RedCloud Second Half 2025 Earnings Call

Today's call will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed today and are based on the company's current intent, expectations and reasonable projections. They are not guarantees of future performance. Description of these risks and uncertainties can be found on our annual report on Form 20th. The fiscal year ended December 31st, 2025, filed with the SEC on May 15th, 2026. We do not undertake any obligation to update these statements except as required by law. Today's remarks also reference operating metrics, including total transaction value and active distributors. These are operational metrics and not financial measures, presented in accordance with US GAAP. I will now turn the call over to Justin Floyd, our Chief Executive Officer.

Thank you, Ethan, and good evening, everyone. This is our second earnings call as a public company and our first covering a full fiscal year. We filed our annual report on Form 20F earlier on today. Before I discuss the operating results for fiscal 25, I think it's important to let me briefly describe what RedCloud does because it sits behind every number on this call.

Consumer goods distributor makes thousands of decisions every few seconds.

What to stock, how much, how to watch price, which route the delivery should take, which outlets and retailers get credit terms, and which do not. Today, most of those decisions are made by the industry manually through spreadsheets. phone calls, and guesswork. The waste in that system across the markets we operate in is measured in billions of dollars. Red Cloud builds the AI infrastructure that takes those decisions out of the spreadsheet and into intelligence. Our infrastructure is what scales in Nigeria and what licensees deploy in their markets and what makes every transaction on our platform incrementally smarter. Let me start with Strategic's shape of red cloud because it is the most important thing to take away from this call. Nigeria is our direct platform engine. We continue to operate Nigeria on the direct transaction-based infrastructure model that we built the business on, and it's working. In 2025, our Nigerian revenue grew 68% to $38.5 million, up from $22.9 million in 2024. Our active distributor base in Nigeria grew 40% to 981 distributors at year-end from 701 a year earlier. Importantly, marketing spend as a percentage of revenue is coming down. The unit economics are improving. And, of course, we're continuing to invest in Nigeria in 2026. And let me spend a moment, if I may, on the product, because the product is the reason why any of the rest of this works. RAID, R-A-I-D, real-time AI for distribution. our infrastructure is built for fast-moving consumable goods by chains in high-growth markets. Across those markets, billions of dollars of goods move through distribution networks every day, which brands to stock, when to reorder, how to allocate across thousands of retail outlets. Those decisions critically drive revenue.

And today, they're made without data reactively and at enormous scale. RAID changes that.

In March of this year, RAID was validated against 3.7 million live FMCG transactions, outperforming industry benchmarks for accuracy. RAID is trained on $6.9 billion in proprietary fast-moving consumable goods transactional data, and that data has been accumulated over four years of live market operation. Every transaction process on the platform deepens that data set. And critically that accumulation is not replicable without the underlying network.

The data is the infrastructure.

And so now we're moving from validation into deployment. RAID is the reason our partners are signing long-term licensing agreements. why because it's an intelligence they can't build themselves our jv licensing model every other market we operate in is moving to a joint venture and an infrastructure licensing model that includes argentina brazil south africa saudi arabia turkey and the new markets that we we expect to enter into in 2026. Red Cloud licenses the AI infrastructure, the open commerce technology and the data and intelligence to a joint venture. A joint venture partner funds the local operations and takes the local market risk. We receive the license fees, the infrastructure fees, share of the revenue, and in some structures, ownership, economics and the actual joint venture itself. Capital outlay from Red Cloud is minimal.

Marketing spend as a percentage of the revenue is minimal. That is the model.

Before I go into the individual market arrangements, I want to note, on the 13th of May, we announced our intent to form a joint venture with ACA Capital to begin deployment of Red AI and RAID across their distribution networks in South Africa. And that's with the intention of expanding to broader African markets over time. ACA Capital is one of the largest African-focused investment platforms with deep reach across the FMC distribution ecosystem. The intent is to extend the operating momentum that we have built in South Africa under that JV model to lay the foundation for a broader African rollout of RAID across the time. Regarding Turkey, As we announced at the time of our last earnings call, we signed a 10-year license agreement with our Turkish JV partner. That represents up to $50 million of licensing revenues to RedCloud. Implementation work with that JV partner is now underway. Regarding Saudi Arabia, we signed a JV with our Saudi partner. Saudi Arabia is one of the largest addressable supply chain digitization opportunities in the world today. and our partner is one of the most established industrial groups in the kingdom. For Argentina, we are not exiting Argentina. What we're doing is we're reprioritizing how we serve Argentina. That 2025 number you'll see in the 20F, 0.1 million dollars down from the 18.8 million dollars in 2024. That reflects the operational redirection of Argentina away from a directly operated transaction-based model into a market constrained by exchange controls and a 32% PSO depreciation against the dollar. Now Argentina has been redeveloped under the JV and licensing model, our operations remain active and continue to generate data for our AI infrastructure. We expect better performance from Argentina in 2026. Regarding Brazil and South Africa, we're evaluating the right pace and structure for the transition to the JV and licensing models. South Africa grew 139% in 2025 into the direct model to $9.7 million. We are not abandoning what is working. We are deciding when and with whom to convert these markets to the JV infrastructure. On the team, earlier this year, I appointed Raju Dattler as the Chief Financial Officer. Many of you will know Raju from our prior earnings call when he was the Chief Strategy Officer. Raju brings over two decades of corporate finance, capital markets and strategic transaction experience to the CFO role. His appointment aligns and underlines the the finance function, the capital strategy that we need to execute in 2026.

