Allen Klee

Allen Klee of Maxim Group questioned Innodata's target adjusted EBITDA margin for 2026 relative to 2025, considering the company's reinvestment strategy. He sought clarification on how "automation, synthetic data generation, and evaluation platforms" contribute to margin expansion. Mr. Klee also asked for any specific insights regarding Q1 2026 revenues or expense spend and clarification on the replacement of $20 million in post-training workflows for the largest customer.

Answer

Chairman and CEO Jack Abuhoff explained that Innodata prioritizes seizing growth opportunities and aggressive reinvestment while maintaining profitability, rather than targeting a specific EBITDA margin percentage. He clarified that the "structural foundation for margin expansion" refers to future gross margin expansion from hybrid software and human team solutions, which are expected to yield higher margins. While not giving specific Q1 2026 guidance, Mr. Abuhoff indicated that upcoming quarters could soon surpass entire past year revenues, with increasing evidence of Innodata's foundational role in AI ecosystems. He further elaborated that innovation allows the company to deprecate older workflows and replace them with emerging, more valuable requirements, leading to scaling, new engagements, customer diversification, and improved revenue quality.

Allen Klee asked about Innodata's target for adjusted EBITDA margin in 2026, specifically whether it would be higher or lower than the approximately 23% achieved in 2025, given the company's focus on reinvestment.

Answer

Jack Abuhoff, President and CEO of Innodata, clarified that the company is primarily focused on seizing growth opportunities and reinvesting in the business, rather than strictly maintaining a specific adjusted EBITDA margin percentage. He affirmed the belief that profitability can be sustained while driving aggressive growth and becoming more critical to a widening customer base.

Allen Klee from Maxim Group inquired about the drivers of Q2 revenue outperformance relative to prior expectations, the go-to-market strategy for the enterprise segment, the planned investment scale for the second half of the year, and sought more detail on the concept of making data 'smarter' for customers.

Answer

CEO Jack Abuhoff clarified that previous commentary was about managing expectations due to external dependencies, not a forecast for a decline, and highlighted a very strong current pipeline. SVP Aneesh Pendharkar added that revenue from their largest customer was $33.9 million in Q2. Regarding enterprise strategy, Abuhoff noted that Agentic AI will be a catalyst, and Innodata is positioned to help companies adopt this new 'economic infrastructure'. Pendharkar stated that after investing ~$1.4M in Q2, they plan to increase investment spending by another ~$1.5M in Q3. Abuhoff explained that 'smart data' involves deep scientific analysis to correlate model performance with specific datasets needed for remediation, elevating Innodata's role to a strategic partner.

Allen Klee sought clarification on the largest customer's revenue dynamics, specifically the ~$135 million annual run rate and the forecasted 5% sequential decline in Q2. He also asked how customer spending on AI training and safety services is evolving.

Answer

CEO Jack Abuhoff reiterated that the company is intentionally embracing customer concentration as a strategic choice for long-term growth, which can lead to quarter-to-quarter volatility. He confirmed the ~$135M run rate was exceeded in Q1 but might be lower in Q2 due to dynamic demand. Abuhoff highlighted that trust and safety services are a significant, recurring revenue opportunity, and Innodata's competitive advantage lies in productizing its advanced evaluation techniques into an automated platform.

Allen Klee asked for clarification on the competitive threat from data distillation techniques like those used by DeepSeek, the sustainability of high Q4 gross margins, and the expected impact of planned reinvestments on 2025 EBITDA.

Answer

CEO Jack Abuhoff addressed the DeepSeek question, stating that data distillation ultimately leads to 'model collapse' and is not a viable long-term strategy for achieving AGI. SVP Aneesh Pendharkar clarified that while Q4 gross margin was strong due to project mix, the company targets around a 40% adjusted gross margin for new opportunities. Abuhoff added that the company will reinvest operating cash flow in a disciplined manner, primarily in talent, with the goal of exceeding 2024's adjusted EBITDA.

Allen Klee of Maxim Group LLC inquired about the sustainability of direct costs and recruiting expenses, the potential for continued operating leverage, and the company's methods for ensuring top-tier service quality. He also asked for an update on strategic initiatives for the Agility platform.

