Adcore Inc.

All right. Let's get started.

Once again, good morning, and thank you for joining us. Earlier today, you might have caught our Q2 results in the press release issued this morning.

We'll be walking you through those numbers today, but that's not all, we also have some exciting updates behind the scenes to share that we think you're really going to enjoy. Joined on the call today, myself, Nick Campbell, I'm Head of IR here at Adcore.

You'll hear from Omri, Adcore's CEO and Founder; and Amit Konforty, Adcore's CFO. The agenda for today before I begin, we'll go over some forward-looking statements, followed by the CEO opening remarks, then the CFO financial highlights; and finally, Q&A.

[Operator Instructions] Before we begin, just please be aware, during this call, we might make some forward-looking statements. These statements are uncertain in nature, so please take that into account.

I'll give everyone about 30 seconds to review this before we move on.

Nick, maybe you want to share your screen.

That would be a good idea. Thank you, Omri.

That's why I am the CEO, you know.

So now I'll give you guys 30 seconds to review the forward-looking statements. Thanks Omri.

All right, very good. And with that, I'm going to pass the mic to Omri, Adcore's CEO and Founder, Omri, the floor is yours.

Great. Thank you very much, Nick, for introducing this earning call and let me share my screen.

So one second, great. So again, good morning, everyone.

With pleasure we're going to present today the company results for Q2 2025, discuss, obviously, the results, I am going to give the management highlights for today for the quarterly results, and Amit is going to discuss the results in more detail. But equally important, that's not something we do in any -- every quarter, we would like to share with you some of the amazing level of innovation that we've been undergoing during this last quarter.

And a lot of it, if not almost all of it is related to AI. So I'm sure that you're going to love what we are about to present to you today, whether it's obviously the quarterly result, but also the innovation that we've been able to achieve this quarter.

So Adcore delivered a very strong Q2 2025 higher gross profit, improved margins, positive adjusted EBITDA, 35% surge in APAC revenue, so in a sense, all the important metrics during this quarter moved in the right direction, especially if you compare them to previous quarter last year. A lot of the growth that we've been able to achieve and the improvement in gross margin, gross profit as well is due to the adoption that we see with our Media Blast apps that come with high-margin SaaS revenue and continued client growth throughout the region, mainly in the APAC and the EMEA region as well.

So let's dive a bit to the numbers. Top line revenue were $6.5 million this quarter compared to $6.6 million in the previous year -- quarter so mainly more or less remain flat.

Gross profit, however, improved 6% quarter -- year-on-year from $2.9 million in Q2 2024 to $3.1 million in Q2 2025. If you look at the quality gross KPIs, then we can see definitely gross margin improved to 47% in Q2 2025 compared to 44% in Q2 2024, so big improvement over there.

And also, if you look at cash position, it grew by 23% year-on-year to $9 million compared to $7.3 million in the previous quarter last year. So again, cash position, stronger, better gross margin, better gross profit, a lot of better adjusted EBITDA, of course.

So a lot of, let's say, improvement during the last quarter. If I need to sum everything up, the things that we love to or like to see during last quarter, the gross margin improved to 47% compared to 44% in the previous year.

Cash and cash equivalents grew by 23% to $9 million in Q2 2025, reduced net loss by only -- we cut the net loss by almost half. So it was CAD 425,000 in Q2 2020 compared to almost $700,000 in Q2 2024.

So a big reduction in the company net loss. Positive adjusted EBITDA, actually, adjusted EBITDA improved by almost $300,000, so from a loss of CAD 173,000 in Q2 2024, we actually achieved a positive adjusted EBITDA of CAD 156,000 in 2025.

Gross profit grew by 6% year-on-year. APAC revenue grew by 35%.

So again, a lot of positive growth and momentum, especially, I would say, what we call, let's say, quality KPIs. KPI like gross profit, gross margin, adjusted EBITDA cash position, all of them move in the right direction in Q2 2025.

And if you remember in the beginning of the year, we discussed some of the company target of what we aim to achieve in 2025 and I want to run a quick check to see where we stand with this target. So we discussed that, ideally we would like to see a scale in revenue to $40 million this year.

So I know H1 was more or less flat if we look year-on-year, but bear in mind that Q3 and Q4 are the strongest quarter for us in here, and we still have enough time to recover. So it's not an ideal start of the year in terms of top line revenue, but we do see momentum building up already, let's say, it's a bit early in the quarter, but in Q3.

