Adcore Inc.

Okay. Good morning, and welcome to Adcore's Q1 Earnings Call.

This morning, you might have seen a press release putting out our Q1 financial results, highlighted very strong growth in our APAC region fueled by Media Blast and new client acquisition in the region. Today, we will review those results in more detail.

On the call today, you have myself, Nick Campbell, Head of IR. You'll hear from Omri Brill, Adcore's CEO and Founder; and finally, Amit Konforty, Adcore's CFO.

The agenda for today will begin with some forward-looking statements. You should be aware of when listening to this call, followed by the CEO opening remarks, followed by the CFO financial highlights, and finally finishing off with Q&A.

If you do have a question during this call, please use the feature in Zoom to submit a question, and we will answer it at the end. Before we begin, please be advised there are some forward-looking statements that will be made today that are somewhat inherent in nature as they are forward-looking.

I will give you a moment to review the statements now before we begin. So, take a minute to do so.

Okay. And with that, I will move it over to Omri Brill for the CEO opening remarks.

Omri, floor is yours.

Thank you very much, Nick, and it's my pleasure to be here today and talk about the Company financial results for Q1 2025. And thank you for all the participants that joined our call today.

Let me share my screen, and we can begin with my remarks. Okay.

So, I think like all in all, when they -- on the first glance of the Company financial result, you can see, okay. It's not like something to write home about, right?

Let's say, top line revenue went up a bit. Like, a gross profit, they meant more or less the same.

Some improving the profitability, but I would say, okay share, okay share quarter. But actually, when you take a deep deeper look at the quarterly result, there's actually a lot of things we should and could be proud about, and I want to walk you through some of the stuff that get us excited about this quarter result and why we are still very much bullish regarding the entirety of 2025.

So, I would say, just like something that was mentioning, obviously, stronger cash growth, year-on-year, positive operating cash flow and record-breaking momentum in Media Blast application that some of the stuff that get us excited about this quarter results. And just like a quick run through.

So, top line revenue this quarter was $7 million compared to $6.9 million in the previous year. That's represent 2% year-on-year.

Gross profit remained similar, $3.1 million in 2025 Q1, compared to $3.1 million in the previous year. If you look at what we call quality gross KPI, that's for us it's gross profit, gross margin, and we can definitely see numbers of where we want it to be.

Gross margin in Q1 2025 was 44%. That's exactly more or less in the middle between 40% and 50%, which is the range we want to see.

And gross profit again, $3.1 million. That's a solid start of the of the financial year.

And if you look -- sorry about that. If you look about the cash positions, and we can definitely see, there's a cash position remain high.

$10.6 million, compared to $10.8 million in the previous quarter. And I know there was some discussion whether we see because of seasonality drop between Q1 to Q4, and I glad to see this wasn't the case, right?

Cash position still remain high, which is obviously a positive thing for the Company. And so just like run quick run regarding the report highlights the way the Company or management see, again, strong cash position, 10.6 million and they are up by 33.3% year-on-year.

A lot of that it's thanks to, let's say deposit we see coming to the electronic wallet from our media blast app. So, there's a lot of more activity and you can see the numbers in the following slide, you see the momentum that we are gathering in this specific app.

And we also see positive operating cash flow of 200 -- sorry, 63,000 compared to 13,000 in the previous year. So big jump over there in cash flows that generated from operational activity, revenue growth, again, 2%, year-on-year and 7 million.

And we saw a reduction in net loss to around 200K compared to almost 400K in the previous year. So again, company is, let's say more operational efficient.

And we also saw positive adjusted EBITDA of 208,000, compared to 2,000 -- sorry, this quarter compared to 2,000 and 1,000 in the last year as well. So again, in most of, let's say the indicator, the way we see it, we saw positive move this quarter and it's still, I would say, very strong quarter for the Company.

And now to the Media Blast app, and Media Blast, it's an application we launched around two years ago, and we glad to report, we see a very strong momentum build up in this application. April 2025, we ended with a record ARR of 2.3 million, even a bit more than 2.3 million.

