Zoomd Technologies Ltd. (ZOMD) Earnings Call Transcript

Thank you for joining us today for Zoomd's Third Quarter 2025 Update Conference Call. With us on the call representing the company today is Amit Bohensky, Zoomd's Founder and Chairman. At the conclusion of today's prepared remarks, Amit will answer some questions that were sent to us by investors and other questions we think are relevant to investors as well. Before we begin with prepared remarks, just a couple of comments. Today's call will contain forward-looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected, and the company undertakes no obligation to update these statements, except as required by law. Information about these risks and uncertainties are included in the company's filings as well as periodic filings with regulators in Canada and the United States, which you can find on SEDAR and Zoomd'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 noted in U.S. dollars as are Zoomd's financial statements. Finally, today's event is being recorded and will be available for replay through the webcast information provided in the press release. With that said, let me now turn the call over to Amit Bohensky, Founder and Chairman of Zoomd. Amit, please proceed.

Thank you, Ben, and good morning to all of you. We are pleased to speak with you today regarding our third quarter 2025 results. In Q3 2025, the company reported a 3% decrease in revenues compared to Q3 2024, primarily due to the fact that most revenue from the Euro Cup tournament was recognized in Q3 of 2024. Despite the revenue decline, the company delivered strong financial results and higher profitability through disciplined cost management and enhanced operational efficiency. Growth was achieved across all key operating metrics, including cash generation, gross profit, net income and adjusted EBITDA. Notably, operating income increased by 15% to $3.7 million for the quarter. Year-to-date, our results demonstrate meaningful progress on both the top and bottom line. For the first 9 months of 2025, revenue grew 37% and net income increased by 150%. These gains reflect fundamental changes we've made in how we run the business and how we are confident in our ability to build on this success. Going forward, on a trailing 12-month basis, we generated $68.9 million in revenue, $32.5 million in gross profit and $17.7 million in net income. We ended the third quarter of 2025 with $18.3 million in cash and no long-term debt. While our current cash position provides ample runway to support organic growth as well as pursuing more partnerships like the one we announced with E2, it also offers flexibility to pursue strategic acquisitions that will further accelerate our expansion, and we continue to evaluate opportunities that complement our core competencies and would be strategically accretive. Our performance continues to deliver operational ROI for our customers, supporting strong client retention and driving new customer wins. Revenues from clients outside of the company's top 10 customers doubled in Q3 '25 compared with Q3 '24, a showcase of the significant efforts undertaken to aviate our customer concentration. Over the past year, we added more than 10 new clients and based on the typical revenue ramp-up time. We expect to see the impact of these wins in 2026. With 2026 in also being a World Cup year, we started to strategize with some of our customers to secure budgets for the World Cup, which is the most viewed sporting event in the world. Our differentiated focus on markets outside the walled gardens is gaining traction and industrial recognition is growing. On our second quarter call, ,I noted our efforts to establish strategic partnerships to accelerate sales growth. Recently, we announced the first of this, a global agreement with E2-Quadrat communication, a leading provider of digital marketing and technology solutions for the sports and betting industry. The collaboration will allow Zoomd to access E2's current and future clients worldwide, accelerating our client acquisition and revenue growth efforts. We are working on securing additional agreements that will accelerate our revenue base. Now I would like to focus on the 3 key areas of Zoomd, our customers, our product and service development and how we are adapting to the market trends. I want to begin with our customer base. We continue diversifying our customer base and focusing on growth sectors, such as e-commerce, iGaming, entertainment and transportation and consumer goods, sectors known for their stable growth patterns and elevated profit margin. We have deepened our activity with current customers as well as expanding to new customers. Consequently, our revenues have experienced substantial growth. The diversification in sectors and geographies is important as we aim to manage strong revenue growth. As we reported, over 70% of our revenues come from top 5 customers. It's worth noting that each of our top clients operate across multiple countries with different KPIs, budgets and strategies. For example, we operate in more than 30 countries for 1 client and 10 for another, which expanded by 50% during 2025. This helped reduce concentration risk and strengthens our overall foundation. Now I would like to turn to our product and service offering. Our competitive edge stems from our comprehensive 360-degree approach to the digital performance with a mobile-first focus, all designed to help our clients to 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 clients' digital performance KPIs. Finally, Zoomd utilizes a combination of research, development, acquisitions and methodologies to improve its offerings. One of our core strengths is 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. This relationship position us not just as a vendor but as a trusted adviser. The depth of this engagement fosters long-term partnership, significantly reduces churn and create strong opportunities for revenue growth within our existing client base. This approach enables real-time campaign management with our delays even while simultaneously handling multiple campaigns across various geographies. This unique approach position 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 the shifts in client strategy, but also broader macroeconomic changes beyond the client's direct control. As a result, we empower our clients to swiftly adapt to market fluctuations, maximizing their impact and driving significant outcomes globally. Our main platform is integrated to hundreds of media sources, allowing us to promote customers' digital assets in multiple channels under one system. We use a DSP for programmatic media buying. The DSP is integrated to the biggest mobile media exchanges, providing our customers full range and reach for their 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 serves valuable time and resources for advertisers, but also provides enhanced clarity and consolidated insights. Additionally, our platform and products are designed for user-friendly operations, eliminating the need for a software development kit, SDK implementation. In our perspective, position and crucial within the ecosystem, the company stands strongly in the industry beyond the walled gardens as Google, Meta and et cetera. The marketing landscape is very fragmented. Zoomd enables advertisers to leverage a wide range and various types of media channels from social to programmatic, OEMs, SDK network and more. Their KPIs are achieved on all channels together or as a mix. Before I go through the financial results, I want to update that in line with the recent changes in the marketing space, 2 of our largest customers are making adaptation to the acquisition models and goals. We are working closely with them on adapting their KPIs and measurement models to align with their new objects. Such transitions are a part of our business and based on our experience, activity typically scales up within a few months. While these changes may temporarily impact near-term activity, they also established a foundation for stronger and long-term collaboration. Transitions like this, similar to other periodic shifts in our operating environment, do not reflect on our quality of service we provide. Our diverse customer base spans multiple sectors and regions, so revenues, cycles may occasionally be influenced by external factors such as seasonality, macroeconomic trends, client budget decision or organizational and internal changes on the client side, as in the case now. As we have successfully done so in the past, we continue to focus on maintaining a resilient, flexible operational foundation that enable us to navigate these fluctuations effectively while preserving long-term profitability and strong client relationships. Financial results. Now I will review the third quarter of 2025 financial results in details. Revenue. Revenue in Q3 '25 were $16.1 million, a 3% decrease from $16.7 million in Q3 of '24, preliminarily reflecting a onetime revenue benefit in the prior year period from the Euro Cup tournament. Gross margin. Gross margin in Q3 '25 was 42.6%, a 332 basis points increase compared to Q3 of '24. This improvement was driven by the continued operational efficiencies. Operating expenses. Total operating expenses for Q3 of '25 were $3.2 million, a 5% decline compared to Q3 '24. Despite a 3% year-over-year decline in sales, operating margins expanded to 366 basis points, reflecting strong gross margin and disciplined cost control. Adjusted EBITDA. Adjusted EBITDA is used as the primary performance measure by the company's management to ensure it has the right structure to support future growth. We define adjusted EBITDA as earnings before interest, tax depreciation, onetime payments and amortization as adjusted for share-based payments and nonrecurring operating expenses. Adjusted EBITDA was $4 million in Q3 of '25, a 3% increase compared to Q3 of '24. And for reconciliation of adjusted EBITDA is available in our MD&A filing. Net income. Net income was $3.8 million, a 20% increase compared to Q3 of '24. Cash. Cash flow from operations reached a record $5.4 million in Q3 '25 as of September 30, 2025. The company had a cash balance of $18.3 million and no long-term debt. Before I move on to the questions, I want to thank to all our employees for their hard work and dedication as well as our investors who support us. I'm always available to speak with investors and look forward to hearing your feedback and answering questions. With that said, I will answer some of our investors' questions and some questions that may be of interest to our investors.

