Adcore (TSX:ADCO) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.
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Summary
Adcore reported a strong Q2 2026 with a 10% increase in revenue, reaching $7.2 million, and a 19% rise in gross profit, achieving $3.7 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. So if you look at top line revenue, it amounted to 7.2 million in Q2 2026 compared to 6.5 in the previous year. Again, 10% year-on-year growth, and gross profit 3.7 million in Q2 2026 compared to 3.1 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. And if you look at, let's say, quality metrics, what the company considers quality metrics, we can still see that again, gross profit 3.7, 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. So to discuss numbers at eye level again: 7.2 million top line revenue, 10% increase. Gross profits 3.7, almost 20% year-on-year increase. Email revenue grew by 12%, which is solid. And North America saw a really nice rebound.
It grew to 1.5 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%. That puts the target price at around 1.3 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. For the three months ended June 30, 2026, we delivered revenue of 7.2 million compared to 6.5 million in the same period of 2025, an increase of 0.7 million or 10%. Gross profit for the three months ended June 30, 2026 was 3.7 million compared to 3.1 million in the prior year, an increase of 0.6 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. As for operational expenses, R&D expenses for the quarter were 0.6 million compared to 0.5 million in the prior year. The slight increase in expenses was primarily driven by increased use of AI-related tools. SG&A expenses for the quarter were 3.7 million compared to 3 million in the prior year, an increase of 0.7 million or 22%. The increase was mainly driven by payroll-related expenses and was partially impacted by foreign exchange rate fluctuations.
Operating loss for the three months ended June 30, 2026 was 0.6 million compared to 0.5 million in the same period last year. Net loss for the three months ended June 30, 2026 was 0.8 million compared to 0.4 million in the same period last year, an increase of 0.4 million. Revenues and gross profits, as shown on the left side of the slide: Q2 revenue grew 10% year over year to 7.2 million, with gross profit increasing 19% and gross margin improving from 47% to 51%.
This is driven again by changes in client mix. Looking at the first half results in the middle, we observe a similar trend with revenue growing 16% to 15.7 million and gross profit increasing 10% to 6.8 million. This is consistent with the full-year trend on the right which highlights ongoing annual growth in both revenue and profitability. As for the geographical revenue breakdown for Q2 2026, APAC revenue continued to grow year over year. EMEA revenue grew 12% year over year, primarily due to new client acquisition and expanded activity from existing clients.
North America revenue rebounded after a slower prior year, delivering a 27% year over year increase. In terms of financial position, we had cash and cash equivalents of 4 million as of June 30, 2026 compared to 10.3 million at December 31, 2025. Total working capital amounted to 3.1 million compared to 5.1 million on December 31, 2025. As for the liability side of the financial position, we can see that the company is still debt free. Adjusted EBITDA, the quarterly non-GAAP results, reflect adjustments for the following: depreciation and amortization, share-based payment, and other unusual and non-recurring items.
For the three months ended June 30, 2026, adjusted EBITDA was 41,000 compared to 155,000 for the same period in 2025. The decrease in adjusted EBITDA was mainly driven by the increase in operating loss. With that, I will turn the call back to Martijn.
Martijn, Chief Partnership Officer
Thank you so much, Amit. With that, we arrive at the Q&A portion of this call. We got a couple of questions. In the first one I direct to you, Omri. It's about gross margin expansion. The question is: gross margin expanded nicely to 51% from 47% year over year, with gross profit growing almost twice as fast as revenue. Could you walk us through what's driving that mix shift and how much more room you see to keep expanding the margin?
Omri Brill, CEO
It's a good question. I would say, first of all, I would say it's go hand in hand, right? If you see top-line revenue growing, gross margin improving, so one can expect gross profit will follow, and actually it followed quite nicely—almost double the growth rate that we saw for top-line revenue. So I think the company, like, we have different revenue streams and we're focusing on the revenue streams that are more profitable for the company, coming with better margins.
