Good morning, everyone. Before we begin the official remarks, here is the cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable securities laws, including, among others, statements concerning the company's objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated.
Please refer to the cautionary statement and the risk factors identified in our filings with SEDAR for a more detailed explanation of the inherent risks and uncertainties that could affect such forward-looking statements. Following the presentation, we will conduct a Q&A session. I would now like to turn the conference call over to Tal Hayek, Chief Executive Officer.
Good morning, everyone, and thank you for joining us on our first quarter of 2026 earning call. My name is Tal Hayek. I'm the co-founder and returning CEO of illumin. I'm going to start with a brief overview of the quarter, followed by an update on our platform and go-to-market progress. I'll turn it over to Michael Amaro, our Interim Chief Financial Officer, for the detailed review of our financials. Our first quarter showed a solid top-line growth, with a revenue up 20% year-over-year to CAD 35 million, driven by strong performance of our Exchange service, where we continue to see strong momentum from both new and existing customers. Exchange revenue increased 45% year-over-year to CAD 17.4 million. We are very proud of the Exchange team. It's doing a phenomenal job.
While it's true that overall the quarter showed strong growth, we've seen mixed performance across the business. Exchange continued to lead the quarter, while the DSP part of the business saw nominal growth. Along with a shift in revenue mix towards lower margin lines, this puts pressure on our gross margin, which came in at 35% and impacted overall profitability for the quarter. Improving this mix is a key focus for us moving forward. In Self-service, revenue was CAD 8.4 million, flat year-over-year, and represent 24% of our total revenue. Let's talk about me. For those of you who don't know me, I was one of the founders of the company back in 2009. I led this company for 14 years. Most of the years were very aggressive growth.
We've gone public on the Venture Exchange first, then on the big board in Toronto Stock Exchange, then on the Nasdaq. We have bought four companies under me. We had an M&A practice, and we bought four companies. Two years ago, I was burnt out, and I decided to find a replacement for myself. The last two years, I done a lot of traveling, spent a lot of time with my family and my kids, my wife, and really invested in myself. I am now back with a lot of renewed energies, and I'm ready to do this again. We've gone through a number of hard times in this company's lifetime. Two specifically that I remember that one of them was back in 2017, and one of them was during COVID.
Both times it felt like it was the end of the world, but we recovered, and we became better and stronger after it, and I believe this will be the same case now. As I walked into the situation in the company, that we're burning a lot of cash, that our revenue, our DSP revenue is down or flat. The first week, as the CEO, we executed some layoffs. I can tell you that is not the fun part of my job. That's, you know, the part of the job that I hate the most, but it needed to happen. We were burning way too much cash. Within the first few days, we've done that.
We also asked our team members to start coming back to the office three times a week versus two times a week, as I feel that we all need to kind of be together and get the team spirit back in order to get this company to win again. What are we focusing on in the future? The big focus is on revenue. We are going to grow our DSP revenue. We are going to increase our margins, and we're gonna become profitable again. That's my focus. How are we gonna do it? We're working on strengthening our sales team, obviously working on the marketing side as well. I think this is a really great time for the M&A opportunities out there. When we were buying companies back in the day, multiples were low, and it made sense. The multiples became extremely high.
It didn't make sense anymore. Well, guess what? Multiples are lower than ever now, and that's a great opportunity to start buying other companies. We're working on executing a plan for finding those targets and acquiring the targets. We will likely buy smaller companies, so I would say CAD 15 million-CAD 30 million in revenue roughly. We are going to be able to remove a lot of the expenses, technically most of their expenses, as we will not need the two technologies. We will probably be able to improve the margins that they have and retain the revenue. I'm really liking that concept, and we also will not likely need to raise any money because we usually pay a little upfront and earn out.
We do give opportunities for founders, operators, to exit, but it's more like there's a little bit money upfront and the rest of it is coming in the next three years. We're giving you a pathway to exit. Out of the four acquisitions that we've done, three of them were done that way, and I believe it went very well. I also want to share that I have a lot of reasons that I want this company to succeed. One of them is I am a very big shareholder of the company. For those of you who have started a business and saw it succeed, it's like your baby. When I saw that the company's in trouble and the board and I were talking about me coming back, I was thinking about it.
Do I wanna give up my freedom or look for another CEO? The answer for me was actually very clear. I was missing a purpose, and illumin is a great purpose. The first day I walked into the job, I felt like at home and alive. I know exactly what we need to do here in order to to succeed, and I'm not gonna say I'm going to do it. We are going to do it because we have a great team that is all ready to go and all want to win again. With that, I'll turn it over to Michael for a closer look at the financials.
Thank you, Tal. Good morning, everyone, and thank you for joining our 2026 first quarter earnings call, which we reported earlier today. First quarter 2026 revenue was CAD 35.0 million, representing 20% growth from CAD 29.1 million Q1 2025. Exchange service continued to be a strong performer this quarter, while our strategic initiatives surrounding Managed service started to take root. Self-service revenue performance was flat for the quarter. Gross profit or net revenue for the first quarter 2026 was CAD 12.4 million, compared with CAD 12.9 million in Q1 of 2025, reflecting a change in revenue mix, the absence of higher margin client activity in 2026, and broader product mix dynamics. Gross margin for the quarter was 35.4% compared to 44.5% in the prior year period.
