Okay, so welcome to the Sidoti Virtual Microcap Conference, and thank you for joining us today. I'm Anja Soderstrom, Senior Equity Analyst here at Sidoti. As I mentioned, next up we have ACCESS Newswire. We have Brian Balbirnie, the Chairman, President, and CEO with us today. He's going to start with a presentation, and that will be followed by Q&A. If you would like to submit a question, you can do so in the Q&A function at the bottom of your screen, and we will direct them as they come in. With that, I'll hand it over to you, Brian. Welcome.
Thank you, Anja, very much. Good morning, everybody. Thank you for participating today at the Sidoti event, as well as spending some time with us here on our presentation, as well as one-on-ones between today and tomorrow. If anybody wants to add an additional meeting for tomorrow, we have got a couple of slots available. Happy to do so. As Anja was kind enough to introduce us and myself, ACCESS Newswire is the former company name is called Issuer Direct Corporation. Started in 2006 as a compliance and communications company. Today, ACCESS Newswire is a PR platform and communications for both public relations and investor relations personnel that want to tell their story, build their brand, engage shareholders, engage media, monitor their brand, and pitch everybody alike. The safe harbor statements everybody knows about.
Want to jump right into revenues, jump right into product, talk a little bit about where we're going, and then we're going to see how good or bad my technology ability is to play a little snippet of audio for you, and I'll explain to you what that is in just a few minutes. Although revenue was down for the quarter compared to last year by 1.7%, I think what's important to understand here in the business is a couple of drivers. One is we spent a good amount of time at the end of Q4 and in all of Q1 in a rebrand of a business, as we talked about from Issuer Direct and ACCESS Wire to ACCESS Newswire. Part of that rebrand was not only naming conventions, symbols, internal infrastructure, processes and systems, e-com platforms, accounting, finance, automation, everything was done within this five-month period.
Everyone's focus was on that in order to build scale and go. As we did that, our sales organization met the objectives of what we tried to set out. Those were some of the things that we called out in Q3 earnings last year, that our goal was to get to 1,500 subscriptions by the end of 2025 and see the average revenue per customer hit $14,000 or above. In Q4 of last year, we had already jumped the number to $12,000. New deals signed in Q4 last year were already at $12,000. We're happy to report that in Q1, if you saw our earnings, new deals done in Q1 were just over $14,000 as well. We're meeting our numbers already. We're on pace to hit the 1,500 client numbers in subscriptions and our customer account numbers in total.
We feel very confident as we move ahead in this true recurring business that is both ACCESS IR, ACCESS PR subscription models on a monthly or annual basis. As you see on the right side of the screen, on a year-over-year basis, we moved our numbers from 9,300 to 14,000. We believe that the number will sit around the 14,000 number as we continue to scale new customers and converting our current accounts to get to those guided numbers. I talked a little about this in our Q1 earnings call. Something else I want to call out here is we think and message the ARR values and the number of subscriptions.
There is also a significant opportunity for us to look at later this year and into next year, a lesser-priced ARR product that could meet more of the masses, meaning we could end up with +5,000 customers at $5,000 or $6,000 a year rather than 1,500 at $14,000. We are going to message that as we contemplate some tests in certain markets and regions of the country and the world of where we think best we could fit into this individual product selection. One of the other things that we called out, and we've said and mentioned this for the last couple of years, is once we get out of the compliance business, this very seasonal, cyclical business that tends to be lumpy sometimes, we will see gross margin improvement begin to happen.
On the right side of your screen at the top, you're going to see the gross margins did increase over the prior year by 3%. We believe that this mid to high 70% gross margin number is where we're going to sit going forward. As we build leverage in our PR platform, our news distribution platform, all that growth falls to the bottom line. We are going to begin to see gross margins, and as revenues grow, gross margins grow, our EBITDA numbers will really start to improve significantly. Operating expenses, obviously, we continue to watch both SG&A numbers, primarily G&A, to really figure out where we can get leverage further in the business. We've done a good job of that in Q1. We likely spent less in sales and marketing than we wanted to.
