Nextech3D.AI Corporation (NEXCF) Q4 FY2025 Earnings Call Transcript & Summary

All right. Welcome. We're inside our Vancouver Broadcast Center here at Proactive for another live stream event and this time with Nextech3D.AI and joining us is the CEO of the company, Evan Gappelberg. Evan, it's great to see you again. How are you? We're just -- we seem to be losing your audio there, Evan, for some reason. We got to get your audio taking care of. So we'll take care of that. And we'll tell you that we are here today to talk about Nextech3D.AI's financials that came out recently and also about some of the things that they'll be doing in the future as they sort of transitioned the business a little bit into where they were in the last few years to where they are going to now. Evan's going to talk a lot about that. Also, recent acquisitions as well, Eventdex and also Krafty Labs, Evan will talk about how that changes things and what the next step is towards trying to put this all together. So let's see if we can get Evan back on. Can you hear us now, Evan? No, we're having some technical difficulties with your microphone. So we're going to try to get that all taken care of, Evan. But modern technology, that's what happens when these things go. I can see you attempting to put your microphone on, but...

How about now?

I can hear you now. Yes, just turn it up a little bit, you should be good. So how are you?

I'm good, sorry about that.

That's all right. No problem at all. Good to see you again, as I mentioned, and welcome once again to livestream event here at Proactive. And again, we are with CEO, Evan Gappelberg of Nextech3D.AI. And so Evan, first off, thought I'd give you an opportunity just to say hello to the people that are watching. We always encourage questions from people as well if they want to log those questions on. We've got of a number of them who's asked already. But just overall, your thoughts on where you're seeing as far as your financials are concerned.

Well, I mean, we reported a very strong quarter, but Q3 wasn't just a strong quarter. It really was an inflection point for our company. We delivered 59% year-over-year revenue growth, 20% sequential growth. That's our second quarter in a row of 20% sequential growth, record 95% growth margins, all at the same time. It's a pretty powerful combination. I don't know that we've ever been able to report a trifecta like that where we've had the gross margin sequential and year-over-year growth all coming through at the same time. And so what you're seeing -- what I'm seeing is the beginning of a new sustainable growth curve as our unified AI platform, our event platform gains real traction with enterprise customers. And I just want to stress that enterprise is the main event here. We are doing business now with the largest companies on the planet, including Meta, Microsoft, Netflix, Deloitte, General Motors and many, many, many others, Spotify, Dropbox, Pinterest. And so all those customers are customers that were now talking to about enterprise contracts, and we have multiple enterprise contracts that are just literally waiting for the ink to dry. We expect them to come in, in the next week or two.

So Evan, let's take a step back here and let's sort of -- I don't want to give a whole history lesson, but let's talk a little bit about last year and really what happened last year and sort of led you to this. This has been sort of a transition that you've been making with the company in order to get to a place where you think you could be sustainable and move forward. So why don't you sort of take us back through some of the vision that you saw and where you see things going now?

Yes. I mean this is truly a story of a turnaround to take off where a year ago, we were kind of left for dead by investors. I mean let's be honest. The stock was at the bottom of the barrel, and we were exiting out of our Amazon contract, which was where we made 3D models for Amazon that was a multimillion dollar contract. And so there was a lot of sole searching that went on. And what we realized is that we had AI, which is transformative technology, and we had a very, very strong position in the event space with Map Dynamics, and they have 500-plus customers. And so what we decided to do was to build out that platform and add more features and more functionality. And then we decided you know what, why build it when we can buy it. And so we acquired Eventdex in late 2025 and once we acquired Eventdex, it gave us the ability -- we basically acquired a portfolio of clients, plus a full tech stack, which includes badging, ticketing, trade show app, AI matchmaking, which is a very big deal. We could get into that in a minute. And so that plus our Map Dynamics event floor plan gave us this end-to-end one-stop shop solution that we never had before. And then we optimized and added AI into the mix so that we can have very strong margins. And the business started to turn around. And then Steve, as luck would have it, Krafty Lab showed up on my radar, and we were able to acquire that business. And that's going to really put more wind in our sales for 2026. That wasn't a 2025 acquisition, that was 2026. And we're looking at acquisitions now quite differently because AI is really a game changer. It does allow us to make acquisitions that are additive to our company, where those companies might be struggling. We acquired them, and we're able to streamline them. We're able to add AI. So you might have 40 people that we can run a business with 4 people. And instead of having the other 36, we just use AI agents. So we have like an army of AI agents that take the place, Steve. And so that's kind of where we sit today, where we're using AI massively and it's going to be more and more a part of our story and that's why we call ourselves an AI-first company because without the AI, we probably wouldn't even be here today.

