Adcore Q2 2026 Earnings Call Transcript

Adcore (TSX: ADCO ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. 7 million.

The company successfully expanded its AI capabilities, delivering five autonomous agents, surpassing the initial target of three, and showcased innovative features in its AI Studio app. North America experienced a significant rebound with a 27% year-over-year growth, attributed to increased activity from existing clients. Adcore is implementing an efficiency plan targeting a 15-20% reduction in operating expenses, primarily through employee cost reductions, aiming for a leaner operation by Q4 2026. The company remains optimistic about H2 2026, expecting to maintain growth momentum while balancing investment in innovation with financial discipline.

Full Transcript Martijn, Chief Partnership Officer All right. Good morning once again, thank you for joining us. Great to see this turnout. Earlier this morning, Adcore released its Q2 2026 financial results, and today we will be walking you through these results and providing you an update on the ongoing company initiatives.

First of all, you might see some familiar faces on the call today. I'm Martijn, Chief Partnership Officer here at Adcore. Joining me today is Omri Brill, Adcore's CEO and founder, and also Amit Konforty, our CFO. And also Koby Arbiv will be here to present some great insights on our AI Studio.

For the agenda today, before we begin, we'll go over some forward-looking statements you should be aware of while listening to this call, followed by the CEO opening remarks and the latest innovations on our AI Studio done by Koby, and then the CFO financial highlights. Finally, we will conclude with a Q&A session. If you have any questions throughout the call, please use the Submit a Question feature here in Zoom and we'll get to those at the end of the call. Before we begin, I will give everyone a moment to review these statements.

Please bear in mind when listening to the call today that the management team may use forward-looking statements which are inherently uncertain in nature. All right, and with that, I would like to pass the floor to Omri for the CEO's opening remarks. Omri, the floor is yours. Omri Brill, CEO Thank you very much, Martijn.

And good morning, everyone. It's my pleasure to discuss the company financial results for Q2 2026. I'm going to give, let's say, the eye level of the results, obviously covering some of the stuff that we've been doing, innovation and working during the last quarter. Obviously, we have some nice presentation to show you on the back of my remarks, and I will see for Amit Konforty, we'll dive into the numbers in more details after that.

So let's start with it, Martijn, Chief Partnership Officer Okay. Under View and then Full Screen. You will be able to start the full screen here in the bottom. Yeah, sorry.

Omri Brill, CEO Yeah. Thank you, Martijn. Okay, so all in all, Q2 was a very strong quarter for us. Top line revenue grew by 10%, gross profit even doubled up, it grew by almost 20%.

So we see a really positive trend. And when we look at the numbers, also comparable numbers, you will see that this wasn't the usual for us. 5 in the previous year. 1 in the previous year.

You can see that the gross profit was almost as strong as Q4 2025, and Q4 is, let's say, a robust quarter for us. So basically in Q2 we've been able to achieve almost as strong a number as Q4, and that tells you a lot about how unique in that regard this quarter really was. 7, almost 20% year-on-year growth. Cash position still solid at 4 million during this quarter.

Again, you see some seasonality, right? In Q4 the company usually acquires more cash, and then the cash position is going down as the quarters move along. But again, that's something that is part of, I would say, the normal course of business for the company. 2 million top line revenue, 10% increase.

7, almost 20% year-on-year increase. Email revenue grew by 12%, which is solid. And North America saw a really nice rebound. 5 million, almost 30% year-on-year increase.

And that's on the back of, I would say, a soft deal that we saw in 2025 for this region. So basically this is exactly what we anticipated. We said that we would expect to see some stabilization starting in the beginning of the year and now a nice rebound move in this last quarter. So that's important for us if we look at H1.

So again, very strong start of the entire year. Total revenue almost 16 million, 16% year-on-year growth. That's impressive. Gross profit grew to almost 7 million.

Again, 10% year-on-year growth. APAC 23% year-on-year growth — that's massive. EMEA 8% year-on-year growth. And North America, again after a softness that we saw in the beginning of, let's say, the year in 2025, 6%.

So back in positive trend. So all regions actually are growing in H1 2026, and that's exactly how we would like to see it moving forward. Now I would like to discuss a bit more technology and innovation. In the last earnings call we already discussed that we built and shipped the first AI agent, previously the inbound agent.

