Earnings call transcript: NowVertical’s Q1 2025 growth and strategic milestones

NowVertical Group Inc. (NOW) reported a strong Q1 2025, showcasing significant growth and strategic advancements. The company achieved a 23% year-over-year increase in revenue, reaching $10.4 million, and maintained a positive income from operations for the fourth consecutive quarter. According to InvestingPro data, the company maintains a "GREAT" overall financial health score of 3.02 out of 5, with particularly strong marks in profitability (3.8) and growth (3.67). Despite these achievements, the stock saw a 10.45% decline, closing at $0.60, reflecting investor concerns over broader market conditions and potential challenges ahead.

Key Takeaways

• NowVertical’s Q1 2025 revenue grew by 23% year-over-year to $10.4 million.
• The company reduced its debt significantly, lowering its debt-to-EBITDA ratio from 5x to 1.5x.
• Strategic partnerships expanded, including achieving Premier Partner status with Google Cloud in LatAm and the UK.
• The stock price fell by 10.45% post-earnings, potentially due to broader market trends.

Company Performance

NowVertical demonstrated a robust performance in Q1 2025, with a revenue increase of 23% compared to the previous year. The company’s income from operations remained positive for the fourth consecutive quarter, indicating stable financial health. With a five-year revenue CAGR of 26% and a healthy gross profit margin of 78.92%, this growth aligns with NowVertical’s focus on expanding its market presence and enhancing its product offerings. InvestingPro subscribers can access 14 additional key metrics and insights about NOW’s financial performance.

Financial Highlights

• Revenue: $10.4 million (23% year-over-year growth)
• EBITDA: $2.5 million (24% EBITDA margin)
• Gross Profit: $5.1 million (50% margin, 15% year-over-year increase)
• Debt Reduction: From $28.1 million to $15.6 million

Outlook & Guidance

NowVertical aims to reach a $50 million revenue run rate and a $10 million EBITDA run rate in the near term. The company plans to focus on organic growth and invest in commercial capabilities in North America and EMEA before considering mergers and acquisitions. Analyst consensus data from InvestingPro shows strong confidence in the company’s growth trajectory, with price targets ranging from $724 to $1,300, suggesting significant potential upside. For detailed analysis and comprehensive valuation metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Sandeep Mendi Radha emphasized the company’s transition to profitability, stating, "We are no longer a loss-making company." He also highlighted the significant potential for growth, noting, "This business has got unlimited growth potential."

Risks and Challenges

• Market Volatility: The recent stock price decline may reflect broader market volatility impacting investor sentiment.
• Competition: The need to maintain competitive advantages in rapidly evolving tech markets.
• Economic Conditions: Potential macroeconomic pressures could affect client spending and growth rates.

Q&A

During the earnings call, analysts inquired about NowVertical’s growth strategy in the UK market and the significance of unbilled receivables related to subscription contracts. The company confirmed the US market as a significant growth opportunity and provided insights into revenue tracking from integrated businesses.

Full transcript - NowVertical Group Inc (NOW) Q1 2025:

Andre Garber, Chief Development Officer, Now Vertical: Good morning, and good afternoon, everyone, and welcome to Now Vertical’s First Quarter twenty twenty five Earnings Call. On the call today are Sandeep Mendi Radha, our chief executive officer Christine Nelson, our interim chief financial officer Glenn Axelrod from our investor relations firm, Bristol Capital and myself, Andre Garber, our chief development officer. So after markets closed, yesterday, the May 21, we issued our q one twenty twenty five, results, our press release, our MD and A and financial statements, which are now posted on our website at nowvertical.com as well as SEDAR plus. We are absolutely delighted to be joined by our new and prospective, stakeholders and existing shareholders and proud to share our phenomenal results today. After our presentation, we will be joined by our analysts for a q and a session as well as open up questions to the to the general, time permitting.

Today’s call, you can flip, to the next slide, we will be making statements related to our business that may be considered forward looking. These statements reflect our views only as of today and should not be regarded as representative of our views at any subsequent date. These statements are subject to various risks and uncertainties that could result, in, different results. All figures today, just to be clear, are expressed in US dollars and will be on an IFRS basis unless otherwise noted. We will refer to specifics like non IFRS measures such as adjusted EBITDA.

And with that, let’s get to the to the fun stuff, and let me turn over the call to Sandeep Mandirada. Sandeep?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Thanks very much, Andre. Very excited to be presenting our q one twenty twenty five results. Another great quarter at Now Vertical. So welcome to this forum. Just as the refresher for our existing shareholders and just giving a brief background for the investors who may be tuning in new, just a little bit of a background about now vertical, first of all, and then we’ll get into the results.

But I’ll give a a bit of a summary about what the results have been for q one twenty twenty five. And then we will also have Christine who will take you through some of the details of the key metrics and the KPI. And then we are gonna have some business updates where we will highlight some of the changes and great things that we are bringing about in the business. So what do we do as a business? We help our clients transform data into tangible business value with data and AI technologies, and we do it really fast.

Let me just break it down, for you. What do we mean when we say we transform data? All the industries have gone through phenomenal evolution and changes, and they are generating more and more of data. The the problem that they face is how do you unlock the real value that’s residing or hidden, in their datasets. And this is where we come into, picture.

We help unlock that value for our clients from the data that they have gathered over so many, years. What we also specialize in, because data is a very vast, subject and it’s getting bigger and bigger, what we specialize in is the customer and finance data. That’s where now vertical specialization is. And because of that, you can also already see that our alignment, because of the specialization is more with the marketing teams, the services, customer services team, sales teams, the digital functions, and the finance functions. The way we do that is we are laser focused on delivering the business value or the business outcomes, for our clients.

