Earnings call transcript: Snipp Interactive Q2 2025 misses revenue expectations

Snipp Interactive Inc reported its financial results for the second quarter of 2025, revealing a revenue shortfall compared to forecasts. The company posted a revenue of $4.8 million, falling short of the expected $6 million, resulting in a 19.5% negative surprise. The earnings per share (EPS) came in at a loss of $0.01. Following these announcements, Snipp Interactive’s stock experienced a significant drop, declining 26.67% in after-hours trading. According to InvestingPro data, the company’s financial health score currently stands at 1.46, labeled as "WEAK," though it maintains more cash than debt on its balance sheet.

Key Takeaways

• Snipp Interactive’s Q2 revenue missed expectations by 19.5%.
• The company reported a negative EPS, contrasting with last year’s positive EBITDA.
• Stock price fell by 26.67% in after-hours trading following the earnings call.

Company Performance

Snipp Interactive’s performance in the second quarter of 2025 showed mixed results. While the company achieved a 2% year-over-year increase in revenue, reaching $4.8 million, this was below the market forecast of $6 million. The gross profit margin declined from 64% to 52%, and EBITDA turned negative at -$1.1 million, a stark contrast to the $10,000 positive EBITDA reported in the same period last year. Despite these challenges, the company maintained a solid cash position of $3.8 million, reflecting a slight increase.

Financial Highlights

• Revenue: $4.8 million (2% increase YoY)
• Gross Profit: $2.5 million (52% margin, down from 64% last year)
• EBITDA: -$1.1 million (compared to +$10,000 prior year)
• Cash Position: $3.8 million (slight increase)
• Deferred Revenue: Increased by $7.1 million (33% growth)

Earnings vs. Forecast

Snipp Interactive’s Q2 results fell short of expectations, with revenue coming in at $4.8 million against a forecast of $6 million, marking a 19.5% revenue surprise. The EPS was a loss of $0.01, indicating challenges in profitability compared to previous quarters.

Market Reaction

The market reacted negatively to Snipp Interactive’s earnings report, with the stock price dropping by 26.67% in after-hours trading. InvestingPro data shows the stock is trading at a low revenue multiple, with a market capitalization of just $0.7 million. The current price represents a -23.61% year-to-date return, reflecting broader investor concerns over the revenue miss and negative earnings. The stock is currently trading at $116.52, down from its 52-week high of $167.79.

Outlook & Guidance

Looking forward, Snipp Interactive aims for a 15-20% growth rate with a target margin of 55-60%. The company expects to achieve positive EBITDA for the fiscal year and sees potential revenue conversion from deferred revenue over the next 12-14 months. Snipp Interactive is also exploring organic growth opportunities and potential strategic initiatives due to unsolicited interest.

Executive Commentary

CEO Atul emphasized the company’s adaptability in a challenging macro environment, stating, "We are taking steps to make sure that clients continue to feel comfortable, that they have the flexibility to change things around." He also reiterated the company’s growth targets, saying, "Our base case is 15 to 20% growth rate at a 55 to 60% margin."

Risks and Challenges

• Macroeconomic pressures: Inflation and supply chain uncertainties are causing client hesitation.
• Decreased margins: The decline in gross profit margin may impact future profitability.
• Market competition: Quick adaptation to market changes is crucial for maintaining a competitive edge.

Q&A

During the Q&A session, analysts inquired about the timing of deferred revenue conversion and the impact of new product developments. The company addressed concerns about operational expense investments and discussed potential effects of AI on their business model.

Full transcript - Snipp Interactive Inc (SPN) Q2 2025:

Atul, CEO, Smith Interactive: Good morning, and welcome to

Daniel, Analyst: the Smith

Atul, CEO, Smith Interactive: Interactive second quarter twenty twenty five 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. Second quarter was a challenging one, especially for clients. All of 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 and revenue growth remains robust at about 19%.

Also, upside for the future is that our deferred revenue increased 33%. This 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 15,000,000 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 uncertainty in the economy is creating hesitation around when to launch. This indecision makes timing everything. For Swift, this is where we actually win. Unlike many in our industry 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 long journey 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 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?

Malcolm Davidson, Interim CFO, Smith Interactive: Thank you, Joel. I’m excited to join the Stiff 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 results 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 are due. The result we’re very proud of.

As Azul 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 March sorry, 06/30/2025, was $4,800,000 up from $4,700,000 in the same quarter last year, an increase of about 2%. Gross profit for the quarter was $2,500,000 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 of $1,100,000 compared to positive EBITDA of $10,000 in the prior quarter last year. Moving to the balance sheet. We ended the quarter with $3,800,000 in cash, up from 3,700,000.0 at the end of Q4. Cash flow from operations for the quarter was $500,000 a decrease of about $800,000 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 30 was $3,100,000 compared to $3,400,000 at December 31, which is consistent with the company’s average account balances for receivables. Combined cash, accounts receivable stood at $6,900,000 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 15,200,000.0 compared to $7,200,000 at the December and $17,200,000 about a year ago. This continues to provide clear visibility into future revenue and demonstrates strong customer engagement across our product suite. The story of the second quarter through is for the deferred revenue that increased by $7,100,000 from $5,300,000 at December 31, an increase of about 1,800,000 This increase is very positive and indicates our customers’ confirmed commitment to future campaigns that have not yet been hunched.

