ACCESS Newswire Inc. (ACCS) Earnings Call Transcript & Summary

Good day, and welcome to the IAccess Alpha - Virtual Best Ideas Spring Investment Conference 2025. The next presenting company is ACCESS Newswire Inc. [Operator Instructions] I'd now like to turn the floor over to today's host, Mr. Brian Balbirnie, CEO of ACCESS Newswire Inc. Sir, the floor is yours.

Good afternoon. Thank you. I appreciate everyone's time today here at IAccess Alpha. I understand some of the presentations have been rather robust and fast paced. So I'm not going to disappoint and we will continue the trend and move forward. As we move along in the slides, I will pull up the safe harbor statement. I don't need to read the entire statements to you, but I want to remind you that statements made in the presentation, are, can, and will be, forward-looking statements within the meaning of Section 21E of the Securities Act as amended. I will also point you in the direction of you should be looking at an 8-K filed on March 6. It talks about the disposal of our compliance business. Information provided in today's call will be on the basis of the discontinued operations for the end of Q4 data that we just filed and released this morning premarket. So data will be recast for revenues, earnings on a go-forward basis with discontinued operations removed. I'm happy to do follow-up because I know there's going to be a lot that comes of some of that from everybody. But for those that don't know who I am, my name is Brian Balbirnie. I'm the CEO of Issuer Direct, now ACCESS Newswire. ACCESS Newswire officially became NYSE-listed and traded company on the 27th of January this year as a result of a name change, as I said, from Issuer Direct Corporation. So some of you may remember ISDR. ISDR, Issuer Direct was a combination of a compliance and communications business that has now been split apart. The compliance assets were sold recently. We'll talk about in a little bit. But our new brand, our new strategy, our new focus as a vision to lead the transformation, innovation and elevated experiences in public and Investor Relations today. So the 2 verticals that we play are both the IR and PR spaces by definition, Investor Relations and public relations. Selling platform subscriptions and tools and technologies to those groups of folks inside of organizations, SMB, small micro nano as well as mega cap companies. And so we'll talk a little bit about the customer makeup today, who we are, what we do, what our offerings are and what they look like and how we generate income. I've been doing this for 19 years, but I couldn't do it without the team of people that we have, right, from our editors, to our data analysts, to our graphic designers, Investor Relations folks, our back-office people and our management team that you see on the screen. We have a very hands-on group of individuals. Each one of us owning their core responsibilities as well as several other responsibilities. I manage about $4 million in revenue myself as a sales rep along with the rest of my duties, so does Jennifer Hammers and Mark and Steve, both from the technology and finance side, have multiple hats as well. We do that because we care passionately. We care about our customers. We care about our company and our brand. Ultimately, those 2 things done correctly benefits all of us as shareholders, right? And so those shareholders become long-term stakeholders of our company. We talk about average tenure of employee. And the individual that did the opening remarks for today's call on our earnings call was Michael Kret, news desk editor, been with us since the very start when we became Newswire. So he's going on 10 years. And when I think about some of the investors that I talked to after the earnings call this morning, some of them have been shareholders for 8, 9, 10 years, too. So it creates value principles far beyond us and our customers, it creates them for shareholders as well. As we move along, what we do, right? Who -- what is it that we sell? How do we generate income from it? And what does that look like? We guided at the end of Q3 earnings report that we would be about $14,000 in ARR to end 2025, so the average revenue per subscriber customer. Today, customers are entering into transactions with us that have an expressed ARR of $9,000 to $30,000. The average right now is about a little over $10,000. But when we did some analysis on a quarterly basis, the new deals signed in Q4 represented an average of about $12,000. So we're starting to already move that number upstream. And so we believe by the end of this year, those deals will be written at subscription values of $14,000 and greater. You're going to get some of the high and the low end, as you'd expect from enterprise. I don't want to give away the secrets of every price of every customer, but we think about companies like the BlackBerries of the world and Frontdoors of the world and Modernas of the world, they're $50,000 to $100,000 a year that they spend with us. And so [UPS] just became a customer of ours here in Q1. So we still sign big brands, big logos, but we have tens of thousands of small companies that have worked with us in our history of what we do. So on the right of your screen, you're