So we are not just the technologists. We understand the data and the landscape of data and the complex environments of very large businesses. And when I say we are laser focused on delivering the business value, Just as an example of the business value, we delivered 9% increase in the subscriber retention of a business called The Economist, which many of you may have come across or maybe the subscriber of already. We also helped a financial services company, Niranka x, in LatAm to increase their product activation. They’ve got multiple products in, you know, in in their portfolio.

We held for one of the products, we held them increase the product activation by 40%. That’s another business value example. One of the technology sector companies, very large business, multibillion dollar business, we have been working with them, and we increased the partner activation or the partner activation of the leads by 50% or more. These are just some of the examples of the business value and the business outcome we deliver, for our clients. And what we what we leverage is the data and AI technologies.

Very specific technologies that we bring to our clients, these are the technologies that are right for them and not just, you know, things that we believe, you know, boxed and, we just forced, on them. So these are the technologies that are right for them. These are the technologies that are not just the generalist. The these are not just the technologies that are, you know, you you basically bring in very specific outcomes, the business value that I talked about, and you structure, you architect, you transform their technology landscape and the data landscape to deliver those business value. The specific technologies, that you may, that that may resonate with you, Google Cloud is one of those technologies, Microsoft Azure.

We work with, Click. Anaplan in the finance area is one of the other technologies. We work with Amazon Web Services. We also work with Snowflake. These are the six key technologies where a lot of revenue is influenced or is directly coming from, from our vertical.

So that’s that’s where, that’s what we do. Who do we do this for is very large, enterprise grade clients. These are FTSE five hundred, type of businesses, multibillion dollar revenue businesses in various industries like financial services, media and entertainment, health care and pharmaceuticals, retail, ecommerce. We also have some horizontal solutions that are based on, say, the subscription model or the SaaS model for, say, the technology sector or the other sectors as well. These are the kind of enterprises or the clients that we have on our portfolio.

We have more than hundred enterprise clients, which we will talk a little bit more about, but more than hundred enterprise clients, very well known household names that are on our portfolio. And that we consider as one of the major assets we have where we are continuously unlocking the value from. So that’s a bit of a background on Now Vertical. The way to look at Now Vertical as a business now, just a little bit of a background, first of all. The phase one, as we call it, of Now Vertical was all about acquisition and growth from acquisitions.

We went public in July 2021 on Toronto Toronto Stock Exchange venture, and we have acquired 12 businesses. Some really great businesses delivering phenomenal value to the clients across various countries and geographies. We acquired these 12 businesses and gained that critical mass in the business. That was our phase one, if you like, which was driven primarily by acquisitions. And I came in through one of the acquisitions that I sold, my business when I sold my business to now vertical in January 2023.

And that’s when I came to now vertical. I was brought in as the chief exec in January 2024 to run this one business, one brand strategy that was driven by integration and organic growth in the business. So now the way you would look at Now Vertical is we have created that foundation already in the business. We are no longer those 12 acquisition and fragmented business. We have started with those collection of 12 businesses, and what we have created out of that is aim business, one now vertical.

That’s our foundation now, that we are working with. And one of the key things as a change that we brought about in the business when we integrated, the business was this operator first model. What that meant is we brought in some of the most successful leaders that came to now vertical from the acquisitions. We brought them to the right seats, the right position in the leadership team, in the management team, and they are the people who are now running the business. And I’m one of them, like I said, which I was brought in as the chief exec, of the business in January 2024.

So that’s the foundation, we are working with. Now what are the opportunities we have created in the business? You may also look at them as what we consider as the growth drivers in the business. So one of the things I mentioned was the hundred enterprise clients that we have. That’s one of the key assets in the business, and there is so much of headroom for us to keep growing within those enterprise accounts.

And it’s becoming more and more possible and more feasible because we have now integrated ourselves as one business. So earlier, when we could only sell one solution or one service to our client, now we can offer them a much, wider a much more comprehensive set of solutions and services on data analytics and AI for our clients. So that’s one of the key growth drivers we have in the business. We are also embedded in the key growth markets. We are not seeking a new market.

We are already embedded in the geographies like The US, in The UK, that’s within our North American and India market. And then Brazil and Argentina, which are again growth markets within LatAm markets for us. So these are the four countries that we are considering as the growth markets for us, and they, on their own, present large enough, target, target, addressable market for us to keep growing, within. So we don’t have to look for a new market. Really, there’s so much of potential for us to keep growing in the existing markets.

We also have high value client contracts. Some of our solutions that we deliver to our clients, they are so high value. Their contract value for us could be somewhere in the range of, say, quarter million to half a million, even more than a million dollar, US in revenue, for us just from one particular solution, if not. That availability of high value client contracts is such a growth driver and asset for us, which we are amplifying further. The other part is the operational scalability.

Now many businesses struggle to scale, you know, even if they have one of the best products, one of the best solutions, one of the best services, what they fail to do is scale their growth and their operations. And this is another thing that we have already sorted. And as an integrated business that has become even more powerful, and we call it as our delivery powerhouse, which consists of our team in Argentina and in India, that presents such a nice elastic and scalable delivery model for us that we can even if we get a $5,000,000 contract tomorrow, we can very quickly scale to support that or stop billing. The enabler for us, which is another growth driver and driver and a brilliant opportunity for us, is the expertise and the relationship that we are developing and nurturing with our technology partners. Yeah.