Answer

CEO Jack Abuhoff explained that recruiting costs will align with growth but are being managed down via internal capabilities. He affirmed strong operating leverage, citing an efficient go-to-market model for Big Tech. Abuhoff emphasized that data quality and agility are key differentiators maintained through robust processes. Regarding the Agility platform, he noted that integrating generative AI has significantly boosted win rates and market position.

Allen Klee asked about the competitive landscape within Mitek's fraud and identity segment, seeking insights into the company's winning strategies and potential areas of loss.

Answer

CEO Ed West explained that the competitive environment is expanding due to Generative AI accelerating synthetic fraud, driving increased demand for Mitek's broad platform. He highlighted Mitek's capabilities in biometrics, liveness, deepfake detection, and data enrichment, emphasizing its unique position with high-assurance financial institutions and the network effect of its growing data assets.

Allen Klee asked about the competitive environment within Mitek's fraud and identity segment, specifically inquiring about the factors contributing to Mitek's wins and potential reasons for losses.

Answer

CEO Ed West explained that the market is expanding due to accelerating AI-driven synthetic fraud, increasing demand for Mitek's broad platform, biometrics, liveness detection, and data-rich solutions. He highlighted Mitek's strong relationships with high-assurance financial institutions and the network effect of growing data as key competitive advantages.

Allen Klee from Maxim Group asked for clarification on the Mobile Deposit business, specifically whether the implied decline in guidance suggests a secular decline or eventual stability for the segment. He also inquired about Mitek's capital structure plans, asking if the company intends to pay off the entire convertible debt upon maturity or utilize credit facilities to maintain higher cash reserves.

Answer

CFO Dave Lyle explained that while overall check volumes are declining, Mobile Deposit transaction volumes have remained stable at approximately 1.2 billion annually, with revenue fluctuations primarily due to deal timing, including a large channel partner deal in fiscal 2023 that recognized four years of revenue upfront. CEO Ed West reiterated the distinction between stable transaction volumes and revenue recognition. Regarding capital structure, Mr. Lyle confirmed Mitek will pay off the entire convertible debt by February 1, 2026, using a combination of existing cash (approximately $196 million) and available credit facilities, with the exact method to be determined closer to the date.

Allen Klee asked about the mobile deposit business, specifically whether the implied decline indicates a secular trend or potential stability, and inquired about the capital structure regarding the convertible debt payoff.

Answer

CFO Dave Lyle clarified that mobile deposit transactional volumes have been stable at 1.2 billion+ for years, with revenue variance primarily due to deal timing, such as a large channel partner deal in Fiscal 2023. He acknowledged eventual secular decline but noted current volume stability. Regarding capital structure, Mr. Lyle confirmed the convertible debt will be paid off completely on February 1, 2026, with the method (cash, borrowings, or a combination) to be decided closer to the date. CEO Ed West added they have approximately $196 million in cash plus facilities.

Allen Klee questioned the fiscal 2025 revenue guidance, which implies modest growth, asking for the rationale behind the flat outlook for deposits and muted growth for identity. He also asked about the timeline to reach the $80-$85 million revenue 'fulcrum point' for identity profitability, suggesting it seemed to be a fiscal 2026 event.

Answer

CFO David Lyle explained the wide revenue guidance range reflects conservatism around large biometric deals, with potential upside from the MiVIP platform. He noted that headwinds from the ICAR product sunset and Mobile Verify pricing pressure are offsetting growth. CEO Edward West confirmed that achieving the identity profitability fulcrum point is a target for the fiscal 2026 period, representing a fully burdened contribution goal that the company is executing against.

Allen Klee of Maxim Group inquired about the reduced pricing pressure for the Mobile Verify product, the competitive environment, and the push towards the MiVIP platform. He also asked for confirmation on a modeling scenario for the Identity segment reaching its profitability fulcrum point in fiscal 2026.

Answer

CEO Ed West stated that the company's primary focus is on growing the higher-value MiVIP platform, which should mitigate pricing pressures over time as the business mix shifts. CFO David Lyle confirmed the logic that if current operational optimizations continue, the Identity segment could cease to be a drag on EBITDA margins upon reaching its $80M-$85M revenue target.

Allen Klee asked about Ituran's strategy for increasing uptake in the South American motorcycle market, particularly following the BMW Motorrad partnership. He also inquired about the overall size of the opportunity in South America and the potential for expansion into other geographies.