going to see the kind of the collage of products broken down into 2 categories. As we talked about before, the focus on IR and PR -- in the public relations side, it is called ACCESS PR. That is the platform. Our customers get the ability to have a fixed number of press releases a month, access to our media database, pitching campaign and monitoring systems for one flat fixed fee. That's not been done in the industry before. You can go buy media database and monitoring products in a very siloed way or a point solution, if you will. But there's always variables to those prices. And then you've got to buy other products. So by the time you go through the market by everything it's $3000, $4,000, $5,000, $6,000, we've quickly spent yourself $15,000 or $20,000. You have 4 log-ins, 4 disparate systems, 4 systems that don't talk together. I think the point is obvious, why the efficiency gain in using the ACCESS PR platform is important. On the Investor Relations side, it is more of the world that we all live on today's call, either speaking, presenting or managing the back office for this, right? We're set in a quarterly world, quarterly earnings, quarterly earnings advisory, an Investor Relations website, quarterly calls, Investor Day, Analyst Day, an event like this and software to drive events like this, that makes up our ACCESS IR platform. And I love the ACCESS name, not to be confused with us, obviously, just coincidental there. But those components are primarily sold to emerging companies going public IPO or already public, and it's a competitive swap from another provider, incumbent there today. If you're a high-growth business, again, emerging to go public or already public that have a need, we sell something called All ACCESS. And that is a combination of both the ACCESS PR and ACCESS IR platforms for a subscription that starts about $3,000 a month. It gives a customer the ability to tell their story, pitch the media, monitor their brands, post a quarterly call, do one-on-one meetings with their shareholders, update their website and everything in between. And so not really a full departure from what we did before. The difference that you don't see here today is we don't do any of the stock transfer, printing and proxy work or the SEC compliance work. Those solutions have been moved off as part of the transaction and what we sold that we'll talk about in a few minutes. So subscription numbers, I think on a recast basis, we're 1,100 and change to end the year. When we look at the revenue attributable from subscriptions, it's about half of our revenue today, approximately half of our revenue is derived about $12 million from subscriptions. The rest of it is on a reoccurring basis. It's not necessarily a subscription, but the customers that are buying bundles of things that renew automatically. And so as we work through our customers on our new brand and product strategies, we're going to be working through what they also are purchasing from us. So you're going to see that number change. We likely will see subscriptions generating 80% of our overall revenues in the next 2 years. That will give you kind of a guidance there. But again, the obvious, right, step back to what Q4 and fiscal year-end numbers look like, $5.8 million compared to $5.7 million in the prior year. It's 1% year-over-year growth. As we talked about, 50% of it came from subscription businesses that were sold in the period that averaged $12,000 ARR. So we're beginning to move upmarket as we talked about. On an annual basis, we had a decline in revenues compared to the prior year from $24.5 million to $23 million. Back half of the year had a lot of activities, right? We were slimming our product offerings, focused slimming down our teams to handle the next evolution of what we're going to become. And so the reality is in a small company, you have a lot to focus on. We had to focus on long term, willing to sacrifice a little bit in the back half of the year and what that looks like. But we're setting ourselves up for what we think is something pretty magical and very scalable with some really clear fixed costs that will drive everything to the bottom line. But let's talk about the transaction. What did it represent? What did we get from proceeds from it? What was the revenue that we sold? The multiple was fantastic. We've got a lot of great feedback from this. We found a great partner. We went out to market in November, late November of last year with a couple of page teaser on the compliance business, had a lot of interest, had about 7 or 8 parties that came and kicked the tires. We had 4 of them come to the table with indications of interest. We interviewed each one of them carefully because we wanted to place the assets with a thoughtful brand that we knew would take care of the customer because after all, some of these customers are both communications and compliance customers of ours today. Ended up at about $5.5 million of compliance business that represented SEC reporting, stock transfer, annual meeting, voting platforms and shareholder fulfillment. We sold the business for about 2-plus turns in revenue, about $12.5 million in total proceeds. $12 million was received at close on February 28 and immediately