Morning. We're pleased you could join us all for NowVertical's Third Quarter 2022 Webinar. I'm Glen Nelson, Vice President of Investor Relations and Communications. With us today, we have Daren Trousdell, Chairman and CEO of NowVertical Group Inc. The webinar today will begin with some opening comments from Daren and our recent company developments and results. After Daren's prepared remarks, we'll take some questions from you. I'd like to also remind you that our remarks today will include some forward-looking statements and are subject to important risks and uncertainties. They may refer to certain non-GAAP or segment measures such as Adjusted Revenue, pro forma Adjusted Revenue, and Adjusted EBITDA. These measures do not have any standardized meanings under IFRS, and as a result, they may not be comparable to similar measures presented by other companies.
For more information on those, please look at our reports we filed on SEDAR. I'd also remind you that a replay of the webinar will be available on our website later today. With that, I will turn it over to Daren.
Good morning, everyone, and thank you for coming to our webinar. Very excited to spend time with everyone today, sharing our results from our Q3 that we posted last night. Very, very exciting to see the momentum continue. Still feels like the earliest days, first inning for our story. Today, I'm gonna spend a little time sharing this information and answer a few questions at the end, and we'll go from there. Just kind of for everyone's benefit, NowVertical Group, stock symbol is NOW on the TSXV. We are a vertical intelligence software and solutions company that's growing our business or building our business through both organic and inorganic means through targeted acquisitions. Our company is comprised of a network of Big Data AI technologies led by industry experts.
We provide solutions for our customers that are organized by industry that help our customers reveal, secure, and mobilize their data. That, in a delivery sense, covers Data Governance, Data Security, Process Automation, and Predictive and Prescriptive Data Analytics. Ultimately, what we're doing is helping our C-Suite customers and government official customers across seven core verticals focus on what matters. That includes eradicating their risk with their data, removing roadblocks so that they can become more efficient as organizations, and ultimately cutting costs. In this macro environment, this is a very important part of the process, and we are helping customers accomplish all three with our solutions. Ultimately, in an effort so they can have the confidence to make bold decisions that are data-backed. We've had an incredible run in a very short amount of time.
We went public July 5th of 2021. We've acquired nine companies, built seven core verticals that we focus on. There are now 200+ customers. Our pro forma TTM revenue is CAD 33 million from very little, only over a year ago. We're moving rapidly on the revenue side of things. The company is now 350+ people globally. We are building something at scale that has meaning in the marketplace, that are solving real customer problems that help us stay resilient in any macro environment. We serve some of the best customers on Earth in our core seven verticals. In government, that includes U.S. government customers like the Department of Defense, Department of Energy.
In media, we cover Universal Music, Twitter, Netflix, Amazon Prime, Energy, Suncor Energy, Chevron, and in financial services, great clients like Lloyds Bank, First National Bank of South Africa, and in other part of the enterprise sphere, Disney, Palo Alto Networks, Adobe, and many more. We have fantastic momentum happening right now on the financial side of our business. Going, you know, 800% revenue growth from the comparable period a year ago, we delivered Adjusted Revenue of CAD 8.5 million in the quarter. Even from the pre-previous quarter of CAD 7.7 million, we are rapidly starting to scale our business up on the revenue front. What's really exciting for us and something we're extremely proud to share is our Q3 had a small Adjusted EBITDA Loss close to neutral.
Our Q4, we are working hard to deliver a positive Adjusted EBITDA for our group into 2023. Making this a positive Adjusted EBITDA story is very, very important to what we're doing in our financial profile. We are on the doorstep of this now after a lot of work, a lot of the factors coming together, integrating acquisitions. We're finally being able to showcase those in our financials, and we're really excited about that. Ultimately, these acquisitions, when you stack them up through the time that we acquired them in aggregate, are giving us much more than 10x+ annual growth. We think there is going to be significant growth to continue even in a tough economic climate.
We see baseline growth around 20% for our group, even on an individual unit basis, which is gonna aggregate into a nice kinda growth picture. When other companies are gonna struggle to grow, we are still gonna have growth, which we're excited about. We're gonna exit the year at a $40 million pro forma U.S. run rate from, you know, very little, like I said, a year ago. The revenue is starting to get to a point where the business has real scale potential. We have not come off of our ultimate goal. We have a goal of getting to CAD 100 million top line. We have additional acquisitions in flight. Work we're always doing on the M&A front.
We've shared previously that we have three LOIs underway, so we're working hard to close those in this quarter. That'll help bring our revenue closer to CAD 100 million. Additional M&A plus the organic growth will get us there, we believe, as soon as early Q1. That's what we're ultimately working on, and that's the goal. From there, we will share new goals and new guidance with everybody at that point once we get to this first macro goal. In our 20-plus, you know, just over 20-month total history, it was going to be a significant achievement for us to get to that level of revenue scale at the size of company we are and as fast as we're moving. All in all, excellent quarter.
