Welcome to the annual general meeting of the shareholders of VerticalScope Holdings Inc. Please note that the meeting is being recorded. I would like to introduce Diane Yu, Chief Legal Officer and Corporate Secretary of the company, who will provide some introductory remarks before the formal portion of this meeting. Diane, please go ahead.
Good afternoon, and welcome to the 2025 annual general meeting of the shareholders of VerticalScope Holdings Inc. My name is Diane Yu, and I'm the Chief Legal Officer and Corporate Secretary of the company. Before we begin the formal proceedings, I would like to introduce the following members of our board who are present at today's meeting. We have Rob Laidlaw, Wayne Bigby, Philip Evershed, and Cory Janssen. In addition to myself, the following members of management are present for today's meeting. Chris Goodridge, the Chief Executive Officer, and Vincenzo Bellissimo, the Chief Financial Officer. This meeting is being held as a completely virtual meeting. The meeting will be conducted in the same manner as an in-person meeting, and our goal is to replicate the experience you would have had if we were able to come together today in person.
We would like to remind you that only registered shareholders and duly appointed proxy holders who have signed in using a control number are able to ask questions during the meeting. Instructions on how to ask questions are on your screen. In order for us to run the meeting efficiently, the chairman will pause before calling for a vote on any matter of business to allow time for any questions on that matter of business. General questions will be addressed during the question period following the conclusion of the formal business to be conducted at the meeting and the business update. Voting at today's meeting will be conducted by online ballot for all matters.
Registered holders of subordinate voting shares and multiple voting shares, who we will refer to as registered shareholders for ease, and their duly appointed proxy holders who have signed in using a control number, may vote on the online platform with respect to each item of business once the chair advises that the polls are open and until the chair declares that the polls are closed. Instructions on how to vote are on your screen. Please remember that if you have already voted by proxy and you vote again during the online ballot, your online vote will revoke your previously submitted proxy. If you have already voted by proxy and do not wish to revoke your previously submitted proxy, do not vote again during the meeting.
We have two matters of business to be considered at this meeting, being the election of the directors and the reappointment and remuneration of the company's auditor for the coming year. The results of the votes on each matter will be announced prior to the close of the meeting. Each item of business requires a majority of the votes cast by holders of subordinate voting shares and multiple voting shares, voting together as a single class, with each multiple voting share representing 10 votes per share and each subordinate voting share representing one vote per share, to be voted in favor in order for the resolution to pass. I will now hand the meeting over to Rob Laidlaw, our Founder and Chairman, to conduct the formal portion of the meeting. Rob, please go ahead.
Thanks, Diane. Welcome all to the Annual General Meeting of the shareholders of VerticalScope Holdings Inc. The meeting is now called to order. In accordance with the bylaws of the company, I will preside as chair of this meeting, and Diane Yu will act as secretary of this meeting. I appoint Rebecca Prentice of TSX Trust Company to act as scrutineer for the meeting. In order to make the best use of our time, certain shareholders have been asked to move and second motions relating to the business to be conducted at this meeting. That is not intended in any way to limit your right to participate in this meeting. I now declare that the polls are open for voting on each item of business.
The notice calling this meeting and the management information circular describing the business of the meeting have been made available to holders of the subordinate voting shares and multiple voting shares of the company as of May 16, 2025. Copies of the 2024 audited annual financial statements of the company and the auditor's report thereon, as well as the related management's discussion and analysis, are available on the company's website and under the company's profile on SEDAR+. Accordingly, I will dispense with the reading of the notice of meeting. Prior to the commencement of this meeting, the scrutineer filed a preliminary report on attendance, and the secretary has confirmed to me that there is a quorum of shareholders present at this meeting. Accordingly, the meeting is duly and properly constituted for the transaction of business.
I direct that the confirmation of mailing of the notice of the meeting and management information circular received from the TSX Trust Company and the scrutineer's complete report on attendance be attached to the minutes of the meeting. We will now proceed with the presentation of the company's audited consolidated financial statements for the year ended December 31, 2024, and the auditor's report thereon, which are available under the company's profile on SEDAR+. I declare that the company's audited consolidated financial statements for the year ended December 31, 2024, and the auditor's report thereon have been received. The next item of business at this meeting is the election of the directors of the company. The number of directors to be elected at this meeting is five.
