Minehub Technologies Inc. (MHUB) Earnings Call Transcript & Summary

Thank you, everyone, for joining us today, and welcome to Minehub's Investor Webinar. My name is Pardeep Sangha, and I will be the moderator for today's call. Joining me on the call today are Andrea Aranguren, CEO of Minehub; and Monika Russell, the company's CFO. This call is being recorded. There will be a question-and-answer session at the end of the call. Please note, portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Please refer to the company's filings on SEDAR + for our disclosure of risks, uncertainties and various factors that could cause actual results to differ materially from our projections. And with that, let me turn the call over to Andrea Aranguren, CEO of Minehub. Andrea?

Thank you, Pardeep, and thank you to everyone who's joining us today. Most of you are probably familiar with Minehub already. But for those of you who are not, we are the leading digital supply chain platform for the commodities markets. Since 2018, we've been connecting buyers, sellers laboratories, logistics providers, finance years into one secure digital platform. And with the acquisition of Jules AI last year, we've extended our product suite to now also serve small and midsized commodities traders and recycled materials -- excuse me, recycled metals operators. We are the only platform in the market that can serve the entire metals life cycle from bulk commodities and concentrates to refined metals and now recycled metals as well. You can go to the next slide. We have shown some very solid commercial progress year-to-date. A lot of this is being driven off the back of the Jules acquisition. So we have been able to add a new customer base, the new SMB or small and midsized trading customer segment has brought a significant customer traction to the business. We're seeing some very strong cross-selling opportunities and some really nice commercial momentum. This has allowed us to grow our customer base by almost 6x year-over-year. So we now have 28 paying customers across our enterprise and small and midsized business. And this has driven very solid ARR or annual recurring revenue growth as well. So we're seeing more than 50% in ARR growth year-on-year. And as many of you know, have heard me talk before, a key part of the way that we're able to serve the market so meaningfully and drive adoption of our tools is in the network and the ecosystem that we've invested in building over the years. And we've seen a very solid engagement on the ecosystem or the network side where we've grown our active counterparties that are interacting with the platform, up from 58 to 91 just year-to-date, and we have a significant number of customers that are onboarding as a result of our new customer agreements. So that's very powerful for the sales pipeline and in our ability to automate data more broadly across the supply chain. We're also seeing very solid engagement as it relates to daily active users. So the number of customers and users that are relying on our tools on a daily basis has grown significantly, almost 200% year-on-year. So we're seeing very strong engagement and use on the platform where they're really relying on our tools to run their businesses. And we're seeing growth not just from the new customer base, but also solid enterprise demand. So we've signed 2 large enterprise customers one being Sumitomo Metal Mining, which we announced and then a European manufacturer which is showcasing some strong demand on the enterprise side. I think a lot of that is also driven off the back of AI momentum, where now we're seeing large enterprise companies actively seeking digital tools in a way that we've never seen before. The onboarding of Sumitomo Metal Mining has strengthened our position outside of our traditional markets, which have mostly been North and South America nd Europe. So we're deepening our presence in Asia in Japan, most notably, but through some of our other customer deals also within other regions such as the Gulf. You can go to the next slide. And in addition to strong progress from new customers and as well as revenue growth, we're seeing strong momentum as well in terms of volumes that we're seeing managed on the platform, both with respect to metric tons or volume managed as well as GMV, which is the gross merchandise value of the metals, and this is driven from all of our customer segments. So on the Minehub enterprise side, the legacy Minehub business, we have seen a very solid growth as well. We're tracking to exceed last year's GMV and volume figures just in the enterprise business alone, just because customers are expanding -- existing customers are expanding the amount of volume that they manage on our business, and we're, of course, signing new customers. But we've also seen, of course, tremendous growth in volume and GMV from the Jules acquisition. So we now have close to 3 million metric tons being managed on the Jules AI platform, which is -- translates into approximately $3 billion of GMV. Those numbers are adjusted slightly from our press release because that was the end of the summer, and we've seen meaningful momentum even just in the last 30 days. So our total GMV year-to-date is almost $16.5 billion managed across our platforms, and we are well on track to exceed $20 billion by the end of this year. Just an update on our broader strategic goals. I've announced these in the past, but just to touch. We continue to be very focused on these 4 strategic goals for this year and also well into next year. First and foremost is continuing to focus on growing revenue in our core markets. So that has been traditionally in metals markets, copper and aluminum and through the Jules acquisition, that also opened up the recycled metals market for us. So we've seen strong pipeline development and execution in our core markets, but we've also been very focused on building sales momentum in adjacent markets, and that's through partnerships, but also through our go-to-market activities. We announced earlier this week that we signed our first pulp and paper trader that is a meaningful step to enter into a new segment, which is pulp and paper. We're seeing also meaningful momentum in ferrous markets, in steel. We continue to partner with our partners in iron ore markets to extend our entry into iron ore markets. And so extension into adjacent commodity markets continues to be a big focus, and we're seeing some nice validation that our tools serve not just the copper and aluminum or nonferrous markets, but new and other adjacent markets as well. Number 3 is building on investor momentum. So this is -- we really appreciate our shareholder support, but we're seeing really interesting opportunities for M&A. We continue to see a lot of opportunities to drive synergies by either partnering or even potentially acquiring companies that allow us to better serve the market. So we continue to actively seek those opportunities, and we've announced some new partnerships, which I'll talk about later. Number 4 is maintaining scalable growth. This has been more important than ever. Post acquisition of Jules. So bringing the teams together, making sure that customer retention was first