applied to the debt on the balance sheet, thus reducing the debt by 78%. So you see on the right side of your screen, about $3.3 million left of long-term debt reamortized about $77,000 a month in carry costs to handle that debt, which is something we, as a business, will be able to take care of and handle and likely will accelerate some payments to put this business in a position of some high growth, good EBITDA and a debt-free enterprise going forward. As we did say at the very beginning of the call, you'll have to look at the 10-Q and the first quarterly filing with the discontinued ops in mind. Once we get past Q1, everything will be clean and the comparatives will be then run for Q4 -- for 2024 and 2025 comparatively just for the communications business. There's about 500 customers in total that went with the transaction, 11 full-time employees that are now off working for Equiniti. And then we are now in part of a transition services agreement, TSA in order to manage the transition of the technology, the customers and everything else in between that we expect will be done here by mid to end of Q2 of this year. As we think through a little bit of year-end kind of revenues and gross margins, I think the reason why this slide is here is because I want to paint the picture of what the future kind of looks like. And a blended gross margin business before was always in the kind of the lower to mid-70% gross margin rate. We start to see gross margins improve a little bit as a result of this year and what we're seeing, we should see gross margins kind of bottom out around mid- to high 70s. Our news distribution business is about an 80% gross margin business. So the scale in news is highly dependent on EBITDA for the business. We continue to scale news. We're almost the third largest newswire today and believe that we'll be in that position here within the next month or 2. So as we continue to scale fixed cost and distribution, technology innovations, we'll talk about a little bit, is going to put us in a position to grow top line revenues, increase gross margins, improve EBITDA margins overall and cash flow from operations. Capital allocation strategy is going to play through here in a second, and we'll talk about that we think is very important and where we're headed as a business. As we think through a couple of the areas that we're talking about investing in, we really want to think about -- and I'll just move ahead a slide because I want to come back to this in a second because I think this is important to talk about. When we think about investing in the business, we think about a couple of different areas. We think about the most important thing, I think you've all -- if anybody knows the business or has heard us talk before, you know that the #1 goal for us always has been is customer growth. The net new customers added every single quarter, along with applicable historical revenues for those customers that we generate tend to drive top line growth and bottom line earnings power for us. That is still the most paramount of importance to us. But being a team of '97, we've got to invest in the growth, right? It's not going to happen overnight for us with the people that we've got. We've got to continue to invest in our brand, our technology platforms and some of the things that we're doing in order to achieve this growth. But it is all done from a customer perspective, right? Something that we released a couple of months ago with our rebrand is we love you more. It is the concept that we are going to answer the phone every time. We're going to be there in an e-mail within seconds, and we are going to do more for you than anybody in this industry to make sure that your story and your brand is heard and told. And that passion and conviction starts at the top with me and our management team and filters down throughout the organization just wonderfully. Our team knows how important it is to take care of a customer and do them right to ensure that they're put in a position to succeed with their constituent, whoever that constituent may be. So when we look at the market from a research perspective, when we look at the market from M&A activity, we understand that the value drivers for this business to be focused around high-growth industries and high-growth verticals that we can attain mid-teens to 20% growth long term that will likely build an enterprise value for this business far beyond what it is today. So ultimate goal, invest in the technology and the people to grow customers and revenues at a faster pace than we have and where possible, pay down debt at an accelerated rate and opportunistically, when share prices dip, be there in a position to buy back shares. And so that is an aggressive capital allocation strategy, but the majority of it is going to be focused on the first 2. It is going to be invest in the business and pay the debt as quickly as possible. I don't want to represent that we'll pay it in a year, but we likely are going to look at ways to finally try to pay this down in half the amount of time that is anticipated for us to do today. And so that's why, probably I go back a slide now because I think that should have been something we talked about ahead of time is it will