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Thank you, everyone, for joining us today, and welcome to Wishpond's 2023 Fiscal Second Quarter Financial Results Conference Call. My name is Jordan Bones, Director of Marketing. And joining me on the call today are Ali Tajskandar, Chairman, Founder and CEO of Wishpond; and David Pais, the company's CFO. This call is being recorded. [Operator Instructions] I trust that everyone has received a copy of our financial press results -- financial results press release that was issued earlier today. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from sedar.com. 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 these laws. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, many of which are outside of Wishpond's control that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements implied by such forward-looking statements. These factors are further outlined in today's press release and in our management discussion and analysis. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans related to the future. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based, except if it's required by law. We use terms such as adjusted EBITDA, annualized revenue run rate and monthly recurring revenue on this conference call which are all non-IFRS and non-GAAP measures. For more information on how we define these terms, please refer to the definitions set out in our management discussion and analysis.
And with that, let me turn the call over to Mr. Ali Tajskandar, Chairman and CEO.
Thank you very much, Jordan. Good day, everyone. We hope that you are all keeping safe and healthy. We truly appreciate everyone for joining us today. We are pleased with our second quarter results in which Wishpond achieved positive adjusted EBITDA for the fourth quarter in a row, demonstrating our commitment to profitable growth. During the first 6 months of 2023, we generated $400,000 of positive adjusted EBITDA compared to an adjusted EBITDA loss of $600,000 in the first 6 months of last year. An outstanding improvement of over $1 million, which we are proud of achieving. Wishpond's cost optimization efforts over the past year have contributed to the company's positive adjusted EBITDA profile. I'm also pleased to report that our new Propel IQ platform is gaining traction in the market and early signs are showing higher margins and increased customer retention. We are now accelerating the hiring of new sales resources to drive additional growth in the second half of the year. Based on the company's performance and growth momentum in the first half of the year, we expect to deliver strong results for the remainder of 2023. Our outlook continues to look promising for 2023 with increasing sales, positive adjusted EBITDA and improving profit margins. We are experiencing increasing demand for our products, and we expect to grow rapidly as our sales pipeline remains robust, and we continue transitioning to bundled product offerings to our customers. I will provide additional details on our outlook later on the call. But first, I would like to turn it over to our CFO, David, who will review the financial results for the second quarter. David?
Thank you, Ali. I'm pleased to report that we've had strong Q2 results for the third quarter, for the 3 months ended June 30, 2023. Our second quarter 2023 results are as follows: Wishpond achieved quarterly revenues of $5.6 million during Q2 2023 compared to revenue of $5 million generated during Q2 2022, an increase of 13%. Revenue growth was primarily driven by stronger product demand and increase in sales and marketing activities and new product introductions. As we mentioned on our last conference call in May, the company experienced some softness in Q2 due to the need for training our sales executives and transitioning them to sell the new bundled Propel IQ platform. Revenue growth was also negatively impacted in Q2 due to the decline in legacy non-Propel IQ related revenue from our largest customer, which happens to be an agency. On a positive note, this customer contributed greater than 10% of Wishpond's total revenue last year, but with the growth in our overall revenue and decline in this customer revenue, we now have less customer concentration as we did not have any customer contributing more than 10% of our total revenue in Q2 2023. Wishpond achieved gross profit of $3.7 million in Q2 2023 compared to $3.4 million during Q2 2022, representing an increase of 10%, driven by an increase in overall revenue. Wishpond's gross margin percentage in Q2 2023 was 65% compared to 67% in Q2 2022. The gross margins were within the company's historical range of 65% to 70%. The United States remains our largest and fastest-growing market, generating 72% of our total revenue in the quarter, with approximately 11% and 17% of revenue generated from Canada and the rest of the world, respectively. During Q2 2023, Wishpond achieved positive adjusted EBITDA of $215,000 compared to an adjusted EBITDA loss of $192,000 in Q2 2022, a year-over-year positive swing of $408,000 in adjusted EBITDA. The improvement is primarily driven by an increase in gross profit and our cost optimization efforts over the past year. We continue to have a clean and healthy balance sheet. As