and foremost and that customer implementations were not disrupted as we integrated the teams. Employee retention has been a big focus as well, and we've done a great job at bringing the teams together, which thankfully were a really great cultural fit and we've been able to leverage AI in ways that, honestly, I could not have even imagined 6 months ago in order to not only increase the value that we serve the customers, and the value that we bring to the market, but also in the productivity and the efficiencies in the way that we run the teams. We go to the next slide. more tactically for this year, we've been, as I mentioned, focused on uniting the teams. This has been really looking at how to drive synergies, improving the ways that we work, finding opportunities where both platforms were maybe looking on developing the same capabilities and that we were able to combine those efforts and to more efficiently and quickly and better actually build those capabilities. A good example is tracking. The Minehub legacy platform has very comprehensive real-time tracking capabilities. When we purchased Jules, we realized that they had -- their tracking capabilities were focused on container tracking, but many of their customers were looking for more enhanced tracking around truck and rail and break bulk. And so we were able to extend Minehub's tracking capabilities to the Jules customers. And so that's just a really nice example of how the synergies and efficiencies of bringing the teams together. It's also been great from a geographical perspective. Jules has brought a base in India, which has been very helpful from a customer support perspective and as well as enhancing our engineering capabilities. Second has been growing the revenue in the network. We've been super focused on retaining customers. As I said, we had multiple large contracts come up for renewal, and we are able to renew key customers. Second is, once you sign a customer, then the hard work begins. So onboarding customers and implementing challenging accounts has been a big focus for the year, and I'll talk to that in a moment as we made some announcements on successful implementations that we've completed and then, of course, focus on signing new customers, which we continue to be focused on. And then as a team, we've been very focused on positioning ourselves for future growth. So a lot of brainstorming around marketing and positioning post -- post-acquisition of Jules, how do we explain who we are and how we serve the market. So we've been doing a lot of work on that, and we'll be updating a lot of our messaging and even the website off of that has been very positive. And then just really creating a solid foundation, do we have the right team in place, the right processes in place to really scale, and then aligning on strategic direction with regards to product, that had changed meaningfully now in terms of what's possible with AI. We've launched new capabilities around AI and our ability to automate data and dashboarding, which is something that's common across both platforms. So we've done a lot of work aligning on our strategic direction. In fact, we had a company offsite last week, where all of the whole team met in Porto and it was really powerful for the 2 companies from Jules, legacy Jules and legacy Minehub employees to see each other face-to-face and to really align on the strategy going forward. We go to the next slide. I've been saying this a lot, but we are small but mighty. We have an incredible team. Just a quick update. We're now 43 people. We are in 16 different time zones, speak more than 10 different languages. And this is -- this really matters. It means that we are where our customers need us to be for customer support, for sales, for conferences. And so our ability to serve a very large and complex customer base is really powerful because of the team that we have now spread out globally. In terms of our competitive advantage, and I presented this to our team actually last week at our off-site. We continue to see our technology as a key differentiator. We -- of course, there's many different platforms that have come to the market over the last months and years. And with AI, it seems like everyone thinks that they can build some sort of automation or platform tool. But the companies that we're serving and the problems we're solving are incredibly complex and cannot be solved with a couple of AI agents here or there. And so we continue to see very little to no direct competition in terms of any other providers that provide as comprehensive suite of tools to as broad a set of market participants as Minehub does, and that's only growing as we continue to invest in the product and post acquisition of Jules. We are -- that -- the fact that we're trusted by market leaders just brings a huge amount of credibility to the platform and the technology, which is also a key differentiator. We continue to benefit from working with larger -- some of the largest mining companies, manufacturers and traders, and that matters for sure in the sales process and in building capability. We have seen very strong product market fit. And what that means is that the value and the benefits that we bring to the market are solving exactly the problems that the market needs. This is particularly clear in the brokerage market. So the Jules AI platform also really has no direct competition. There's no sort of system of record that solves the real problems of commodities traders in the way that the Jules AI platform does. And then in terms of visibility over the last year or so, we've really seen our capabilities around visibility in terms of order status, shipment status, inventory to be unparalleled versus the many of the other visibility providers out there. And then second, and I would say foremost is our people. We're seeing that especially in the age of AI, it's incredibly important to have this combination of people that understand the industry the problems that we're solving, but also the complexities of building large-scale enterprise technology. And we do benefit from that combination of tech and industry knowledge, and that has only grown with the acquisition of Jules, who also had that unique combination of tech and industry knowledge within their teams. And now also in growing importance is practical knowledge on how to apply AI to solve real problems. AI is not perfect. And I think understanding how to build the right agents and to know how to interact in a way that is solving meaningful problems and can be relied on is incredibly important. We're doing that with our customer base every day and internally within our own technology build. And that practical knowledge is really differentiating us as we talk to new customers. And even in our renewals and retention of existing customers. And because of the way that the team is -- where the team is located, their ability to speak different languages, to understand the real industry problems to have real expertise from a product perspective, our ability to service customers is amazing. I have been going to different conferences and in conversations with customers that I attend. I don't go to 1 meeting or have 1 interaction where