Very proud of our team, proud of our partners, proud of our customers, proud of our shareholders. You know, 800%+ growth from a comparable period. Our Gross Profit is growing, you know, in totality, and we're now on the doorstep of positive Adjusted EBITDA, which will transform our story for the long term, we believe. Some catalysts to look forward to, just to recap. More M&A, organic growth within our group, which will include baseline 20% and cross-selling opportunities between our units now that we'll be talking a lot about next year.
We have some other projects on the way, whether it be U.S., you know, better access for people to buy our stock in the U.S. and some other work we're doing in the capital markets front on, you know, uplisting the company next year at some point that would make sense for us to expand the story and make it more accessible to a larger pool of investors and shareholders. That concludes the presentation. From there, I think we should answer some questions, Glen.
Yep. Thank you, Daren. You can find the Q&A button on the bottom banner of your Zoom window here. Feel free to ask a question and we'll get to answering them. Okay. We have a question here from Rob Goff at Echelon. Can you please talk about the progress that you're having with your integrations?
We're doing very well on our integrations. A few projects that we've been delivering through the year that now are becoming a big part of our overall M&A playbook. One is back-office systems. First thing that we are implementing for our group. We have procured NetSuite for our company, which is our kinda back-office accounting system. We are putting NetSuite into all of our operating units. That helps with speed and timely reporting that we can aggregate and consolidate our financials every month. That's a really big kinda first step. From there, banking and other back-office steps so that we can ensure that we can leverage any of our Operating Unit Cash, bring to parent, et cetera. Those functions help kinda give us visibility, reporting, and control of our operating units.
From there, we look at any overlapping kind of roles or overlapping costs that we're looking to find synergies there, so we do a lot of work there. We've been doing stuff to improve the Margin Profile, and that's a big opportunity for us to optimize our margins. That will continue. The next big project for us on integration that you'll see is brand. We want to rally and go to market around the Now brand. You're going to see our operating units start to map quickly to the Now brand versus their historical end market brands. Those are the core projects on M&A.
Perfect.
Great.
This question is from Hernán Gómez. Can you expand on the type of measures that Now's taking to improve on profitability?
Like I just mentioned on first things first, on gross margins, improving the cost on our service delivery, which lives in our Cost of Goods Sold in the service side, solutions side of our business. Our software business has very strong gross margins, you know, around 75% to 80% roughly, you know, give or take. We're really working to optimize our solutions delivery margins, so next year you'll see those improve. You know, we really would like to see this get to the 50% gross margin in aggregate for the group. Obviously the more Software Assets we add, that helps with that, and the better we optimize our Cost of Goods Sold on the service side, it'll help with that. Those are active projects now that you'll see those improve over time.
Next question is from Jesús Sánchez León. Can you give us some color about the CFO transition?
Yeah. Alim Virani was brought in in an operational context in the finance department, working with Terry. You know, as we put in the press release, as we've kinda shared publicly, we're building a purpose-built team of people that essentially been there, done that. You know, Alim comes from, you know, in the Canadian market, you know, the best public company success story I've seen personally, which is Constellation Software, and that's been built in a very similar way to us with a rigid acquisition M&A inorganic playbook. While at Constellation, Alim was in an operating group, also a Portfolio Manager in the Finance side, brings a capability that we need in here as we accelerate the pace of our M&A and work to get the integration path even more efficient than it is today.
We felt Alim is a strong leader, a strong operator, and Terry and Alim together have really built a world-class finance operation in a short amount of time. Terry, handing the reins to Alim is just a natural progression. We wanna make our transitions now because next year is going to be insanely busy with what we have going on.
Great. Can you discuss the progress we're making on the backlog?
The backlog, you know, has hovered around CAD 70-ish million in our government business. We've increased that with the recent win with Department of Energy. Line of sight, you know, to CAD 80, you know, now, so we're growing that slowly but surely. There's some bids in flight now in our government business that are going to give us the potential to get that to CAD 100 in short order, I think in a quarter if we can win those awards. Our happy place in the short term, call it next two quarters, three quarters, is to get that backlog close to CAD 100 million. That backlog, for everyone's understanding, is the way that that part of our business works.
It's guaranteed contracts, that are multiyear, that have a value that we deliver against, you know, whatever the parameters are in the contract. So in the case of our current backlog, that's, you know, getting close to that, you know, high seventies, eighty million mark roughly is, over a three-year period. So, you know, it's very durable, consistent revenue, and the faster and bigger we grow it, the more, the more durable the overall revenue picture becomes for our group.
Great. Now I guess one that's, you know, asked a couple times here, how are you viewing economic headwinds now? How are they affecting the company going forward?
Yeah. Nobody in any industry is immune from, you know, the macroeconomic picture. It's not pretty out here. It's, you know, commercially, from the public markets, private markets, there's, you know, a lot of contraction happening right now, a lot of decision-making. We're in a unique position with the NOW business. I like to look at it, there's Mission-Critical technology and service, and then there's discretionary technology and service. Discretionary technology and service could be, you know, an email platform, you know, things that you don't have to stay compliant or avoid fines or provide, you know, efficient delivery of service in your company.
