thank you, and good morning, everyone. Before beginning the financial overview, I would like to remind you that the following discussion will include GAAP financial measures as well as non-GAAP results.

All amounts will be presented in Canadian dollars. In the third quarter of 2025, strong growth in EMEA balance softer results in North America.

Operational expenses were lower than last year and cash level increased year-over-year. The company continues to maintain a solid debt-free balance sheet.

Let's review in more detail. For the 3 months ended September 30, 2025, we delivered revenue of $7.6 million compared to $7.8 million in the same period of 2024, a decrease of $0.2 million or 2%.

Gross profit for the 3 months ended September 30, 2025, was $3.1 million compared to $3.7 million in the prior year, a decrease of $0.6 million or 16%. Gross margin for the 3 months ended September 30, 2025, were 40% compared to 47% in the same period last year.

As for operational expenses, R&D expenses for the quarter were $0.5 million compared to $0.6 million in the prior year. SG&A expenses for the quarter were $2.9 million compared to $3.2 million in the prior year, a decrease of $0.3 million or 12%.

Operating loss for the 3 months ended September 30, 2025, was $0.3 million compared to $0.1 million in the same period last year, an increase of $0.2 million or 128%. This is mainly due to the decrease in gross profit.

Net loss for the 3 months ended September 30, 2025, was $0.4 million compared to $0.2 million in the same period last year, an increase of $0.2 million or 160%. Revenues and gross profit.

Looking at the slide, we can see quarterly results showed a decline. But over the 9 months, we see a stabilizing trend.

We anticipate that the fourth quarter and full year results will maintain the positive trend observed in prior years. In terms of geographical breakdown, as you can see from the slide, the company saw different trends across its main regions with strong growth in EMEA, offsetting a decline in North America.

This shows the value of the company's strategy and global presence, which continues to support stability and resilience across the different markets. Selling, general and administrative expenses.

SG&A expenses for the quarter were $2.2 million compared to $3.2 million in the same period last year, a 12% decrease year-over-year. For the 9 months ended September 30, 2025, SG&A expenses totaled $8.7 million compared to $9 million in the same period of 2024.

The decrease was mainly driven by lower sales and marketing expenses, including reduced referral fees. The company also continues to focus on building teams in lower cost regions to improve overall efficiency.

In terms of financial position, we had cash and cash equivalents of $7.3 million as of September 30, 2025, compared to $10.8 million at December 31, 2024. Cash and cash equivalents as of September 30, 2024, were $6.7 million, showing an increase of 8% year-over-year.

Total working capital amounted to $5.9 million compared to $7.3 million at December 31, 2024, a decrease of $1.4 million or 20%. As for the liability side of the financial position, we can see that the company is still debt free.

Adjusted EBITDA. The quarterly non-GAAP results reflect adjustments for the following items: depreciation and amortization, share-based payment and other nonoperational items.

Adjusted EBITDA for the 3 months decreased by $160,000 compared to the same period last year. But when looking on the 9 months results, adjusted EBITDA increased by $175,000, mainly due to a decrease in operating losses.

With that, I will turn the call back to Nick.

Thank you, Amit. At this time, we will move to the Q&A portion.

And the first question submitted here is about APAC, which continues to post strong growth. Can you just provide some color on what's working in APAC and if you expect that to continue?

Absolutely. So we are very encouraging about the growth that we saw in APAC in 2025.

I think that's definitely the biggest market for us today, together with EMEA. Both of these markets are showing tremendous strength.

I think like what we -- bear in mind that outside of Israel in terms of headcount, this is the biggest market for us. We have a big team in Australia, another team that we have in Hong Kong and in Shanghai as well.

So like 3 different teams, and we continue to see growth in this specific region. I would say mainly reason for this growth is client acquisition, new client acquisition that almost goes without saying that, I would say, a critical component of any growth for any company.

But equally important, what we call same-store growth. It's been existing clients that are expanding, expanding in terms of how much they're willing to spend, but equally important, if not even more important, expanding the services that are required from Adcore, whether it's like not just performance marketing, but also full funnel marketing, branding and awareness type of campaigns as well, studio, SEO affiliate marketing.