somebody doesn't say to me, your team is amazing. And that also really matters and something that we're very proud of. And then third, we've been saying this for quite some time, but our timing is really a huge advantage. We take advantage of a first-mover advantage, where we're able to enter the market when there were a few options. And now there continue to be meaningful barriers to entry even with AI in terms of offering enterprise-level solutions that these companies can rely on. And we are benefiting from the wave of AI, as I mentioned, where we're seeing more commercial momentum than ever before. in prior webinars, I talked about how sales cycles were slow and things could be painful. And thankfully, we're really seeing that sort of unblock, and I do attribute a lot of that to AI where companies are now actively seeking digital solutions in a way that they weren't before. Next slide. We have -- we've announced some landmark wins over the last few months. In May, we announced the signing of a new enterprise customer, which is Sumitomo Metal Mining. They are based in Japan, not to be confused with Sumitomo Corporation, which is one of our partners. This is a separate company. They buy copper concentrates, and they refine it and they provide the Japanese and the Asia market with copper cathode, amongst other materials. They're going to be leveraging our real-time shipment visibility. But thankfully as part of the SMM implementation because they sell to many large enterprise customers in Asia, we were able to onboard a number of large and meaningful Japanese buyers or consumers, which we are now actively in the process of converting to paying customers. Also very exciting, we signed the expansion of our Schupan contract. So originally, Schupan is a metals trader based in the U.S. they had originally been using Jules for their international business, and now they expanded to add their domestic trading operations as well, doubling their ARR contribution. We announced as well at the end of May, a digital traceability project, where we completed the deployment with a leading global mining company who unfortunately asked to be unnamed, where we delivered end-to-end traceability and digital product passport capabilities. And then in September, we've had a series of very exciting announcements as well. We completed the onboarding of Al Carrion, which is a global scrap and processing materials trader. Their deployment covered very sophisticated hedging workflows with LME position management and pricing closure tracking. And then Triumph was implemented as well. They are a global trader of recycled nonferrous metals and their implementation was focused on deploying LLM powered automations and agents to handle back-office tasks. And then very exciting this week, we announced that we've signed an agreement with our first pulp and paper trader, a leading trader, and this represents a very meaningful entry into a new commercial segment for us. and really validates our ability to expand into adjacent markets, which, as I just mentioned, is a key part of our strategy. Next slide. In addition to all the commercial traction that we've been focused on, we've also made some exciting advancements to the product and our platform capabilities. Core to all of this has been embedding AI across the platform in very sort of thoughtful and meaningful ways. We've launched new modules like assay Manager, which is a stand-alone tool to manage and compare assay data for the concentrates and bulk commodities market. We've also launched an AI trade execution assistant, which automates repetitive trade execution task. That's a tool that customers like Triumph will be taking advantage of. We've provided more detail around our AI strategy. I encourage you to look at that press release from April to see how we're embedding AI across the -- all of our core platform functions. And we've also enhanced our digital product passports through our traceability work and our partnership with Minespider. In terms of expanding the ecosystem, Minespider is one of Europe's leading traceability platforms. They are working with the EV industry, battery metals, and critical minerals. This is going to be extremely topical with the battery passport legislation that's going to go live next year. And so we've been working closely with the team to see how we can incorporate their capabilities and expand our ability to serve the market once traceability and sustainability becomes even more important than before. We signed an MOU with Mitigram, which is actually a competitor to [indiscernible], which is one of our other partners as well. as we look to continue to integrate trade finance into Minehub's offering and to leverage Minehub's capabilities to streamline trade finance activities within the commodity supply chain. And then we continue to work very closely with Abaxx on digital title and a number of other initiatives, which I'll talk more about on the next slide. You can go to the next slide, Pardeep.. Our partnership with Abaxx continues to be very strong. We're engaging with the team every single week on a variety of different levels, whether it's commercial or technical or product. We've integrated with Abaxx secure identity technology. So we now offer Abax single sign-on for any of our customers and can take advantage of their identity and verifier protocols. We've also been working with the teams on integration on a number of use cases in different markets. where we can bridge that gap between pre-trade and post-trade so that any contracts on the Abaxx exchange that go to physical delivery, that physical delivery can be handled on the Minehub platform, and we're seeing some nice progress there. And then specifically on digital title, the teams have been meeting on a very regular basis as we continue to advance incorporating Minehub's capabilities into Ibex's digital title framework so that we can extend all of their offering to include in-transit shipments. In terms of our priorities for the rest of the year, is continuing to drive ARR growth, both within our existing markets as well as in new markets, expand reach regionally as well. So building on the momentum we're seeing in Asia, in Europe, in the Gulf to really capitalize on that, continuing to partner with our friends at be to move towards commercial application of an integrated digital title framework. Commercializing the new products and new capabilities are more specifically assay manager continuing to work with our partners on the trade finance side as well as digital product passports. And five, scaling Jules AI, so really continuing to grow this new segment, the small midsized business traders segment not just within recycled metals, but also more broadly. And then AI automation, continuing to incorporate AI, leverage the power of AI to automate document heavy trade workflows and really sharpen the analytics that we can offer to the market. And then we continue to be focused on strengthening our partner network and actively assessing deals on the M&A side that expand our total addressable market and accelerate our path to profitability. With that, I'm going to hand it over to Monika to talk through the financials briefly.

