VerticalScope (OTCPK:VFOR.F) 2025 Conference Transcript

VerticalScope Conference Call Summary Company Overview - Company Name: VerticalScope (OTCPK: VFOR.F) - Industry: Online Enthusiast Communities - IPO: Listed on TSX in 2021 - Registered Members: Over 70 million [2][3] Core Business Model - Revenue: $66 million in the last twelve months with $25 million EBITDA [3] - Cash Flow Efficiency: Nearly 90% EBITDA conversion to cash [3] - User Engagement: Core users are enthusiasts contributing over 2.3 billion posts [4] Strategic Advantages - Tech Platform: Utilizes a tech platform and data assets to unlock value through AI [1] - Community Focus: Dedicated spaces for niche interests, leading to high-quality content [5][6] - Competitive Moat: Authentic user-generated content and volunteer moderators enhance community engagement [5] Market Trends - Evolution of the Web: Transitioning from static content to social platforms, now entering the "Agentic Web" phase where AI systems require structured human-generated content [9][10] - Data Quality: High-quality data is becoming the currency in the new web landscape [10] Growth Drivers 1. Direct Traffic Expansion: Focus on growing direct audience connections, leading to three times higher engagement compared to search traffic [12] 2. AI Product Innovation: Leveraging AI to enhance user experience and engagement, including the introduction of an AI community assistant named Fora Frank [13][17] 3. New Revenue Sources: Exploring immersive brand experiences and data-driven revenue products, with advertising making up around 80% of total revenue [14][24] 4. M&A Strategy: Actively pursuing acquisitions of independently run communities to enhance growth [15][22] Financial Position - Debt Reduction: Reduced net debt by $46 million, achieving a net leverage ratio of 1.2 times [29] - Flexible Debt Structure: $100 million revolver with attractive rates [29] - Cash Generation: Strong cash flow supports growth and capital allocation strategies [30] Revenue Model - Digital Advertising: Primary revenue source through programmatic ads and direct sales [24][25] - E-commerce: Contributes under 20% of revenue, including affiliate revenue and subscriptions [26][27] - Marketplace Revenue: Recent acquisition of the Ritual food pickup app has driven double-digit growth in commerce [28] Leadership Changes - CEO Transition: New CEO appointed in June, with continued involvement from the founder as chair [31] - Promotions: Key leadership promotions to strengthen operational capabilities [32] Summary - VerticalScope is positioned for growth with a solid foundation, focusing on direct traffic, AI innovations, and strategic acquisitions. The company aims to capitalize on the evolving digital landscape where authenticity and intent are paramount [33]