Our customers, as the world gets more challenged, as they are reducing workforce, they need our product and service more than ever because they can become more efficient and cut costs. Some context with that, just our privacy products, which is ultimately helping our customers understand their Data Estate, is helping to reduce overall data storage costs for our customers. What's remarkable, over 60% of our customers' data we're finding is redundant, data waste, that is costing them tons and tons of money. Just doing these small exercises with our software products are helping to create really significant savings for our customers. We think our message is resonating well in tough economic times, and we resonate well in boom times.
Great. This next question is from Gabriel Leung. He's asking, and I think you've given us a little color on this already, but can you provide some insights around the current pipeline of opportunities, both within the Technology and Solutions Group? Are you able to quantify some of the larger opportunities and timelines around the potential close of some of these larger deals?
Yeah. There's, you know, two pipelines we run ultimately. We have an M&A pipeline of new companies that we acquire and look to acquire, and that pipeline always in a general sense is sitting, you know, $200 million to $400 million of revenue opportunity. In flight right now, and we've shared this in previous presentations, there are three acquisitions that we are close to closing on that would represent roughly $30 million, $32 million of revenue, profitable revenue, that we would add to our pro forma $40 million that would help us exit the year around $70 million. Those are, you know, those are in-flight, close, news, you know, things we're getting close on. Stay tuned on those. On the commercial front, we have a very fertile, active pipeline that's driven by a couple things.
One, we have a very strong external sales channel network that is run by Doug Drummond in our company, who is building a global capability of resellers, partner networks that are out there reselling our products, mostly the software side of our business. We're seeing a lot of activity come through there, especially on our privacy product and Affinio product that are, you know, easier to integrate as a starting point also with the cost-saving message. We're seeing, you know, an abundance of opportunity there. On our solutions business, we're hitting it out of the park. You know, in Latin America, we keep announcing new customer wins. We just announced an Aeroméxico contract. We just keep winning in that market. In the U.K., we keep winning. In U.S. and Canada, we keep winning.
We're very bullish on our ability to continue to drive the commercial engine in our group organically, not just inorganically. We're going to find a way to share the synergy benefit now. The real thesis here is a customer. If you take one customer we have that's using our privacy products, take, you know, a Lloyds Bank uses our privacy product. That's all they're using right now. The opportunity is ultimately to unlock other opportunities in the customers we already have. That will drive our baseline 20% growth much higher, and that's what we're figuring out for next year, and we really think the organic story is gonna be as exciting as the inorganic story.
Right, kind of a follow-on to that. Can you discuss the organic growth parameters and how we're kinda looking at organic growth?
Yeah. As I just stated, 20% baseline. If we can get the synergies working to what our expectations are, it'll be substantially higher than that.
Then from Jesús Sánchez León. G iven cash position, you know, in the interest rate market that's out there right now, and the share price, how do we, you know, how are you looking to approach future funding needs, to keep the current growth rate going?
Even at current interest rates, you know, we have previously in the last two acquisitions used debt strategically and very effectively in our transactions. We currently are still excited about the debt capability, even as interest rates are going up a little bit. It's still much cheaper than using the market, so we don't intend to, you know, go to market for every acquisition we have. We'll stay opportunistic. We have hopes that the capital markets are gonna turn to a much better climate and sooner than later, hopefully. We still aren't seeing debt become too cost-prohibitive for us yet. It's still very effective. You know, you'll see news from us in short order on some of those latest and greatest kind of impacts that we'll see.
Okay. This one's from Andre Garber, just kind of a follow-on to Gabriel's questions. Can you speak to the nature of the business in the M&A pipeline, adding color to, you know, where you're looking to bring in synergies?
We've been focused a lot this year, going to the end of this year, on our Solutions Group and getting more capability, obviously more profitability into our group, positive EBITDA, and also geographic coverage. We now have strong, I mean, extremely strong operations in Latin America that we are looking to expand. We have strong operations in North America we are looking to expand. We are looking for new markets in Asia and expanding Europe. We've done very well in the U.K. already. The geographic coverage is an important point. We are excited about software again because of the macroeconomic environment.
We think there are going to be excellent deals to have in great software companies that are still subscale revenue that we can now get into very low single-digit revenue multiples that we can bring into our group and improve their profile and profitability and turn that into a much higher multiple long term. You will see us do both types of deals now versus just Solutions Group. Those software companies are going to quickly help us elevate our Gross Margin Profile to our target.
Great. Well, I think with that, there's no further questions. We're clear to wrap up.
All right. I just wanna thank everybody for their time, their support, the great questions, the constant dialogue I'm having with everybody. I'm having a blast spending time with shareholders, sharing the story, helping people understand what we do. You know, some of the technology side of this is complicated and not as easy to understand as, you know, selling a widget. It's very, very important work we do. I wanna thank our team for incredible delivery in their operating units and their customers. I wanna thank our customers for trusting us with their most precious asset, which is their data.
I want everyone to kinda stay upbeat, and let's, you know, beat the bearish mentality in the market, and let's, you know, really push forward in a tough time so that we can all win together. Thank you and have a great day.
Thank you. Just as a reminder, we'll be posting this version of this webinar to our website maybe this afternoon. Thank you, Daren.
Have a great day, everyone.