Especially the likes of the Google Cloud platform or the Microsoft Azure and click. We are already enhancing our relationship, phenomenally, and I’ll cover some of the those updates in the business update section. But the other technologies as well, which we will also get into is the Amazon Web Services, very strong expertise there. Snowflake is another one. We were some of those early partners of Snowflake, and we have done some phenomenal work with that, software.

And, Anaplan as well, which is very specific, you know, connected planning type software, which brings the right forecasting for large enterprises to fruition. So these technical expertise around the technology technologies that we are partnering with, and how we are nurturing these partnerships is one of the key assets and the growth drivers for us, and it presents phenomenal opportunities. Just to give you one specific insights, 60% of our revenue in 2024 came from our top 30 accounts. And we grew our average contract per year in that top 30 accounts per client to 724,000 US dollars. This was just, you know, phenomenal growth and the testament of our focus and the discipline that we brought about in in the enterprise accounts that we call as strategic accounts, the top 30 clients that we’re focused on.

What that and how do you encapsulate that into our strategy in very simple ways with all of these opportunities and the growth drivers is three things. We are focused on the account integration, which is all about scaling our existing enterprise clients, the strategic accounts that I mentioned. And you can already see, you know, how that is already delivering results, and we’ll talk about that, more. That’s one of our key pillars of our strategy, which we can keep working on for years to come. The other pillar is the partnership integration.

So the technology partners that I talked about, we are working towards nurturing these relationship in ways that it becomes a very, scalable revenue channel for us and very reliable revenue channel for us over a period of time. And it not only, gives us that revenue channel, but also positions us as the top leaders, as the experts in the industry with our clients. Also, that brings in that debt and rent on these technologies. And, of course, that will, of course, enhance our, relationship with the technology partners too. One of the other pillars is our capability integration.

The technology expertise that is that has been built over many years. That technology expertise was existing in pockets of our business, and different types of technologies expertise existed in different areas of our business. What we are doing is now bringing all of that together within that integration strategy, and we are now democratizing that capability, the technology capability across our business. This is already happening. And like I said, you know, I’ll talk about that again in the business update section.

And just to give you one context on the technology partners and the revenue from the technology partners and what it means for now vertical, every dollar that is spent on the the cloud platform by our clients, every dollar they spend, we get about six to eight times of the services or the solutions revenue on that cloud dollar spend. And that’s the scale that we are that’s the growth and the scale that we are aiming to achieve and get that, you know, enhance our share in that pie. So that’s just one of the key insights about what kind of opportunity really lies in front of us in this technology partnership. Our short term, near term goal is what this whole thing translates into is achieving that 50,000,000 US dollars revenue run rate and a $10,000,000 EBITDA run rate. That’s our near term goal, which also, must have a composition of very rich integration revenue.

Now because we are all integrated, we are also focused on how do we enhance that revenue streams, by bringing in different solutions and services from one part of the business to another. And that’s our near term goal. These are just very small numbers for the potential that we are unlocking in the business and the potential that lies here. This is just a near term goal that we are focusing on so that we we can really prove to ourselves that this kind of a growth and integrate with an with an integrated business is absolutely possible. And this will mean a lot for our confidence and how we unlock the further further opportunities and the value in the business.

This is all about our very sustainable organic growth engine. I have not even talked about the inorganic growth channel, which is absolutely gonna be on the cards in the coming times. But what we believe in is always crawl before you can walk, walk before you can run. And what we are doing right now in the business is all the transformation we have gone through in the last fourteen to fifteen months, we are ensuring that it’s better properly. It’s stabilized very nicely, and we are able to deliver the organic growth with this engine.

Once that’s done, we will absolutely be reigniting the inorganic growth channel, which presents another avenue of growth. And that’s why I keep saying this business has got unlimited growth potential. This is what we are unlocking in the business continuously. And, hopefully, this is gonna be reflected in the results that you’re gonna see shortly. So what’s our performance overview and the KPIs?

Some of the key ones I will go through. The most important ones, what’s our revenue? 10,400,000.0 this year, which is 23% year over year over year growth. Absolutely phenomenal. Very pleased with the whole management team, everybody in our, whole team that has been working towards and growing in the same direction with us.

10,400,000.0, as a US dollar revenue. These these all numbers are in the US dollars. And this is all excluding the divested businesses. You know, so this is this is pure numbers of the business that we are today, and we are comparing with apples to apples of our last year also. So 41,600,000.0 of US dollar run rate already achieved in revenue.

And on EBITDA, very pleased very pleased to see another quarter where we have got 2,500,000.0 of, the revenue well above our expected margin of the 20% as the target that we have set or the goal we have set for ourselves. This is the second quarter where we are we have delivered 24% EBITDA margin. That’s the consistency that we are bringing in into the business. Once again, the 10,000,000 US dollar run rate of EBITDA achieved another in another quarter last year. Last quarter as well, we had surpassed the 10,000,000 EBITDA level.

We have done that again. So very pleased with this consistency, of the, growth and the KPIs that we are bringing, to our shareholders. Our gross profit is rock solid at 50%. If you remember, I have been saying that our goal is to be better than the best in our industry with, you know, 50% of gross profit and 20% of EBITDA, and we are consistently delivering that. So gross profit of 50% with 5,100,000.0 US dollar gross profit, which is 15% increase year over year.

And very critical metric, which is our income from the operations, is very positive, very profitable. That’s 1,500,000.0 US dollars, and we are no longer a loss making company. That’s the consistency that we are delivering in the business. That’s how the business should be. That’s what we said.

You know, that’s we we we are gonna be bringing this consistency and sustainability with organic growth. That’s driven by profitability. That’s exactly what we are delivering time and again. Just to give you the context of how we have evolved in the last few quarters, and you have to appreciate that this is the management team completely changed, completely new management team that has now spent five quarters in business, and we have been able to deliver as a management team five consecutive quarters of consistent year over year growth. That’s just the normal.