then drive this chart to be a little more meaningful more than it is today for folks. And so -- if we look at kind of the non-GAAP EBITDA numbers on the screen and we really just look at Q4 data, right, we lost $0.07 a share in Q4 last year and made $0.21 a share and non-GAAP earnings, $819,000 for the quarter. And on an annual basis, we're about $1.9 million compared to the prior year. So growth with fixed costs and cost containment, SG&A containment like we've already modeled out and have done, drive these numbers significantly. So where we see EBITDA numbers be 15% of revenue in Q4 of this year or last year rather, we could see that number climb into the high teens in 20s this -- the back half of this year. So we're very focused on achieving those results for us. Giving away for tax impacts, the business will generate about $4 million in free cash this year. We believe that, that money can be used for investment. It can be used for obviously paying down the debt and then obviously dealing with taxes as impacts come about for that. So we're very focused again on that, but I think it's important to kind of push that a little bit further through in the conversation there. Customer metrics, again, 4% year-over-year to 12,349 our customers ended last year. Subscription platforms, 1,124, again, 7% growth. Something that we continue to believe will be at these levels or higher as we continue to work through. We'll have a lot of conversation in Q1 about customer makeup. We committed last quarter to telling you that our KPIs for 2025 would be very clear. We've not deviated from that. We, on May 13, we will do our earnings call with you, and we will talk about total customers, total number of customers subscribing, the ARR values, averages for those customers, the net dollar retention for those customers and also then the anticipated subscription, non-subscription business for the remaining part of the year. So on the right side of the screen, you do see us guiding a little bit that revenues today are approximately 50% of overall revenues from subscriptions. Next year, we think it will be 60%. And the year after that, we think it will be 80% and something we talked about earlier at the beginning of the call, that 80-20 rule is really where we see this business sitting. And so there's a lot of work to be done there. The industry has never historically [boughten] subscriptions like this in this way. So we're kind of leading the market. We've done this before with flat fee news distribution with no advert costs and no image video inserts. We're innovators in price to deliver model and with the highest gross margins beyond our peers. And now we're iterating again to be a flat fee, all-inclusive with nothing else, meaning unlimited amounts. So industry doesn't like to innovate. We love to innovate. We've got a lot of technology coming in the couple of quarters here that we intend to want to move through the organization, and that really gets us to our product road map and what that looks like over the next 12 months. There's 3 areas of focus, much like capital allocation, the product road map has to be aligned together. If it's not, then you end up with a disconnect in the business and nobody understanding from a finance side how to invest. And from my perspective, then I'm at a loss as to where we're going. So product innovation is important for us because there are things that we can do to our product today with slight modifications or developments that can further differentiate our offerings compared to the competitors today. And so one is, if you think about this, I've talked about this before, during the story, I call it a story, but the press release, the article that's being written about their company or their product or their earnings for a particular period or point in time has a tonality to it. It's my tonality, meaning it's my tone, it's my voice. But there are messaging improvements with natural language processing AI that can help improve tonality. I could use it. We all could use that help sometimes. And so we built measurement tools inside of our applications with a product we call AImee, it is our AI engine to help customers be able to really understand that. We're reoptimizing and deploying that here next quarter to our customers to use it to help them improve their messages, their tone, but also be sure that we're not ignoring the obvious, like SEO validation and channel targeting. So this is like the challenge today. If you go to the ACCESSWIRE newsroom, you take the first 5 articles within 15 minutes, you paste that article headline into Google, we come up #1 from an SEO ranking perspective for those articles. If you do the same thing to GlobeNewswire, Business Wire, here and Newswire within a 15-minute interval, it takes them up to 2 hours to have the same indexing. So we've really figured out how to index our newsroom. It's generating more traffic for our customers than ever before, which helps us be stickier as a brand, and that's important to us as we sell subscriptions, we want to improve that retention. The internal efficiencies is another area that a lot of companies kind of ignore and/or to be fair, don't talk about because they're one, either ashamed of the fact that