The management information circular contains the names and backgrounds of the five individuals that have been nominated by the company for election as directors until close of business of the next annual general meeting. I now declare the meeting open for nominations. In the interest of expediency, I will ask Diane Yu, Chief Legal Officer and Corporate Secretary of the company, to make the nominations on behalf of management of the company.
I nominate each of the persons specified in the management information circular delivered with the notice of meeting, namely Rob Laidlaw, Wayne Bigby, Cory Janssen, Michael Washinushi, Philip Evershed, to serve as directors of the company and to hold office until the close of the next annual meeting of shareholders of the company, or until their respective successors are duly elected or appointed.
As the company did not previously receive timely notice of any further nominations of persons for election as directors of the company, as required by the advance notice provisions of the company's bylaw number three, I declare the nominations closed. In order that a vote may be held on the matter, I request a motion that the five persons nominated as directors of the company be so elected.
I so move.
I second the motion.
Before I call for a vote on the nominated directors, I will pause for a moment to allow for any questions on the matter to be submitted.
I confirm that we have not received any questions relevant to this motion.
Thank you. Registered shareholders and duly appointed proxy holders who have signed in using a control number can now vote by online ballot. I will now proceed with the next item of business and report on the votes at the conclusion of this meeting. We will now proceed with the reappointment and fixing of the remuneration of the auditor of the company. In order that a vote may be held on this matter, I request a motion that MNP LLP be reappointed as the auditor of the company until the close of the next annual meeting of shareholders of the company, and that the board of directors of the company be authorized to fix their remuneration.
I so move.
I second the motion.
Before I call for a vote on the motion, I will now pause for a moment to allow for any questions on this matter to be submitted.
I confirm that we have not received any questions relevant to this motion.
Thank you. Registered shareholders and duly appointed proxy holders who have signed in using a control number can now vote by online ballot. We have now dealt with all items of business, and I declare that the polls are closed for voting. I'm pleased to confirm that the scrutineer has reported to me that all matters put to a ballot have been passed with the requisite shareholder approval. Accordingly, I hereby declare the nominated directors elected, the auditors reappointed, and the Board of Directors authorized to fix the auditors' remuneration. The press release will be issued forthwith following this meeting. This concludes the formal business brought before the meeting. As there's no further business that may be properly considered at this meeting, I declare the meeting to be terminated.
Thank you, Rob. Management will now present a business update that includes an overview of the market landscape and certain strategic priorities and initiatives. This presentation will contain forward-looking information within the meaning of applicable securities laws. Forward-looking information is based on certain expectations and assumptions and is subject to known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those anticipated. VerticalScope does not undertake any obligation to update forward-looking information, whether as a result of new information, future events, or otherwise, except as required by law. I will now turn to Chris for management's presentation. Chris?
Thank you, Diane, and thanks, everyone, for joining today. It's been two weeks since we announced our leadership transition, and we look forward to providing an update on our progress, offering some comments on the changing landscape, and discussing our near-term strategic priorities that will position VerticalScope for long-term growth. We're at a pivotal moment for the internet. Google search has dominated content discovery on the open web for close to two decades, but the emergence of LLMs and their consumer-facing applications like ChatGPT and Perplexity have the potential to upend that dominance and fragment content discovery. At the same time, Google's making changes to the search experience to put its own AI experiences at the forefront with AI Overviews and now with AI Mode.
When viewed in context, these latest changes are a continuation of the trend to decrease the prominence of organic search results at the expense of much higher ad loads, the promotion of Google's own services like YouTube, and direct answers to questions through snippets. VerticalScope has navigated all these changes in the past and in each case has come out a stronger company. Regardless of the role that AI-generated answers play in content discovery, we know that authentic human intelligence and real-world experiences will become increasingly more valuable. Our communities are a key source of that intelligence and those experiences. In many cases, a simple AI answer will satisfy a query, but people will continue to rely on platforms like Fora or Reddit to obtain social proof and validate answers, but also to engage with other people to tap into their real-world experiences.