Given the focus on rebrand and rebuilding the business, it was important for us to really step back, complete the tools, and do the things that we need to do. Now in Q2, we've got several different recs out there to hire more salespeople and additional marketing personnel as we continue to go forward. Non-GAAP and adjusted EBITDA numbers, we see a significant opportunity for improvement here. We saw improvement over last year. We think there's even further improvement to go here. Q1 EBITDA at 10% is okay, but it's not good enough in my mind. We need to be at the high teens and into the 20s by the end of this year.
Given where we're headed as a business, given what we're doing as a business, we feel like those numbers are attainable to us as we continue to build scale in our top-line product and add additional products as we go through. Balance sheet and deferred revenue is another area that folks have wanted to talk about a little bit. Our deferred revenue numbers, although increasing, aren't going to increase at the higher rates of what we've had seen in the past. That is really simply because we're getting out of a paid upfront contract that is based on utilization compared to an MRR product that people are paying for monthly. We'll tend to see the scale in revenue and customer growth, but maybe the deferred revenue numbers not grow as much. That's an okay indicator. We'll message that as we go through the year.
Ultimately, that, to be fair, is a good problem for us to have. The fact that it's just customer growth and scale, deferred revenue is not an indicator as much anymore. Cash flow from operations, we believe we can continue to increase this. We'd like to see at the back half of the year generating over $1 million a year each quarter, about $750,000 in Q1 of this year. There was some expense related to rebranding and other things that we had to do transactional cost-wise that caused impact to that. We do believe in the back half of this year, we can see cash flows jumping over $1 million in each of the quarters left.
I think what we did in the earnings call, and I'm using some of those slides, and I want to continue to do for the next several months, is to really be sure that folks understand who we are, what we sell, and how we sell it, and what differentiates us from the market. I'm likely going to sit on the slides and talk about this for quite a few minutes because I think it's important as we emerge as a new brand for folks to understand what our core offerings are. Before I explain each three of the subscriptions, I think it's obvious that everybody knows that ACCESS Newswire is the third largest newswire now in North America. It started out about nine years ago as less than a quarter percent of the market with barely any distribution.
Over that period of time, we've built it into a premier global distribution brand that now accounts for 20% of the market news every single day. That catalyst to growth enables us to innovate and build products that can pull behind into and with our customers and new customers all these other wonderful products that we spend a good amount of time building and investing in. If we isolate looking at just the ACCESS PR products, these are ideal for public relations professionals, agencies, and companies that have marketing, marcom, and PR internal that they could license and subscribe to our media database, media monitoring, pitching, newsrooms, and even PR Optimizer. We'll talk about it in a second.
This collage of products enables our customers to spend anywhere from $700 a month all the way up to several thousand dollars a month to get all the communications needs that they could ever want in the organization that covers all the public relations, messaging, and marcom messaging that they need. The competitive advantage to this, if we step back, there are beautiful companies in this industry just like us that have great products, but most of them are very siloed. Companies like Meltwater and Muck Rack are siloed brands, Agility siloed brand product that does not have a comprehensive suite. What that really means is, and using Cision as an example, Cision has a Cision One product like our ACCESS PR platform, and you can do everything there that you can do with us.
In order to run your press releases and have them linked to your database and monitoring, you have to log in and out of two systems. It becomes very cumbersome, permission-based, costly, not only time value of money, but also just licensing costs and distribution costs. Competitive advantage for us is not only award-winning customer service and the "We Love You More" concept and wonderful pricing. It also is an efficiency gain of having everything in one platform that you can monitor your brands, sub-brands, or agency brands all within one system. Flipping over to ACCESS IR, which is primarily geared towards our investor relations professionals, sorry, both IROs internally and practitioners in the market that are looking for a home to build a world-class investor relations website with CMS, do-it-yourself updates, as well as managed services, quarterly earnings calls, and event platforms for one-on-one meetings.