So it's a much more holistic solution that we are now being able to supply in this specific region, and we can see it definitely in the numbers. So client acquisition, more holistic solutions.

So this means more budgets that we are managing and controlling all of that are reflecting in the Q3 results that you see.

Thank you, Omri. The next question is about SG&A, which dropped significantly from $3.2 million to $2.85 million in the quarter.

Can you provide some color on how you were able to achieve those cost savings?

Yes. I think -- Amit, maybe you want to answer this one?

Yes, sure. So as I mentioned in the presentation, these cost savings are mainly due to reducing sales and marketing expenses, including referral fees.

Also, in general, the company puts much more emphasis on cost savings, including hiring teams in lower-cost regions. These are the main factors.

Thank you, Amit. The next question is about gross margins.

In Q3, they're at 40%, down from 47% in Q2. Can you help investors understand the reason for the change and if you expect that to continue into Q4 and onwards?

Absolutely. So a few remarks.

So when you look at quarterly metrics, usually, they can fluctuate, right, because some maybe revenue can be shifted from quarter to quarter. But I think like as long as it's within the norms that we -- the company talked about 40% to 50%, that we are still comfortable with it.

And equally important, when you look at the 9 months result, you can see it's exactly in the middle, 44% gross margin. So I think like we are pretty comfortable with the result overall.

Like we're not too alert or alert at all with the specific quarter metrics. And I think, again, we need to be somewhere in the middle between 40% to 50%.

This is where we're aiming for. And if any time when technology revenue is going to grow, actually, we can start discussing even better gross margin, like 50% and above and maybe ideally even more than 60%.

But this is once we have more robust revenue stream from technology, pure technology.

Thank you, Omri. A question regarding North America revenue.

It was down 50% from the prior Q3. Can you just elaborate on the headwinds you're seeing in the region?

Yes. I would say it's mainly due to stop activity, but it's also a bit misleading because some of the stop activity actually shifted to EMEA.

So the same partners that we work that were based in North America, we are now choose to work with partners that are located in the EMEA region. So I would say -- and this is part of the reason that you see a big growth coming from EMEA and a decline in North America.

So I think part of it is about shifting revenue from one region to another region, which is fine. It's part of doing business another thing that I think it's worth saying that we believe Q4 2025 is going to mark the button.

So after Q4 2025, we can start seeing this specific region, it's an important region for us, is actually recovering, and we expect to see actually more revenue coming from this specific region in 2026 and an uptick, not a downtick for this specific region.

Very good. Thank you, Omri.

The next question is with the rise of AI drawing user traffic away from traditional search platforms like Google or Microsoft, are you seeing that in your clients expressing concerns about how to adapt their advertising strategies? And how do you see opportunities to help them capitalize on the AI revolution?

Absolutely. That's a fair and good question, I would say.

I would say the following. In the beginning, when OpenAI almost 2 years ago introduced ChatGPT in the beginning, there was an alert mode for all, let's say, Google, for example, Meta and everyone and see it as a big, I would say, risk to their business model.

But if you look at, let's say, Google latest report, it just showed the most robust report ever in the company history. And actually, AI nowadays represent to Google more opportunities than risk.

And the same concept is applied to Adcore and to Adcore clients as well. I think AI can make the campaigns -- is already making the campaigns more efficient.

So this means every dollar spending online is actually making more revenue increase like doing better ROI, for example. You can see the nature of, let's say, ad and creative we can generate with AI.

That's a game changing. If before, we used to spend $50,000, $100,000 to produce like to produce video nowadays, we can spend $2,000, $3,000 and do it in a day or 2.

So that's a game changer. And I think like if I need to put everything into one formula, then I would say from one end risk.

So for every risk factors that maybe AI represent, now we understand there's like 2 to 3 things that are actually opportunities. So the formula is working for us and not against us.

And I think AI currently is definitely something that has a lot of positive effect, both on Adcore. Adcore clients, our ability to run advertisement more efficiently.

And I think like, again, AI is definitely more opportunities than a risk.