at June 30, 2023, Wishpond had $1.1 million of cash and short-term investments, and the company has no debt. The reduction in cash balances during the quarter was caused in part by payment of an earn-out for an acquisition, capitalized R&D costs related to investment in the business and changes in working capital. The reduction in cash in Q2 2023 was due in part by our earnout of $323,990 related to the Viral Loops acquisition. There is a final remaining earn-out in the amount of $304,000, which will be paid in equal installments in each of Q3 and Q4. We have no further earn-out obligations after this payment. Wishpond has an undrawn $6 million secured revolving operating line of credit agreement with National Bank of Canada's Technology and Innovation Banking Group. I will now provide an update on our cost reduction strategies. As Ali mentioned earlier, since last year, the company has been implementing various cost reduction strategies which resulted in a $1 million positive swing in adjusted EBITDA in the first 6 months of this year as compared to the first 6 months of last year. Wishpond has continued its ongoing efforts with cost optimization and enhanced operational efficiency. By leveraging the power of AI technology, we have seamlessly automated various processes and lead generation activities. As a result of these efforts, we have reduced our headcount by approximately 20 team members across the organization. Additionally, we have rationalized subscription and hosting costs across the organization, resulting in lower monthly operating costs. Through these multifaceted initiatives, we remain committed to maximizing resource allocation and driving sustained growth. As a result of these cost reduction efforts, our declining earn-out payments, increasing revenue and improving cash flow, we feel confident that Wishpond can continue to fund the growth of its sales team and new product launches from cash flow from operations. From time to time, we may dip into our credit line for short-term working capital requirements. The cash flow generated by the company will continue to be reinvested in the business and allocated in a disciplined manner to accelerate organic growth, future acquisitions or share repurchases. Before I turn the call over to Ali, I would like to provide an update on the NCIB. On June 27, 2023, the company announced that it's notice of intention to make a normal course issuer bid or NCIB was accepted by the exchange. During Q2 2023, the company purchased 32,000 common shares under the NCIB for an aggregate consideration of $18,528. The Board of Directors of Wishpond believes that the recent market price of the company's common shares do not properly reflect the underlying value of such shares and that the purchase of the shares would be a desirable use of corporate funds in the best interest of the company and its shareholders. Hence, we will be opportunistic in purchasing shares under the NCIB program while prioritizing the company's other cash requirements. In summary, Wishpond remains in a solid financial position with growing revenue and profitability. Based on the company's performance in Q2 and growth momentum, we expect to continue delivering strong results in the second half of the year 2023. This concludes my financial update, and I will turn the call back over to Ali. Ali?
Thank you. I would now like to share with you some recent business highlights. During the second quarter, we also completed the acquisition of Essential Studio Manager or ESM, which is the sixth acquisition in the company's history, and further expands the breadth of our product offering. With over 150 customers, ESM is a provider of business management software, including invoicing and customer relationship management solutions for small businesses in the services industry.
The integration of ESM with Wishpond's Propel IQ platform is well underway. On July 27, 2023, the company announced the launch of our new partnership program. Introducing a transformative approach to collaboration for our partners to collaborate closely with Wishpond's marketing platform. This program involves 3 types of partners, including one, affiliates; two, marketing agencies; and three, other technology companies. We've been working with partners, including marketing agencies and technology companies in the past, but this program creates a methodology, which makes it easier to partner with Wishpond. Earlier this week, the company announced the upcoming launch of SalesCloser AI, a fully autonomous AI sales rep that delivers specialized sales demos over Zoom without the need for human intervention. And now I would like to provide an update on our AI-related activities. The use of AI technologies is rapidly changing the digital marketing landscape and Wishpond is at the forefront of utilizing these new innovations to provide small businesses with new advantages against larger competitors. We've already launched 2 AI-based products with Braxy and website builder, which is powered by generative artificial intelligence technologies. The AI website builder allows our target small- and medium-sized businesses to cut down a significant setup and making us time and save thousands of dollars on potential programming, design and copywriting services.