Our ACCESS IR subscription product does that. Later on this quarter, we're going to be bringing to market a cohesive event platform and investor relations system that upgrades what our current customers have to give you, the investor, the ability to click a button on their IR platform to book a meeting directly with the executive at the company, coordinate schedules, have links sent right to text message, right to your email box, and manage from both calendars in real time. We think that this advancement will help firms like Sidoti, like us, and like millions of investors in the market be able to transparently communicate with the companies of interest both inside and outside of a conference period. We feel very strong that that will be a component of interest for our customers. It will drive further ARR.
To be fair, ACCESS IR customers generally end up adding their news distribution to the platform, which increases their ARR spend with us and also increases their stickiness. Customers can come into our platform. They can set up all four quarterly earnings calls, build all four pages for registration, get all four dial-in numbers that they need, update their investor relations site, post their news, target media, and do everything from one simple platform. Like the conversation about ACCESS PR, about the competitive advantages, this becomes even further leaping ahead of our competitor in that there's not many systems out there in the market that combine both IR and PR together. They typically are very separate siloed functions. We've been able to do this because of our expertise in this industry for almost 20 years by finding the right workflow solutions that fit an IR professional.
Of course, there's always add-on products. Our Incident Management and Whistleblower System today powers the New York Stock Exchange platform. It is the largest publicly used whistleblower platform of all U.S. exchanges. There's over 500 customers there in the last two years that have licensed that product and continue to grow. We felt like it was a core component for our IR business that fringes a little bit of compliance so that we can stay close to our partnership at NYSE should they expand their subsidy offerings to include news distribution and earnings calls. We want to be well-positioned for that. For the hundreds of customers we have in Canada that do their news distribution that are public, they also require SEDAR filings. There's always add-ons as well for that.
One of the things to point out is that for folks listening today that are invested in any OTC-listed company, our ACCESS IR, ACCESS PR, and all ACCESS subscription products are available in OTC IQ. As a partnership with OTC Markets, our product platforms are available for customers to learn more about when they're logged into their IQ platform, to subscribe to and use and directly connect to our systems to do that. Our platforms are also available to the New York Stock Exchange-listed customers through our subsidy programs that are also able to log into their NYSE Connect platforms and gain access into our systems automatically with centralized billing and efficiencies there. We also have a very similar relationship with London Stock Exchange that their corporate customers use both our news distribution as well as our regulatory whistleblower management systems here in North America.
We've got tentacles into exchanges for the public relations and investor relations worlds. To be fair, the majority of our focus is on the PR world. The number of customers in the total addressable market for us is far significant than the IR world. Not that we do not love investor relations and public companies, but we all recognize that the quantities of them are much, much smaller than there are in the public relations space. Hopefully that was able to really articulate what our product set is. Now what I'd like to do is talk a little bit about the customer numbers, both from a results period of Q1 for this year and last year, as well as the expectations of subscription and non-subscription revenues that will come over the next couple of quarters for us.
Before I get into that, though, it's important to point out that the customer count numbers we're looking at have been altered and corrected to remove compliance customers that were included in Q1 last year and for part of Q1 this year. So these are net numbers. These are not anything non-comparative information based on compliance communications. This has all been cleaned up, discontinued operations separate from this. We ended the quarter with a little over 12,000 customers. We have said that customers are the most important thing for us, both not only acquiring, retaining, excuse me, and continuing to love these customers as we want to grow these numbers ultimately by double digits by the end of this year. Our subscription business also the same way. It was a 9% increase over the prior year.