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.

Atul, CEO, Smith Interactive: Thanks, Malcolm. In summary, the first half was an interesting mix of operating environment 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 laser focus on bringing in offer content that we can monetize in the back of the 60,000,000 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 manufacturing in The US and Canada, managing complex incentives, media platforms, e com transactions, and logistics, touching hundreds of millions of households, e com orders, pharmacy scripts, and product returns. They bring to the table thousands of key based offers that we will be enabling on Smith Media’s financial media network and industry first. So 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 Smith and our company. We continue to evaluate all opportunities as we 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 on the chat, post your question, and we will try and answer it. First question is from Daniel. I’m just gonna unmute you, Daniel. There you go. If you unmute yourself now, you should be able to.

Daniel, Analyst: Hi. Good morning, Matul and Malcolm. Thanks for taking my question. My first 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?

Atul, CEO, Smith Interactive: I think yeah. So, you know, it’s again the the the funny part of the environment we are in is that it’s not a recession and it’s not optimism. So it’s a 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, you know, launch things on a dime.

And that’s really what the initiative is, right, to be launch ready, as I mentioned in my comments. So we are doing we’re doing a lot to keep clients, you know, comfortable that, hey. Let’s call our budget. You know, we can launch them as we decide to do things on a much shorter time frame than 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 was on normal averages, our revenue would have grown substantially. It’s very simple connection. Deferred revenue becomes revenue when we launch programs. If you don’t launch programs, deferred revenue continues to go higher.

Why? Because clients trust us. They pay us, you know, and that money sits there until we can recognize it.

Daniel, Analyst: So with the increase in deferred revenue, could you speak to the timing of kind of how you see that revenue getting booked? And then I was just wondering, has there been you know, it’s nice to see that your preferred revenue there. So 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?

Atul, CEO, Smith Interactive: There in lies the million dollar question on timing. Right? If I knew our revenue would have gone up another 19% this quarter. But it will it will eventually convert. It will convert within, you know, twelve to fourteen months at the most.

If it can work over the next half of the year, which is what I hope will happen, once there’s clarity as to what’s happening, let’s see what happens with interest rates today and if that impacts clients decision making. You know? So that’s the it it our deferred revenue typically can work between can work up to a maximum of fourteen months. Within the first fourteen months, you know, it converts into revenue. I’m hoping that actually it converts even faster given everything that’s going on.

Daniel, Analyst: Alright. Thanks for that. And then I was wondering if I could just dig a bit deeper in terms of, you know, the different products that’s in solutions. You know, is there anything to say, especially around the banking offerings that you have now? Just any deferring performance when you think about it from, like, a product perspective when you think about characterize the quarter?

Atul, CEO, Smith Interactive: I I I don’t believe like, I’ll set up the new products that we launched with the Smith offers and Smith Media, right, which are very, very early stage products. We’ve done all the difficult work of the deals with the banks and financial institutions and the, more importantly, the technology infrastructure, you know, connections and developments 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 back. Kumar is one of the investors in this company.

You know, that’s doing a deal with us. It’s pretty market. They they you know, we hope to announce that soon. It’s sitting with the PR department because they wanna make a big pusher of it. They run loads of different types of programs at retailers, so they have a lot of, as we call it, offer content.

So 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 kick started 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. You know?

On on our core products, that just continues to grow. I mean, like, yeah, you know, you look at it quarterly, it’s it’s one thing. But, like like I said, we have 19% growth. Core business, core products. I mean, there’s nothing else for me to say.

Daniel, Analyst: Okay. I appreciate that. And lastly for me, I think you mentioned unsolicited inbound interest. Like, is that an ongoing discussion that you’re having? Or I understand that can’t speak to too many details here and maybe just a comment on anything else strategic that you’re thinking of.

Atul, CEO, Smith Interactive: Yeah. You know you know when when market conditions start changing, people come shopping. Right? Buy low, sell high, simple paradigm. So, you know, we are an asset that sits there.

We’ve been pretty stable in building out, you know, and growing a $2,025,000,000 dollar asset. We don’t blow up a lot of money. We have no debt. You know, we could actually extract a lot of EBITDA to the bottom line in an environment where we put together a few different types of companies. So those conversations continue.

Your bank’s part of one of them. So, you know, it’s it’s it’s it’s just the environment. Right? So in I’ve our goal as as stewards of of this company is to evaluate every opportunity that makes sense for shareholders. Right?

And we continue doing doing that. It’s just, you know, there are quite a few of these conversations happening now at the same time for all these reasons.

Daniel, Analyst: Great. Appreciate the context. That’s the line. Thank you. Yeah.

Atul, CEO, Smith Interactive: Okay. So the next question is from Sanchez. Let me just unblock you. Jose. Hold on.

Yeah. Go ahead. I think you have to unmute yourself.

Malcolm Davidson, Interim CFO, Smith Interactive: I think it’s still muted.

