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Revenue: $13.6 million, down 8% year over year.
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Advertising Revenue: $11.5 million, down $1 million from last year.
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Programmatic Revenue: Down 6%, excluding video, grew 2% in Q1.
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E-commerce Revenue: $2 million, down 8% year over year.
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Net Loss: $2.4 million, $1.2 million less favorable compared to the prior year.
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Adjusted EBITDA: $3.6 million, 27% margin, down from $5.2 million and 36% margin last year.
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Operating Cash Flow: $3 million for the quarter.
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Free Cash Flow: $3.1 million, 86% free cash flow conversion from adjusted EBITDA.
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Net Leverage Ratio: 1.24 times, within target range of 1 to 1.5 times.
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M&A Investment: $5.5 million, acquiring 23 online communities.
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Share Repurchases: 518,000 shares year-to-date at an average price of CAD 4.89 per share.
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Monthly Active Users (MAUs): 104 million, down 8% year over year.
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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VerticalScope Holdings Inc (VFORF) reported a positive increase in programmatic revenue outside of video, indicating the effectiveness of their tech stack.
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The company is focusing on improving its AI capabilities to enhance user experience, including AI translations which have attracted approximately 2 million MAUs.
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VerticalScope Holdings Inc (VFORF) is ramping up investment in direct traffic sources such as mobile apps and email newsletters to reduce reliance on search engines.
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The company completed acquisitions of Enthused Digital and Ritual Technologies, which are expected to contribute to future growth.
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VerticalScope Holdings Inc (VFORF) maintains a strong balance sheet with a net leverage ratio of 1.24 times, providing financial flexibility for growth opportunities.
Negative Points
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Q1 revenue declined by 8% year over year, primarily due to a decrease in MAUs and lower video advertising CPMs.
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The company experienced a net loss of $2.4 million, a less favorable position compared to the prior year.
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Adjusted EBITDA margin decreased from 36% to 27% year over year, driven by a lower revenue base and increased operating expenses.
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The company faces challenges from Google's algorithm changes, which have impacted organic traffic and MAUs.
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Investments in new initiatives such as AI and direct traffic sources are expected to impact margins, with guidance indicating margins in the low 30s.
Q & A Highlights
Q: How should we think about the recovery of organic MAUs following the recent Google algorithm changes? A: Rob Laidlaw, CEO, explained that the recent Google algorithm changes are pushing organic search results further down the page in favor of AI overviews. This affects the entire digital media ecosystem. While this may have a sustained impact, users still seek social proof from forums, Reddit, and YouTube. VerticalScope is focusing on improving user experience and expects some recovery, though not full, as the landscape evolves.