More importantly to that metric, the KPI there is the percentage of revenue that comes from subscribing customers. I think I said earlier by the end of 2025, but I think if you go back at our earnings transcripts a couple of quarters ago, I said by the end of 2026. We are far, far, far ahead of where we expected to be. Excuse me, just a little less than 50% of our revenues today come from recurring subscriptions, contractually MRR, ARR business from our customers with both ACCESS IR and ACCESS PR. We firmly believe that by the end of next year, that number will be 75% or greater. We are going to get that done this year. That is my benchmark to the market to say we are going to deliver.
I know there's been a lot of folks concerned about, could we get to $14,000 in ARR? We have done that. Folks didn't think we'd get to 12,000 customers, and we've done that. And we've increased gross margins as we said we would. I want to be ahead about a year in my guidance for revenues coming from subscriptions to get to 75% by the end of this year. We know and understand what our market is, what the opportunities are. We've built a platform, we've built a brand, and we've built a team to get there. It's on us to go and deliver now. We're going to be able to do that going forward. Let's talk about how we do that.
A lot of folks are saying that's a lot of subscription customers to do, but let's just actually take one narrative and say that if we've got 12,000 customers, only 8% of our customers today are purchasing platform subscriptions. If we increase the convergence of just 5% of the balance of the customers, that gives us a target cohort of over 500 additional, or 600 additional, I'm sorry. With retention and attrition numbers, that gets us to our 1,500 number by the end of this year. This is not new. This is just converting current. We really do believe that we can increase far beyond the 1,500 number by the end of this year if our research is conclusive on the internal customers as well as the inbound interest.
I, like any good CEO, should absolutely be one of the contributing customers or salesperson personnel in the organization. I am. I take inbound leads to really understand customer behaviors from different markets, to understand what their buying behavior patterns are, what their budgets are, and what really drives them on our product platform so that we can stay close to the business as possible from a customer's perspective because that's the ultimate barometer for us. When I talk to new customers coming in, the value proposition of what our ACCESS IR and ACCESS PR platform has truly does give us a competitive advantage in the market to displace three or four incumbents, meaning a press release provider, a media database provider, and a monitoring provider all into one system with us.
We're confident we're going to be able to exceed these numbers, but it's just an opportunity for retrospective to understand how we think about it and where we think they can come. At the end of the year, last year, I talked a lot about capital allocation. Folks may have been thinking of allocation as pay down all the debt and then buy back shares. All those are great things, and we've done one of them. We may do the second one this year. We also want to be sure that we're investing in the business. You can't grow and scale without investment. There are a lot of things that we've already done and things that we're going to continue to do over the coming quarters.
I wanted to highlight some of those because I think it's important for you to understand what our commitment is to both product platform and customer retention, but as well as also just leaping ahead of the market and doing things to give us a significant competitive advantage so that we can build scale much faster than we all want. The internal efficiency is the first component I'd like to talk about for the next couple of minutes. We take in tens of thousands of press releases every single quarter. Those press releases come to us via our workflow engine that our customers log into to submit and pick their distribution. The news business requires editorial review.
Each article is looked at by at least two editors, an initial editor and then a supervisor, to ensure that the content meets guidelines for both our distribution partners as well as compliance guidelines and content quality and accuracy. We all live and are living the world of AI advancement. Over the last six months, we've been able to take a concept internally called Speed to Wire, where we can run the articles through the system of our AI AMI engines to be able to understand if the article meets compliance guidelines, meets content guideline restrictions with our partners before an editor touches that. What that means is I get a 10%-15% increase in efficiencies with my editorial teams.
If that continues to show through, then I've got capacity in the system to be able to grow before we have to add new editorial compliance professionals on top of each of the accounts. It's a good thing for us. That Speed to Wire is being proven out for the last couple of months internally only. It will be turned over to customers beginning next quarter, where customers will be able to actually hit the AMI automation buttons to verify their content and point out areas that they need to improve before they could submit it to us, again, furthering and gaining efficiencies within our editorial capacities. Ultimately, what this means is the business can scale and we can improve our gross margins as we continue to move our product throughout the platforms and the ecosystems. A complete platform.