Okay. Thank you, Amit. We have some questions for you. The current year is marked by highly volatile and complex global macroeconomic environment. This does not -- this doesn't appear likely to normalize in the near term. How is Zoomd navigating the situation?

Very good question. We are operating in a volatile environment. So we've been very focused on effective, agile management that allows us to adapt quickly. At the same time, we've maintained a lean cost structure and a strong operational backbone while continuing to invest in market analysis, customer management and R&D, all of which support our competitive edge. We always constantly work to improve our customer diversification. Revenues from client outside of our top 10 doubled in Q3 compared to last year. In addition, we expanded our presence in North America and Europe and strengthen our position in sectors with stable demand and attractive margin, such as e-commerce, iGaming, entertainment, transportation and consumer goods. All of this contribute to the high profitability across key metrics: cash regeneration, gross profit, net income and adjusted EBITDA. And this ties directly into our strategy going forward. We operate in a dynamic evolving environment and management remains focused on the 3 core strategic initiatives: one, organic growth, continuing to expand in a stable, high-margin verticals while improving internal efficiency; two, strategic partnerships, strategic partnership in high potential sectors, allowing us to unlock new opportunities quickly and efficiency; and three, actively exploring M&A opportunities to accelerate growth, deepen technological capabilities and broaden our customer base. The combination of disciplined execution and clear strategic framework position us well position to navigate market fluctuations while staying ready to capture opportunities as they arise.