Yes. Talk to us about Krafty Lab because for people not familiar with it, what did you see in Krafty lab that you thought was a really nice fit to what you were trying to build with Nextech?

Well, I mean, Krafty adds something that we didn't have. So as I said, with Eventdex and Map D, we had Expo and live event tech. We had the full end-to-end one-stop shop solution. With Krafty, we now have virtual experiential events as well as live kitted experiential events, essentially team building. And as it turns out, Steve, every single large corporation in America and the world has a budget for team building. It really goes down to employee retention, right? How do you keep your employees engaged when they're spread out across the globe? How do you make them feel like they're part of a very big company. And so these platforms, Krafty offers team building. So you have mixology, you're making cocktails with your coworkers, you have a chocolate making class, you have a candle making. You have Trivia. We've done trivia here at Nextech, actually virtual trivia. It's a blast. It's fabulous. It's so much fun. Here's a good example on -- like Krafty. And I've said this before, but I'll say it again, growing up, I used to love recess. Who didn't love going out and playing with your friends. And so -- but when you grow up, recess goes away. And -- so you go to the office just like you used to go to school, but there's no real interaction with your coworkers. So think of Krafty Labs as that platform that allows you to have that recess. And that is a lot of fun, and it does build camaraderie and teamwork. And so that business we see massive, massive upside, too, because it started out, Steve, just as I've described it, experiential. But we've recently announced a gifting component to that. So it's the same HR person that's now ordering gifts for their employees or for corporate customers. Now they're doing that through the Krafty portal. And we're adding off-site events which are potential multimillion-dollar off-sites where you have 50 or 100 of the top execs that travel to Hawaii or some other remote exotic location, and they hire Krafty to put together the entire event from the flight to the airfare to the hotel to the food and all of that is something that we can do now. And so when you look at Krafty, it's a way bigger platform than when we acquired it just 6 weeks ago.

Yes. Talk to me a little bit about companies you mentioned that you're working with. Krafty had its own client list when it came to you. And these type of organizations are so big, so widespread, it's all around the world that the type of events that you're talking about are something that they -- it's not a -- if they want to, if they have to, in essence, do these events.

Yes. It extends beyond these big companies. So yes, we -- our clients now are Google, Microsoft, Meta, Netflix, General Motors, BNP Paribas, Deloitte, just -- I mean all the Fortune 1000 companies, they're all doing these types of events on the Krafty platform. And we're talking to them now about enterprise contracts and really getting a bigger share of their wallet. And so when you think about government organizations, Steve, we're also talking to them because they're spread out. They have a massive size just like Google, right, Google is basically the size of a government. And so -- or our government's the size of Google. And so we're talking to governments about the same thing.

Okay. Are you -- you mentioned that you're looking at other acquisitions as well. I know you can't get into too much details, but is it augmenting what you already have? Or is it adding things that you think you need to have in order to move forward?

So amazingly on the tech side, Steve, I think we're done pretty much. Like AI is going to be the only thing that we develop in-house. We don't need to acquire that. But we're looking at adding more and more. I'm just going to call them modules or potentially customers to our base, right? We just want to have a bigger slice of the pie. And so we're looking at companies in the same space or companies that are just adjacent to us. We have a lot of orgs associations so there might be a company that we're looking at that works with associations. The events industry is quite fragmented. And so it gives us an opportunity to kind of roll them up under the Nextech banner and integrate them into our ecosystem and really just acquire more and more clients, more and more revenue and then optimize that with our AI.

Okay. Just on clients. We've got a question here. You mentioned actively engaging 200 enterprise customers. What's the realistic breakdown over the next 12 months, Tier 1, 2, 3? And how does that sort of apply it to revenue?