It's nice to say that we have a media database, pitching analytics, and brand monitoring systems. It's invaluable to really come to life and build your story, pitch media and shareholders, and monitor the brand. Where is it coming from? Today's webcast is being broadcast live, both on the Sidoti platform and other social platforms. I have already hooked up our systems to see if the cashtag of ACCS shows up during today's playback on all of these social platforms, where the press releases were gaining interest, where it was clicked on, what geographic region, how long time people spent on this platform and others, in order to give me some brand relevance to understand where I need to improve, what we're doing right, and who maybe is resonating with our story and what happens. That happens in multiple ways for us, right?
As a public company, it happens by inertia of new shareholder base interest and by customer interest coming in, asking and looking at our product platforms to buy. Having a complete platform is very important for us. Social integration is next. It's nice to have social components in every product platform you buy. It is easy for us to have done this where you can connect Twitter or LinkedIn or X, I'm sorry, or LinkedIn or some other social platform, but that's not really what we're after doing. To be fair to all of our competitors, that is rather boring. To do that in that way, we have no interest in.
We are building social compatibility systems with our AI products to be able to give customers the ability to take snippets from their articles and place it in certain distribution channels on a social platform to monitor that content engagement and what resonates more. Is it hard facts and bullets of results? Is it quotes? Is it product slogans? We want to be able to give customers the ability to alter their story and tonality from one platform to the next. I call them mediums, right? Each one of these social platforms are just mediums for us of distribution points. There is the distribution of the news wire, and there are also 10 prevalent social platforms, as well as your shareholder base, your customer base, and your partner base of interest. We have connected all of that.
I call that social and integration, but that's likely what we'll bring to market later this year to give our customers the ability and an all-access subscription to really cross-pollinate their messaging across all of these platforms. For us, it gives us increased ARR, number one. Number two, it gets us down the hall to the marketing stack rather than just a PR stack. There are bigger budgets there, to be fair to us PR and IR folks. We want the ability to build confidence in that discipline to be able to get some trust for them to come in and use our system.
Lastly, we've already been doing this internally with our development teams, and we will start beta here in the next quarter or so for customers to curate a story, a press release with different tonality markers to give them the ability to highlight a paragraph or a sentence or the entire document and give them an ability to utilize our AI algorithms and engage analytic engines to what readers really want to see. I'm going to pivot from that just a little bit. I'm likely not going to hit the audio button because I do not think Zoom will play this, but I will put it out as a sample for folks to look at.
What the next big jump in the market is, and we are in the process of applying for a process patent on this today, is we have taken a press release, an article, or a message, and we have wrapped taxonomies around that message, much like financial data. We have been able to segment components, quotes, contact information, boilerplate information, financial results to be able to give our customers the ability to move those snippets from component to component throughout their platform with us, but also then measure the anticipated engagement based on their past releases that they have done with us and to know what tonality to change to improve engagement on the press release. That is the first major advancement.
The second advancement is we've been able, excuse me, to take that entire message with the right tonality that you want and turn it into a microcast in about two and a half minutes. What that would give you the ability to do as a reader, meaning the investor or interested party, not the company, is the ability for us to click the play button and listen to a narrative conversation between two people talking about the company, their results or their product or their next announcement in a very collaborative way that gives us the ability to ingest content differently. The reason why we're going this way is because we firmly believe that the market will always have space for press releases. Press releases will never go away.
They may be commoditized, and they may increase or decrease in volumes over a period of years based on what other mediums people use. At the end of the day, the amount of content coming to us, it's physically impossible for all of us to ingest it all. Turning it into an auditorial way of folks getting to ingest it, a microcast way, is something that we really feel passionate about and is a product that we will advance and distribute and protect this year to our customers. I could talk about the business forever. I love what we do here at ACCESS Newswire. I hope that there's some questions we could answer. I look forward to spending time with each of you on some one-on-ones. Let's see if we can open it up for the next couple of minutes for some questions.