they're going to tell you what they have to do to improve themselves or two, they don't want the customer to know. And to be fair, we want everybody to know. We're not afraid of the competition understanding it. We would love our customers to understand it, and we think it's very important that stakeholders also understand it. And so I'll give you and set an example because the industry goes through it. There are thousands and thousands of articles that come -- tens of thousands of articles that come through our system every single quarter. And thousands of them don't meet compliance. In other words, we reject 10% to 20% of the articles that come into us. They've got content guideline issues. They've got vernacular issues. They've got formatting issues. There's a tremendous amount of help in the market that's needed to perfect and improve the story. Our editors spend a significant amount of time reading these articles, press releases and having to reject them back to the customer to have them rewritten or then refer a PR practitioner to help them kind of fix it. We built some AI tech that helps automate some of that. We can free up headcount and focus the people on the more important tasks, letting technologies handle some of this. So that is a prime area that we're going to handle. Today, another area is auto scheduling. We auto schedule small amounts of articles, but with our new scaled architecture here shortly, we're going to be able to auto schedule thousands of articles at once. Again, further reducing headcount staff time, right, human capital time on small tasks that we can let technologies and AI kind of help us with, thus then creating a more focused editorial team about the highest quality content for our customers. So internal efficiencies, we're going to spend some time this year as well. And then like everybody else, you have to do it, right, is that product parity. Where do you stack up in the competitive landscape in the quadrant with the competitor? What are they innovating that you're not? What have they done that you don't? And where do you need to kind of add features to ensure that you're keeping up, at least when the customer is then checking the box to see what you have and they have. We've got to be ready standing with people and continually product monitoring everybody to ensure that we're doing that. We've built the infrastructure. We've built the people, we've built the product team. So we're capable of handling that and are doing that today. A lot to digest about our company, try to do it in about 20 to 25 minutes. I think the kind of the salient points here is a refocused business that is now outside of doing everything for everybody down to just being a core communications platform subscription business, led by our ACCESS Newswire brand and distribution arm. We are the fastest-growing Newswire 4 years in a row in North America. We will be the third largest by the end of this end of -- or beginning of next quarter. We generate growth, probably twice the amount of growth that the industry does. Typically, CAGR is about 4% in news. We're running about 8% to 9% in our news-only revenue model. So we're doubling CAGRs in the industry. We're generating more cash than the rest of our competitors. The majority of them lose money. And we put ourselves in a position to build scale to this enterprise. And so we couldn't be happier to be ACCESS Newswire. Couldn't be happier to have disposed of an asset that we've coveted for 19 years, and we're looking forward to the next 19. I appreciate everyone's time and look forward to chatting with you on some one-on-ones as we go through.

I've got a couple of questions. I'm going to try and hit a few of them. And if I don't get to all of them, I will come back to you guys individually. I apologize, I sometimes [indiscernible] here. What difference ACCESS Newswire from other 2 big competitors? At first, I appreciate you say 2 big competitors, not 3. So you're definitely a fan. Thank you very much for asking the question. The differentiation is threefold, is that one is distribution and uniqueness of distribution. When you buy a distribution product from, say, a top 2 newswire since you said 2, you are locked in with price to that product. You can't buy any other distribution without going through your sales rep and building over a contract and taking days. In the ACCESS Newswire application, you come in and get a standard pricing agreement with a preferred pricing discount on your most important news distribution outlet. And you can pick and choose where you want your article to go, whether it's global, national, regional or targeted to specific things like AP. We're the only newswire lets you do that. Everyone else sells an entire circuit for much larger of a fee. That's one. Two, we are the only newswire today, and this is as a competitive intel as of last week that you can come into a platform, create an article, build a pitch, monitor your brand and see your analytics all from one dashboard in a matter of minutes. Most of the systems, CisionOne and PR Newswire require 2 separate log-ins to do it. The rest of the media landscape that sells product and point solutions do not have this integration with other newswires. Business