Thank you, Omri. Moving on to Proposaly.

Can you share your road map or the commercialization plan for Proposaly in 2026? And how you expect that to contribute to Adcore's recurring revenue base?

So that's actually a good question, and I would answer the following: a, the road map says that we need to start monetize from Proposaly as early as beginning of 2026. So we expect to see the real paying clients by then.

This is one, I would say, like if you look at Media Blast, that I would say it's at least 2 years more advanced than Proposaly, then Media Blast been able to achieve an ARR of $1 million in the first year. So -- and we expect nothing less from Proposaly.

So I think like it's still a bit too early. We need to see that everything is working as planned.

There's good market fit. The product is, I would say, mature enough in order to do what is supposed to do.

But I think like at least if Media Blast is the base, this is what we want to do as a bare minimum. And ideally, we want to even to be a bigger success story, we built Proposaly to be the biggest success story, like overseeing Media Blast and all the rest of the apps we ever developed.

So we have a lot of expectation from this app and 2026 definitely will be an interesting year for us.

Thank you, Omri. That dovetails nicely into the next question about how the company is prioritizing investments between organic initiatives like Proposaly or your geographic expansion and potential M&A opportunities as you look forward to 2026?

Absolutely. So I think we touched a bit of that before in the previous earnings calls, and I mentioned that we are pretty pleased with the current geographical setup that the company have.

So we don't see at least not in 2026, the company needs to expand into new markets, like we are well positioned within the EMEA region. We are well positioned within the APAC region with actually 2 different outputs of teams, well positioned in North America, both in Canada and in the U.S.

as well. So I think that gives us a good coverage of the entire world.

So this with regard to geo expansion. With regards to continue investment in R&D, I would say the following.

And again, I would use Media Blast as an example because we can definitely see that after 2 years as Media Blast was fully deployed and launched, then we can definitely see that investment in terms of pure R&D is going down, maybe 50%, maybe even a bit more. But actually operational costs going up because there's more clients is more need to serve them or stuff like that.

So -- but this is offsetting a bit by earnings coming from the application as well. So I think if I need to look at Proposaly maybe not 1 year, but maybe 2 years ago, that probably we can start looking at reducing some R&D-related costs.

But again, probably we're going to -- should have more operational related costs as well, but also they come with earnings as well and MRR and ARR, which is the best type of earnings we can make. So I think all in all, a lot to look for in the future, 2026 and beyond coming from the technology pipeline that the company currently have.

Very good. Thank you, Omri.

And with that, that concludes our Q&A session. I want to take a moment to thank Omri and Amit for your comments, but of course, you, our investors and guests for attending the call.

Omri, I'm going to pass it back to you for any parting thoughts.

No. So again, we want to thank everyone that participated in the earnings call.

It was our pleasure to discuss the numbers for Q3 2025 and the 9 months for 2025. I think all in all, like Amit showed in this graph, if you look at the 9 months, numbers look solid, top line, midline, even bottom line that improved a lot in 2025 compared to 2024.

And bear in mind that the best quarter is still in front of us, which is Q4. So again, solid start, I would say, of 2025 compared to 2024 and the biggest quarter.

So we should definitely look optimistic about what is ahead of us. But I think equally important, quarterly results only tell you the story about what we have been right now, what was the present.

But it doesn't tell you about the future. And I think the future of the company is bright.

There's a lot going on in the technology side of the company. Proposaly should go big in 2026, maybe not mega big because we're still launching.

So I don't want to overblow the expectation. But we should still definitely monetize Proposaly in 2026.

And I think like you can see it for yourself, see what we build, see how we are investing in the company future and investing in the company future is investing in our own future and shareholder future as well. And that's the most important thing.

We just not dream just for the sake of investing as an investment. We do it in order to make our life better and the investor life more happy about the value they can get from having or holding Adcore shares as well.

So that concludes my part of today's remarks.

Thank you again, Omri, and thank you all to our guests who have joined the call today. We look forward to providing you an update after Q4.

So thank you all again, and be well.

Thank you.

Thank you.