Three consecutive quarters with 2,000,000 US dollar plus EBITDA. That’s the consistency. That’s growing. And three consecutive quarters of 19% EBITDA margin. And that’s very important because this is way better than the best in class EBITDA that our industry has.

And that’s why we are just mentioning this to you that this business is rock solid with the KPIs and the growth we are experiencing. And like I said, very important metric for us when we came to the to the seat as the management team is the positive income from the operations. And this is our fourth consecutive quarter with very positive income from the operations. This is all phenomenal work from all of the management team and everybody in the business has been working so hard. This transformation was not easy, and we are continuously delivering on this growth and consistency completely heads down on that.

And so pleased, so proud of the management team to be bringing these results to our shareholders. With that, Christine, if you could please take us through some in-depth KPIs there.

Christine Nelson, Interim Chief Financial Officer, Now Vertical: Sure. Thanks, Sandeep. We’ll we’ll start off with the revenue performance. So we went from 8,400,000.0 in q one twenty twenty four to 10.4 in q one twenty twenty five, a 23% year over year increase, which we are absolutely, over the moon, proud of. This is a this is a huge increase, completely from organic growth.

So this is us building consistency off the revenue growth we saw throughout 2024 to reach this 10.4. And it’s also really representative of, you know, how what a positive impact this change in strategy has been. You know, q one twenty twenty four, huge change in management. We’re shifting strategies. We’re focusing on the integration of all the acquisitions, the operator first model.

So huge, huge change here in 2024. And so we’ve continued to build on that consistency and that growth to get to 10.4. So really proud of this metric. And it really just is a representation of all that hard work that we’ve put in over that past year. You know, a couple of this the key strategic shifts that we did was that focus on the enterprise and the strategic accounts.

So really focusing on increasing our account value with those with those clients. And we everyone now we’re not just, you know, one acquisition is focusing on this. We’re one business, one brand. Everyone’s sharing these same goals. We’re aligned across across all markets, across the globe, and these results really speak for itself on the execution of these strategies.

So we’re gonna continue in the future to focus on those strategic accounts, focus on our enterprise clients, as well as also deepening our technology partnerships, and, of course, account integration, which is gonna be scaling our existing enterprise clients globally as well. Next, we’ll talk about EBITDA, which we’re just, really proud of. I mean, this is just huge, huge for us. This increase of a 19% year over year from 1,200,000 to 2.5, is absolutely fantastic. We’re we’re incredibly proud of this.

This all this hits a few metrics for us, a huge a few targets. Right? So it’s hitting at $10,000,000 EBITDA run rate. It’s also exceeding our target of 20% EBITDA margin. You know, industry standards are generally between, you know, 1520%.

We’re targeting 20. So hitting 25 24% to start off the year is fantastic for us. How do we get here? So, you know, previous slide, I spoke about our strategies with our strategic accounts, enterprise clients increasing those those account footholds, and then as well, of course, the operator first model, which I’ve spoken about before, and you’ll hear me say it again, but it really allowed us to produce our overhead costs. So big focus, we started looking at all of our costs both in the market, at corporate as well at the beginning of twenty twenty four to reduce wherever we could.

And moving to that operator first model really allowed us, to do so by, you know, capitalizing on the existing expertise that we had in the markets. And so, really, our admin costs, we’re looking year over year a $1,000,000 decrease, and about half of that was actually corporate costs. And these kind of aren’t, like, one time decreases. Right? Like, this is a sustainable, admin cost level that’s gonna be able to provide consistency going forward and help, you know, help increase our profitability going forward with consistent admin costs.

And then next, we’ll go to income from operations. So this is obviously another one we’re incredibly proud of year over year going from a loss of about, 100,000.0 to a gain of 1,500,000.0. You know, this speaks to speaks volumes about how successful the strategic shift has been over the past year and all the hard work that everyone has put in. You know, this, I mean, we we didn’t put the number on here, but I just would like to say that this is a 253% increase year over year. It’s also the fourth quarter we’ve had positive income from operations.

Just going to show that consistency that the change in management and the strategic shift that has had, throughout this past year. And once again, this is also a direct result from the things I’ve pro spoken about previously, reduction in cost, the increase in revenue, the increase in profitability on our gross margins, all directly related to this amazing year over year performance. Next, we’ll talk about debt, something else that we’ve really been working really been working hard on in reducing our overall debt. So when I when I our reference to debt here is actually including a few things. It’s including our institutional long term debt.

It’s including our, convertible debt and any acquisition related, liabilities as well. So, like, deferred consideration, that type of thing. So if we’re looking at, you know, the progress that we have made in, you know, like, from beginning of twenty twenty four to, you know, end of q one twenty twenty five, which is not a not a long time, we’re going from 28.1 to 15,600,000.0. I mean, this is absolutely incredible, incredible. And for the business, for the business cash flow, you know, just it’s absolutely fantastic.

And even in q one, we were able to reduce this by a further 8%, about 1,300,000.0. And we were able to do that, make these, you know, significant changes within this quarter a couple different ways. We obviously we continue to make cash payments for our acquisition liabilities. We are continuing to make our, you know, our debt principal payments to reduce our long term debt, as well as the prior shareholders of AcreTrend. We’ve reached additional settlement with them.