And we strongly believe that we're still having like positive Q3 and positive Q4, we can still be at least near to the targets that we discussed. And strengthen profitability, we said we want to achieve a 6 straight quarter of positive adjusted EBITDA.

So yet again, over a big check, we did another positive quarter, which is great, AI-driven innovation. So it's not a slogan for us, it's something that we do now on a daily basis.

And actually, most of the innovation I'm about to reveal on earnings call is AI related. So there's a lot going, trust me.

And I'm sure that you are going to love what we're about to show you with regards to AI. And last but not least, SaaS recurrent revenue, again, we see that Media Blast has continued to grow.

We had some challenges this quarter with regards to Microsoft advertising account linking. We have overcome these challenges.

And even with these challenges, still Media Blast average MRR grew by almost 10% quarter-on-quarter. So I think that we still see Media Blast contribute a lot of new value to the company and improving the different metrics as well.

So now I would like to take a pause from discussing the quarterly results and quarterly numbers and talk about the future of Adcore. And the future of Adcore is very much integrated into AI, so a lot of what we're doing, a lot of what we're building nowadays is built on the foundation of AI.

And I would like to present 2 new features that we're very proud that we're recently releasing to Proposaly and trust me, it wasn't an easy task to select which feature we would like to disclose today because there's so much innovation going on Proposaly literally daily basis that we need to pick like which functionality, which feature we would like to disclose. But eventually, we pick 2 that we think going to contribute even more value to Proposaly than what the app already has to offer.

The first one is the ability to easily generate Proposaly using a simple AI prompt. So instead of manually now going and start building the proposal, building the presentation of the proposal and make sure that everything is ready, we can literally do it with AI in less than 2 minutes.

So basically, when you click proposal now with Proposaly, you have an option to create it with AI. You're going to need to enter your company website, so we can scan the website and get all the information, also get the design and look and feel of your website and copy to the presentation using AI, but equally important creating all the content and everything that is related and let's see a short demonstration of this new functionality in Proposaly.

[Presentation]

Great. So that was just like a sneak preview, but trust me, it's a game changer because like, again, if now, I'm a salesperson, and all I need to do is to give a simple AI prompt to Proposaly, the system already going to be able to generate the proposal for me, so my life become much easier.

I can create proposal with no hassle and basically, the entire sales process become much more efficient. And that's, let's say, basically a big, big differentiator from other applications out there.

And other cool features that we would like to disclose today is the ability to send one-off payment request via Proposaly. So if you remember, Proposaly was built, Proposaly vision and mission was to streamline the entire sales workflow, make it more efficient, increase sales and revenue through it and basically take a very complex, I would say, a process, what we call traditional sales flow and make it as simple and easy and accessible as possible.

So in a traditional sales work flow, I would say it starts probably with the presentation. And then I would send the client the price quote, maybe I would need to do some adjustment to this price quote.

If he's happy with the quote, I need to send him an agreement to sign. And then I need to make payment and then I need to update them on the project, like everything I just discussed now in a typical company requires few apps, a few platforms.

It's disconnected. It's not friendly and Proposaly is all of that.

We send one link to the client, you have the client portal and everything is there on his portal, the presentation, the price quote, the add-ons, the ability to sign the agreement, to make the payment, to get the project update. Everything in one friendly place and looking like $1 million.

And then -- so that was, let's say, Proposaly like a mission. And then we say, okay, but what if the clients just want to send an agreement, I don't want to send the entire proposal.

So we say, okay, we create a new document type under Proposaly, call it an agreement, and it's only going to contain, let's say, the presentation, the agreement, the ability to interact within the client portal. So that's an agreement document type.

And then we say but what if it's not even an agreement. I just want to send a presentation because also presentation looks like $1 million in Proposaly.

So we say, you know what, let's create a new doc type, we call it presentation. And now we say, but what if I just want to get the one-off payment from a client.

So I don't need a fancy proposal. I don't need to sign a fancy agreement or anything like that.

Not even a presentation just like send a payment request, maybe have the ability to add some add-ons, some maybe like ask for a tip, for example, as an option, and that's it, very simple. So go to Proposaly, set the amount, set short description what the payment is about, put the recipient email, click send and that's it.