Although much has changed over the years, our mission and vision remains the same. We provide a place where people with shared passions can connect and go deep on topics they love. The authentic perspectives and deep expertise shared on Fora is the heart of our business model and will continue to be a key driver of our growth. Our resilience and adaptability has always been a strength and will continue to be in the months and years ahead. Central to our adaptability is our talented management team. We're fortunate to have Rob's continued involvement as chair of our board and our largest shareholder. Rob has steered VerticalScope through many challenges and changes and will benefit from his continued guidance and strategic insight.
In addition, as part of our leadership transition, we're excited to announce the promotion of Ezra Menaged to Chief Operating Officer and Meir Wohlfarth to Chief Technology Officer. Ezra and Meir joined VerticalScope through our Hometalk acquisition in 2021. They're very strong leaders and exceptional operators who have a deep understanding of our users and the keys to driving organic growth. I'm excited to see the innovative approaches we'll be taking to grow our audience and provide new experiences to both our users and our customers. Beyond Ezra and Meir, we're fortunate to have a deep bench of leaders who know our business very well and have been key drivers of our resilience and adaptability over the years. Following on these leadership changes, we've moved quickly to realign our teams and operations over the past couple of weeks with a few key goals in mind.
First is to increase the pace of development and change with a focus on direct connections with our users and improve monetization. The second is to align our strongest capabilities with our greatest opportunities for growth and remove obstacles to moving quickly. Finally, our focus has been to make the business more efficient by eliminating management layers and accelerating the adoption of AI tools across every department in the company. We're entering our next phase of growth from a real position of strength. The profitability of our business model is well established and has allowed VerticalScope to be a consistent cash generator with 90% cash conversion over the last 12 months. Our cash flow has allowed us to strengthen our financial profile with leverage a little over one times, and our updated credit facility, signed last fall, provides us with over CAD 60 million in liquidity.
This foundation positions us to aggressively pursue organic growth opportunities, but also to selectively deploy capital to continue to scale our business. To this end, our focus in the near term are on the following strategic priorities. The first is diversifying our revenue. Our advertising business has been a key driver of our recent growth and makes up over 85% of our revenue. We'll be aiming to broaden the customers we serve, but we're also pursuing net new revenue sources, including an expanded branded content offering that draws on the unique value of our communities. We're also working on launching new data-driven revenue products and are pursuing new commerce-based revenue streams as well. Second focus is expanding our direct traffic sources. With changes to content discovery through search, we're expanding our direct audience connections.
We currently have 68 million registered users on the platform and have been steadily growing our direct traffic. This is a top priority for our teams. We'll work to grow our mobile app and expand the number of users who are authenticated through email. We'll then aim to leverage those direct connections to drive higher levels of engagement and content contribution. This strategy will seek to lessen the relevance of search engines over time and lead to more predictable levels of MAU and DAU. Our third priority is AI-powered platform innovation. As much as AI and LLMs are reshaping content discovery, it's also unlocking completely new growth opportunities that we're leaning into that wouldn't be possible without AI. These initiatives will add utility and value to the Fora platform. Just a few examples. The first is AI-powered translation.
We've started translating content on Fora into multiple languages to enable discovery across a broader potential user base, and the early results are encouraging. The second is our community AI assistant. The beta launch of our new community AI assistant, which we call Fora Frank, is identifying questions that are unanswered and encouraging greater posting activity. This is a way that AI can support a richer experience without sacrificing authenticity or trust. On threads where we've launched Fora Frank, we're seeing increased engagement, and we expect that to continue as it's scaled up. Third, AI summaries are launching across our communities. These helpful summaries distill complicated and detailed threads into easily digestible snippets. This feature is particularly helpful to new users who are looking for quick answers to their questions, and we believe will improve both retention and engagement.
These are just a few examples of the platform-driven innovation that AI will unlock on Fora. Finally, we'll continue to be opportunistic with M&A. Our financial strength will allow us to continue to be very selective and opportunistic. We've made four tuck-in acquisitions so far this year, which are all performing well, and we have a deep pipeline available to pursue. The current dynamics at play with AI, search, and content discovery may be disruptive to independently owned communities that don't have the benefit of a scaled tech platform like Fora, and we expect this will lead to even greater opportunities for us in the coming quarters. With that, I'm going to pass it over to Vince to walk you through our recent financial performance.