So we they agreed to settle about $800,000 of deferred consideration, that would have been payable in cash mostly the beginning of twenty twenty six. They agreed to settle that for shares. So that is a huge I mean, that’s just a huge win for us, a huge win for our cash flow, and also, obviously, reducing our debt as well. So overall, if we’re looking at our debt to EBITDA ratio from beginning of the end of twenty twenty three, we’re looking at five times, and now it’s about 1.5 times. I mean, it’s just an absolutely fantastic, improvement that we’ve been able to make, and something we’re really proud of.

And we’re continuing to work on this as well going forward. Back to you, Cindy.

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Thanks very much, Christine. What you see on the screen in terms of just our leverage ratio is so phenomenal, and we are so proud of this. You know, this really creates such a headroom for us to grow further. You know, our EBITDA margins are much higher than the best in class. We are under leveraged company from the market standards if you consider 2.5, you know, as a leverage ratio, which is kind of standard.

For a rightfully leveraged, business, we are at 1.5. That just creates more opportunities for us to grow here. One other, thing like Christine mentioned, the there is a convert loan, which is part of our 15,600,000.0 debt that’s pending now on our balance sheet. We are actively working on this strategies to deal with the convert loan. We’ve got a little over four months left.

It’s due and matures in October 2025. We are actively working on it, and we will have a strategy to solve this for sure. So stay tuned on that one aspect. I know this has always been a question from our investors, so I thought I’ll just interest that proactively. Getting into the business updates, we like I said, you know, that’s the kind of engine of the organic growth that you should look at for now vertical.

This is how the business is operating. One of the key things, like I said, is the key pillar is the account integration where we are scaling our enterprise accounts that we call as strategic accounts. We focused on 30 strategic accounts in 2024. And in q one twenty four, our revenue from these 30 strategic accounts was 4,100,000.0 US dollars. What we have been able to do with the focus and the discipline that we have brought on these strategic accounts and growing those strategic accounts is we have now for those 30 strategic accounts, we have been able to grow that revenue in q one twenty five to 6,400,000.0 US dollar, which is 56% year over year growth.

And that’s just a phenomenal aspect which proves our belief in, these strategic accounts or the enterprise accounts being one of the big assets where we will continuously, keep unlocking the value from, we are not gonna stop here. There’s so much more headroom that we have available. So that’s just one update. I get this question also about, you know, how much of a focus is on the net new business and, just the existing business. What we have also done is added 10 additional accounts to our list of the strategic accounts that we are focusing on.

In q one twenty four, the revenue was only $32,000 from those strategic accounts, 10 strategic accounts. What we have been able to do is grow that to 716,000 US dollar in q one twenty five. And out of these, 10 strategic accounts, there are six new strategic accounts that we have added. Net new strategic accounts where we did not have any relationship with them in q one twenty four. They have been added to our bucket as well.

So that’s one of the things that represents our focus and the balance that we are having to grow the existing accounts, existing strategic accounts, and bringing in some net new strategic accounts also to the bot. So that’s our account integration and some updates on that in very specific revenue terms and the growth terms. What we are really excited about is you may have seen these press releases, but this is such a phenomenal shift. We started focusing on our technology partner relationships last year, a lot more focus on that and nurturing those relationships. You would have seen we were given the premier partner status with Google Cloud in LatAm.

We have also, earlier this year, been given the partner of the year award, by Google Cloud, for Latin America results. This means a lot, to the business. And what we have been able to do is leverage that success and that positioning and bring that status in The UK also. By the way, we have already, democratized that, status within all of LATAM. So all of LATAM has been our part of premier partnership status with Google Cloud.

And within The UK also, we have got the premier partnership status, which will help us grow the revenues and scale this revenue and accelerate that growth with the with the partners much faster, with Google Cloud much faster. Another star on the jacket here is the click partnership. We have recently been awarded the channel growth partner of the year. We have been two partners for many years. 2023 have was a very difficult year in that region.

In 2024, we have been able to turn that around completely, enhance the partnership, nurture that partnership further, grow the business successfully. And this there’s a lot of concentration in our Brazil region for the click partnership, but just receiving this channel growth partner of the year award is is just a phenomenal thing to be proud of. So that’s another really key change that we have we we are seeing and development that we are seeing in the business. One of the things is the debt in the solutions that we are bringing while working with these technology partners. Data Catalyst is one of the solution enterprise grade solution that really helps integration of data in much more modern and fast and agile ways.

We have been able to bring this, Data Catalyst as a solution to couple of really large enterprise clients. And what we have done this into is a proper packaged solution, which is now on the Azure marketplace. And Microsoft Azure has approved this after going through hundreds of the validation point checkpoints, and this solution now exists as a b to b integration data integration solution on Microsoft Azure marketplace, which is another what it means for the business is that we will be able to work much closer with the Microsoft commercial team and take this to many of their other clients through this channel. So these are some of the updates about our partnership integration and what’s happening. I will keep bringing these updates to you from, now onwards in every quarter.

Capability integration. One of our clients really large, very successful client in their own industry. This is in the technology sector. We have been working with them for many years now. What we have been able to do after all of the integration that has, happened, Our relationship was concentrated only in The US with this client.

What we have been able to do now is expand the capabilities, offer them more solutions and services, and at the same time, serve them from the other countries as well. So we are now not only working with their business in The US, we are working with them in The UK, in the Asia Pac, and we are also delivering with much wider capabilities and our teams that are also working from, India as well as in LatAm from Colombia and Argentina. So that’s just, the reflection of how this integration strategy and that’s one of the examples of how this integration strategy is already working really well for now vertical. That’s all about the business updates. I will let Andre open up the q and a here, please.