Answer

Eyal Sheratzky (CEO) highlighted the large market for mid-to-heavy engine motorcycles in Brazil and Latin America. He explained that Ituran developed a state-of-the-art security system and application, leveraging OEM partnerships (Yamaha, BMW Motorrad) to build reliability and attract aftermarket interest. He anticipates tens of thousands of new subscribers from this segment starting in 2026. Regarding geographic expansion, Eyal Sheratzky (CEO) emphasized Latin America as a huge, emerging market with untapped potential, where Ituran focuses on synergistic expansion. For other regions, M&A is the preferred strategy, targeting companies that align with Ituran's criteria and offer leverageable assets.

Allen Klee asked about Ituran's strategy for increasing uptake in the South American motorcycle market, particularly following the BMW Motorrad partnership. He also sought insight into the size of the opportunity in Latin America and the potential for expansion into other geographies through M&A.

Answer

CEO Eyal Sheratzky explained the development of a state-of-the-art unit for motorbikes, leveraging OEM partnerships like Yamaha and BMW Motorrad to tap into an underserved market with millions of potential subscribers, expecting significant growth from 2026, including from the aftermarket. Mr. Sheratzky emphasized Latin America as a huge, emerging market with ongoing expansion opportunities due to synergy and brand recognition. He noted that expansion into other geographies, such as the U.K. or Europe, would primarily be pursued through M&A, seeking companies with leverageable assets and established infrastructure.

Allen Klee of Maxim Group asked about the primary hurdles and key selling points in securing partnerships with automakers, financing firms, and insurance companies. He also inquired about the attractive market dynamics in Ituran's key countries, the opportunity in usage-based insurance (UBI), and the potential scale of the Santander partnership.

Answer

Executive Eyal Sheratzky detailed the long B2B sales cycle, which involves aligning with a partner's strategy, extensive technology validation, and complex contract negotiations. He highlighted that the high demand for security in Latin America makes it an attractive market. Regarding UBI, he described its success in Israel and early-stage efforts in Argentina and Mexico. For the Santander contract, he noted it's a multi-year deal in Brazil expected to maintain a net base of 100,000-150,000 subscribers annually, with ambitions to expand to other regions.

Allen Klee of Maxim Group inquired about the key takeaways from Oxbridge's recent extensive conference attendance and asked for more details on the proposals for the upcoming extraordinary general meeting (EGM).

Answer

President, Chairman & CEO Jay Madhu explained that conference attendance has revealed strong investor demand for compliance and transparency in tokenized products, which Oxbridge provides through its PCOB audited financials and no-leverage approach. Regarding the EGM, Madhu stated it is a strategic move to prepare the company to act decisively on its RWA and Web3 initiatives when the timing is optimal, positioning Oxbridge to capture a share of the massive reinsurance market.

Allen Klee from Maxim Group asked for an outlook on marketing for tokenizations over the next 3-6 months, the overall health of the reinsurance market, and more details on the strategic partnership with Plume.

Answer

Sanjay Madhu, Chairman, President, and CEO, stated that progress on the next token launch is positive, highlighting a new 'balance yield' token to complement the existing 'high-yield' offering. He described the reinsurance market as solid, with positive impacts from recent regulatory changes in Florida. Regarding the Plume partnership, he characterized it as a significant distribution channel that is part of a broader strategy to engage with major blockchain players while adhering to SEC regulations.

Allen Klee of Maxim Group inquired about the drivers of the strong Q2 revenue growth, the progress of investments in Always Alpha and affiliate marketing, and the financial structure and potential of the 'Youngblood' film. He also sought clarification on future cost savings from expiring leases and loans, business seasonality, and the status of the IMAX partnership.

Answer

Bill O'Dowd, Chairman, CEO & Founder, explained that the 23% year-over-year revenue growth was broad-based across subsidiaries, not reliant on a single large project. He noted that the positive adjusted operating income was achieved despite ongoing strategic investments in women's sports and affiliate marketing, which are expected to pay off in 2026. O'Dowd detailed that the 'Youngblood' film was produced with no capital from Dolphin and highlighted its sales potential at the Toronto International Film Festival. He also reiterated significant future cash flow improvements from expiring leases in 2026-2027 and loan repayments ending in 2028, and confirmed active efforts for a follow-up project with IMAX.

Allen Klee of Maxim Group inquired about the growth strategy and financial model for the Always Alpha and affiliate marketing divisions, the release timeline for the 'Youngblood' film, the company's top priorities for 2025, and the qualitative financial outlook for the remainder of the year.