That's represent almost 300% growth year-on-year compared to the previous year ARR and just months that's represent 15% growth. So basically, we see a lot of, let's say, movement of momentum building up.

And you can clearly see it in the early chart of 2025, 1.7 in January in ARR, 1.861 in Feb, and then over 2 million and now over 2.3 million. Then clearly a strong momentum.

We see a lot of, let's say, traction. And I think the most important things regarding the Media Blast app is we see good market fit.

So, we see a lot of demand and this demand is like, it's continued growing. So, it's not like we are reaching any plateau, any glass ceiling.

There’s still a lot of demand and we continue to report a very strong result in this specific application as well. Actually because of this application, we also see a lot of other positive indicator within the financial result, whether it is the cash position and another important indicator as well that improved because of the specific application.

And last quarter when we did the earning call was the ending of the fiscal year of 2024. And obviously, we took this opportunity also discuss what the Company goals for 2025, right?

Like what we are trying to achieve, and I want to run with you together, let's say using the opportunity now that we already one quarter into the new year to see, okay, where do we stand? Whether we meet or we are, what we think about meeting the goals that we discuss, in the last earning call.

And I said the first one we discussed that the Company would like to grow 2025, by 25% to $40 million, and that's a big ambitious goal. And I would say, yes, this quarter, we only grew by 2%, but we still believe because traditionally for us, Q1 and Q2 start slow usually, and then we pick a lot of momentum.

The Company still believe we can reach this goal of $40 million revenue for the entire end of 2025. So, I would say, we still need to prove it, but we are still bullish about meeting this goal as well.

And we talk also about strengthening the Company profitability. We would like to achieve six straight quarters of positive adjusted EBITDA and positive cash flow.

So, in this regards, big check, right? Both the adjusted EBITDA and the cash flow generating corporation activity were positive in Q1 2025.

We talk about AI-driven innovation, and, actually, I would glad to report is a lot of innovations that is AI-powered or AI-related going on, especially around our Proposaly, but not only. So, basically, we see, let's say, a very deep AI integration to all the different technology the Company is developing, and that's very exciting.

And I'm sure, we can share later down the year a lot of this innovation with our shareholders as well. And last but not least is, we would like to grow our SaaS recurrent revenue to around $4 million to $5 million.

And again, over a big check as well, we see the adjustment in the middle class up. We're already $2.6 million -- sorry $2.63 million.

So, that's mean and this is a lot of momentum. Around 10% mass-on-mass growth just for this specific up.

So, we definitely believe that we can meet this target by the end of 2025 as well. So, I think like all in all, we set like four very ambitious goal for the entire year, and I see like we can like on track to meet most of them, if not all of them, and that's a positive sign for us as well.

Last but not least, I would like to talk about the current share price, and obviously, talk about comparable companies as well. So, if you look at the current share price, which is around $0.27, I think or $0.29, if you look at these numbers from May 7 and you look at comparables.

So, we clearly see there's a lot of upsides to be made within the stock. We're looking at EV to gross profit.

We talk about more than four 500% upside. So, that represent $1.5 as a share price or target share price.

And if you talk about EV to EBITDA, then we're talking about 200% price upside, and that represent around $0.60 share price. So, I think like mainly believe the coin share price is deeply undervalued.

There's a lot of money potentially, one can make with the Adcore stock as well. And again, all in all, I think it was a positive air quarter for us.

We started 2025 in the right tone. And more importantly, when you look a bit inside and you look at, let's what we call it quarterly KPIs, whether it's the cash position, cash flow, the momentums that we see in SaaS revenue, then, actually, it's not good.

It's very positive, even more than good. So, I see it like positive quarter for us and with the important KPI was even an excellent quarter for us, all in all.

And now, I would hand it, I guess, to our CFO to talk about the financial result in more details.

Thank you, Omri. Okay.

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 first quarter of 2025, we saw a strong increase in our APAC revenues sustaining the momentum from 2024.