And basically you can think of the inbound agent as a receptionist. So that's the person that's answering the phones that are coming to the companies, that is answering the emails, that can sit on WhatsApp, on Facebook Messenger, all different channels — and basically one agent that can do the work of one person, of 10 receptionists, or even a team of 100 receptionists. But it doesn't stop at just answering questions and giving information. It can literally send proposals.

It can send payment requests, sell tickets. So this agent can do everything. They can do a home run — can start a conversation and send a proposal and make sure this proposal is signed. And it doesn't matter which channel we're talking about — it's been done by email, it can be done by the phone, it can send you an SMS link with the proposal — everything.

So that was the first agent, already built and shipped in Q1 2026. And then we said that we committed to build another two agents during Q2 2026. But guess what — we built four. So we built and shipped the Outreach Agent, which is basically like an SDR.

This agent can go over, or work over, let's say old leads, cold leads, and basically make them warm again and see if there's a sales opportunity in this database. For example, Deal Agent starts to play when the proposal is already sent — it's like a salesperson, you do the follow-up, it makes sure that everything is clear about the proposal and maybe offers some kind of discount. But basically this agent is responsible for the deal to get closed. And Customer Agent takes responsibility to start when the offer is already closed — basically make sure that the client is happy, satisfied, gives him updates.

It can do collection if needed, it can do upsell and cross-sell. So everything that is more or less, I would say, post-sale type of activity. And again, between the Inbound, Outreach, Deal, and Customer agents, you have your entire sales team. And that's not like a slogan — that's what is already up and running and reality on the ground.

And we are super happy about it. Actually the fifth agent is AI Studio Agent, which Koby is going to cover in a bit more detail. So I think, proposing, in six months' time we did the complete platform — I would say flip over the platform from a workspace/document type of platform to an agentic-first platform, where workspace and basically documents are now tools in the agents' toolbox. So basically it's a complete, I would say, upside down for what the platform used to be.

So it's not like agents are serving the documents; now the documents are serving the agents. And that's a complete, I would say, evolution of where the platform is today. And that's a big promise moving forward, and we can discuss it in a bit more detail if needed during the Q&A session as well. And now the next thing is AI Studio.

AI Studio is already up, running, and generating some early revenues. We have really good traction and good signs for good market fit about this product. Koby will give you a quick demo about the latest and greatest — what we've been able to build and ship during the last quarter in AI Studio as well. So I think, like, stay tuned for Koby's presentation, and I think this covers, I would say, the highlights of the technologies that we've been building and working on during the last quarter.

And last but not least is comparable current share price — it's 15 cents Canadian dollar. We see a very big upside, you know, if you look at EV to gross profit compared to comparables, almost 900%. 3 Canadian dollar. It's a big gap from where we are today, and ideally we would like to see the gap starting to close.

So basically the company has high expectations for the future, where this company is going to — this high level of innovation, maybe like never before in the history of the company. And we are very optimistic about the level of maturity that our product achieved already. And I think H2 is going to be an interesting time for us, you know, making sure that basically these apps are already generating revenue and we can take them to the next level. With that I conclude my remarks, and I will hand the floor, I guess now, to Koby.

Koby Arbiv, Go-to-Market Lead, AI Studio Thank you. Hi everybody, I'm Koby and I'm leading the go to market of the AI Studio app, basically in charge of generating revenue out of the platform. Now, I know in our last earnings call you have seen the app already, you got excited of seeing how cool it is. So it actually became even cooler in the last months.

We actually added some really, really cool and really smart features that we can see from our clients that are already using it — how excited it is and how it's going to save a lot of time and a lot of resources for our partners. So I'm going to show you today, I'm going to focus on how we generated a special flow that allows users to create any kind of creative format from a single static banner.

It could be a banner that you created on our platform, it could be a banner that you created by yourself, but with a single static banner you will be able to generate all the way to motion banners, moving on to UGC — user-generated content, you know, like influencers and TikTok videos — and all the way to a TV production, CTV production commercial, only in a single click. Sounds a bit like magic, but it is. It's already here, it's already working on our platform. Let me share my screen to show you the full-on example.

So actually I started putting in a brief, a very simple one-line brief saying: generate me static banner for a super promotion sale, 30% off, on Sunny Sunny — it's a brand, it's a cosmetic sunscreen brand, giving a bit of glow, attracting women. So the platform generated four different design concepts — by the way, that itself, if someone knows a bit about how advertising studios work, takes about five, six hours' work — that took me less than a minute to generate. So they generated those four different creative statics. Let's say I'm in love with this one.