Atul, CEO, Smith Interactive: Is this the other two muted?

Jose Sanchez, Analyst: Hello. How are you? Yeah. I’m still gonna mute myself from this side. A question about the you you mentioned the the decrease in in bookings, but we still have a a pretty healthy backlog of 50,000,000 now.

How are you seeing the bookings this q three so far? How is the pipeline?

Atul, CEO, Smith Interactive: Well, most of our bookings in the quarter come in in the last month. So right now, the pipeline actually is decently healthy, but will it actually grow is the question. Right? And we know I’ll know more in the next four weeks. That’s too early for me to give you a sense of what the three bookings look like.

Daniel, Analyst: Mhmm. Okay.

Atul, CEO, Smith Interactive: And, also, at the end of summer, so and especially in this quarter, most people come back, you know, this week or the next week. So things actually pick up in September. It’s a very, very busy month for us from all the things that’s like that.

Jose Sanchez, Analyst: That’s great. And let’s let’s wait for q three results then. On the other side, do you think that this is a one off thing because the turmoil or is this gonna continue in the near future with all the volatility that is being in the market, companies deferring CapEx, uncertainty for sure. What’s your thoughts from your conversations with your clients?

Atul, CEO, Smith Interactive: Well, I I I think I thought, you know, I I mentioned this on our last conference call. It has only amplified since then. It got slightly better, and then it came right back, you know, I guess, because of some of the vacations, I guess. I don’t know. But, like, people aren’t really sure what to do.

And, again, 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 the last move we have in the year based on the direction that they get from their retail partners and their customers their retail customers. Right? So, you know, we we don’t see this changing until something happens. You know, I don’t know.

It might be the stock market crashing. It might be, you know, interest rates actually going up versus down. We don’t know. I mean, it’ll be good to know whether we’re doing another recession or not, and then people can make their plans quite easily in our business. Mhmm.

Is inflation coming in, not coming in, how much of it is gonna you know, that’s gonna continue. Who knows? But all we can do is plan to not know, and 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 still allowed for that. That is what we’re Right?

Jose Sanchez, Analyst: Sorry, Atul. Definitely, what is this? 20,000,000 market cap companies with 4,000,000 cash and 50,000,000 in backlog. So totally. Regarding the operation operating expenses, they they raised a little bit.

Is that due to to to wages, salaries, is due to our other investment in other products? And if we continue to see this decrease in revenues, are you planning on any cost cutting strategies?

Atul, CEO, Smith Interactive: Yeah. We we we increase the again, you know, just in this environment like, we are planning for growth. Right? And we kinda have technology leverage built into our model now. Talked about this in the past.

Right? Expanding to new markets, you know, investing in sales for our media and office product. So we have our own cash that we’ve generated sitting on our balance sheet. We wanna put it to good use, and therefore, we have been investing in the right, you know, right resource spread to help us do that for that future. And I don’t think we’re gonna stop doing that.

The whole idea is to ramp the company from where we are today to a, you know, 250,000,000 mark. So 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 are just planning for the future. So I’m not gonna react on one quarter.

Jose Sanchez, Analyst: Perfect. That will be all at all. Thank you very much, and I will pass the line.

Atul, CEO, Smith Interactive: Thank you. And I I will respond to you on copy. I know you’re in town. So

Jose Sanchez, Analyst: Oh, yeah. Okay. Yeah. Sure. Thank you.

Atul, CEO, Smith Interactive: Yeah. I think at this stage, I know that people still joining the call. If they’re not welcome, I hope you I can send you the recording. You just join. But 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 the first question two questions from AT.

Can you explain in more detail why the EBITDA was negative? It’s a big difference. Do you expect a positive EBITDA for this fiscal year? Yeah. Again, you know, our plans were based on a certain amount of revenue being recognized.

When revenue doesn’t get recognized, you know, obviously, we can’t cover the cost that we’ve invested in, and 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, and and that’s the plan. The second question you had is is there much larger user of AI or big threat? No.

We don’t we we you know, the the big threat of AI is that we actually don’t use AI, but we’ve, you know, our entire receipt processing machine learning through a platform is what AI was before AI became AI in our in our field for receipt processing. Right? We also invest in quite quite significantly. I’ve announced a partnership a while back with agent with an agent tech AI company. We continue to deploy that.

We’ve got clients who who are paying us now for for a lot of agent tech AI customer service box that we have been investing in. We were invited by the Canadian government to apply for a grant. I don’t know if we get the grant, but it is it has to do with with AI. So I don’t think it’s much of it does not upset at all. It’s it’s a very massive opportunity that we continue to evaluate based on how we can make profit from it.

There’s a question on Thomas Lee. Looking ahead to 2026, past some of the macroeconomic noise, How do you see the growth and margin profile of the company evolving as you ramp? You know, I said this before. Right? Like, our base cases of 15 to 20% growth rate at a 55 to 60% margin.

And 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 chain you know, transformational opportunity. And that’s what we stayed true to, and that’s what we continue to plan around. Okay. So at this stage, it looks like there are no more questions. Thank you, everybody.

We will be in touch for the next quarter. And yep. Thanks. Thank you.

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