In addition, we are actively working on developing additional AI-powered marketing tools, including an AI e-mail responder, AI content generator and AI produced promotional videos, all of which we intend to launch in the coming quarters. Yesterday, we announced the launch of SalesCloser AI, which we expect to have available for general release by the end of the year. We would like to show you a brief demo of this new product. [Presentation]
Thank you, Jordan. SalesCloser AI is truly an exciting technology that has the potential to reshape the sales landscape by delivering personalized, round-the-clock sales calls and product demos over Zoom without the new need for human intervention. This is a game changer for businesses, large and small, allowing them to have the power of a limitless sales force delivering calls and presentations in all different -- in multiple different languages. Wishpond's outlook for Q3 2023 and heading into 2024 remains strong and healthy. Wishpond is well positioned for continued growth and profitability. Wishpond expects to achieve record revenue and cash flows in 2023. This is driven by organic growth from ramping up sales of the company in Propel IQ bundled product offerings, increasing the size of its sales team and new product introductions, and we continue to experience strong performance across all of our businesses with robust demand for our products. We expect to be adjusted EBITDA positive in each quarter going forward. In line with the company's focus on profitable growth, Wishpond will continue to scrutinize all discretionary expenditures across the organization, with the intent of optimizing operations and achieving cost savings synergies.
Wrapping up the sales team. As of June 30, 2023, we had just under 40 sales professionals, which is flat compared to the beginning of the year. Our focus in the first half of the year was on transitioning our existing sales personnel to selling the new bundled Propel IQ platform. As this transition takes some time, for sales staff to familiarize themselves with the products and the value proposition. We have since started to ramp up our sales resources more aggressively in August. We are hoping to increase the number of sales account executives to between 60 and 70 by end of the year compared to our prior estimate of 70 to 80 sales account executives by end of the year. As a result of the slower ramp in our sales team and also lower revenue contribution for our largest customer, we believe Wishpond could land below its historic organic annual growth rate of 30% for the full year ended December 31, 2023. Although we are experiencing some short-term softness in our revenue growth, we are expecting the increase in sales resources in the second half of 2023, will help accelerate growth in 2024 and beyond. With the launch of Propel IQ, we are expecting higher customer retention rates going forward. Clients are increasingly signing up for annual 12-month terms. Propel IQ improves the stickiness of our platform and aids in retaining customers for longer periods of time. The bundled pricing of Propel IQ provides a better customer value and is expected to result in greater customer satisfaction, less churn and consequently higher customer retention. Wishpond will continue to invest in research and development efforts to launch new AI-based marketing tools and products. We are in a fortunate position to be able to lead the charge in applying AI to marketing applications and to democratize AI technologies for our SMB customers. By providing our customers with powerful tools, we can help them grow their businesses more efficiently and profitably than was possible in the past. Wishpond is recession resilient. The business has no impact due to recession, inflation, supply chain or other macroeconomic effects. And in an economic slowdown, companies often reduce or freeze their budgets on their inbound market -- in-house marketing and sales staff or on individual fragmented marketing solutions. However, they still need to acquire new customers to keep the business afloat. And so the business is looking to cut costs, find value in Wishpond's all-in-one consolidated software platform, which caused a traction of all the individual products in to [indiscernible] place. Where there are more businesses keeping an eye on their costs, we're looking to cut costs, find Wishpond has a much cheaper alternative to an internal marketing resources. Wishpond is an effective low-cost alternative that is thriving in a recessionary environment. Management is optimistic about the company's growth prospects, and I'm pleased to reiterate Wishpond's key goals for 2023. One, increased monthly recurring revenue through both organic and inorganic means. Two, scale the size of the sales team to help achieve the company's organic growth profile. Three, remain adjusted EBITDA profitable by balancing aggressive growth with increased positive cash flow from operations. Four, invest in R&D so that we can continue to launch new AI-powered products and services to increase long-term value for our clients. Five, leverage the Propel IQ platform to further accelerate the company's growth, improve margins and increase customer retention and long-term customer value. In closing, I want to reiterate that Wishpond is an elite software company with profitable growth. Technology companies are known to burn lots of cash for many years before becoming cash flow positive. It is rare to find a software company of our size that is growing rapidly, maintains gross margins of over 65% and is also adjusted EBITDA positive. Wishpond truly is a unique, high-growth profitable company, and we remain committed to delivering profitable growth in the future. Wishpond today is an enviable position with a growing customer base, increasing revenue, broader product offerings, clean balance sheet and positive EBITDA. I'm proud of what we have accomplished, and I'm excited with our future plans. Finally, I want to thank the entire team at Wishpond whose hard work continues to elevate the company to higher levels. We want to thank our customers who rely on us to help them with their digital marketing needs. Also, I'd like to thank you all for joining us on this call today. We look forward to providing an update next quarter. I will now hand it back to Jordan for questions.