Perfect. I’ll pass

Andre Garber, Chief Development Officer, Now Vertical: it over to Glenn for this

Glenn Axelrod, Investor Relations, Bristol Capital: Thanks, Andre. We do have some questions coming in from our analysts. So the first individual to ask this question is gonna be Rob Gop with Ventum. Rob, your line is open.

Rob Gop, Analyst, Ventum: Thank you very much, and congratulations on the quarter. One of the things that I was looking for was a return to growth in The UK and was very pleased to see it. Could you perhaps dive into that that growth?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Thanks very much, Rob. First of yes. The growth in The UK, we are very pleased with that. You know, The UK market is something where we already had many of these enterprise clients in. And a lot of our leadership team, management team also is here in The UK.

So it was quite natural for us to bring in more focus in The UK region just because it’s much easier for us to do that. And it’s a very mature market from the client the the sophisticated solutions that we offer to our clients. So what we have done is once we package these solutions all across our business, we have been bringing more and more of these solutions and services that are tech enabled to these existing clients as well as growing, you know, the net new business care in The UK. So these were some of the drivers, basically, that brought that that are bringing in that growth here in The UK. And one other thing I must also mention is, I think I mentioned this last time, we now grew, the $1,000,000 plus accounts to, eight accounts in 2024 when they were only we were only getting 1,000,000 plus revenue from only three accounts in 2023.

So we have been able to grow that number to eight accounts, and five of them are coming from the North American EMEA business. So that that’s one of the key things which we have been able to bring about in The UK specifically.

Rob Gop, Analyst, Ventum: Okay. And with your, you know, now expanded record of consistent organic growth, are you at a stage where you’re looking to invest in either additional sales capabilities, account management capabilities, or service capabilities?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: %, Rob. One of the key challenges for me for the business is how do we how do we bring about that sustainable growth in the business. And the key driving factor for that is to build a very strong and robust commercial capability, especially in the North American and EMEA. We will be doing that in LatAm as well, but North American and EMEA is where the business is already screening for that, commercial engine to be established and scale. And that’s where we will absolutely be investing more time, more money.

We are already doing that, and I will bring in some more updates, in the next quarter about it. So that’s not only on the cards. It’s already in flight, Rob.

Rob Gop, Analyst, Ventum: Very good. Thank you, and congrats.

Glenn Axelrod, Investor Relations, Bristol Capital: Super. Thank you. Our next question will come from the line of Suthan Sukumar with Stifel. Suthan, you’re alive.

Rob Gop, Analyst, Ventum: Thank you. Hey, guys. Good morning. Good to see the solid progress here against your full year targets. For first question, I wanted to just touch on what you talked about with your average spending with top strategic clients.

Can you speak a little bit about the typical cross sell levers that you are having success with in driving that increased share of wallet?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Absolutely. First of all, thanks for launching the coverage on us, Sultan. Really appreciate that. In terms of our growth in these strategic accounts, there is now the the the kind of growth drivers that exist for us, they are of multiple nations. So one is, you know, we have got the wider solutions in an integrated business now.

So if we were able to offer to our clients only one or two solutions earlier as one small company, now as an integrated business, we are able to offer a lot more value to them. Or once we go into a client, once they start seeing the value we deliver, and this is also reflective and there’s lot of evidence, so many cases where our journey begins small with a with an enterprise clients. But then we have, say, six plus years of average relationship in our top 30 clients. What that means is we are able to not only embed ourselves in the transformational programs that are driven by data and AI technologies, but we are also able to bring business value to various functions. So if we are if we were initially engaged with, let’s say, only marketing function, we then are able to move into these sales.

We are able to move into customer services, to additional functions, to finance function because many of the platform work that we do or the foundation work that we do with the data and AI, especially with the customer and finance focus, it unlocks many of the use cases in these functions that I mentioned. And then what we are able to also do is not only the transformation of these functions, but we are able to bring in the managed services component of it where we bring in the depth of the expertise and the breadth of the expertise to run all of their data and AI capabilities, which otherwise, for them to stand up, would cost a lot, not just in terms of money, but also in terms of time. So you will see that managed services kind of, you know, revenue coming in from these clients also. And then the sweet spot we have is the the partnerships with these technology vendors as well as our own software and our own technology, which is very nicely and naturally embedded into the solutions and services we offer to our clients. So these these are the things that really generate that association, that tenure, or the longevity, in the relationship, which is based on complete value, for our clients.

And hence, you see, the the growth in these strategic accounts.

Rob Gop, Analyst, Ventum: Thank Thank you for that color. That was great. I wanna dig into the Google relationship next. You you guys are obviously building on your relationship in, the LatAm region and moving into The UK, which feels like, you know, a bit more of a crowded market than than LatAm, but you are seeing some strength there. And having a part partner like Google feels like a, you know, unique advantage.

Can you speak to your progress there with Google to date, you know you know, granted its early days. I’m just kinda curious what you’re seeing on the ground.

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Yeah. You’re absolutely right, Sutan. You know, this is a very crowded space. But the the key advantage Nava has the key advantage we have created for ourselves is we are now the premier partners with Google. Where only 3% of the Google Cloud partners really make it in those specific specialized area like data and AI.

There will be only 3% of the all the partners that offer data and AI type of solutions and services, only 3% get to the premier status. And we are, already there, and this is the advantage we have created to come out of the crowd, first of all. What this also means is we are engaged with the Google sales team, and they have the trust, in our capabilities and ability to deliver, the programs to our clients risk free. That’s why we are the premier partners with them. So what happens is when there are certain conversations going on around a particular solution and Google, you know, the sales team or the commercial team is aware of that, they then walk us into those opportunities with these enterprise clients.

