Greetings, and welcome to the ACCESS Newswire First Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. And a question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Sean Carlis. Sir, you may begin.

Welcome to ACCESS Newswire's first quarter 2025 earnings conference call. My name is Sean Carliss, and I serve as the company's Director of Sales. I've been in the press release and communications industry for nearly 11 years, including the past seven here at ACCESS Newswire. It's a pleasure to be your host today. In just a moment, you'll hear from our Founder and Chief Executive Officer, Brian Balbirnie; and our Chief Financial Officer, Steven Knerr, who will walk you through the company's performance for the quarter. Before we begin, I'd like to read a brief version of our safe harbor statement. I'd like to remind you that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements, which may involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed and implied by such statements. Non-GAAP results will also be discussed on the call. The company believes that the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only. With that said, I'd like to introduce the company's Founder and Chief Executive Officer, Brian Balbirnie; and our Chief Financial Officer, Steven Knerr?

Thank you, Sean. You're hosting today is a treat for us. I've enjoyed watching you progress over the last almost seven years. You've been a great mentor and knowledge tree for the team and our organization. I have no doubt you will continue to succeed, and we all look forward to seeing what the next seven years brings. It's exciting to go to market with you each and every day. Most of you don't know this, but Sean purchased his very own Jedi fighter helmet a while back, and he puts it on each day and now serves as his internal organization's headshot. I love seeing this, Sean. But our customers can rest assured that Sean surely takes it off before each and every call, keep up your Jedi ability, sir. We love having a little fun here each quarter with our team, having them host our company call also gives you a little bit of our human approach to how we work together. With that, good morning, everyone. Welcome, and thank you for taking the time to speak with Steve and I today on our first quarter 2025 performance. Our press release, which is accessible in our newsroom, was released premarket this morning and provides key takeaways on our performance for the quarter. Revenues delivered from Q1 were $5.476 million compared to $5.572 million in first quarter last year. The 1.7% decrease in revenues were a result of less public company activity in the period. Market driven volatility drives this customer profile to perform in this manner, something we believe will improve later this year. With that said, our core press release business grew 1% in revenues and 2% further in volume. Strategically, becoming ACCESS Newswire and not a compliance and communications company was and is the right decision…

Thank you, Brian, and good morning, everyone. As Brian mentioned, a lot was accomplished during the first quarter of 2025 that we believe will put us on the right path for growth in the quarters ahead. But for now, I will highlight some of the results we achieved during the first quarter of 2025. Total revenue was $5.5 million, a decrease of $96,000 or 2% compared to $5.6 million for the same period of 2024. The decrease was due to slight decreases across our various product lines. However, revenue from our core press release business increased 1% due to an increase in volume during the quarter. During the quarter, we experienced an increase in our gross margin percentage, which increased to 78% during the first quarter of 2025 from 75% during the first quarter of 2024. Gross margin also increased to $4.3 million from $4.2 million. The increase in gross margin percentage was due to optimization of our operational teams and lower headcount. Moving to operating loss. We posted an operating loss of $677,000 for the first quarter of 2025 compared to an operating loss of $862,000 during the first quarter of 2024. In addition to higher gross margin, operating expenses decreased $96,000 to $4.95 million. The decrease was primarily due to a reduction in sales and marketing expenses as a result of lower headcount and advertising costs, partially offset by an increase in general and administrative expenses due to a onetime stock compensation benefit recorded in the first quarter of 2024 of approximately $430,000. On a GAAP basis, we reported a loss from continuing operations of $765,000 or $0.20 per diluted share during the first quarter of 2025 compared to a net loss of $783,000 or $0.21 per diluted share during the first quarter of 2024. Income from discontinued…

Thank you, Steve. For the remaining time today, I'd like to speak about and articulate our go-forward products where we see growth coming from recent wins, our product innovations as well as further efficiencies that we can see in the business. The reason why I wanted to go back to this is last quarter, I do not think I did an adequate job putting the products together for you in each of their respective subscriptions as well as what we keep as a result of the compliance business sale. Of the 10 individual products I highlighted last quarter and the three different subscriptions, here is how they are sold. ACCESS IR includes our Investor Relations websites, our corporate newsrooms and our quarterly earnings calls. ACCESS PR includes our news distribution, our media monitoring, media database pitching and corporate newsroom. Additionally, we have stand-alone product subscriptions that are sometimes sold as add-ons to both the ACCESS IR and ACCESS PR subscriptions. Those are our PR Optimizer, our events platform for investor meetings and annual meetings. And then the two compliance products that we kept as a result of the sale was our SEDAR filings, which is directly tied to our Canadian public companies for press release distribution to file with SEDAR in Canada as well as our incident management whistleblower services, which is a New York Stock Exchange subsidy product that we wanted to continue on our platform. The All ACCESS subscription is essentially a combination of both our IR and PR subscriptions that I just mentioned above. The market is telling us that by pipeline insights that all signs for the remaining part of the year and into next year will be the majority of our growth will come from our ACCESS PR subscriptions, an offering that typically starts at…

Yes, sir. We will be conducting our question-and-answer session. [Operator Instructions]. Thank you. Our first question is coming from Jacob Stephan with Lake Street.