Answer

Executive William O'Dowd detailed the company's strategic investments, explaining that the Always Alpha women's sports division has a 6-to-9 month lag between hiring managers and recognizing significant revenue. In contrast, the new affiliate marketing division can become cash-positive more quickly and is expected to be a solid profit center by Q4. O'Dowd outlined the plan for the 'Youngblood' film to debut at a fall festival, targeting a February 2026 streaming release to coincide with the Winter Olympics. He identified growing Always Alpha and the affiliate division as top priorities for 2025. He also expressed confidence for the full year, noting that the business impact from the Q1 Los Angeles wildfires was contained and that the core entertainment marketing segment still grew 2% year-over-year.

Allen Klee of Maxim Group inquired about several key growth initiatives, including the quantification and return timeline for Q4 investments, the potential for the influencer marketing segment to exceed 25% of revenue, the mechanics of the new affiliate marketing division, the financial impact of recent disruptions in Los Angeles, future plans for The Door agency, and the outlook for the 'Youngblood' film and Staple Gin ventures.

Answer

Executive William O'Dowd detailed that Q4 investments were primarily in staffing for the Always Alpha women's sports firm and the Digital Department, with rapid revenue generation expected. O'Dowd projected that influencer marketing could surpass 25% of total revenue, potentially reaching 30-33%, driven by the new affiliate marketing services. He acknowledged a minor Q1 impact from L.A. disruptions but confirmed operations had normalized. O'Dowd also highlighted the strategic addition of the DSRPT agency to The Door and expressed optimism for the 'Youngblood' film's potential premiere at the Toronto Film Festival, signaling a return to scripted content. He concluded that the Staple Gin venture is performing well and is ready for expansion.

Allen Klee of Maxim Group asked a series of questions covering the drivers of Q3's strong revenue growth, updates on the digital department and the "Blue Angels" content venture, progress on new influencer verticals, the strategy behind the LODI AI partnership, key priorities for 2025, and the go-to-market plan for the new Always Alpha women's sports division.

Answer

CEO William O'Dowd addressed the questions, attributing the 24.5% YoY revenue growth to strong performance from special projects, the acquisition of El Communications, and organic growth in legacy PR firms. He detailed progress in the digital department's talent and events divisions and clarified that the "Blue Angels" project has fully recouped its investment with future revenue expected from theatrical distribution. O'Dowd explained the LODI AI partnership is a core service enhancement with potential to become a venture. For 2025, priorities include organic growth, expanding Always Alpha, and launching multiple new ventures. He emphasized that Always Alpha's competitive edge comes from its expert leadership and Dolphin's comprehensive marketing infrastructure.

Allen Klee of Maxim Group inquired about the financial model for the AI Center of Excellence, the go-to-market strategy for new offerings like critical access hospital EHRs, and the performance of the MedAssar RPM business. He also followed up on second-half seasonality, the ROI of internal AI investments, the focus of capitalized software, and customer adoption of new AI tools.

Answer

Co-CEO A. Hadi Chaudhry detailed a threefold strategy for the AI Center of Excellence: driving new revenue, enhancing product competitiveness, and optimizing back-office operations, noting a high trial-to-adoption rate (over 75%) for new AI tools. Co-CEO Stephen Snyder explained the go-to-market strategy focuses on the underserved critical access hospital market and confirmed the MedAssar revenue base is stable. Snyder and Interim CFO Norman Roth affirmed that internal AI investments are funded by strong cash flow, with second-half seasonality expected to mirror the prior year, and capitalized software is focused on enhancing existing platforms.

Allen Klee from Maxim Group inquired about the drivers of Q1's year-over-year revenue growth, the product roadmap for the AI initiative, business seasonality, the potential of RPM/CCM services, and the sustainability of recent financial improvements in cost of revenue, spending, and tax rates.

Answer

Co-CEO Stephen Snyder attributed the revenue growth primarily to a large, non-recurring MedSR project, while noting that tuck-in acquisitions and upselling existing clients are the core growth strategy. Co-CEO Hadi Chaudhry stated that the AI initiative will deliver and report on new projects quarterly. Interim CFO Norman Roth confirmed the cost of revenue improvements are sustainable and the low tax rate will continue due to NOLs.