In addition, we saw a big increase in cash flows from operating activity, improving the Company financial flexibility. Let's review in more detail.

So, for the three months ended March 31, 2025, we delivered revenue of 7 million compared to 6.9 million in the same period of 2024, an increase of 0.1 million or 2%. Gross profit for the three months ended March 31, 2025 was 3.1 million compared to 3.1 million in the prior year.

As for gross margin for the three months ended March 31, 2025, they were 44% compared to 45% in the same period last year. As for operational expenses, R&D expenses for the quarter were 0.6 million compared to 0.6 million in the prior year.

SG&A expenses for the quarter were 2.8 million compared to 2.7 million in the prior year. Operating loss for the three months ended March 31, 2025 was 0.3 million compared to 0.2 million in the same period last year, an increase of 0.1 million or 51%.

Net loss for the three months ended March 31, 2025 was 0.2 million compared to 0.4 million in the same period last year, a decrease of 0.2 million or 49%. As for revenues and gross profit.

When looking at the quarterly result, we see that revenues and gross profit remain relatively the same. We are continued to prepare the ground for a much stronger second half of the year, aiming to keep the yearly positive trend.

As for geographical revenue breakdown for Q1 2025, revenue in APAC saw a massive 85% year over year increase. This is driven primarily by acquiring of new clients.

Revenue in EMEA decreased by 42% and in North America by 25%. This is mainly due to stopped activities.

Net cash from operating activities in the three months ended March 31, 2025, we kept on generating cash from operating activities in the amount of 263,000 compared to 13,000 in the same period last year. This improvement in cash flow is mainly caused by the increase in our revenue from APAC, which also comes with favorable payment terms.

In terms of financial position, we had cash and cash equivalent of 10.6 million as of March 31, 2025 compared to 10.8 million at December 31, 2024. Total working capital amounted to 7.1 million compared to 7.3 million at December 31, 2024, a decrease of 0.2 million or 1%.

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 adjustment for the follow items: depreciation and amortization, share-based payments, and other non-operational items.

For the three months ended March 31, 2025, adjusted EBITDA was $208,000, compared to $201,000 for the same period in 2024. With that, I will turn the call back to Nick.

Thank you, both Amit and Omri, for your comments. At this time, we'll move over to the Q&A portion where there's been a number of pre-submitted questions.

I want to start with, Q1 delivered a strong increase in cash flow from operations. We saw it go from about $13,000 in the Q1 of 2024 to over $260,000 in Q1 of 2025.

Can you just provide a bit of color on what's really driving that improvement in cash flow from operations?

That's a fair remark. Maybe, Amit, you would like to answer this one.

I know you already comment on it, but maybe you would like to follow it up.

Yes, sure. So, as I mentioned, the main reason is the increase in revenues from APAC, which comes with favorable payment terms.

Moving on to the second question here. We have the APAC market seemed to really be outperforming this quarter.

Can you just provide a bit of information on what's working there? Can you apply the strategy to the other markets in which you operate in?

Actually, that's a very good question. I would say a few things.

A, when you look at historically, I would say, you see we see some fluctuation from time-to-time in different regions, right? Let's say, even APAC, which is now, let's say, the leading roles for us.

If you look post-COVID for example it was went down a lot and then remained plateau, and now it's like slowly start to peak momentum and now actually is accelerating in this momentum. So, I think like we see from time-to-time that the different region, behave differently.

This can be related to macroeconomic in every region and other factors as well. I think like in APAC, what we see probably is, I would say, combination of positive macroeconomic, and I think like client acquisition as well.

And so, this would build such a strong momentum in this specific region. And yes, we definitely, all the time, look at what's working for us or even not working for us in a specific region and try to copy it or adapt it in our other regions as well.

And I think like what we like to see more in our other region, is tracking our client acquisition capabilities that also would generate such a positive momentum as well. So, I think like all in all, we're very happy in what we can achieve in APAC this specific quarter, and we definitely would like to see this momentum carried to other regions as well.

