Good morning and welcome to the Snipp Interactive Second Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. Following the company's prepared remarks, we will open the call for questions. Please note that today's call is being recorded. Before we begin, I'd like to remind everyone that today's call contains forward-looking statements within the meaning of applicable securities laws. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks and uncertainties, please refer to our public filings available on SEDAR and our Investor Relations website. We do not undertake any obligation to update any forward-looking statements made during this call, except as required by law.
Good morning, everyone, and thank you for joining us. We are pleased to report our second quarter results earlier than we typically do. This should firstly give investors the comfort that we are continuing to invest in our processes and financial systems to enable faster reporting that will also help with our end-of-year audits. The second quarter was a challenging one, especially for clients. Following my comments from the first quarter's conference call, wherein I had spoken about our clients finding it difficult to decide on when to launch programs as they assess conflicting signals around inflation, supply chains, and consumer sentiment, we witnessed this playing out in program launches and new bookings. With delayed program launches, our revenue growth was impacted, but we still managed to grow our revenue for the first quarter, and our half-year performance on revenue growth remains robust at about 19%.
Also, the upside for the future is that our deferred revenue increased 33%, which will eventually turn into revenue as some of these pent-up programs launch. The impact of the second quarter can also be seen in our bookings that declined year on year. However, our backlog remains healthy and above $15 million today. As we move into the second half of the year, we're adapting to a new reality where clients are taking longer to make decisions. They have the budgets and the intent to execute with us, but unfortunately, when the economy is creating hesitation around when to launch, this indecision makes timing a return. For Snipp, this is where we actually win. Unlike many in our industries who require long lead times, our ability to stay diligent, flexible, and fast to market gives clients the opportunity they need.
We are investing the effort to keep programs launched readily across multiple formats, so when clients are ready to move, we can activate immediately. That speed and adaptability has become one of our biggest competitive advantages in this environment. When I step back and look at the full year, our pipeline remains strong. Client retention remains excellent. We remain debt-free, have cash on hand, and the underlying drivers of the business are intact. While we may see some quarter-to-quarter variability, I remain confident in our ability to grow profitably. With that, I'd like to turn the call over to our Interim CFO, Malcolm Davidson, for a more detailed look at the financials. Malcolm.
Thank you, Atul. I'm excited to join the Snipp team and to be here during this exciting time of growth and development. During the quarter, we continued to invest in our financial reporting processes and systems, and we're now starting to see the positive result in our internal and external reporting. Our investment in these resources has resulted in our ability to report and file our quarterly results more than a week before we were due, a result we're very proud of. As I mentioned, we continue to build on a solid financial and operational foundation, which will set the stage for future periods. Revenue for the three months ended June 30th, 2025, was $4.8 million, up from $4.7 million in the same quarter last year, an increase of about 2%.
Gross profit for the quarter was $2.5 million, resulting in a gross margin of 52% compared to 64% in Q2 of last year. The decrease in margin is a result of our investment in campaign and operating infrastructure and in key team members. Turning to EBITDA, we reported just slightly negative EBITDA, $1.1 million, compared to positive EBITDA of $0.01 million in the prior quarter last year. Moving to the balance sheet, we ended the quarter with $3.8 million in cash, up from $3.7 million at the end of Q4. Cash flow from operations for the quarter was $0.5 million, a decrease of about $0.8 million from the same quarter last year. The primary reason for the decrease was the continued investment in our infrastructure and operating platforms, campaign infrastructure, and again, key personnel.
Accounts receivable at June 30th was $3.1 million compared to $3.4 million at December 31, which is consistent with the company's average account balances for receivables. Combined cash, accounts receivable stood at $6.9 million, essentially flat compared to year-end, with a much cleaner AR profile. Bookings backlog, which ties closely to deferred revenue, as it represents contracted programs that have not yet been recognized as revenue, were $15.2 million compared to $7.2 million at the end of December and $17.2 million about a year ago. This continued to provide clear visibility into future revenue and demonstrate strong customer engagement across our product suite. The story of the second quarter is the deferred revenue that increased by $7.1 million from $5.3 million at December 31, an increase of about $1.8 million. This increase is very positive and indicates our customers' confirmed commitment to future campaigns that have not yet been launched.
Overall, we remain focused on maintaining financial discipline while continuing to invest in the areas that are driving long-term growth. With that, I'll turn the call back over to Atul for closing remarks.
Thanks, Malcolm. In summary, the first half was an interesting mix of operating environments across the two quarters in which we still achieved 19% revenue growth. The reason being that the key driving force behind our business today is our value proposition, which continues to resonate in the market. Our platform also continues to gain traction across promotions, loyalty rebates, and our new offers and media product. Having successfully launched this media product with marquee financial institutions like Bank of America, we now raise our focus on bringing in offer content that we can monetize on the backs of the 60 million audience that we have access to. Large players in the industry are beginning to notice and have been engaged with us over multiple quarters to finalize deals to access this audience via our offers and media platform.