Hey guys. Appreciate you taking the questions and congrats on all the progress here. On the gross margin, can you just give us a little bit better sense on maybe some of these efficiencies you're seeing? Obviously, nice outperformance in the quarter, but how do you expect the gross margins to kind of trend throughout the year?

Jacob, nice to talk to you again. It's a great question. As Steve highlighted in some of his prepared remarks, a little bit of the gross margin improvement came from staff realignment on the top line of the business as we prepared to exit the compliance business and really hone in on what scale could look like for our communications focused go-forward platform. But the second component is what I touched on is this PR analyzer product internally that we're using as a compliance check. It gives our editors more time to focus on articles, handle volumes greater than what they had in the past. And so we're able to see some efficiency gains there. As we continue to improve it, I think I used the word agent, it really meant like AI agents and AI bots that are running in the background to continually find new things in advance that we expect that even to continue. We don't see pricing pressures in the market. If anything, we see lifts in price, both on a pay-as-you-go basis as well as bundled subscriptions moving upmarket. So we've got some insulation on top line. It just now becomes a scale game, but we really do believe between 75% and 78% is where we'll see the remaining quarters.

Okay. Very helpful. And then next one, maybe dissect a little bit on the new subscribers and being onboarded at $14,000-plus ARR. Is that more of a function of a change in pricing? Or is it more product uptake?

It's a combination of both. Really, we've done well. As I highlighted, we've got groups like BlackBerry coming back into the platform to kind of trade up. I've been using this nomenclature inside the organization about trade up and trade in. We're doing a really good job of customers trading up, right? Meaning they're buying an introductory or a small platform, and they're coming back within the year to upgrade and BlackBerry is a great example of that. There's many others that are causing lifts in ARR. And then secondarily, we see the kind of the trade in. How do we get customers to come into our product platform from the competitive landscape that's out there, meaning they buy three or four or five vendors, consolidate to one. We're seeing those prices start to come in at a higher rate as well. And it also does impact having large accounts with a much kind of disproportionate ARR in the top line. But we're seeing it across all areas, which is a good indicator to us that the stickiness of the product platform is starting to happen within the customer base. We've invested heavily in our customer experience teams. We love our customer more, as we say, to get in and show them the demonstrated value of each of the components and how they use them across all their mediums. And we think that's starting to progress for us, which will ultimately help on retention and attrition and everything else.

Okay. Thanks. Maybe just one more. On kind of UPS, BlackBerry, White Sox, obviously, some big brand name wins here. But what's the sales cycle like here? How different is it from maybe onboarding a smaller public company? How are these customers finding out about ACCESS?

Yes. The rebrand of our business is really driven on traffic and volume inbound interest. If we approach this in a couple of different ways. From a traffic perspective, we're driving about 2.5x to 3x more traffic to our platform, which means both customer log-in traffic as well as eyeballs, people like you and I are reading news articles every day, which means increased engagement for our customers, which is good stickiness for them. Educated customers where this market is really, over the past couple of years, changed significantly, I think, like many other industries and verticals is that the customer is educated. They're doing their research before they come inbound, before they make the call or before we even contact them. They know what they want, they know how they want it and they know what price point they need to be at. The large accounts actually from an initial touch to close are sometimes just as quick as the small. The only difference is once you get past the decision maker, you then have the back-office compliance of SOC 2 and security concerns and everything else that you've got to go through for vendor management, which takes a little longer. But the contact to demo to proposal to close, in many cases, is very similar. A lot of them are one-call-closes on the small side and the larger mega cap companies tend to be three to four call closes with a couple of meetings in between. So we're seeing the sales cycle shorten to part of your point, whereas we could then start to see some velocity in this, and we continue our marketing and branding and our sales teams continue to work those accounts, we should begin to see a lot more of those large numbers happen for us in the back half of this year.

Got it. Very helpful. Appreciate it guys.

Thank you, Jacob.

Thank you. [Operator Instructions]. Our next question is coming from Mike Grondahl with Northland Securities. Your line is live.

Hey, Brian, a question about you said in the quarter, the subscriptions you signed averaged $14,000. And prior to the quarter, they averaged $9,000. What is a $14,000 customer look like versus a $9,000 customer? Is there a common package they purchased? Is it a longer term? Just help us understand the difference, if you will?

