ACCESS Newswire Inc. LD Micro 20th Annual Main Event Conference

Welcome everybody. How is everybody? I am sorry I am late. I got stuck talking to a bunch of folks, and I couldn't get away. For the folks that don't know me, my name is Brian Balbirnie. I am the CEO of ACCESS Newswire, one of the founders of the company, and I hope to spend now about 18 minutes talking about the business, and then I will walk you through some quick questions and answer session. We all know what the forward statements are. Don't need to read them. We are going to talk about who we are, what we do, why we do what we do, with a little bit of financial data on the screen for you to look at. Hopefully, you can see it easily. This will be available on our website this afternoon, and then any follow-up, I can email it to anybody.

Sequential revenue growth up 5% over the prior quarter. We are talking about Q2 numbers now, okay? We haven't reported Q3 numbers. ARR per subscription up 15%. We've gone to $12,718 per subscriber. We've got 1,100 and change subscribers on our platform today. Guided probably 1,300 to 1,500 by year's end. This is the convergence business that we'll talk about and what it is that we do. We brought to market a lot of new products. Social monitoring. If you walk through the main lobby today, you see a big TV up there. There are 101 companies, all of which presenting here today. We are tracking every social sentiment of each one of those companies, their symbols, their executives, and putting together sentiment scoring against each of them. We shamefully were at the bottom, and now we are at the top today. We'll see how it ends up for everybody.

I am going to pause there because those are the quick highlights. What is ACCESS Newswire and what does it do? You've likely seen us in the dateline of press releases that you read for public companies or even private companies that you read news on. We make money in two ways. The first is our investor relations subscription platform. Companies come to us to build their investor relations system, CMS system on their website. So wherever you visit ir.thatcompany.com, we power that for about 475 public companies. The growing large and mega cap is where our focus is today, compared to companies in the space here today. You think about Moderna, BlackBerry, Sherwin-Williams, Pinnacle Bank. Some of the largest brands in the world in every sector use us to power their IR systems, including their quarterly calls.

The calls that you listen to, that analysts are asking questions, that you may ask questions on, those are our operators. That's our infrastructure and our technology that does that. All of that revenue sits in our subscription business. So part of that 1,100 and change customers that we talked about are investor relations-focused customers, all public companies or de-SPACs or just new IPOs. Georgia Banking Company is a new one that's going public this week on Nasdaq. Been a client of us for about 90 days. We built out everything for them in the IR capacity. On the other side of the fence is our public relations business. You typically will think PR as press releases. For us, it's public relations.

It's about a part of a press release, but it's more about what social monitoring, media monitoring, journalist pitching, journalist database, constituent pitching, and brand monitoring all collided into one platform that we sell to our public and private customers. When you think about ARR, I hate to use these acronyms and terms to be a SaaS-y business, but if you think about ARR for a customer in the public space that buys both of our solutions, they typically spend about $25,000 a year to have both. We'll talk about the reasons why of what that is. We went through revenue a little bit. Again, these are Q2 stale numbers, but we're in a position now that we're November 12th, that we'll print Q3 numbers.

We had messaged last quarter that we said to our shareholder base that we would return to growth in the back half of the year, increase our adjusted EBITDA, increase our subscriptions, and improve our gross margins. I'm not going to tell you what the results of those are, but those are the four tracking things that we said that we would do for folks. I'm going to skip through some of the financial slide data a little bit. One of the things that I want to talk about here in gross margin, because I've been very high on increasing our gross margin percentages, and we've got two ways. Thank you. We've got two ways that we can lever this gross margin impact. One is the reality of life. It's AI. Can we automate the editorial process to save human headcount to look at press releases?

We'd all expect that we could do that, but we don't do that. The quality of the product that we put out for our customers, the ACCESS Verified content that you ingest is very important to us. That is an area that we could swell gross margins to 80% by going to AI or higher, but we're not going to do that. We generate higher than average gross margins in the public relations space from a news distribution standpoint. The average last known that we could track was about 68%, is what it is for the most of them. We feel like we're doing a good enough job there. The second is rising distribution costs. This used to be a business that people loved content. It would take content. Now it's a pay-for-play game. We balance pay for play. You'll see gross margins jump around.