[Operator Instructions] The first question is from Gianluca Tucci of Haywood Securities.
Just wondering if you can speak to the early progress on Propel IQ and how customer adoption rates have progressed since that product launch?
Yes. It's been definitely going well but not without its challenges because it's a more all-in-one platform, especially on the side of our sales team, there have been some challenges initially to get the messaging right, to get the presentation right and position in a way that conveys the value without overwhelming or complicating that value proposition for the audience as well as us organizationally really hone in and fine-tune every aspect of the presentation of the pricing plan and those things to make sure that we do the best. And that has now progressed quite well, and the team is now hitting their strides, and we're seeing that they're doing quite well with that. And on the execution side of it, clients are having success with the platform. We're getting a lot of happy customers that are also already we're seeing early signs in the first few months that they're being retained better and getting more value before. Just other day, I was looking at a very small business that before joining Wishpond and using Propel IQ from their website every month, they got 0 leads. So everyone went to the website or whatever, they got 0 leads out of them. With Propel IQ, which included redesigning their website to be on Wishpond, a different lead capture, LMSs, like forms of pop-ups and landing pages, e-mail marketing that goes with the SMS marketing, referral marketing, all of those. In the first month after switching to Propel IQ, they went from 0 leads to 30 leads per month. And that is completely transformative for that business. And that's a small example that I would share. So we are very excited with what we're seeing so far.
That's good color. And as a follow-up to that, so it sounds like growth should accelerate in Q3 and Q4 and then into '24. But how should we be thinking about the second half altogether compared to the first half in terms of overall growth rates? And does like the launch of Propel IQ, does that change your expected seasonality of the business?
In terms of the second half of the year, we expect the growth rate quarter-over-quarter to increase and go back to more what we've seen in the past. And already we are partly into Q3 and the momentum is quite strong. So the second half of the year, definitely, we're going to have record, I guess definitely. We expect to have record revenue and profits as well. In terms of seasonality for Q1 of next year, it's hard to comment on it. I think over time, there will be probably less seasonality as a result of that. Having said that, we still have a lot of our legacy clients from the past that make up a majority of our revenue. So it will take some time before it shifts more -- the balance shifts more towards a new Propel IQ revenue and then seeing higher margins of it and higher stickiness as a whole take effect.
The next question is from Jason Zandberg of PI Financial.
So I just wanted to -- Ali and David, just wanted to talk a little bit about your cash position and cash burn. You mentioned in the presentation you've got your last earn-out payment that will be paid out over Q3 and Q4. Just wondering if you anticipate dipping into your LLC in the second half of the year? Or do you expect to generate cash from the business and actually build cash? What would be the available cash? If you could answer that?
Yes. Yes. Very good question, Jason, and I'm glad you asked that. I'll pass it to David to add some color as well, obviously, but I'll provide my response to that first. For normal working capital needs on a week-to-week basis or something like that, we might be dip into the line of credit, but we currently don't expect that we will need to use a line of credit. We currently expect that by end of the quarter, we will still -- our cash cost to be more or less flat compared to what it is right now. And that is for a number of reasons. One is that there's less earn-out to be paid because the remainder is now spread out. But also, we've done a lot of work in terms of reducing our expenses that has already taking effect, and we can see the results of that.