And with that, I'll hand over to Rajin.

Thank you, Justin, and good evening, everyone. I will walk you through our full year 2025 financial performance, then cover the balance sheet and subsequent events and our outlook. Let me start with the key messages. Revenue for 2025 was 48.5 million, up 4% from 46.5 million in 2024. Nigeria contributed 38.5 million, up 68%. South Africa contributed 9.7 million, up 139%. Argentina contributed 0.1 million, reflecting the redirection Justin just described. Total transaction value on our platform continue to grow across our active markets. Marketing and commission expenses was $49.1 million or 101 percent of revenue down from 52.9 million or 114 percent of revenue in 2024 to getting more efficient with how we deploy platform incentives. The shift to the JV and licensing model in markets other than Nigeria will further reduce our marketing spend as a percentage of revenue over time because the local marketing investment in those markets is born by our JV partners. Salaries, benefits, and contractor costs were 21.8 million up from 19.3 million. We reduced headcount in functions that do not directly affect revenue and reinvested in technical and commercial roles. While total headcount declined, the purpose and cost moved up faster than overall headcount moving down as we hired higher salaried employees in technical and commercial roles. Net loss for the year was $46.2 million, an improvement of $4.5 million from a net loss of $50.7 million in 2024. Basic and diluted net loss per share was $1.03 compared to $2.09 in the prior year. We expect the JV licensing model to meaningfully reduce our marketing spend as a percentage of revenue than the direct platform model, which we believe should support gradual improvement in operating leverage over time. And on the balance sheet and cash flow. As of December 31st, 2025, we had cash and cash equivalent of half a million dollars. Net cash used in operating activities for the year was $37 million versus $34.7 million, an increase of $2.3 million compared to the prior year. Net cash provided by financing activities was $39.9 million, reflecting IPO proceeds, the conversion of related party loans to equity, and other financings. As disclosed in the 20th, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. We addressed those conditions directly in our financial statements and operating review, and I will address them directly here. Subsequent to the year end, we have had multiple sources of capital. In February of 2026, we issued senior secured convertible notes, resulting in $4 million of gross cash proceeds. In April and May 2026, we completed multiple drawdowns under our $30 million equity line of credit, generating $1.4 million of additional gross proceeds. We received $0.9 million from the exercise of previously issued warrants. We also receive additional unsecured loans from existing shareholders. The 20F contains a complete description of these transactions. Our historical cash usage exceeds our current liquidity. The capital raised subsequent to the year-end is not by itself sufficient to fund operations for the full year 2026 financial year. We will need additional capital, and we will continue to reduce operating cash burn. The transition to the JV and licensing model in markets other than Nigeria is one of the levers we expect to use to reduce the amount of capital we need to deploy to grow. Let me close with our outlook. We are reaffirming our target of $120 million of revenue for full year 2026. The components are consistent growth in Nigeria, where the direct platform model is delivering, plus licensing revenue from JV agreements we have signed, including Turkey and the JV agreements we expect to advance in 2026, including Saudi Arabia. We will provide additional color on the composition of 2026 revenue as the year develops. We are managing liquidity. The warrants in place have been exercised from time to time, and we expect them to continue. We will evaluate capital markets and strategic financing opportunity support our 2026 business plan. To sum up, 2025 was a year in which Nigeria scaled, a marketing spend as a percentage of revenue improved, and the JV and licensing model became real with our first signed agreement in Turkey. 2026 is a year in which Nigeria continues to scale, and the JV and licensing model becomes a measurable part of our revenue. Back to you, Justin.

Thank you, Raju. Four things to take away from this call.

One, Nigeria is working and we're continuing to invest behind it. Two, every other market is moving to the joint venture infrastructure licensing model.

Turkey, signed. Saudi Arabia, signed. Argentina, being redeveloped under the JV infrastructure model. Brazil and South Africa are next.

Number three, we're targeting $120 million of revenue for 2026, driven by Nigeria and by the licensing revenue from our JV infrastructure agreements. Number four, RAID is the product of the centre of all of this. it's validated it is in deployment and every transaction on our infrastructure makes it stronger that is on low thank you for listening we will not be taking questions on this call however please do reach out to us investor relations at redcloudtechnology.com for further information and of course for a complete discussion of our results and risk factors please refer to our annual report on Form 20F file download today with the SEC.

Thank you.