So imagine, I don't know, like flower boutique shop in California, I get an order for a special bouquet over the phone. But now instead of me starting to take the client credit card details or anything like that, which is not very secure or user-friendly can easily send him a custom payment request with add-ons, maybe with tip request and stuff like that straight to his phone.

And let's see the next video that basically show exactly this story. [Presentation]

So very nice, and it's come with a big promising. So basically, now there is even, let's say, small businesses can send, let's say, Amazon grade checkout, like custom checkout to their clients without any issues.

And that's a big differentiation and a big game changer the way business are done now a days. And basically, we bring e-commerce for traditional businesses but do it in a customized way.

So it's not like we're not building a website for them. We're building a special link for them that is special, let's say, payment request, special proposal or whatever that is custom made for this specific client, but look like $1 million, and that's a big, big value addition to our system.

So I want to share the presentation again, sorry about that. We discussed a bit new functionality that we added to Proposaly and trust me, there's much more that's going on in Proposaly literally on a daily basis.

And now I want to discuss what AI, our AI is transforming our creative studio. So basically, before AI creating, let's say, commercial- grade video for us was almost mission impossible.

And if it was possible, we need to spend so much money, do the video production, a lot of people involved, very costly and it's like maybe $50,000, $100,000 just to create one video like that. It was very difficult to do.

But now with AI, our creative studio can create TV commercial grade videos, but basically do it in less than one day. And it's look like a $1 million, trust me.

We're going to show you like 2 videos, one created for our client GRB in Australia, which is a kitchen warehouse e-com company and another one was created to the Jewish agency as part of the tender that we are currently taking in Israel. So basically two videos but both of them generated by AI.

By the way, the two videos that I show you to Proposaly also created with AI and that took us less than one day to create them. So basically, again, that's mind blowing what we can do today with AI, and this is just yet another cool example.

[Presentation]

Cool. So this is one we do, again, like probably, like I said, commercial -- TV commercial grade type of video, can be on any national TV and again, was created with AI in less than 8 hours.

So it's a mind-blowing and game changing moment for us. And the same -- same video, different concept generated with AI for the Jewish agency.

[Presentation]

So I think like I'm sure that you love what we showed you today and that's also a demonstration that in Adcore, we don't just talk AI, we do AI, we integrate AI, we implement AI. And that's already transforming the way that we are doing business, whether we are more efficient, you can already see it in the numbers, let's say, whether it's like we are getting new clients because of our AI abilities, whether it's the level of innovation we can introduce to Proposaly, for example.

So for us, AI is not just, let's say, a slogan or a trend, it's something that is already happening and transforming the way we're doing business. And that was important for us to share it with the audience today.

So last but not least, I'd like to conclude the management remarks with discussing the share stock price. Currently, it sitting on $0.26.

We see -- looking at comparable companies, we see massive upside of almost 800%. If you look at EBIT to gross profit or even EBIT to EBITDA, a massive upside of more than 50%.

And again, management still believe there is a disconnection where the stock price is currently sitting and where the company true valuation should be. And we are working very hard every day, every week, every month, every quarter to make Adcore the best and most innovative company out there.

And I think eventually, stock price will catch up and basically Adcore will become the success story deserved to be. So with that, I want to conclude my today's remarks and add it back to Amit I guess.

Thank you, and good morning, everyone. So 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 second quarter of 2025, we saw increases in both gross profitability and gross margins.

Our APAC revenue grew by 35%, reflecting strong regional performance and our cash position rose by 23% compared to June 30, 2024. Let's review in more detail.

For the 3 months ended June 30, 2025, we delivered revenue of $6.5 million compared to $6.6 million in the same period of 2024, a decrease of $0.1 million or 1%. Gross profit for the 3 months ended June 30, 2025, was $3.1 million compared to $2.9 million in the prior year an increase of $0.2 million or 6%.

Gross margins for the 3 months ended June 30, 2025, were 47% compared to 44% 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 $3.1 million compared to $3.1 million in the prior year. Operating loss for the 3 months ended June 30, 2025, was $0.5 million compared to $0.8 million in the same period last year, a decrease of $0.3 million or 40%, mainly due to improvement in gross profits.

Net loss for the 3 months ended June 30, 2025, was $0.4 million compared to $0.7 million in the same period last year, a decrease of $0.3 million or 38%. Revenues and gross profit.

Looking at the quarterly results, revenues saw a slight decrease, while both gross profit and gross margins improved meaningfully. For the first half of the year, we achieved growth in both revenues and gross profit, which is positioning us well to maintain the positive trend for the year that you see on the right.