And there's increased revenue as well. So we actually expect to be more or less in terms of cash balance flat for the quarter. But again, we do have the line of credit available should we need to dip into it for any short-term needs. And currently, we don't see short of a major disaster that we cannot foresee. We don't currently foresee the need to raise any money for continued operations or continued organic growth. And we do definitely want to raise money when it makes sense for a purpose of acquisitions, not for continued operations. David, you might want to add your to sense that as well.
Thanks, Ali. And Jason, thanks for that question. Just to add to what Ali said, we've -- I think Wishpond has always been quite conservative in how we've managed our business. So we've always walked that fine line between managing growth, trying to maximize growth and at the same time, controlling our expenditures. And none of that has changed, except of what has changed is quarter-to-quarter, if you look back over the last 2 years, our top line has been great, right? So if you consistently have 65% to 70% margin on an accelerating top line, but at the same time, you've kind of kept your costs in check more, so actually in Q2, we started implementing further rationalization efforts. So our costs have actually come down a little bit. That spills more cash to the balance sheet that we can use for other things. So the other things, namely earn-outs. In the Q1, we had $371,000 in earn-outs. In Q2, we had $324,000 that we paid out in cash. In Q3, we're going to have $150,000 and the same in Q4. So the quantum of that is decreasing. The good news is by the end of Q4, we'll be done with all the earn-outs, all the acquisitions that we've done. So unless we do raise more money, we do more acquisitions, there's not going to be any more earn-out payments consuming cash, right? The other component of cash that we could that we use is really product -- it's capitalized R&D. So it's really for product development. And that's been in check as well, even though we continue to roll out the products. But as we spill more cash from operations, we're able to control -- or basically cover that expenditure. If you look at our last 4 trailing 12 months, Jason, we've actually had $1.7 million in adjusted EBITDA from the business. So yes, in the first half of this year, it's been $400,000 -- in excess of $400,000 in adjusted EBITDA. But you're moving into the larger 2 quarters, so the second half has traditionally been larger quarters in terms of revenue growth and cash flow generation. So just to add to what Ali said, I think we're fairly comfortable that even if we dip into the LOC from time to time for temporary reasons, overall, our cash flow from operations will covers.
Yes. And two more elements that I think might be helpful to note here was that we also paid for the ESM acquisition in cash in Q2 that we don't have in Q3. And another element is that so far all the acquisitions we made earn-outs have been structured to is our discretion whether we use cash or stock. The fact that we paid the earn-out for Viral Loops in cash, and we also decided to pay the remainder also in cash was completely our decision because the current price of the stock is not reflective of the value of the company, and we were comfortable enough that we will still be able to handle our cash burdens regardless of that earn-out. So I hope that answers the question, Jason, but if you have any follow-on to that, we'd be happy to answer.
Yes. No, that's fantastic. Very good color. Just for a second question, I just wanted to ask about your SalesCloser AI. Very impressive demo that you showed here on this call. And I see in the demo that you were using it to sell or sell your own product. And I'm just wondering, are you currently live using SalesCloser AI as an active sales channel for yourselves? And if not, when would you expect to go live with that?
Obviously, like most things we rolled out and productize, we are point client #1, and because of that, you rightly noticed that it was actually presenting Wishpond's Propel IQ to this client who happen to be me. Some people joke after watching that video. They're like, we don't know who's AI, who is a real person, but that's another point. So we are not live using it for our sales channels yet. But when we said by the end of the year we'll be ready to release it, that would be productized where everyone can sign up and you use it. We're going to -- we expect to use it a lot earlier than that in a matter of -- I don't want to put a date but relatively soon. And I think that product is a potentially transformative one for the whole industry and for Wishpond as well. And the price point for it would be also quite different from some of the things we've seen in the past. If -- you can imagine, for example, per seat, we have a finalized person, but you can imagine per seat it might be in the orders of $1,000 per seat. And that will still be significantly lower than the alternative. And that is something that can really accelerate our growth as well. In some cases, you can imagine one large client can pay for 1,000 seats, and that's $1 million per month. Just if you want to imagine the impact that it can have on us, but also the impact that it can have on the industry as a whole is quite revolutionary.
Next question is from Neil Bakshi of Canaccord.