We will be shortly announcing a new partner that is an industry leader in the couponing and incentive space. They work with about 90% of consumer product manufacturers in the U.S., and Canada and manage complex incentives, media platforms, e-com transactions, and reverse logistics, touching hundreds of millions of households, e-com orders, pharmacy scripts, and product returns. They bring to the table thousands of huge shoppers that we will be enabling on Snipp Media 's financial media network and industry first. That should come out soon. As we look into the second half of the year, we're excited by all the organic growth opportunities that lie in front of us. In addition, there is an increasing unsolicited inbound interest in Snipp and our company. We continue to evaluate all opportunities as they arise and look forward to the rest of the year.
Thank you, as always, for your support. I'll open it up for questions if you can raise your hand or on the chat, post a question, and we will try and answer it. First question is from Daniel. I'm just going to unmute you, Daniel. There you go. If you unmute yourself now, you should be able to.
Hi. Good morning, Atul and Malcolm. Thanks for taking my question. A quick question was just around the macro environment you described. I was just wondering what levers or tactics you could take as you think about how that macro impacts the second half. You know, any initiatives you could speak to in terms of navigating it.
I think, yeah. You know, the funny part of the environment we are in is that it's not a recession and it's not optimism. It's this strange in-between place that everybody seems to be stuck in, and that basically calls for flexibility as a company, flexibility to give them the confidence that we can launch things on a dime. That's really what the initiative is, right, to be launch ready, as I mentioned in my comments. We are doing a lot to keep clients comfortable that, hey, Snipp got our budget. We can launch them as they decide to do things on a much shorter timeframe than they would have been able to before. A lot more standardization of their products and free work, that is what we're doing, which is what you can see in the deferred revenue, right?
If that deferred revenue were on normal averages, our revenue would have grown substantially. It's a very simple connection. Deferred revenue becomes revenue when we launch programs. If we don't launch programs, deferred revenue continues to go higher. Why? Because clients trust us, they pay us, and that money sits there until we can recognize it.
With the onset of the deferred revenue, could you speak to the timing of kind of how you see that revenue getting booked? I was just wondering, it's nice to see that deferred revenue there. Would you say there's a change in some of the conversations you're having with customers relative to quarter end and where we stand today?
Therein lies the million-dollar question on timing, right? If I knew our revenue would have gone up another 19% this quarter, but it'll eventually convert. It'll convert within, you know, 12 - 14 months at the most. It could convert over the next half of the year, which is what I hope will happen. Once the clarity is to what's happening, let's see what happens with interest rates today and if that impacts clients' decision-making. That's the, our deferred revenue typically converts between up to a maximum of 14 months. Within the first 14 months, you know, it converts into revenue. I'm hoping that actually it converts even faster, given everything that's going on.
Thanks for that. I was wondering if we could just dig a bit deeper in terms of the different products that Snipp frutions, you know, is there anything to say, especially around the banking offerings that you have now? Just need deferring, performance when you think about it from like a product perspective, when you think about characterizing the quarter?
I don't believe, like, outside of the new products that we've launched with Snipp Offers and Snipp Media which are very, very early-stage products, we've done all the difficult work of the deals with the banks and the financial institutions and, more importantly, the technologies, infrastructure, connections and development with them. Now we are very much focused on selling those into the market. This deal that I just talked about is with a very, very large private equity backed company. Comarch is one of the investors in this company, you know, that's doing a deal with us. It's pretty marquee. We hope to launch that soon. It's sitting with the PR department because they want to make a big push around it. They run loads of different types of programs at retailers, so they have a lot of, as we call it, offer content.
If that starts kicking in and getting traction with the eyeballs on the other side, which are the banking clients, the customers of banking apps, all of us who bank inside our customer apps, right? We actually would have kickstarted the media venture, and it will also give us a lot of visibility with other brands who've been sitting on the fence, who've been testing, saying, "Okay, this is real now." On our core products, that just continues to grow. I mean, like, yeah, you know, you look at it quarterly, it's one thing, but like I said, we are 19% growth, core business, core products. I mean, there's nothing else for me to say.
Okay. I appreciate that. Lastly, for me, I think you mentioned the unsolicited inbound interest. Is that an ongoing discussion that you're having? I just want to speak to too many details here and maybe give a comment on anything else strategic that you're thinking of.
Yeah. When market conditions start changing, people come shopping, right? Buy low, sell high, simple paradigm. We are an asset that sits there. We've been pretty stable in building out and growing a $20 million, $25 million asset. We don't blow up a lot of money. We had no debt. We could actually extract a lot of EBITDA for the bottom line in an environment where we put together a few different types of companies. Those conversations continue. Your bank's part of one of them. It's just the environment, right? Our goal as stewards of this company now is to evaluate every opportunity that makes sense for shareholders, right? We continue to do that. There are quite a few of these conversations happening now at the same time for obvious reasons.