And that’s how we are creating more and more of the growth opportunities for ourselves. Just to give you an example, of some specific numbers, just in last year, we had about 60 inbound leads from Google Cloud commercial team just in LatAm. And this is exactly what we are replicating now in The UK. Are we are strengthening our relationship by bringing in the right team members and the right capabilities here in The UK too. And the LatAm team is has been extremely helpful for us to enable this in The UK.

So that’s how that relationship is developing, Susan.

Rob Gop, Analyst, Ventum: Great. That that’s helpful. And for my last question, guys, I just wanted to touch on your proprietary software strategy, you know, with, your offerings like Now Privacy, Now Hub. Can you speak to, you know, what the recent level of engagement and attach rates are for these offerings within your broader solution delivery? And are there other solutions use cases that you are working on currently?

And, you know, could m and a accelerate that?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Yeah. So one of the things I think I’ll I’ll touch on the m and a in a second, Susan. But, you know, on the nonpreviously side, nonpreviously, just in ten seconds, it’s it’s basically a software that goes and crawls across the data estate of a large complex enterprise and uncovers the hidden risks that could be leading to data breaches by exposing, say, PII data or the credit card information data, the, you know, the the HR type data and all that. And this is how the now privacy software helps by uncovering that risk. What we have done in the last year is encapsulate encapsulated that Now Privacy as a software to expand it into more of a value driven solution.

So now we not only are able to uncover that risk and and showcase that risk to an enterprise client, but we are also able to mitigate that risk for them with our solutions and services in there. And not only that, we are we are we can’t we we we can actually say in in this three month period, we can reduce all of these high risk or medium risk for you by doing these things. So that’s how we mitigate. We can now also provide them the managed services, and you can view that as just a CCTV that’s scanning their data estate all the time. And as soon as the risk appears or the potential of the risk appears, it flags it to them.

That’s how we have expanded that particular solution, which we believe is the right enterprise grade solution and is the need of the hour when all these enterprises are already experimenting a lot with the AI democratization of the data that’s underway. And this becomes even more of a powerful solution when you have to think about the AI readiness in your business. So that’s the now privacy part, which now has been in caps encapsulated in a solution. The m and a part, we would like to continue our exploration on the solutions and services side first rather than trying to do an m and a on another software product. Because that’s where we see a lot of value, and we are creating many of these accelerators and frameworks and methods that are proving to be very successful for our clients.

And AI journey as it evolves will then lead us into what are the right kind of software. Either we, you know, buy some software really in the future or partner with some of these softwares as well to bring in the right value for our clients.

Rob Gop, Analyst, Ventum: Perfect. Thank you for taking my questions, guys, and congrats on a on a solid quarter. I’ll pass the line.

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: Thank you.

Andre Garber, Chief Development Officer, Now Vertical: Thanks so much, Rob and Suthan. So I’ll just get into I know we don’t have a ton of time, but I’ll get into to the questions. And first question is, from, us mentioning 724 per account for the top 30. Does that represent growth from a prior period? And if so, what does that growth look like percentage wise?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: That growth is prime so just to give you some specific numbers on those top 30 clients. Before 2024 or in 2023, our growth in those top 30 clients was less than 3%. In 2024 alone, our growth, there was almost 20% in those top 30 accounts. That’s just a focus and discipline. And keep in mind, you know, what we all need to appreciate is we were going through massive transformation in the business.

And while going through the transformation, we created this kind of a growth organic growth in our top 30 clients. That was about 20%. So that’s the shift we have been able to bring about, and that’s the shift that you saw, you know, q one over, you know, year over year growth is 56% in just those top 30 clients. So that’s why I’m bringing in these metrics, which really embeds our confidence in the belief that we had, which we said we will be focusing on our strategic accounts and the growth in these strategic accounts. We see the value.

We see the potential, and that’s what we are able to deliver. So it’s it’s really proving our belief and our thesis right.

Andre Garber, Chief Development Officer, Now Vertical: Great. Thanks so much. So just a question on unbilled receivables, and we’ve had a few questions actually about unbilled receivables and how how that has changed over the last few quarters, increasing as so much as of late. Maybe that’s for Christine, if you could perhaps touch on on that question.

Christine Nelson, Interim Chief Financial Officer, Now Vertical: Yeah. For sure. This is directly related to the reselling subscription revenue that we have, which is also broken down separately in our revenue note on our financial statement. So under IFRS, we’re we are actually required to record a % of the revenue that’s related to these subscriptions, specifically because we are reselling these subscriptions. So normally, a subscription revenue, you know, you’d be recognizing it monthly over the course of the period of the subscription, or in this case, we have to rep we have to recognize 100% of the revenue on delivery of the service of the subscription.

So that may mean if you’ve got a three year subscription, a % is going in on day one. And so and generally for these subscriptions, we are billing these over the period of the subscription. So if you’re having a really strong quarter with a lot of reseller contracts being closed, you’re gonna really have a big spike in your accrued AR. Now, of course, that’s gonna come down depending on how much you’re billing for those subscriptions. But if you’ve got a really big strong quarter that has maybe some more multiyear contracts being closed, you’re gonna see a spike.

And so this is kind of this is an expected increase for us. And as well, we’ve also recently started closing multiyear contracts. So, generally, historically, we had these one years. And now starting in 2024 and 2025, we are seeing an increase in, say, three year contracts being closed. So that’s kind of what’s causing a even bigger spike in the accrued AR.

Andre Garber, Chief Development Officer, Now Vertical: Great. Thanks so much. Another question was about US revenue, now being greater than a million. Are you seeing more upside in The US going forward?