This year-over-year change was driven by a higher proportion of revenue from service lines with lower margins, such as Exchange service. Exchange service revenue for the first quarter increased 45% year-over-year to CAD 17.4 million, reflecting strong new customer acquisitions and augmented spend from existing clients. This performance underscores the impact of the strategic investments we made over the past year, core technology enhancements, strengthened external partnerships, and expanded customer capabilities. Turning to Self-service, revenue was CAD 8.4 million for the quarter, which was relatively flat to prior year and represented 24% of total revenue and saw seven net new clients added. In Managed service, revenue was CAD 9.3 million for the first quarter, an increase of 7% compared to CAD 8.7 million Q1 of 2025.
This favorable variance was driven by a higher volume of spend by customers, largely due to enhanced features with external partners. Total operating expenses for the first quarter of 2026 were CAD 16.6 million, compared to CAD 15.5 million during the same prior year period. The year-over-year increase reflected higher general and administrative costs and depreciation and amortization that was partially offset by lower technology expenses and share-based compensation. The increase in general and administrative costs was primarily due to a lower reversal of annual bonus accruals and a higher bad debt provision, partially offset by lower salaries and benefits from lower headcount. The increase in depreciation and amortization was attributable to an increase in capitalized costs, partially offset by certain lease equipment assets becoming fully amortized.
Q1 2026 operating expenses as a percentage of revenue was 47.5% compared to 53.3% in Q1 2025 and is down primarily as a result of the increased revenue. First quarter adjusted EBITDA was a loss of CAD 2.0 million compared to CAD 0.4 million in the prior year period, primarily due to lower gross profit as a result of lower gross margins and higher operating costs, as mentioned before. Net loss for the first quarter of 2026 was CAD 3.2 million compared to CAD 1.9 million in Q1 2025. This year-over-year change reflects the factors mentioned, as well as higher income tax expense, partially offset by a higher foreign exchange gain.
Income tax expense was CAD 252,000 in the current period compared to a benefit of CAD 63,000 in the same prior year period, primarily due to higher Exchange service revenue. Net foreign exchange was CAD 940,000 for the quarter compared to CAD 311,000 in the same prior year period, largely due to the U.S. dollar strengthening against the Canadian dollar in the current quarter as compared to the prior year quarter. Effective December 31, 2025, the company commenced a Normal Course Issuer Bid or NCIB to purchase for cancellation up to CAD 3.8 million of its outstanding common shares. As of March 31st, 2026, 686,558 shares have been purchased and canceled under this program at an average price of CAD 0.85 per share, totaling CAD 581,000.
The NCIB remains open and can continue until December 30, 2026, or until we reach our targeted repurchase limit. We ended the quarter with CAD 37.5 million in cash versus CAD 43.8 million as of December 31, 2025. Cash was down primarily related to investments to enhance our product platform, operating losses as mentioned before, timing of working capital, common share repurchases, and lease payments, partly offset by foreign exchange gain on cash and cash equivalents.
Turning now to our balance sheet, we ended the quarter with CAD 37.5 million in cash, no debt, and have a strong balance sheet to support our long-term strategy. We are taking additional steps to find further efficiencies in our business to improve upon our liquidity and to improve our financial flexibility to pursue selective, strategically aligned, and accretive acquisition opportunities that expand our capabilities and enhance shareholder value.
We continue to see attractive opportunities and more rational valuations, and we'll continue to evaluate them with a disciplined approach as we move through 2026. As at March 31st, 2026, total number of outstanding common shares stood at 51,201,537 compared to 51,602,090 shares as at December 31st, 2025. This decrease reflects the share repurchases we made during the quarter, partly offset by the impact of shares issued through the exercise of vested equity instruments. Additionally, our insider share ownership is at 33.9%. In conclusion, our first quarter 2026 results were mixed.
We continue to see strong performance in our Exchange service line, while Managed service showed stable improvement in the first quarter, increasing 7% from the same prior year period, reflecting the strategic initiatives implemented during the latter part of the prior year. Self-service remained relatively flat in the first quarter and is an opportunity for improvement. Operating expenses increased year-over-year, but as mentioned, were largely due to lower non-cash bonus accrual true-ups, partly offset by lower headcount and resized operating expenses to align with revenue levels. We ended the quarter with CAD 37.5 million in cash and no debt. Investments made in product development and platform upgrades during 2026 and the latter part of 2025 position us to support revenue growth efficiently. We continue to look for opportunities to improve operational efficiency and remain disciplined with our capital allocation.
With that, I'll now turn the call back over to Tal for closing remarks.
Thank you, Michael. For closing remarks, I want to share that moving forward, our priorities are focused on increasing DSP revenue by focusing on marketing and sales, as well as increasing margins by increasing the DSP portions of the revenue mix. We are also going to pay special attention to M&A opportunities, and I believe there's going to be quite a few out there under these market conditions. I'm very excited to be back. I don't have much good news yet, but give me a few quarters and we will share a lot of good news. Okay, now we're going to go to Q&A.
Good morning, everyone, and thank you for joining today's presentation of illumin Holdings' first quarter financial and operating results. As there are no questions, this will conclude our time this morning. My thanks to Tal, Michael, and a special thanks to our shareholders for attending. Please join us next time as we present our second quarter 2026 financial and operating results. Bye for now