Just asking a little bit more about the major customer who reduced spend. I Just wondering if you could provide more color on -- so I see it was about $400,000 expense this quarter, but should we anticipate that being kind of the go forward from that customer? Or should there -- should we expect any further kind of runoff? Just wondering if you can provide more color there.
So currently, our forecasts are assuming that it would be at the same $400,000 or so per quarter. But having said that, we're working actively with that client to help them accelerate their spending again. And there are some early signs that, that might happen. But it's hard to know because a lot of it is not really in our control and it's more external to us and their business. So we're kind of -- our assumptions are somewhat conservative from that point of view.
Okay. And then just one last thing on -- just on that customer. Was there anything in terms of like the margin profile about it that was maybe in line or above or below your typical margins?
Yes. Their margin profile is a lot lower than our average margin profile. So yes, as a whole, the rest of the business actually had a higher margin profile. But one thing that you have to keep in mind is that as they reduce their spending, it's not that there will be higher margin contributed because there's a fixed element of some of our costs related to that client that are going to still stay at least for the next few months. And then it could change.
Okay. Great. And then just one more question with respect to the SalesCloser AI. Very interesting demo. Just wondering in terms of, I guess, how you look at like an illustrative kind of rollout with a customer integration with their kind of software flow. What you would see as kind of the uptime for, let's say, a client wants to take it on? And is it a matter of weeks? Or would it be a longer touch point for getting it ramped up with client?
By the way, maybe the next earnings call will be presented by AI, but we'll see about that. They might be able to answer the conversion better than me. So we're going to have a self-serve dashboard where they can sign up, enter the information, including the call flow and knowledge base and demo recordings and all that. So if someone really wants to launch it right away and they have everything ready, they can. I expect that for certain clients, especially larger clients, they might want us to also help them with best practices and setting some things up for them. In which case, it might take a couple of weeks of helping them on board. But again, that's dependent on the case by case.
The next question comes from Christian Sgro of Eight Capital.
Is there any color you'd offer around, call it, churn or retention in this macro? Are other software companies have commented on things being tougher, just wondering what you're seeing across of the SMB market and your clients?
Well, what we've seen so far has been relatively steady. We haven't seen a big change. So I think SMBs generally, as a whole have always had a higher share profile anyway. And we're not necessarily seeing that have increased over the past months.
That's good to hear. And then the second question I'll ask today is on pricing dynamics. I think last we chatted, you were exploring different types of packages, whether it's usage or transactional or within the bundling to see what made the most sense. Just wondering how you're going to market with Propel IQ? And what sort of pricing and the positioning there is the best value for clients?
It's more or less the same as what we had in the past. One of the changes that we're actually experimenting with is a faster onboarding and more streamlined onboarding. And as a result of that waving the setup fee so that there would be less friction when signing up new clients so they would just get started and they will pay the monthly fees. So that's kind of what we're seeing. And obviously, as clients use us more of them will end up paying for overage fees and there's also upsell opportunities for additional products like Braxy to be offered to them or additional services to help them with some of their marketing needs.
I'll sneak in 1 more only because it's related. But for Propel IQ the typical contract length is 1 year out of the gate? Is that still the strategy, Ali?
That's right.
The next question comes from Gabriel Leung of Beacon Securities.
Just a couple of things. First, just going back to that the large customer for a second, Ali. Just curious, the year-over-year decline in revenues from these guys, is it their own business declining? Or is it this agency transitioning maybe to another provider? I just wanted a little bit of color on that.
As far as we know, and I have no reason to doubt it, they're not transitioning to another provider. It's their business -- changes related to their business.
Got you. Okay. That's helpful. And then just shifting over to Propel for a second. I'm curious as you go through this -- the sales, I guess, retraining some of the transition of the selling there. Are you worried at all about your sales team focusing more of their time trying to set up new banners for Propel as opposed to sort of base sits with cross-selling within the existing legacy customer base? And whether that might have a little impact on overall growth rates over the near term?