As for geographical revenue breakdown, revenue in APAC saw a significant 35% year-over-year increase which is driven primarily by the acquiring of new clients. Revenue in EMEA decreased by 6% and in North America by 43%, mainly due to stopped or reduced activities.

In terms of financial position, we had cash and cash equivalents of $9 million as of June 30, 2025, compared to $10.8 million at December 31, 2024. Cash and cash equivalents as of June 30, 2024, were $7.3 million, showing an increase of 23% year-over-year.

Total working capital amounted to $6.3 million compared to $7.3 million at December 31, 2024, a decrease of $1 million or 14%. 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. For the 3 months ended June 30, 2025, adjusted EBITDA was $156,000 compared to a negative $173,000 for the same period in 2024.

This increase in profitability is primarily driven by a reduction in operational losses. With that, I will turn the call back to Nick.

Thank you very much, Amit. At this time, we will move over to the Q&A session, where we have a number of submitted questions.

And we'll begin with APAC, which saw again another strong quarter with around 35% growth. Can we expect this to continue?

And what's really working for you in that region?

It's a good question, and we're definitely happy from the result and the performance that we see in this specific region. I would say, first, what is working for us in this region.

I would say it's a mix of new client acquisition. So we've been able to acquire some very nice clients in this specific region that obviously contributed to the results that we see coming from this quarter as well as I would say, performance or increase in SaaS revenue from our Media Blast app that is directly related or contribute within this specific region.

So I think like it's a combination between SaaS revenues that are growing for us and new client acquisition. And yes, like we expect the positive trend in the specific region to continue throughout 2025.

Very good. And Q2 gross margins were at 47%.

That's relatively high when looking at previous quarters. Can you elaborate on how you're able to achieve this and if that's sustainable?

Indeed, maybe, Amit, you would like to cover this one.

Yes, sure. So basically, part of the increase in our gross margin this quarter is due to an increase in our SaaS revenues and also improved efficiency that we presented partially by implementing AI -- so this is the reason.

Thank you, Amit. Next question is, is Adcore able to leverage some of the new AI tools coming out, particularly there's Google AI MAX?

And can we use us to monetize it and gain market share?

So it's a good question. I would maybe start by what Google is saying in his latest earning call.

There was a lot of, let's say, concern regarding AI impacting Google business model, for example, and Google actually say that it look at it as a moment of bigger expansion and we believe -- we truly believe that's the case. This represents a massive opportunity for us and Adcore being an innovative technology company basically is poised like to lead this trend as well and it's not a trend, that's a revolution.

And we would like and want to be part of this AI revolution. Google recently had a very big event in APAC and Adcore was presented to be the poster boy, I would say, for implementing Google new AI Max, which is AI-based campaign for search, Google literally introduced.

We did a big case study. You know like presenting the result of this tool on one of our client, Candlefox.

So that show you how Adcore basically is in the front row of this massive transformation. And I think I've been able to be there.

It's also helped us to attract new clients, new businesses. People look at Adcore as an innovative company and a company that you would love to be part of, partner with in order to benefit from all this AI boom.

Thank you, Omri. And kind of similarly, AI is having a huge impact on many industries.

Does Adcore have a plan on how we are going to use AI to increase our revenue and reduce costs?

So I think like for Adcore, I believe we already proved it during this earnings call and during the presentation, AI is not a slogan, it's a way of life. And it's already deeply integrated with everything we do more or less, whether it's our technology, whether it's our -- the way we operate and run business, and you can already see it in the results.

Like Amit rightly mentioned before, some of the improvement that we see in efficiency is because of AI. We can get more work done faster, easier with less people sometimes, and that's a game changing.

And when we talk about technology and talk about innovation, the sky is the limit. You saw how easily its now, let's say, to create a proposal using AI, for example, never been able before, creating a TV, like great commercial in less than 8 hours or day work time like.

So I don't know what's all the Hollywood studio going to do now, but they need to be careful of the Adcore AI studio nowadays. So I think like, again, AI is here already.

It's already the way which we're doing business for better, and it's going to have even more positive effect as we move along next quarter, next year, it's definitely a big game changer for better for us.

Yes. Agreed, Omri, its quite incredible what you can do with AI in those videos in less than 8 hours.

It's quite amazing. But moving on to the next question, your LinkedIn has your employee count at 95 people.