Wire is a solely newswire-only brand. So those are 2. And then the third, we will never be understood. We will find a way to save you money or we don't want to do business with you. we are going to return value to the customer so that they can free their expense loads up to buy more products that help them tell their stories and build their brand even more. So there's a bunch -- those are good things to go through. Next question, did the noise and efforts around the sale of the compliance business impact the core ongoing business? Look, there's a simple answer for that. Yes, it did. The amount of focus it took to do that significantly from the finance operations and management teams and executives was monumental. We did that at the same time when we were rebuilding a brand, the same time that we decided to redeploy a new commerce system and merge Salesforce systems. We've done a lot in 4 months. So yes, right? Not happy with the Q4 results. We're back on track in Q1, and we're happy about that. But like any small business, you're going to have some of those impacts, but we've rebounded wonderfully and couldn't be more happy on that. Another quick question before time runs out. How do you drive ARR per customer? And how do you drive new customer growth? Building brand, right, building brand, building brand. The market still does not know who ACCESS Newswire is. A small portion know who they are. So we have to continually invest to go out to market to ensure that the PR firms, the IR firms and every practitioner knows who ACCESS Newswire is and what our applications of ACCESS IR and ACCESS PR afford them. How do we drive ARR value, right? Absent of just increasing pricing, one could do that, but that's not our model. We want to provide further value. So totality measurement tools, AI-assisted tools, anything that we can continue to build or partner to add to our platform, we're going to do. We've got about a dozen ideas in the hopper. 4 of them are being worked hard. Our Wikipedia component is going to be added later this year. Those are incremental. Some current customers paying premium, we'll get them for free. Others will have uplifts in the product platforms to get those modules. And then having a robust commerce and omnichannel system to help drive all of that. So if you've got 20% of your customers that buy one product, how do you get them to buy 2? An omnichannel ecosystem from Marketo and will help us do that and Magento. So those 2 platforms have been deployed in the last couple of months, they integrated into our systems and ecosystems. So win-back campaigns can be done, coupon coding can be done, cross-selling can be done, e-commerce, intelligence through social posting and everything else all can be done from one system. So we're really happy and excited about starting to see some of that scale happen for us, and we're seeing inbound feeds start to increase as a result of those systems. Another question is, how does ACCESS Newswire differentiate itself from competitors in the press release and Investor Relations technology space? I answered part of this question already, more PR, public relations and press release related, but I want to hit on the Investor Relations side, too, because I don't want to ignore the IR community. We have a wonderful business in the IR practitioner space. We get referred business all the time for news distribution, Investor Relations websites and earnings quarterly conference calls and event software. And so we want to be prevalent there. Again, same theme is very consistent. You could buy and build beautiful IR websites with our competitors. There are some really good companies. Q4, Equisolve are great market leaders in the space, but they're very point solution driven. And part of the problem is, and like you see many times with companies is when they release earnings. Today, for example, at premarket is the press release, the earnings presentation, the audio file and the transcript, all there within a matter of seconds after the event. With us, it is. A matter of fact, I've got all 4 next pages built for our Investor Relations website that have all of the coordinates and links ready to go. It's just waiting for documents to be had in the days and times that they're approved. So we prebuild efficiencies and workflows for our Investor Relations customers that make their life just a heck of a lot easier. Today, when you do an earnings call with another provider, you've got to chase a transcript, send it to the IR company, they'll upload it. You've got to approve it, then they push it live. There's a lot of work. In most cases, even large-cap companies don't put that on their website until the next day. And so we're building engines there to help drive that efficiency. We released a lot of those upgrades last year. And to be fair, we don't talk about them as much, but those are really important things. I think I'm out of time, folks. I'm a minute over. I want to be respectful of everybody. I appreciate your time today, and I look forward to the one-on-one follow-ups, and I'll follow up with everybody on their private questions again here shortly. Thank you.

Thank you. That concludes ACCESS Newswire Inc.'s presentation. You may now disconnect.