No, I don't think so. I mean there definitely have been short-term concerns. But in terms of it affecting our growth profile with distracting them from upselling or those kind of things of existing clients, no, that's not really what we're seeing. What we're seeing more is that sometimes there's a challenge with account executives shifting the mindset from what they were selling or point solutions to more streamlined Propel IQ with less service involvement and all of that. And of course, the monthly MRR client for Propel IQ starts lower than what we were charging before, but then it has more upsell, more overage and more LTV associated with it. And that's some of what we've experienced. But I think a lot of it is behind us now. And David, if there's anything you want to add as well?
No, I think you covered it off. I think it's typical when you change a product or a bundle of a product and the sales team are used to selling a certain product in the past. They're now going to retrain and just realigning how they present their demos and so on. It takes a little bit of time, and I think we're seeing that. So I think just as Ali mentioned, it takes a transition. Hopefully, we'll be at the end of the transition, and it's going to be smoother sailing.
Got you. Just one last question. Obviously, you guys were thinking about Propel, there's a very good value proposition there just given the all-in platform-type services they offer. But I'm curious, though, in your discussions with your customer base who have traditionally been sort of SMB players, are they actually looking to pay a little bit more for all this feature and functionality? Or do you feel you need to sort of move up-cap, which may require a different sort of selling strategy, perhaps more targeted selling strategy towards larger customers. I'm just curious to get your thoughts around that.
Well, they are willing to pay for it. And our prices are quite reasonable, right? We're talking about $300 a month subscription fee, which is quite affordable, and fraction of the cost of the alternatives. So from that point of view, we are not seeing a lot of issues with that. But in terms of going upmarket and sending to larger businesses, as I mentioned, with B2B [indiscernible] we're doing some of that, and we will push more towards the medium size of the businesses as well. SalesCloser is a good example of it, that I think there's a huge appeal in the larger businesses or a solution like that. You can even imagine that in the case of Wishpond, for example, we have a lot of interest for receiving demos of Wishpond. At times that we don't have any salespeople working or in languages that our sales team doesn't speak or in countries where the value of currency is lower and our current price doesn't make sense for them, and we would have to have a smaller entry price point that would not be feasible to sell through normal salesperson, and SalesCloser can help with that. And that, again, goes back to that solution and some of the solutions that we're doing are definitely quite appealing to larger businesses. And as that happens, we will approach that as well, and we will push our market when necessary.
The next question comes from Daniel Rosenberg of Paradigm Capital.
My first question is around -- just kind of the demand trends that you're seeing on the front lines like x the customer that rolled off, is there anything to say between Canadian operations and U.S. operations that you're seeing on the front lines?
In terms of whether demand is greater or weaker between the U.S. audience and the Canadian audience?
Yes, exactly.
I mean, majority of our revenue comes from U.S. audience anyway, about 72%, as we mentioned, is U.S., 11% Canada, 16% everywhere else. And I don't think -- I personally have noticed. I mean I do listen to a lot of sales calls. I personally haven't noticed or haven't heard also that there is a difference between those 2 audiences in terms of their demand. Yes. I think the demand is quite strong. The challenge with us, as we talked about and alluded to it earlier, has been that we haven't expanded the size of the sales team even with national addition has been slightly declined. So we can bring a lot of demos for our salespeople, but currently we haven't had enough salespeople to actually provide those demos. So that's why now we're accelerating to add more account executives to the floor. But keeping them busy has not been an issue at all.
Okay. Understood. And then in terms of the sales hiring, you're also at a point where cash generation seems to be improving. The scale of the business is generating more resources to be able to invest. I'm just curious, at the same time, you seem to be rolling out a lot of AI tools that can potentially be quite interesting as well. So in terms of your thinking around hiring back into sales, like where do you want to be? And at what point do you really want to increase the R&D effort into developing some of these tools into the opportunities that we see?
So we're slightly short of 40 account executive right now. And as we mentioned, we are hiring now, adding more salespeople to get to about 60, 70 by end of the year. Starting at the beginning of August, we've added some people and that's our plan for the remainder of the year. You probably also remember that our first year revenue to cost of acquisition ratio is 4:1, which means that sales people that we add to the floor within 3 months, they become profitable. And because of that, as we invest in bringing more salespeople, it doesn't take long before they contribute positively. And so because of that, we're not too worried about adding some headcount there. In terms of AI, especially because we've done a lot of cost control and cost reductions, we feel like we have enough offer to be able to invest appropriately in research and development. And some of it, we'll also be shifting existing the resources that we have from other projects into projects like SalesCloser at least for now. And when needed, we also will use external resources.