That's about a 25% growth increase over the previous year. Is that accurate figure?

Yes and no. I believe the more accurate number, and that's including both like direct employees and nondirect employees is around maybe more accurate is 75, I think, Amit, correct me if I'm wrong.

Yes, that's correct.

Okay. So I believe the LinkedIn is probably some of it related to legacy maybe employees and people that who maybe having hard time to disconnect from Adcore, but I'm not sure 95, it's a bit exaggerated.

What is true is that Adcore is growing in the number of employees. If you need to look at the same number last year, probably the headcount were around [ 65%, 63% ].

Having said that, we took a very different strategy in 2025 than we took in the previous year and most of the growth that we see nowadays coming from specific regions of countries that come with relatively low salaries. We're growing a lot our team in Vietnam.

We started to grow our team in South America, for example, in Argentina. But these people come in, I would say, 1/3 or 1/4 of the cost that basically it costs us to get somebody on record employing, let's say, in Australia or in Canada or in Israel.

So it's a big game changer. So we are growing the team but not growing actually the salaries expenses.

Amit, like correct me if I'm wrong, but I don't believe there's like a big growth, if any, in salary expenses in Q2 this year compared to previous year.

Yes, that's correct.

Okay. So I think -- and that's just, let's say, the early sign of this transformation that we are undergoing.

And trust me, maybe these people come relatively in less cost, but by no mean lesser of employees. This is like great employees that we can get, like, including developers, in these specific countries.

And basically, that's going to be transforming the way we can do business and our salary costs moving forward. So the idea is, yes, to grow the headcount needed, but grow it in countries that are going to cost us as much, let's say, people in Australia, people in U.S., people in Israel.

Very good. Thank you, Omri.

And I guess on that note, does Adcore have any plans to open up a new office, perhaps in South America?

So I think like the short answer is not now. Not as I know of, at least, because to be honest, it's not needed.

Part of our ability to reduce cost is like we can employ someone in Argentina as a contractor, working fully remotely without like having an office cost associated to it, and we can still get the work done. So I think like currently, we're fine with our current offices, branches.

And if you're going to employ somebody, so we don't need that we need to run and open a new branch in Argentina or Vietnam or anything like that.

Thank you, Omri. And in the press release, you discussed some new features on Proposaly.

I'm interested, do you have expected go live date for the app? And how is the beta testing going?

Okay. So actually, better testing is live, right?

So Proposaly is working and we do have like an active beta client. And I think like, yes, it's a transformational moment for the application like going to beta, close beta stage is a very important and critical stage in the app life cycle.

It helps us to better understand the market fit. If we still have some gaps between the current functionality that the app can support and the actual needs of, let's say, a real client.

And we did find out that we have some gaps, we are narrowing them as we speak. And basically, I think like -- so that's like a big change.

And also the shift of focus, the focus is shifting, shifting from pure R&D to, let's say, more business side of the application, whether it's client acquisition, whether it's onboarding teams, whether it's client success team. So I think like we're gradually now shifting focus from just a pure product-related R&D focus to more business side of the application and the activity.

And I think like that's an important step moving forward and a critical step in order for Proposaly it to be the success story and we're all working very hard for it to be.

Very good. Thank you, Omri.

and I believe that concludes all the questions we had for today. So at this time, we'll move over to -- thank you, Amit and Omri for your notes today, and thank you for joining the call.

I want to give Omri the last moment here to end off the call.

Okay. With pleasure.

So again, thanks for everybody that joined today's call. I think it was an interesting call.

It wasn't an usual typical call. From one end, we had like a strong quarter, a positive quarter with like all the quality indicators moving in the right direction.

But also bear in month Q2, Q1, for us, are not the most importing quarter of the year. So we still have, let's say, the peak of the year is in front of us, whether it's Q3, Q4.

But it was an interesting earning call because we've been able to showcase how AI is transforming Adcore. And what we can achieve, what type of innovation level we can achieve now with AI.

And this is like an eye-opening moment for us as a company, for shareholders to understand this is the future, and the future is already here, and Adcore is part of this future. And I think it's very promising.

And we look at, let's say, over the next quarter, the next, let's say, year, very optimistic.

Thank you, Omri, very excited indeed. And as you mentioned, the future is now, so quite exciting.

That's it for today. Thank you all for joining, and have a great rest of your day.

Thank you.