So I mean, when you talk about Tier 1, 2 and 3, I mean, they're all Tier 1 and 2. I don't think there are any Tier 3s. Well, Tier 3, if -- I don't know if this investor is talking about Tier 1, 2 and 3 as far as our pricing calculator because if he's talking about our pricing calculator, they're in all tiers, right? So as I've mentioned, and I think that is what he's talking about. Tier 1 is like $25,000 to $50,000 and then Tier 2 is $50,000 to, I think, $150,000 and Tier 3 is above that. And so as we've mentioned, the way that these clients work is they start at one tier and then they move up the ladder. So we're talking to all of them. But you got to keep this in mind. These customers weren't in any tier. They were in no tier they were spending small dollars, relatively small dollars multiple times a year. And so now we're actually putting them into enterprise contracts. That's the big news. Of course, we want $250,000 contracts, but I'll take $25,000, $50,000 contracts all day long because I know we could grow those into 6-figure contracts.

And Evan on that, these companies that you're talking to and talking about are -- as we mentioned, they're always engaging their employees and there's so much demand for employees these days in certain companies. The company is doing everything they can to hold on to employees and especially the good ones they want to hold on to. And so now as in the past, it used to be, companies would say, okay, well, here's what we've got. And if we have any revenue leftover, we'll do something with the employees, like we'll do a pizza night or something like that. But now they're budgeting in their budgets, large amounts of money in order to -- for simply employee retention and employee engagement. And that's -- I think that's the key to all this, isn't it? That these are not something that's just off the side of the desk. These are people who are specifically hired to make sure their employees stay where they are.

So it's the HR department and they're given budgets, annual budgets.

Big budgets.

Big budgets for -- I mean, big companies have big budgets. Even their pencil budget is big at Google, right? Yes. So it's all big, but they're basically coming to us saying, "Hey, I have $50,000. I have $100,000. How can I spend it with you guys? Give me a road map, show me what you guys have. Let's have some fun. Let's build some experiences that are memorable, let's do some team building." I mean you couldn't ask for a better customer than that, right, where they're eager to buy. And they have a mandate to spend that money. And so they're just looking for a company that can give them the ROI. And so our whole thing is about data and analytics. And so in another week or two, Steve, we're going to come back on your show and we're going to be announcing a new platform that has some very, very exciting data and analytics, and it's all AI. It's all on the Krafty platform play with the crafting credits, et cetera, et cetera. And so there's a lot happening at Nextech that's going to make all of this turn into a reality. There's a lot going on behind the scenes with me and my team, and we're going to be showcasing some of that in the next couple of weeks. But we have the clients. We're rolling out the platform. We have the product. We're really just executing at this point. And the 59% growth, Steve, is a clear sign that it's happening. It's not just talk.

Okay. Another question from an investor who wanted to know about ticketing and contracts, big players. And somebody else asked a similar question about Ticketmaster, StubHub, people like that. I know that we've talked about ticketing in the past and in your brand of ticketing, how you do it is very different than what you're seeing there. So can you talk to us a bit about the ticketing part of the company?

Yes. So what we're going to be doing -- we can't just launch me-too ticketing. Let's be clear on that. We will not win. So we're launching blockchain ticketing. As we've mentioned many times, blockchain ticketing is our hero product in the ticketing market. And so we're beginning conversations. It is going to take a little bit of time, but we're starting to have conversations with the big ticket masters and StubHubs and reaching out to them and getting them engaged and talking to, again, agencies, government agencies about blockchain and how we can use that for certification, not just for concerts, but beyond that. So there's a lot happening here. We're trying to do it all at once. It's definitely a bit of a challenge.

Fair enough. I get it. But more to come is what you're saying?

Yes, more to come. It's happening. It's just -- it's in motion.

Okay. A lot of questions, Evan, about total revenue for the year, guidance, all that. From what I understand and interviewed many times, you have not set any guidance for the company, and that's not something you're prepared to do today, I don't think. But you're happy with where the sequential growth that you're seeing in the quarters and you want to sort of build on that?

Yes. I mean, look, I'm confident that we're going to show triple-digit growth in this year. I'm confident that there's going to be surprises to the upside not to the downside. It is a little early for me to project the numbers, but it's definitely going to be way better than last year, which was the [ trial ] and we think that this is really just the first year of a multiyear growth curve, where it's that hockey stick, and we're just at the bottom turning it up, right? But it starts to go like that. And so we're just at that first year, and this is really the first quarter that we can really talk about that.