And I think this type of strategy is proving itself. So you see, like, a nice, I would say, improvement in the company's gross margin, and we expect to see this trend carry on onward. I would say, with some exception—obviously Q4 can have, let's say, lower gross margin traditionally because of the spike in cost of revenues related to holiday-related spending. So I say, but the trend as a trend I would say is definitely looking more positive, and we expect gross margin to remain solid.
Martijn, Chief Partnership Officer
Thank you, Omri. Following question is regarding North America. It's encouraging to see North America bounce back with 27% growth after a softer 2025. What's behind the turnaround, and do you feel good about that momentum carrying into the second half of this year?
Omri Brill, CEO
So I think maybe Amit can shed a bit more light. But I think, like, most of the growth that we saw in North America are coming from actually existing client activity—so improving this activity, I would say—and that's something that is very encouraging for us to see. Let's say the momentum is shifting, and these clients are now growing again, growing the, you know, growing the spend, and basically that's always a positive sign. So I think this is one thing.
Also bear in mind that moving towards and seeing, like, H2, we still have compare, like, better numbers to present, you know, because the comparables should be working in our favor—soften 2025. So I think, like, yeah, we are more positive regarding North America and we expected to see this type of behavior. We expected to see it stabilize and then to see it going back into, I would say, growing trends. And I'm happy that we've been able to achieve it in Q2 and we are hoping to, you know, preserve this type of momentum, carry into the second part of the year as well.
Martijn, Chief Partnership Officer
Great, thank you, Henri. The next question is about our AI development and development in general. You committed to three autonomous agents by Q2 and actually delivered five, which is a nice execution story. What kind of early customer feedback or usage signals are you seeing from Proposals agents and also the creative agent on the AI Studio?
Omri Brill, CEO
Okay, so first of all, if we miss, we might as well miss—you know, like overdeliver than underdeliver, I guess. But I would say, like, if we're talking about Proposals, obviously we have four different agents now running live: inbound agent, outreach agent, deal agent, and customer agent. And we see, like, a good, I would say, market fit, you know, from early beta clients. So they are excited about what these agents' capabilities are, what type of issues they can solve for them, for their organization.
And I think, like, in general we see, okay, there's, like, definitely a place for the solution, like Adcore is building in the market. And actually it's quite a unique solution in the market because maybe everybody more or less can, I would say, build an AI agent nowadays, but let's say an AI agent that is integrated to the different workspace and platform and document and can generate revenue from A to Z just from visitor—that's quite a unique sales story that only Adcore possesses.
And I think that puts us in a very different, I would say, position from other vendors in the market today. So AI, like Proposals—I'm definitely happy from the early reactions that we are getting. And maybe Koby can elaborate a bit more about the reaction that you see from early users of AI Studio with regards to the agent.
Koby Arbiv, Go-to-Market Lead, AI Studio
Of course. As far as the AI platform in general, we have a lot—we have already started to go to market. We have some, few—we actually have a few, quite a few working partners already. The feedback, of course, it's about saving time, saving resources. And I just finished a call actually with one of our partners using the connector to Claude, actually, with our agent, and she's saying that it's never been easier for her to generate creative. She's not—she doesn't need to count on our agency anymore to send her deliverables.
They don't need designers, they don't need to pay extra, and what they're actually paying is, like, less than a day's work of a designer, and they're getting a full stack of creatives that can take a full month to work on. So obviously no complaints—only really just compliments on how good the platform is right now.
Omri Brill, CEO
So that's the best type of stories, right? The client success stories that are happy with it, using the agent. I think, like, that's exactly why we are working so hard, building this type of solution for the client—to give us this type of feedback. So that's amazing. Thank you for sharing, Koby.
Koby Arbiv, Go-to-Market Lead, AI Studio
Thank you.
Martijn, Chief Partnership Officer
Amazing. Thank you, guys. The next question is probably more for Amit, as it's a financial question. The question is: you mentioned the cash flow and working capital declines, largely seasonal, should reverse in H2. Could you please give us a bit more color on the expected timeline for that recovery?