Asked about the drivers behind the first year-over-year revenue growth in two years, the product development timeline for the new AI initiatives, and the expected business seasonality for the rest of the year.

Answer

Executives attributed the revenue growth to a pivot back to growth strategies after restructuring the capital base, highlighting a large MedSR project as a significant contributor in Q1, though MedSR revenue is expected to be flat going forward. The growth strategy focuses on upselling, new specialty-specific EHRs, and tuck-in acquisitions. For AI, the company is scaling its team and will provide quarterly updates on project deliveries and adoption, with some back-end RCM improvements already in progress. Regarding seasonality, Q1 is typically the lowest quarter due to deductibles, but this year was an outlier. The focus remains on achieving the full-year guidance of $111-$114 million, representing modest growth on a lower cost base.

Sought detailed clarification on the mechanics of the Series A preferred stock conversion, the status of the remaining shares, and the future dividend payment plan for both Series A and Series B shares, including specific quarterly amounts.

Answer

The company explained that approximately 1 million Series A shares opted out of the conversion and remain outstanding, continuing to receive dividends. For both the remaining Series A and all Series B shares, the company will make regular monthly dividend payments, with the accumulated unpaid dividends to be settled at a later date, likely upon redemption. The go-forward annualized dividend expense is projected to be about $5.5 million.

Allen Klee of Maxim Group asked a series of questions regarding the monetization strategy for AI services, the revenue outlook for the medSR division, progress on the company's expense reduction program, and the growth opportunity in remote patient monitoring (RPM).

Answer

Executives A. Chaudhry, Stephen Snyder (President), and Norman Roth (CFO) provided responses. Chaudhry confirmed AI services are converting from trial to paid models, generating modest revenue from over 100 initial providers. He attributed the medSR revenue decline to being blocked from the Epic Systems ecosystem, making future revenue difficult to forecast. Roth affirmed the company is on track to achieve its $26 million expense reduction target by year-end. Snyder announced the recent launch of an in-house RPM solution to improve margins, with Roth providing year-to-date revenue figures for RPM and Chronic Care Management.

Allen Klee of Maxim Group asked for details on the GRC World acquisition, the implied second-half revenue from recent M&A, rebooking trends for 2026, a clarification on adjusted free cash flow, the Q4 impact of the Las Vegas construction, updates on internal AI initiatives, and the company's positioning within its full-year guidance range.

Answer

CFO David Doft explained that GRC World was a small 2024 acquisition included for pro forma comparison and confirmed the math on second-half acquisition revenue. He noted that while it's early for a 2026 rebooking figure, trends are positive, and 2025 is 90% booked. Doft clarified that adjusted free cash flow for the quarter was $17 million higher due to pre-acquisition cash collections. CEO Hervé Sedky and Doft confirmed a Q4 event is also affected by construction but the overall quarterly impact will be smaller. Sedky detailed AI pilots yielding efficiencies, and Doft reiterated that the full-year guidance range remains appropriate given remaining uncertainties.

Allen Klee of Maxim Group sought details on the financial contribution and event schedules for the InsurTech and This is Beyond acquisitions, future quarterly seasonality, and the specific drivers behind the company's expense discipline and AI initiatives.

Answer

CFO David Doft detailed that the InsurTech acquisition contributed approximately $5 million in Q1 revenue and that all 'This is Beyond' events will be captured in 2025. He outlined the year's seasonality, with Q2 and Q3 being the smallest quarters. CEO Herve Sedky attributed expense discipline to platform consolidation, AI implementation, and centralized procurement, but noted it's too early to share specific AI metrics.

Allen Klee of Maxim Group inquired about the financial mechanics of Emerald's recent acquisitions, including funding, deferred payments, and their annualized impact on revenue, EBITDA, and quarterly seasonality. He also asked for clarification on management's confidence in their outlook based on first-half pacing, the impact of the Las Vegas Convention Center construction, and the potential for further portfolio optimization in 2025.

Answer

CFO David Doft explained the acquisitions are funded with cash on hand, with performance-based deferred payments through 2027. He confirmed the guided $40 million in revenue and $15 million in EBITDA represent the full annualized impact. He noted a moderate seasonality shift from Q1 to Q2, which also factors in pruned events. Both CFO David Doft and executive Herve Sedky attributed their confidence to strong real-time pacing. They clarified that while the Las Vegas construction is a near-term drag, its completion this year is a positive for 2026. Herve Sedky affirmed that portfolio optimization is a continuous process and they will continue to prune underperforming assets.