It was 75% the prior quarter. It was 73% last quarter. It will be 75% or 76% next quarter, and then down to 74% the quarter after that. You end up with distribution costs driving some of that, but you think of this as a mid to high gross margin business. Anybody that knows or looks at the market cap or is a shareholder in the room knows the business today continues to generate cash. Continues to have adjusted EBITDA earnings, continues to do buybacks to buy its own stock back, and continues to be at an all-time low on market cap value. I think there's contributing reasons as to why. One of the reasons why, about eight months ago, was the erosion of what one would typically think a SaaS subscription business to be, and they determined it to be called SaaSpocalypse.

Every single company that was in the SaaS business was getting eroded by market cap, and all of us as shareholders were selling off these businesses. We got stuck in a few of those, because I know several of our shareholders have left and exited the position because of the assumption that that's what we are. Although we use the term SaaS in our business, I would tell you, it's not software as a service, it's services as a service. It's our editors that are doing the work. Our people are building our IR platforms for our customers and delivering the human capital for the engagement that we all do on earnings calls. It's a services-based software application. Without our people, customers can't do the work. I think we were displaced in an area that we shouldn't have been, and we're really not there.

It's my job to be sure that people understand that. This is a human capital business. Anybody that's in the room that services a public issuer knows that it's us that makes the business work. It's not the product, it's the people. That's the most important part of what we've got to continue to make sure people understand. The second part is a slide that I'll talk about in a few minutes, that some of you have probably used in other industries. I may have the worst analogies, and I apologize if I do, but it really talks about what a melting ice cube looks like and what it is. Businesses that fit into what a melting ice cube is. We generate cash, like we said. We sit at about $3 million in cash on the balance sheet at any given time.

We spend about $1 million a year of our cash accumulation in stock repurchasing. We will likely continue to do that and evaluate areas to both invest in the business strategically to drive growth in the future, as well as continue to buy stock back at these levels, which is ahead of what I already said. This buyback was put into place at the beginning of the year. I think if you read down on one of the bullets, as if I even gave you forward-looking guidance, as of Friday, the repurchase plan did 146,000 shares, about $977,000 of the $1 million, and approximately 4% of the issues outstanding. For folks in the room, that's good for us. We're taking out shares in the market that folks don't want, and we're reutilizing that and retiring it to treasury and not holding it on our balance sheet.

We're reducing the shares issued and outstanding. New product mix. We're clear on what the business does. We're the third to fourth largest news distribution outlet. We are one of the highest consumption in-app rated PR platforms according to G2 now. What that means is a customer comes in, buys a press release, or has a subscription for press releases, and then turns around and buys some of these additional products that we have that I'll talk a little bit about. This in-app purchase helps us drive the average spend per customer, the average unit economic per transaction, and helps give the customer more defendability. I bring these five up because these are five that our competitors don't do. We've got about 14 inside of our ACCESS Toolbox today. The one is called ACCESS Verified. We don't charge a customer for ACCESS Verified.

When a customer comes in and distributes a press release with us for the first time or every time, but more particularly the first time, we analyze the industry and sector, the contact, the company, the information in the body of the press release, and a quick background and validation check on the business and the person that's in the contact of the press release. The reason why we do that is to thwart out any possible bad actors. Bad actors are folks that come to us trying to run a press release that says they're involved in XYZ company. Since I'm standing on stage where a Tesla guy did his pitch last night, we'll say Tesla, and they've invented something new, but yet they have an email address that gives you the impression you think it's Tesla.

The number of press releases that come to market from a bad actor every single day is growing significantly. The ACCESS Verified solution ensures that we deliver accurate content to our distribution partners, that us as readers can know that it's been trusted and validated. The next one that we released here just recently was the ACCESS Events platform. It is our event booking management system, earnings call platform, and earnings advisory system all wrapped up into one. Anybody here a public issuer or do work for public issuers? Got a couple. Here's the benefit. Today, this is no discredit to any other vendor, regardless of who they are. You call your webcast company and say, "I'm going to do earnings on the 12th of November." They deliver you a URL and a phone number with a bunch of pins.