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: %. US is a phenomenal market. Our sophisticated solutions have got so much demand in, the countries like The US or the whole of the North American region and even in The UK. We will absolutely be going after and chasing that growth potential in The US market. But like I said, you know, what we are what we are doing here is be able to crawl before we start walking.

And that’s the philosophy that we are taking to bet the transformation that we have brought about into the business properly and start delivering that organic growth. There are so many different avenues for us to bring in the organic growth. And then, like I said, you know, even the organic inorganic growth. But US is gonna be absolutely one of the markets where we would love to tap into the potential of the growth for our sophisticated solutions.

Andre Garber, Chief Development Officer, Now Vertical: Thanks. Maybe I’ll just put two just because of the time, put a couple questions together, a question, around, you know, whether we see any obstacles that may, you know, hinder our, you know, growth and our our targets. And also, just to talk to the a little bit more detail on the 10% of the total revenues, from integration and how that is kind of generally tracking.

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: So 1010%, integration revenue. First of all, I think that’s tracking really, really well. You know, we have talked about what are those key areas of our solutions and services that are beautifully cross pollinated or could be beautifully cross pollinated, and that’s what we are bringing to the market. The integration will also happen within the markets and across the market. One of the key example of that integration is, like, I demonstrated the Google Cloud partnership.

We did that all of that effort of four years, many years, that hard work was actually done in LatAm. And because now we are an integrated business, we are bringing that to The UK also. And it’s already in flight. We are accelerating our growth and nurturing that relationship here in The UK. So these are just the examples.

I also shared the other example of, you know, the technology client that we have who we are now working not just in The US, but also in the other, regions. That’s another example of that integration, and we are tracking really well against the KPIs, for that growth.

Andre Garber, Chief Development Officer, Now Vertical: Great. So let’s get into some of the balance sheet, questions that have come in. So just looking at the working capital, movements as well, on the balance sheet, There we got a question saying that there’s a that there’s some differences between kinda trade and other receivables, accrued expenses, and other current liabilities and deferred revenue. So, you know, just kinda looking at outflows, versus inflows and just kind of trying to clarify whether maybe some of that has to do with FX volatility or whatnot.

Christine Nelson, Interim Chief Financial Officer, Now Vertical: Yeah. None of that has to do with any FX volatility or anything. I would actually refer you to note 17 in our financial statements. There is a reconciliation that gets to that 3,300,000.0 that you were referring to in your question, and it shows all the variances, in the movement between, all the the balance sheets and the changes in working capital there. So, hopefully, that will provide a a bit of an explanation.

But, generally, the the reason is, for that for that change in working capital is really what I kinda spoke about pre previously, which is that increase in accrued revenue. So we have about 2,000,000 of increase in the an I’m sorry, in unbilled receivables, related to the reseller, subscriptions that we closed this quarter. So those are majority of those is revenue that we’re seeing in our financial statements, but we haven’t necessarily built all of that yet. So that’s a big reason for that as well. We also had a fairly material move in our deferred revenue.

So we had done some advanced billings, in q four of last year, which we actually got paid for. It’s right the December, for bills that were actually kind of covered December all through March as well. So that’s another reason for that, that shift as well.

Andre Garber, Chief Development Officer, Now Vertical: Thanks, Christine. And just staying a little bit on the balance sheet here. The earn out obligations from past acquisitions have now been fixed. Whoever wrote that question, thank you very much, for seeing that, and are no longer generating meaningful revaluations. However, this quarter includes a nearly 600 k adjustment according to the question related to contingent and deferred consideration.

Could you clarify what triggered this and, whether we should expect, future volatility going forward?

Christine Nelson, Interim Chief Financial Officer, Now Vertical: Yeah. I can handle this. This is directly related to the acquisition, settlement that I, discussed earlier, related to app AcreTrend. So they had about, this mostly relates to this fixed earn out amount that we had previously settled. It was about 750,000.

It was due on 01/01/2026. This earn out was tied to employment. So with after the settlement that happened in 2024, we were advertising it into our p and l quarterly, bringing up to eventually over the course of 2025, getting to that full $7.50 by the December 2025. So as of the opening balance date in December, we only had about 200,000 ish of this actually amortized into our liabilities. Then in q one, this was settled for shares, and so we actually had to record, go from 200,000 to $7.50.

We have to actually record essentially that liability, has now been settled. So now it’s going into our p and l. So it’s noncash. It really represents that value of the settlement that we did for the $7.50 that’s going into common shares. So it’s a onetime expense, noncash, will not be repeating in the future.

We don’t expect to see any more of these revaluations in the future. And so, really, it should be, like, the last time we’re seeing kind of these revaluations that are

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: that have been we’ve been

Christine Nelson, Interim Chief Financial Officer, Now Vertical: seeing over the past year. But, really, it’s a good thing because, really, it means that that $7.50, we’re not having to pay that up in cash in in January of next year. So it’s a great thing.

Andre Garber, Chief Development Officer, Now Vertical: Great. I think we

Sandeep Mendi Radha, Chief Executive Officer, Now Vertical: got although, I guess, we are out of time, and we’ll probably have to pause the questions here. I need to jump on to another meeting. But I just wanna say you very much for your support and and the belief in the business. The management team is now 27% holder of the equity of the business. We are completely aligned with the shareholder sentiments and the objectives here.

I just wanna mention that this is how we are driving the business forward, and that’s gonna be a complete win win situation for all of us from the growth trajectory in the business. Thank you very much.

Christine Nelson, Interim Chief Financial Officer, Now Vertical: Thank you, everyone.

Andre Garber, Chief Development Officer, Now Vertical: Thank you.

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