Allen Klee of Maxim Group LLC inquired about Health and Tech's growth drivers, focusing on the momentum from new partnerships during the typically slow season, the strategy for expanding into the mid-size employer market with the new AI-backed underwriting platform, and the potential for partners to drive new business. He also asked for clarification on the revenue model for larger employers, the company's operating leverage, and the status of the iCard product and other new service offerings.

Answer

CEO Tim Johnson explained that small groups can switch plans off-cycle, driving year-round sales, and noted the new large-group platform will turn a month-long underwriting process into five days. CGO Dustin Plantholt added that major partners like Vertiguard and Unified Health Plans are already bringing in new business, including larger cases. CFO Julia Qian confirmed the strong momentum, detailed the operating leverage improvements with S&M and G&A costs as a percentage of revenue decreasing, and clarified that revenue from the relaunched iCard product is expected in Q1 2026.

The analyst inquired about the sources of new business and momentum outside of the typical renewal season, the strategy for targeting mid-size employers with the new AI platform, how new partnerships contribute to customer acquisition, the revenue model for larger employers, the company's ability to maintain operating leverage, and the status of the iCard product and other potential new offerings.

Answer

The company executives explained that new business comes year-round as small groups can switch plans anytime. The AI platform for mid-size employers is being rolled out through existing broker partners who are bringing larger cases, significantly increasing underwriting efficiency. New TPA and broker partnerships are a key distribution channel, bringing their existing client bases to Health and Tech. The revenue model for larger employers is a mix of underwriting fees (a percentage of premium) and program fees (based on services chosen). Management affirmed their commitment to maintaining positive operating leverage by ensuring revenue growth outpaces disciplined expense growth. They also confirmed that the iCard product is being fast-tracked for a specific opportunity, with revenue expected in Q1 of the following year, and teased other new products that will be announced soon.

Allen Klee of Maxim Group inquired about the key drivers of the strong advertising revenue and record ARPMAU, the impact of TikTok's return to the ad market, and the outlook for monthly active user (MAU) stabilization. He also asked for updates on Emojipedia features, Zedge Premium marketplace performance, the rollout strategy for the new dataseeds.ai B2B offering, the upcoming AI audio generator, and the expected bottom-line impact of cost-saving initiatives in Q4, including details on remaining restructuring costs.

Answer

CEO Jonathan Reich attributed the strong performance to a comprehensive ad optimization strategy, the focus on high-LTV users in developed markets, and the market-wide CPM lift from TikTok's return to advertising in mid-February. He stated that while overall MAU has declined, the user base in well-developed markets is stabilizing, and the focus remains on acquiring high-value users. Reich highlighted the upcoming launch of digital stickers for Emojipedia, the expansion of Zedge Premium to the web, and the strategic potential of dataseeds.ai to leverage Zedge's creator community for AI training data. He also detailed the near-term rollout of an AI audio generator. CFO Yi Tsai added that testing new ad mediation platforms also contributed to higher CPMs and clarified that Q4 will include approximately $600,000 in cash outflows related to the final restructuring and GuruShots retention payments.

The analyst asked about the key drivers behind the strong advertising revenue, the specific impact of TikTok's return to the ad market, the strategy for stabilizing and growing Monthly Active Users (MAU), upcoming features for Emojipedia, the performance of Zedge Premium, the rollout plan for the new dataseeds.ai business, details on the upcoming AI audio generator, and the financial outlook for Q4 considering seasonality and remaining restructuring costs.

Answer

Management attributed strong ad revenue to a comprehensive optimization strategy, the addition of new mediation platforms, and the return of TikTok, which increased market demand. They are focusing on acquiring high-LTV users in developed markets to drive higher ARP MAU and stabilize the user base, even if overall MAU declines. Key product developments include launching digital stickers for Emojipedia and a new AI audio generator for the Zedge app, both expected to boost engagement and subscriptions. The new B2B initiative, dataseeds.ai, is in the market-building phase. Financially, while Q4 is seasonally slower, they anticipate continued top-line growth and strong cash flow, with approximately $600,000 in remaining restructuring and retention bonus cash payments expected in the quarter.