Great. I appreciate the context. That's all right. Thank you.
Okay, the next question is from Francis. Let me just unmute you for a second. Go ahead. I think you have to unmute yourself.
I think he's still muted.
Did you just hear us too, muted?
Hello. How are you? Yeah, I'm clean and I've muted myself from this side. A question about the, you mentioned the decrease in bookings, but we still have a pretty healthy backlog of $15 million. How are you seeing the bookings this Q3 so far, and how is the pipeline?
Most of our bookings in October come in in the last month. Right now, the pipeline actually is decently healthy, but will it actually grow is the question, right? I know I'll know more in the next four weeks. It's too early for me to give you a sense of what Q3 bookings look like.
Okay.
At the end of summer, especially in this quarter, most people come back, you know, this week or the next week. Things will actually pick up in September the right way this month for us from a booking perspective.
That's great. Let's wait for Q3 results then. On the other side, do you think that this is a one-off thing because of turmoil, or is this going to continue in the near future with all the volatility that is seen in the market, companies deferring CapEx, uncertainty for sure? What's your thoughts from your conversations with your clients?
I mentioned this on our last conference call. It has only amplified since then. It got slightly better, and then it came right back, I guess because of turmoil and vacations. I don't know. People aren't really sure what to do. I think for us, we now understand that's the environment we have to operate in, and we are taking steps to make sure that clients continue to feel comfortable, that they have the flexibility to change things around. That's a lot easier than the other based on the direction that they get from their legal partners and their customers, their retail customers, right? We don't see this changing until something happens. I don't know, it might be the stock market cracking, it might be interest rates actually going up versus down. We don't know.
It'll be good to know whether we're going in a recession or not and when people can make their plans quite easily in our business. Is the recession coming in, not coming in, how much of it is going to, is that going to continue? Who knows? All we can do is plan to not know. That's what we are doing now. Part of the investments we made with our operating costs increasing, even though we were cash flow positive from operations, is to allow for that. That's what we're doing.
Yeah, definitely. Right. I see $20 million market cap companies with $4 million in cash and $15 million in backlog. Totally. Regarding the operating expenses, they raise a little bit. Is that due to wages, salaries? Is it due to our other investment in other products? If we continue to see this decrease in revenues, are you planning on any cost cutting strategies?
Yeah, we've increased our, again, just in this environment, like we are planning for growth, right? We kind of have technology leverage built into our model now. I've talked about this in the past, right? Expanding to new markets, investing in sales for our Media and Offers product. We have our own cash that we've generated sitting on our balance sheet. We want to put it to good use. Therefore, we have been investing in the right resource spread to help us do that for that future. I don't think we're going to stop doing that. The whole idea is to ramp the company from where we are today to a $250 million mark. At this stage, we're not planning any kind of cost cutting because we don't see the need to do it. In fact, we're just planning for the future. I'm not going to react on one quarter.
Perfect. That will be all. Atul, thank you very much. I'll wrap it up.
Thank you. I will respond to you on coffee. I know you're in town, so.
Oh, yeah. Okay. Yeah, sure. Thank you.
Yeah, I think at this stage, I know that people should join the call. If ever, welcome. I hope you, I can send you the recording if you just join. I don't see any more questions, but again, happy to answer any more questions. Oh, wait, I see two in the chat. Okay, the first question, two questions from AP. Can you explain in more detail why the EBITDA was negative? It's a big difference to expect a positive EBITDA for this fiscal year. Yeah, again, our plans were based on a certain amount of revenue being recognized. When revenue doesn't get recognized, obviously, we can't cover the cost that we've invested in. That's why EBITDA was negative. We expect it to be positive for the rest of the fiscal year. We certainly hope to grow profitably, which is EBITDA is the metric that we track. That's the plan.
The second question you had is, is there a much larger use of AI a big threat? No, we don't. The big threat of AI is if we actually don't use AI. Anytime receipt processing, machine learning for a platform is what AI was before AI became AI in our field for receipt processing, right? We also invested quite, quite significantly. I've announced a partnership a while back with an agentic AI company. We continue to deploy that. We've got clients who are paying us now for a lot of agentic AI customer service bots that we have been investing in. We got invited by the Canadian government to apply for a grant. I don't know if we get the grant, but it has to do with AI. I don't think it's much of, it's a lot of head at all.
It's a very massive opportunity that we continue to evaluate based on how we can make profits from it. There's a question from Thomas Lee. Looking ahead to 2026, apart from the macroeconomic noise, how do you see the growth and margin profile of the company evolving as you ramp? I said this before, right? Our base case was a 15%- 20% growth rate at a 55%- 60% margin. That's the plan that we have based on the capital that we have access to, with no plans to go raise external money unless there is a significant change, transformational opportunity. That's what we stayed true to, and that's what we continue to plan around. At this stage, it looks like there are no more questions. Thank you, everybody. We will be in touch for the next quarter. Yep, thanks.
Thank you.