Yes. Let's talk about margins because that was a big part of your news release as well talking about company margins and I know there's been a lot of work put in by you and the team to try and get your margins to a certain point to where they are now. And it's significant. So can you talk to us about margins and where they're at? And are you at the point where the -- you can't improve on them anymore because your margins are quite high.

Yes, I don't know that we can improve beyond 95% -- we can't get to 100%. But we are a high-margin business because it's primarily been software that we're selling. So software is the highest margin business. In the past, the 3D models, we were trying to get to pure software. We never actually made it there. We were like 50% there. But yes, because we're pure software, because we've reduced our expenses, those margins are very, very high. And we're very proud of that, that the finance team has done an amazing job. I do want to also -- I don't know if the question has come up, Steve, about the acquisition of ARway. Has that been one of the questions?

Yes, as a matter of fact, that was my next one. The next 3 to 4 months, so you're [indiscernible] 3D models as well. And just is the company sort of moving away from that. And -- but let's talk about ARway first.

Well, I will just grab that 3D model thing. So we have some contracts that are ongoing with 3D models, but it's not a big business. It's not millions, it's like hundreds of thousands, right? So we're just not focused on that because we're chasing after the tens of millions, right? And we just don't see that in the 3D modeling space. So it's still there. It's -- if it does take off, we'll be able to take advantage of it. But we did have Amazon, and we weren't able to turn that into a sustainable business. So I don't know what's bigger than that, right? As far as ARway, let's talk about that. So the deal is done, but there's always a but. The deal is done, but in order to get the regulators to approve it, there's a process, and that process is we need to have audited financials for both companies and Nextech is in its Q4 right now. So we're going to be auditing our financials anyway. We don't want to do two audits because that would unfairly burden the company with additional costs. And this doesn't make any sense for us to do an audit today when we're going to be doing an audit in 6 weeks. And that was the calculus over the last couple of weeks that we've been going through. Do we do the audit or do we wait? And so we've decided to wait because we just don't want to burn our precious cash paying auditors twice. And that's really the bottom line. So once the audit is done for Nextech, we'll be able to quickly move that acquisition into the done deal. And so we're just waiting for our audit and then we move to close.

Okay. Let's talk about this year. And you mentioned the revenue in this particular financials is not related to Krafty lab and only partially of Eventdex as well. So what are sort of the things that investors should look for in 2026 as you continue to build the product out and obviously really push sales?

I mean there's a number of things. One is keep a look out for M&A because we are hunting for new deals that would help us to grow even faster. That's kind of the turbo booster. But also, the enterprise deals are going to start to be announced soon. And then for us, it's really just executing on the business that we have landing and expanding into -- we already landed through acquisitions, the biggest companies. Now we want to expand. And so there's a lot happening. I could tell you that, that these government agencies are quite excited to be working with us. These large companies are quite excited to have a one-stop shop of these enterprise accounts. And we think a little bit out of the box. I'm not a techie so I think in terms of just solutions, and I'm trying to find solutions for our customers that maybe other people haven't thought of. And I think there's some really good opportunities there. We're going to innovate and offer some solutions that is unique to us, is proprietary. And so it's really, Steve, about mining the gold mine that we sit on. We have a gold mine. We really do. And now we're just mining it. We're moving the equipment into place. We're moving the people into place and the results are starting to show up in our quarterly reports.

Okay. Let's talk about the blockchain because I want to just ask a question about that because I'm just wondering in the process that you're building and soon to roll out eventually, has it been easier than you thought it was going to be? More difficult to -- what sort of the process involved in trying to put something like that together?

I mean, it's definitely a process, I mean, but it's a high-margin growth engine for investors. I mean global ticketing is a $100 billion industry. Counterfeit and duplicate tickets unauthorized reselling and scalping all of that is a big issue. And these are not edge cases. This is like a structural flaw in the system and blockchain ticketing really fixes this at the foundational level, each ticket becomes a unique verifiable digital asset that can't be forged, duplicated or altered. And so there's trust, transparency and security all built into blockchain tickets. And it's -- again, it's not just ticket, it goes beyond ticketing. Some people think of it as just ticketing for concerts, but think of it in terms of like certification as well. And there's a lot of certification that these big companies that we have as customers need to do better at in terms of preventing fraud. So that's -- every ticket is -- so anyway, we're going to do a demo of the blockchain ticketing, again, in the coming couple of weeks. So get ready, Steve, it's going to be busy. You and I are going to be busy doing demos. And I'm going to be bringing on my team to do screen shares and show how the tech works.