Hi, everyone, and thanks for joining us. I'm going to touch on our midyear financials, which were released back in August. Revenue was up 39% compared to the first 6 months of last year, which was due to additional revenue from the Jules AI platform as well as new customers on the Minehub platform. All revenue for both periods is SaaS, which reflects our ongoing focus on stable recurring revenues. Our gross margin percentage increased from 23% to 29%. Our main cost of sales categories are payroll, cloud hosting and tracking fees. And at the moment, tracking is the most variable component, so further increases in revenue should continue to improve our gross margin. Turning to our other costs. As you'd expect after an acquisition, our operating expenses increased after the Jules AI acquisition. We definitely realize some synergies pretty quickly on costs and likely still have more to come as we harmonize more of our back-end processes. We regularly rationalize our costs to ensure that we're getting value and we definitely are running our team as lean as possible with compromising our ability to service customers. and to grow revenue. We do make some intentional choices to spend money on things like conferences and in-person interactions with customers because we do see a return there. But overall, we are extremely cost conscious. That said, we did see an overall increase in our adjusted EBITDA loss and net loss compared to the prior year. which will improve as revenue grows. And last thing, I wanted to remind everyone that under the semi-annual reporting program, our next financial results will be published in April. Back to you, Andrea.

Thank you, Monika. So I'll conclude quickly and then we can definitely open it up for questions. But just in summary, why Minehub as an investment, we still have some of the largest companies in the world relying on us, including Southwire, Sumitomo Metal Mining, Sumitomo Corporation, Codelco, Super Asics, other and many others, which don't allow us to say their name, but we do have a very solid blue-chip customer base. We have now an even more diversified revenue stream with enterprise as well as the fast-growing SMB segment. We still are benefiting from a huge opportunity, which seems to just be growing with time. But I think our ability to bring digital tools to a market that desperately needs them and will only become more important as we add extend into new markets and traceability becomes more important. So massive opportunity to deploy digital tools to a market that desperately needs them. We are -- our technologies are built on deep domain expertise and IP with AI now being embedded across all of our core functions. We benefit from a very strong virality in our go-to-market approach and a very solid network. We have a growing ecosystem of partners now across new segments and new regions, which is growing even faster than before and continue to be led by a strong management team with a proven execution and a clear strategic road map. And with that, I will hand it over to Pardeep to help us manage the questions.