Allen Klee of Maxim Group inquired about the timing and quarterly impact of the announced $4 million in annualized cost savings, the drivers behind the stable Average Revenue Per Monthly Active User (ARPMAU) despite ad revenue headwinds, and the go-forward strategy for GuruShots following its restructuring. He also asked for updates on beta projects, the launch timeline for the AI Audio feature, the company's plan to grow monthly active users, the long-term sustainability of focusing on lifetime subscriptions, and clarification on the outlook for advertising revenue in Q3 versus seasonal trends.

Answer

Executive Yi Tsai clarified that the full $1 million per quarter in cost savings should be realized starting in Q3 2025, before additional restructuring charges. Tsai also explained that ARPMAU held up due to growth in subscription revenue and Zedge Premium GTV offsetting the advertising decline against a lower MAU base. Executive Jonathan Reich detailed the GuruShots strategy, which involves optimizing the current game for ROAS while ideating a 'GuruShots 2.0' for future growth. Reich noted that beta projects are on hold post-restructuring, the AI Audio feature is expected in the coming months as part of the pAInt suite, and MAU growth relies on product innovation, paid user acquisition, and a multi-tiered monetization strategy, including lifetime subscriptions which are offered to a continuous stream of new users. He confirmed the ad market has improved with TikTok's return but did not state Q3 revenue would beat the seasonally stronger Q2.

Allen Klee of Maxim Group inquired about the returns Zedge is achieving from its paid advertising spend and how the company plans to manage operating expense growth relative to revenue growth in the upcoming fiscal year.

Answer

CEO Jonathan Reich stated that the company's world-class marketing team is highly analytical, successfully reducing cost-per-install while improving efficiency through rigorous monitoring of return on ad spend (ROAS) and incrementality. Regarding expenses, Reich emphasized a strong commitment to ensuring a positive ROI before increasing spending, managing the business based on ROAS, and seeking the optimal point before hitting diminishing returns to drive profitable growth.

Allen Klee from Maxim Group followed up on the CRO business, asking if the outlook for a lighter first half and stronger second half still holds, and sought to confirm a simplified pro forma EBITDA calculation following the Orion acquisition.

Answer

Executive Alexander Dobranowski confirmed the CRO business performed as expected in Q1 and the outlook remains consistent with previous comments. CFO Anthony Lam addressed the EBITDA question by reiterating that Orion adds approximately CAD 100 million in annualized revenue and will help the company achieve positive adjusted EBITDA for the full year 2025, without confirming a specific quarterly run-rate.

Allen Klee asked for the pro forma share count, cash, and debt following the Orion transaction and inquired about the company's progress in shifting its clinical trial business toward later-stage trials.

Answer

CEO Dr. Alexander Dobranowski deferred the question on specific capitalization figures but elaborated on the clinical trials strategy. He explained that the company is strategically reorienting its BioPharma subsidiary from a focus on early-stage trials to include later-stage trials by leveraging its partnership with the WELL Health clinic ecosystem, with progress expected to be communicated in coming quarters.

Allen Klee asked for the current share count and pro forma cash and debt figures following the Orion-related financing, and also requested an update on the clinical trial business's progression toward later-stage trials.

Answer

CEO Dr. Alexander Dobranowski deferred the question on specific capitalization figures for a later follow-up. Regarding the clinical trial business, he detailed the strategy to reorient the BioPharma unit from its early-stage focus towards later-stage trials by leveraging the extensive WELL Health clinic network, with progress updates to be provided in future quarters.

Allen Klee followed up on the CRO business, asking if management still expects a lighter first half of the year followed by a pickup in the second half. He also asked for a simplified view of the pro forma EBITDA, questioning if adding Orion's expected quarterly EBITDA to the current quarter's loss provides a reasonable starting run rate.

Answer

Executive Alexander Dobranowski confirmed that the CRO business performed as expected in Q1 and that the outlook for a stronger second half remains consistent with prior comments. CFO Anthony Lam addressed the EBITDA question by reiterating that the addition of Orion Health, with its approximately CAD 100 million in annual revenue, is expected to make the consolidated company adjusted EBITDA positive for the full year.

Allen Klee asked about the specific drivers for increasing revenue from existing partners, current and future applications of artificial intelligence, and the key assumptions behind the 2025 guidance for revenue growth, gross margins, and operating expenses.