Omri Brill, CEO
Yeah, definitely. So basically, historically, Q4 is the strongest quarter of the year for the company, so we do expect to see a recovery. The decrease that we see now in H1 is partially payments for Q4 of last year, so it's something pretty usual in the company.
OPERATOR
All right, thanks for elaborating on that. The next question, either for Amit or Omri, is about the efficiency plan rollout. Omri mentioned there's a plan for a 15% to 20% OPEX reduction. Could you share more on the expected timeline, if there's any one-time implementation cost, and which areas of spend will primarily be targeted?
Omri Brill, CEO
I think the biggest line item of expense for the company is obviously employee costs, so this would be the first place that we need to tackle. We saw some headwind with regard to the current exchange fluctuations, which basically didn't work in our favor during H1 2026, and that's something we need to take actions on. So we are planning some employee cutoffs, to reduce the number of employees. Looking at other lines of expenses the company has, whether it's AI tokens and other things that are consuming a large budget of what the company is spending right now.
All in all, in terms of timelines, we want to do the majority of the cut effort or saving effort during Q3 2026. We might have some carry-ons, but the idea is to enter Q4 2026 as a far leaner and slimmer company, with, ideally, SG&A costs dropped by 15% to 20%. That's the goal for the company.
OPERATOR
Great, thank you. Omri, I think we have room for one or two more questions. The next question is about balancing growth and profitability. Omri, you mentioned keeping adjusted EBITDA positive while simultaneously investing in a fairly ambitious agent build-out. How are you thinking about that balance between funding innovation and protecting profitability as you head into the second half of 2026?
Omri Brill, CEO
That's actually a very good question, because obviously it is an arms race now between different AI companies, developing the AI agent and making sure to grab as much land as you can, and I think that's not the time to slow down or to stop. That's definitely the case. We need to move, and we are moving. We already proved it, right? We talked that we are going to build and ship three agents by the end of Q2. We built and shipped five different agents, so we definitely proved already that we know how to execute, and execute fast, which is great.
But that's one side of the story. The other side, like you said, is we need to be mindful of the company's financial position, making sure that we are not overspending and basically keep another eye open on that front. There should be a balance between the two, and the company already proved historically that we know how to do it, and we know how to do it quite well. So I'm pretty confident that we will be able to continue to balance between these two, I would say, sometimes conflicting efforts.
OPERATOR
Thank you, Omri. That brings us to the last question for today, which is: the first half revenue grew 16% and the gross profit grew 10%. So, strong first half overall. How much of that momentum do you expect to carry through the second half, which you reflect as seasonally your strongest?
Omri Brill, CEO
That's another good question. I would say a definitely very strong start of 2026, right? Top-line revenue, midline revenue, all of them move in the right direction, so we definitely see some tailwind in that regard. Like I mentioned before, we had some headwind regarding currency exchanges, which reflected an increase of cost. The plan is to go into Q4, which is the most important quarter for us, as a slimmer company but maintain the same momentum.
If we can balance the two and achieve the two—continue growing top-line and midline revenue, but reducing the SG&A costs—I think that should be a story to tell and put the company in a better position moving forward.
OPERATOR
Absolutely. Thanks so much, Omri. We covered a lot, both on the slides, the presentation by Koby, and also the Q&A session. Do you have any final closing remarks for the audience today, Omri?
Omri Brill, CEO
No. I think, all in all, the company was able to present a robust quarter—almost as robust as Q4 2025—and that's telling you a lot. A lot of innovation going on. Also, the level of maturity of both of the flagship app, which is our AI Studio, is far better. AI Studio is already generating real revenue, and we have a very strong and robust GTM regarding this app, purposely early beta users, but again it reached a level of maturity where all the AI agents are active and ready to go to market.
So I think we are definitely entering H2 far stronger than we started H1, which is obviously a good place to be, right?
OPERATOR
Amazing. Thanks so much, Omri. Thanks, Amit. Thanks, Koby, for your contributions today, and most of all thanks to everyone joining this call. With that, we conclude the earnings call today. Looking forward to seeing you next time. Thanks so much, and have a great day. Thank you, everyone. Thank you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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