Okay. There's a lot of questions about, obviously, share price because people always talk about that. I know you've talked about that in the past. Share buyback programs, management buying more shares, a lot of things about sort of the corporate side of things. So I'm not sure how much detail you can get into or if you -- I know you're bound by regulations on what you can or can't say. But just on -- I know you're the largest shareholder of the company, I believe. So just for shareholders, you sort of want to talk to them directly and message them.

Yes. Let's just be clear. I mean, it sucks when the share price is down. It really sucks. And I feel the pain. And I've been through this before, though, with Nextech. When we first launched Nextech as a public company, the stock sat for a year in that $0.25 to $0.50 range. And then it took off, went to $1, $1.50, $2.50, it corrected hard and then it had a massive move up to $10. So I guess what I'm saying is that it's not for the impatient investor. But for the patient investor, I think this is going to be a very, very rewarding journey. I hope we all live long enough because it's been a bit of a roller coaster. It's been a while. I do -- when I say I hope -- I'm talking about rear view. People that have been in the stock since 2018, '19 but going forward, I think this is the year, the breakout year for the stock. I think that it's undervalued at the current share price. I don't just say that. I bought 550,000 shares in November at CAD 0.14. I think it's around the same price today, so you could buy at the same price that I bought it at. I'm considering buying more because it's dirt cheap, in my opinion, based on our growth trajectory and based on the fact that we're probably going to go cash flow positive this year sooner than people think. I'm quite bullish. So yes, I think this is just opportunity knocking. I know that when it comes to turnaround stories, everybody always -- like really? You do -- like that. You kind of look at it, you squint a little, you go "Really. Is it really turning around?" Well, the numbers don't lie, the numbers don't lie. And so when you have the kind of numbers that we showed today, and this is our second quarter of 20% sequential growth. It signals to me and it should signal to you, to our investors that this is real. This is happening, the turnaround has happened. And so we're just in that first quarter. And I think, as I mentioned, the Q4, the next quarter is going to be even better. So you can take that and run with it.

Okay. Lastly, I thought this was a really good question. It just popped up here a moment ago. And from -- and this is from -- given your focus on disciplined growth and minimal dilution, do you expect the company can execute its plan with your existing resources? You also mentioned M&A., but if M&A doesn't happen, do you feel confident that you've got the things in place to execute on that plan you just talked about?

I do. The M&A is additive. It's like a turbo, right? We're going fast. We're going very fast. But like the M&A, just catapults you forward even faster because you just -- instead of it taking you a year to acquire customers and build that revenue, it happens in a day, essentially, right? So that's the benefit of M&A. But we do have the resources without M&A to continue, and that is the plan. If the right opportunity comes along, we are comfortable with M&A. I mean we just made two acquisitions. So I'm bringing it up because it's not something that should be discounted, right? So it's something that you should actually think about as likely at some point in the future.

Okay. Last word, Evan, last final thoughts?

Final thoughts are that opportunity comes along every once in a while that again, you've watched me, heard me, listened to me speak over the years. From where I'm sitting today, this is a tremendous, tremendous opportunity to get in at the very, very beginning of a new multiyear growth curve that's driven by AI that has blockchain wrapped around it and that is in the event industry, which is a $1 trillion global industry, and we're doing a couple of million. So when you think about the upside versus the total addressable market, and you start to realize like there is no real limit to how fast and how far we can grow Nextech. It really does represent a tremendous, tremendous opportunity today for smart investors.

All right, Evan. We'll leave it there. Thanks so much, once again for joining us on our live stream and talk about your financials and other things happening with the company and a look ahead for the rest of 2026 as well. So good to see you again.

Thank you.

All right. There is Evan Gappelberg. He is the CEO of Nextech3D.AI. And I'm Steve Darling here at the Worldwide Broadcast Center for Proactive in Vancouver. Thank you once again for joining us for our live stream and we'll see you next time.