Thank you, Brian. That was a good overview. We have a couple of minutes for questions here. I'm going to kick it off. You mentioned you did a good job on expanding the EBITDA despite the lower revenue. You mentioned some targets there. What will be the main driver for the EBITDA expansion?
Yeah, I mean, look, it starts with top-line growth. It really does. It starts with accelerating. I was talking to a shareholder this morning, and he said, "You set yourself up to get exactly what you wanted, right? You got a new brand, you have a refined, focused envision, and you have a clear product platform. What's next?" My scale. We have to build scale. We understand clearly what we need to do and where we need to go.
Because of the fixed costs of our business, both infrastructure-wise for our product platform, personnel-wise to drive that platform, and G&A expense, it's pretty much fixed now. Everything that comes in incremental growth falls to the bottom line for this business. It's absent of sales and marketing that we will continue to invest in, which always is a great return for us when done right. That's where it is. It's all about growth. There's not a lot of efficiencies we can take out of the business anymore, to be fair. Even if we advanced AI like crazy, we really, really are committed to infrastructure and people that we've got today in order to sustain and grow.
You talked about expanding the customer base, but is there also room to grow the average revenue per customer? What's the driver for that? What's your pricing power?
Yeah, it is. Going back to Q3, we launched the subscription product last year on a test trial basis to internal customers only. In the last month of that quarter, I said to the sales team, "Let's go public with it and let's talk to customers." We ended Q3 with 70% of the customers that bought the platform. It increased their ARR spend from $4,500 to about $9,000. We were able to find pricing power in our current install base to increase their subscription to give them more product selections for a higher price. We proved that. In Q4 last year, I said, "Let's outwardly focus to try and get new customers buying." We increased the ARR there and got to $12,000. The numbers reversed. 70% of the customers in Q4 that bought the product platform were new. 30% were current customers upgrading.
Q1 this year, just last quarter, it was about 50/50. We're still able to convert current customers from $5,000-$6,000 in spend all the way up to $12,000-$14,000. New customers coming in were at $12,000. We're doing a really good job blending both. I still believe there will likely be kind of an 80/20. 80% of our customers coming in buying product subscriptions are going to be new. 20% will be ones that we convert as we go through the year.
Okay, thank you. I'm going to squeeze in one more. Can you talk about the competition and your market share and just general market growth?
Yeah, if we look at just at news distribution, PR Newswire is the largest. GlobeNewswire is the second largest. We are the third now, and Business Wire is the fourth.
We've come out of nowhere in 10 years. These other news agencies are wonderful. They do a great job. Their editorial processes, their distribution is great, just like ours. They've been doing it for 50, 60, 70, 80 years. We've been at this for 10 years, and we've already been able to get 20% of the market. We think we can get to 30% in the next 18 months. We believe we've got the brand and the product and the distribution to get us there. We've got the team to get us there. We believe the customer opportunities, the total addressable market is there for us to hit as well. Couldn't be more right aligned, right time, right place. Now it's about execution for us.
Okay, thank you. This has been very informative. You mentioned you had some time slots open for one-on-ones tomorrow.
Thank you. I know you're accessible to investors. If someone would like to catch up with you after this presentation, you can reach out to the company directly or to us at Sidoti, and we can put you in touch with ACCESS. With that, I'm going to hand it over to you, Brian, for some closing remarks.
Yeah, I really appreciate the time today.
Again, like I said, I could talk about this for hours and show, but what I'd like folks to come back because I couldn't play the audio clip, I want you to hear it because this is a narrative clip that I did myself in our AI product in two and a half minutes at 11-minute audio talking about the business, the results, the rebrand, the compliance spinoff, and everything based on me giving this investor presentation, as you saw, and a copy of our earnings script. So very advanced technologies. I want you all to hear it and see it, just understand the conviction and excitement we have in our business and where we know we're going. Thank you very much.
Thank you. Thank you, everyone.