Answer

Chief Financial Officer Wenting Ji, translating for an executive, detailed four pathways for revenue growth: adding new partners, expanding into used vehicle renewals, offering non-auto insurance packages, and covering more vehicle types with existing partners. An executive also explained that Cheche's AI strategy focuses on a third-party platform using blockchain and AI to determine liability in autonomous driving incidents. Wenting Ji further clarified that revenue guidance is based on maintaining slow growth in the traditional auto market while capturing over 100% growth in the much higher-margin NEV segment, which is expected to drive overall margin improvement and profitability.

Allen Klee of Maxim Group asked for clarification on the company's AI competitive advantage, details on the Scite earnout payment schedule, and the current outstanding share count.

Answer

Josh Nicholson (executive) explained that the AI advantage stems from both exclusive content access and a deep, vertical focus on researcher workflows. William Nurthen (executive) detailed that the Scite earnout, calculated in May, will be paid half in cash and half in stock over eight quarters starting around July. He also provided the current share count as approximately 32.6 million.

Asked for clarification on a Q4 operating expense reduction due to seasonality and questioned the rationale behind splitting the sales force to focus on the academic market.

Answer

The Q4 operating expense reduction was due to a year-end reversal of sales bonus accruals, and Q3's SG&A is a better run-rate indicator. The company is splitting its sales force not because academic is better than corporate, but to have dedicated, focused teams for each distinct market (corporate and academic) to accelerate growth in both.

Allen Klee of Maxim Group asked for an update on how the synergy between the property management business and the HomerAI tool has driven growth and inquired about the remaining opportunity in this strategy.

Answer

CEO and Co-Founder Wan Wong explained that HomerAI, though initially expensive to build, is now a scalable platform that nurtures potential sellers over time, making customer conversion more affordable as the user base grows. She highlighted that the AI provides accurate, 24/7 data, reducing the need for human agent involvement to about 30% of the transaction journey. Director of Finance Leo Li added that the property management app directly integrates a HomerAI feature, serving as a key 'hook' to convert property management clients into brokerage customers by facilitating home price discovery.

Allen Klee of Maxim Group inquired about how the combination of the property management business and the HomerAI tool has driven growth and the current stage of this opportunity.

Answer

CEO and Co-Founder Wan Wong explained that HomerAI, while expensive to develop, is a key long-term strategy to nurture potential sellers and reduce future customer acquisition costs. She noted it provides users with constant, accurate data, reducing the need for agent involvement to about 30% of the transaction journey. Director of Finance Leo Li added that the property management app directly integrates a link to HomerAI, serving as a crucial hook to convert the 9,000+ managed units into brokerage and renovation leads, with plans for deeper integration.

Allen Klee of Maxim Group LLC inquired about the specific amount of onetime operating expenses in Q2, the stability of the future expense run rate, plans for the current 9-property portfolio, the status of liabilities from exited leases, and how a recent capital raise addresses the large working capital deficit.

Answer

CFO Michael James could not provide a specific onetime expense figure on the call but confirmed overhead has been reduced by millions and the company is now running a lean operation. CEO Robert Arigo stated they are confident in the current 9-property portfolio and do not expect substantial future liabilities from exited leases. James confirmed a ~$10M Q3 capital raise and explained the working capital deficit will improve as the ~$11.2M in unearned revenue from presold rooms is recognized through year-end.

Allen Klee of Maxim Group LLC inquired about the value of onetime operating expenses in Q2, the sustainability of the current expense run rate, the stability of the current 9-property portfolio, the status of liabilities from exited leases, and clarification on a recent capital raise relative to the working capital deficit.

Answer

CFO Michael James acknowledged onetime expenses in Q1 and Q2 but did not provide a specific figure, confirming that overhead has been significantly reduced for a 'lean' operation. CEO Robert Arigo stated the company is confident in its current 9-property portfolio and that liabilities from exited leases are being resolved without substantial future impact. James confirmed a ~$10 million Q3 capital raise and explained the working capital deficit is largely due to the burn-off of ~$11.2 million in previously collected unearned revenue.

Asked about the drivers for 'as-a-service' attach rates and sought clarification on data contract costs and ongoing litigation expenses.

Answer

The company attributed higher attach rates to improved cross-selling of integrated solutions and a snowball effect from successful customer references. They explained that a one-time negative impact from switching data providers will turn into a positive leverage due to new fixed-cost contracts. Litigation costs are expected to spike in Q2 ahead of a September trial date.