[Operator Instructions] Okay. First question here is it looks like more of a business question for Andrea. What does the Sumitomo Metal Mining agreement mean for your international strategy?

I think I touched on this earlier, but really, it's just -- it's a meaningful expansion beyond our sort of historical market. So our early customers were more focused on North America, South America and then Europe. And so the Asia market is a difficult market to penetrate for a variety of different reasons. And so signing not only a new customer but a customer as large and important to the region as the Sumitomo Metal Mining is a huge validation but also an incredible opportunity because they have a very broad customer base. And so we're in the process of onboarding all of their customers onto the platform, introducing them to our tools. and frankly, opening up conversations with companies that before may be more hesitant to work with an international company like ours. So it's really opened up the Japanese market for us, both on the sell side as well as on the consumer side. And it is further showcasing our ability to expand globally, the Alarion and the Triumph service implementations also show our expansion, not just into Asia, but also into the Gulf region as well, where we're seeing a lot of interest in the Middle Eastern markets.

Okay. We have a couple of AI related questions. So how is Jules AI performing?

Really well. We were from an AI perspective, that has been an unexpected benefit of the Jules acquisition that it has greatly accelerated our use of AI in both in our products as well as internally. Prior to the acquisition, we were -- of course, we were talking about it, we were looking at it. But when we had acquired Jules, they had already built several AI agents to automate workflows, and they came with just the experience and a level of expertise around AI that frankly, we didn't have before. So in addition to opening up a new customer segment and helping us to sign new customers and expand our capabilities, there's a network effect. But from an AI perspective, we are leaps and bounds frankly, where we would have been without them if we're being honest.

And second question with regards to AI is, how does the AI actually generate revenue for Minehub?

Yes. So AI is opening up our ability to increase our pricing. It's also -- we've announced we're now charging specific new revenue for AI task completion. So for AI tasks that are completed on the platform, we're charging customers per task. So it's opening up a new revenue stream from the AI automation and agent work. It's also significantly enhanced our ability to extract and automate data with a lot more accuracy, which means that we're managing more volume in some part, attributed to AI because we can capture data, better track more shipments, manage more volume off the back of that.

Okay. We have a couple of financial questions here. I guess the better more towards Monika. Can you talk a little bit more about the first half 2026 results in terms of what are the key drivers for revenue growth?

Yes, you got I think overall, adding Jules revenue, obviously brought in a whole new revenue base. Andrea touched on bringing in more of those SMB customers and they brought existing customers with them, but also we've added new ones, and we've added more Minehub customers as well.

Second question on the financial side around gross margins. gross margin is 29%. What drives it? Where can it go?

So as I mentioned, we improved from 23% to 29% for the first half of the year. And those main buckets of cost of sales around payroll, tracking and cloud hosting at the moment, the tracking is the most variable component. So we -- as we added revenue, a bunch of those components are more fixed at the moment, so more revenue translates directly into more gross margin. and we would expect that to continue as we scale revenue.

Okay. Thanks, Monika. Going back to a couple of business questions here. Can you explain more about how you will partner with Minespider, are you complementary or competitive?

It's an interesting question. We are very complementary. And really, the power is it's -- when people talk about traceability, they really mean traceability and tracking. And because when you can combine Minehub's ability to automate data from the source to capture the origin and providence of shipments and cargoes to centralized documents to provide real-time tracking and ETAs as those -- that material moves through the supply chain with a full summary of the route and everything that it passed through coupled with Minespider's knowledge and capabilities in terms of producing the actual product passport. Minehub data feeds a lot of that and really enhances their -- the true traceability in the true sense of traceability where you can really see how the material has moved through even in real time. So we see the capabilities as very complementary, and we -- there's very little overlap from that perspective. So we're very excited about that partnership.