Thank you, Omri. And can you elaborate on the slowdown in North America and EMEA market and if you expect this to continue?

So, that's actually also very good question. I would say the following.

Like Amit mentioned on his report, a lot of this slowdown was as a result of, let's say, what we call stop activity. And just to give you some color behind, let's say, we take EMEA.

For example, we used to have a very big tender with the Israeli advertising government, advertising agencies that was for five years and actually ended in Q1 2024. So, I think like the stop of this specific activity impact some of the drops that we saw in Q4 in, let's say, in, for example, in Q1 2025.

But let's say, if you look forward, Q2 2025, then we didn't have in 2024 this type of activity, and that's why we don't believe that we're going to see such a big drop or such a drop even at all in the EMEA region. At the same logic MOLA supply also to North America as well.

So, I think later it was one off stop activity effects that we saw in this specific quarter, and we believe later than there, we can recover definitely in these regions as well. So, we don't expect to see continued deterioration in this specific region.

Very good, thank you, Omri. Question regarding Media Blast.

It looks to continue growing nicely. Do you see the demand tapping out or is there still a lot of room to grow for that app?

Good question. As far as I'm concerned, we're not scrapping the surface over there.

There's like endless demand compared to what we currently deliver. And there's a lot of room to continue growing within the Media Blast app.

Whether it's introducing additional channels currently Media Blasts, for example, support within the app itself Microsoft and Google advertising. But let's say, we now can introduce Meta, for example, or can introduce TikTok, for example.

That's why itself represent a big uptick and a big room to grow. And like I say, like there's no limit for what we can do in a Media Blast compared to the current, let's say ARR number.

So, we still a lot there. No, let's say glass ceiling.

There's no something that will stop us like continue growing as far as the Company concerned.

Thank you Omri and your newest app, Proposaly, how's the development going and can you share a timeline for when that's expected to, to go live?

Okay, so actually it's going pretty well. I think like we already have a quite robust app in our end, and we already started the early stages of a close beta, you can call it alpha or beta close beta stage.

And basically, we expect to still be on track to go out from the close beta stage to almost a full release in the second part of 2025. So basically, the app is moving along and we would like to see some revenue generated from this app in the second part of the year already.

Thank you, Omri. Another question here.

Looking at the targeted 25% growth this year after a slower Q1, what really gives you the confidence that you can achieve that rate in the remainder of the year?

So, that's a fair question, but I would say, Q4 2025 give me the confidence. We had the massive rebound like, if you look at 2024, it started a bit slow, even slower than what we see in this year, 2025.

And then we had a massive rebound in the second part of the year, whether it's Q3 and even more so Q4. So, I think like if we continue to see the same behavior and the same trend, and so, we still have the potential to do massive rebound and still this numbers.

And so again, shareholders should look how the Company started 2024 and our company ended 2024. And if we can copy paste that into 2025, then I think like we still can be within the ambitious targets that we would like to meet.

Very good. Thank you Omri, that concludes the Q&A for the call.

I want to give you an opportunity Omri, the final thoughts before ending the call here.

So, I would end with the way I started, again, obviously, thanks everybody that joined today's call. Like I say in the first look at the quarter result, you can say cash quarter.

But if you took a deeper look and you see there's a lot of things that we can and should be proud of and a lot of metrics moving the right direction, there's a lot of exciting movement within what the Company do, whether it's the Media Blast day app with the tremendous growth in the application ARR and that's, let's say, I think been undervalue we should get better multiple for this type of revenue. We see tremendous growth in our APAC region and this reflects everything the Company doing.

There's a lot of takeaways we can copy from this region to another region as well. Positive cash flow, positive cash position.

So, all in all, I'm very happy about this specific quarter, but I'm more happy, excited about what 2025 can bring to our company and to the shareholders.

Thank you, Omri, and thank you, Amit, for your comments today, and thank you all for joining. We appreciate your continued interest and support.

Thank you again, and have a great rest of your day.

Thank you.