Yes, absolutely. And I think it's important to articulate. Nice to talk to you, Mike. Thank you. I appreciate the question. Q1 last year was $9,000 and change. And that number, if you guys go back in history, and I can put an update to the slide deck on our investor presentation to kind of show the progression of this every quarter, it's continued to increase. And we messaged two quarters ago, $14,000 would be our average ARR by the end of 2025. And a lot of folks were questioning whether or not we could deliver that. And to your point, we've done it by targeted distribution that drives value. So the ACCESS PR subscription product platform, which is our leading subscription product is made up of media database, pitching analytics and news distribution. Early on, when we started selling that product before we rebranded, we were selling it to much more of a smaller business that was buying a budget product and budget was budget distribution. So it didn't really go everywhere that you'd expect, like a national or a premium or a North American press release. Not the early adopters, but now the adopters of buying the subscription today are buying into more of a North American premium or a U.S. premium product that rises the price and limits the number of releases they can do. So we're seeing that ARR lift. And so I think at the end, and Steve, keep me honest here, at the end of Q3 last year, we were about $11,000 change. We ended Q4 about $12,000 and change, meaning the deals signed in the quarter averaged that. And in Q1, they're already at $14,000. And so to be fair to that number, we believe we can continue to drive ARR higher on product expansion adjacencies, things like we talked about social integration, things that we talked about with totality checking and optimization. And then the third item that I briefly touched on, which is a very auditorial kind of product that will be added to this in the back half of this year. However, we do also think about having a lower entry point subscription product that could drive significant volume of subscribers. And so we want to balance this. We're not going to come off of our $14,000 number this year guidance and go beyond. But we may think about next year having a more entry-level product like many other subscription-based businesses do, you've got an entry point that you can get tens of thousands of customers to come in for a very small amount. So we're keeping our eye focused. But for today, we believe we're going to continue this progression and continue to add on, which could further drive this $14,000 number.

Got it. So it's kind of been add-ons have driven it, but also a repackaged a little bit as a premium product. Are those the two biggest drivers, if I heard you right?

Yes, that's correct. That's correct. Yes.

And then how should we think about you have 955 subscribers, 12,000 customers, if I read it right. How are you targeting those 11,000 that aren't on a subscription?

There is targeted messaging that goes to that group. And so we examined the group from kind of the cohort of what do they offer in the opportunity for us to convert them. What do they have as a package price today? So here's an example. We have hundreds and hundreds of customers, likely thousands that are buying what we have called in the past a value pack or a bundle of press releases. This is the good and the bad about the press release industry and that you can get a lot of companies to purchase, at a discount, a committed number of press releases and you take the money upfront or over. But you get to recognize the revenue as they use the press releases, which then causes it to be a little seasonal and lumpy and not consistent like an ARR product. We're focused in on those customers spending kind of $3,000 to $6,000 and moving them to a subscription product. We talked about this a couple of quarters ago. That was where our initial ACCESS PR or what we call Media Suite at the beginning was really found kind of success, 70% of the subscriptions we sold in Q3 last year came from existing customers. And we used kind of a $5,000 to $9,000 rate dollar value to convert those customers. And so now we're going to come down market a little bit and saturate those customers. And so we believe that there's another kind of 600-plus potential customers that we can get to convert based on their current spend and based on the add-ons that they'll get to drive to our 1,500 number and beyond. And that I think answers your question ties into your prior question is how do we drive volume there. And so we think about a lower-end subscription because there are thousands of customers that come in and buy a press release, right? And so they may spend $500 or $600 once and they have nothing else to talk about. And so we want to figure out how ways to drive those customers because that is going to be the key here next year as we can continue to brand and market. We get five to 10 of these folks every single day coming in and buying a press release. What can we do to convert them into something that's more of a recurring model.

Sure. And then just lastly, where is headcount today versus say maybe, I don't know year-end '23?

Yes. That's probably an estimate number I'd give you. We're likely about 100 today. We're probably down from 120, 125 from the prior reference period. Some of the reduction, obviously, is members of the compliance division went with the business. And then others were just areas of the organization because of the transaction, we were able to lean up and become more efficient, IT, HR, back office kinds of things. We believe we're at a good headcount kind of G&A wise. We do want to spend and invest in sales and marketing. You'll read our 10-K here shortly and likely can pick it up from the 8-K filed with the earnings press release already this morning. We had a reduction in sales and marketing as we approach the rebrand. We really wanted to be careful of how much we're investing in sales as we were changing a bunch of brand names and product offerings. And now that we've gotten that behind us, we've got likely two to three new salespeople to be added this quarter. We're rounding out interviews now. We've got additional marketing headcount coming in as well. So we want to invest in those areas because it's going to help accelerate this business even more. But call it, around 100 today compared to the 125.

Okay. Fair. Thanks a lot. Good luck.

Thank you, Mike. Thank you so much.

Thank you. [Operator Instructions]. Okay. As we have no further questions on the line at this time, I'd like to turn the call back over to Mr. Balbirnie for any closing comments.

All right. Thank you, Sean. Thank you. Steve and I also appreciate everyone spending time with us this morning to talk about the Q1 results. A copy of this transcript and the presentation that we shared with you today will be available at our Investor Relations website here shortly for reference, it's investor.accessnewswire.com. Steve and I, as always, are available for follow-up calls. We look forward to talking to you again as always in the future. Thank you. Have a great day.

Thank you. Ladies and gentlemen, this does conclude today's call, and you may disconnect your lines at this time. And we thank you for your participation.