And maybe just one kind of follow-up on the SalesCloser. It would seem like a tool like that could be quite interested to an enterprise level customer, but in adjacent markets. I thinking of like financial services or something like that. Is there any thought process? Or is this more of a long-term thing that you have enough in the near term to pursue? I'm just curious how you're thinking about adjacent verticals if there's opportunity any..
Well, I mean, as the name suggests, our focus right now is on sales. And you're right, this could potentially apply for a whole bunch of different industries, including even medical and financial and a lot of different things. But with the sales area, the need is a very pronounced one. It is a very -- there is a huge market, many, many billions of dollars market. And because of that, we feel like by focusing on sales specifically, we can have a product experience that would be better and more fine-tuned. And then later on, sure, we can look into expanding into other verticals.
And the last question comes from Neehal Upadhyaya of iA Capital Markets.
In terms of M&A and talking about some of the smaller tuck-ins similar to ESM, is there anything out there that you're seeing right now that potentially moves the needle in terms of filling product gaps?
There are always different ones that we look at, and some of them are quite interesting. But obviously, given that our cash balance is lower than it used to be, we're more careful. And our priority is more on organic growth and operations right now. And we have a lot of opportunities that we're already pursuing. Product suite, I think, is quite rich right now and sticking quite well with the client. I think acquisitions in terms of accelerating growth and adding more revenue to our financials would be something that would make more sense as the stock price appreciates and we can properly raise and do larger acquisitions for that. Obviously, we're going to be opportunistic, but nothing immediately in front of us like ESM. David, do you want to add anything to that?
No, I agree with everything you said, Ali. I mean, Neehal we pretty much get different types of deals in our e-mail mailboxes, but pretty much every week, right? And Ali, Jordan and I will often chat about many of these, pretty much on a weekly basis. We've always been disciplined even when we had a ton of cash to the bank being very selective. We continue to be selective. The only one difference right now is the issue of getting something that's accretive, right? So we're extremely careful. We don't want to make a mistake. Making a large acquisition that potentially may not produce cash flow. We've never done that in the past. We intend continuing on making sound acquisitions. So we look at everything that comes in. We don't know when we pull the trigger on the next one. Hopefully, sooner rather than later. And to respond to your question directly, there's always a deal flow.
No, fair enough. And then, look, it's been a few quarters since the launch of Propel IQ. Anything you've learned those may be surprising, good or bad?
I think we expected the rollout and the change management, especially in terms of our team members to be difficult. So from that point of view, it is not surprising. But maybe I was hoping that some of those challenges would be handled more quickly. That's one that I've seen. But I think as a whole, it is interesting that a lot of the theories and hypothesis we had about how it's going to resonate and how it's going to be more sticky and how it's going to be perceived and the value that it generates, actually have materialize exactly the way we thought. And now the partnership program that we talked about, it is a lot easier to make those partnerships with Propel IQ and make them work well than previously before having Propel IQ. A lot of doors are opening now that were not available just in the past.
Perfect. And then maybe one last one. David, I think you mentioned that you like go 20 team members. Can you provide some color on which cost functions the headcount was reduced from?
It's pretty much across the organization, Neehal. We've just been very careful with where we add people. Sometimes there's a for attrition. We might not refill that position. We'll just get it done with whatever resources we have internally. In other cases, they have been very specific initiatives that Ali and Jordan have implemented like for the SDRs and so on in terms of how we respond to e-mails, so we use AI for that. And so we're able to get better productivity from the existing number of members without adding to them. So it's been across the board that we've been able to save on headcount.
There are no further questions. So I'll pass it back to Ali Tajskandar for closing remarks.
Thank you very much, Jordan. In closing, I want to thank everyone once again for joining us today for this call. Thank you to the analysts for your questions. Everyone, please stay safe and healthy, and we look forward to providing more updates this year. Thank you.