This one is my favorite. So I'm just clicking here, and with that single click I can create a motion banner, a UGC — user-generated content — video, or a full-on commercial. Let's see how it actually looks like. So I'm clicking the motion banner.

Let's see the end result. I'm getting this. Martijn, Chief Partnership Officer Koby, maybe you need to share again with sound. Koby Arbiv, Go-to-Market Lead, AI Studio I'm sorry, one second.

Wait, let's try it again. Sorry about this. So, interesting fact about motion banners — actually what we know from research and our own experience is that motion banners are able to double the conversion rate of a campaign, reduce dramatically the cost per conversion, and generate just much better results. Again, there is no need to produce, there's no need for a motion designer to generate those things — clicking a button, anyone can do that.

Really. I'm not a designer and I've done it myself. So, take this motion banner. I want to even challenge it even more.

I want now to go live on TikTok, for example, with an influencer talking about this amazing product. I click user-generated content and I get this amazing thing. What it actually did, it took the person, the girl from the banner, generated her as an avatar, and was able to generate a UGC, a full influencer video, in a click of a button. Honestly, now this sunny SPF 50 stick lives in my tote; twist, swipe over makeup every two hours.

I always—we're talking here about a video that usually costs a few thousand dollars to produce. It takes days and finding the creatives and everything, and come on, for me it's magic. I don't know. What about you guys?

Moving on. I want to challenge it even more. I want to go live now on a CTV campaign, YouTube campaign with a commercial—full-on commercial—addressing a general audience. That is possible as well in a single click—bag palms, sunlight—swipe it on in seconds.

SPF 50 glow still going. Looks amazing. I don't know. Now let's put it this way.

Using the platform is super, super easy. But this month it became even easier for our users to use it. We added our AI agent, which is embedded within the Adcore AI Studio app. You can just ask whatever you want: generate a banner, generate a commercial, generate a picture—whatever you want.

You can use the AI agent to do it for you without saying too much; just say what you want to be in the banner, and the AI takes it from there. You know what? We want you—you're even more lazy than we think. We don't—you don't have any strengths.

You don't even want to leave your own AI agent—the AI program that you are using. I'm using Claude; some people are using ChatGPT—and you want to use our platform through that AI platform. Simple: it is with an MCP. With our new MCP connector you can just go in, connect it to ChatGPT, connect it to Claude—whatever AI you're working on—saying, create a banner with Adcore AI Studio by just adding the brand name, what is the discount, and it's automatically generating.

With the click of a button you get a full set of banners. And of course from that, again, you can create a UGC, a commercial, and so on. So obviously, bottom line, we've dramatically improved the platform. We're continuing working.

There's a lot of things—sorry, I'm going to stop the share—there's a lot of things coming in this month and already in development. But as you can see, every single day this app is improving. There are already active paying clients for the app and a lot of people are just on the step of joining in. So more to come.

Stay tuned. Thank you. Martijn, Chief Partnership Officer Thanks so much, Koby. It's amazing to see how much it developed since the last time we met at the Q1 2026 earnings call.

So it's amazing progress and love to learn more in the next update. With that, we'd like to pass it on to Amit Konforty, CFO of the company, for some CFO highlights and financial highlights. Amit Konforty, Chief Financial Officer Thank you. Then one second.

Okay. Okay. So good morning, everyone. Before beginning the financial overview, I would like to remind you that the following discussion will include GAAP financial measures as well as non-GAAP results.

All amounts will be presented in Canadian dollars. The second quarter of 2026 showed continued momentum with revenue growing 10% year over year and gross margins improving to 51%. This is in line with the overall first half performance which also reflects higher revenue and gross profitability. Let's review in more detail.

7 million or 10%. 6 million or 19%. Gross margins for the three months ended June 30, 2026 were 51% compared to 47% in the same period last year. The increase in margin is due to the increase in revenue and the change in client mix.

5 million in the prior year. The slight increase in expenses was primarily driven by increased use of AI-related tools. 7 million or 22%. The increase was mainly driven by payroll-related expenses and was partially impacted by foreign exchange rate fluctuations.

5 million in the same period last year. 4 million. 2 million, with gross profit increasing 19% and gross margin improving from 47% to 51%. This is driven again by changes in client mix.