Thanks, Chris, and thank you to everyone for joining today. 2024 was a strong year for VerticalScope, marking four consecutive quarters of double-digit organic revenue growth led by digital advertising. For the full year, we generated revenue of CAD 69.1 million, up 13% organically over 2023, largely driven by MAU growth, ongoing enhancements to ad tech, and new programmatic partnerships. Digital advertising, which made up 87% of total revenue, increased 20% year-over-year. Programmatic was the standout contributor in the channel, growing 30% year-over-year, driven by growth in our user base, contributions from video, and higher CPMs across more than 35 supply-side integrations. Our direct advertising business also performed well, finishing the year strong with 11% growth in Q4. Momentum in categories like automotive, power sports, and retail continues to build, and we're seeing promising signs of repeat spend, with full year 2025 bookings up when compared to prior year.
Turning to e-commerce, revenue declined 18% year-over-year, but the channel's become more stable and predictable, with subscriptions now making up over 60% of our e-commerce revenue. Our April 2025 acquisition of Ritual Technologies and its localized food pickup app will contribute new revenue and return the e-commerce channel to growth in 2025. Looking ahead, we remain focused on navigating the evolving search environment and the impact of AI-driven content discovery. While recent algorithm changes have created near-term pressure to our top line, they also reinforce the long-term opportunity for forums and human-created content. In high-value, purchase-driven categories, consumers increasingly seek social proof and community validation, areas where our four communities deliver exceptional value. 2024 was also a very strong year financially.
Adjusted EBITDA increased 27% year-over-year to CAD 29.8 million, and we converted those profits into cash at exceptional rates, with free cash flow up 34% to CAD 27.6 million, representing a conversion of over 90% and demonstrating the strength of our financial model. Looking ahead, we remain focused on a disciplined approach to growing our business and maximizing free cash flow generation. For 2025, we have guided to full-year adjusted EBITDA in the range of CAD 21 million-CAD 24 million, and full-year free cash flow in the range of CAD 20 million-CAD 22 million, with conversions of 85% or above. This guidance reflects the near-term impact of changes in search traffic and our current assessment of the impact of tariffs may have on U.S. advertising budgets.
It's worth noting that our projections do not include any contributions from organic initiatives, including diversification of traffic sources and AI-driven enhancements across our platform and operations aimed at growing ARPU and further optimizing our cost base. Our business model is built for resilience, which it has demonstrated time and time again over our history. With a strong balance sheet, scalable platform, and ample liquidity, we are well positioned to invest strategically, whether through organic initiatives, AI innovation, or accretive M&A. We are entering 2025 with a clear focus to diversify our traffic sources, grow direct relationships with our users, and continue investing in AI-powered enhancements to unlock the next phase of long-term growth.
I'd like to take a moment to highlight the great work we've done over the past two years in strengthening our financial foundation with a deliberate focus on reducing leverage and positioning the company for long-term flexibility. Since 2023, we have reduced our net debt position by nearly CAD 50 million and have improved our net leverage ratio from over two times to 1.24 times as at March 31st, 2025, as defined by our credit agreement. That strategy is now paying off. We're entering 2025 with a strong balance sheet, healthy free cash flow, and ample dry powder, with over CAD 60 million in available liquidity between our revolver and cash on hand. We are well positioned to pursue strategic investments in organic growth and accretive acquisitions without sacrificing our financial stability.
In today's environment, that flexibility is a competitive advantage, and we will continue to evaluate capital deployment opportunities that align with our long-term strategy and create sustainable value for our shareholders. Now, I will pass it back to Chris to close things out. Chris?
Thanks, Vince. To sum things up, as we've outlined today, our near-term priorities are focused on building new revenue sources and opportunities, more direct user connections, AI-driven platform improvements, and selective M&A. Our financial discipline and operational focus will continue to be consistent drivers of our success, and our team is really excited for the next chapter. Thank you to our shareholders for your continued support. With that, we'll pause now to open it up to questions.
I confirm that we have not received any questions.
Great. On behalf of the board and management of the company, I'd like to thank everyone for attending today. Thank you for attending today's meeting. You may now disconnect.