Nextech3D.AI (CSE:NTAR, OTCQX:NEXCF) reported its first quarter results earlier this week, highlighted by a significant rise in profit margin despite a slight revenue dip.
In this interview with Proactive, CEO Evan Gappelberg outlined the company's expansions and strategic focus on long-term profitability, expressing confidence in securing future growth through large enterprise deals.
Proactive: How do you interpret the significant cost reductions reflected in the company's first quarter numbers, especially considering your focus on reducing costs in recent discussions?
Evan Gappelberg: We're quite pleased with these figures. Despite a slight year-over-year decline in revenue, we made significant efforts to control expenses. In 2023, our profit margin was approximately 30%. However, in Q1 2024, we're reporting a 51% profit margin, marking a considerable improvement. We anticipate this trend to persist into Q2, with projections reaching as high as 80%. These are massive improvements in our profit margin, which means our business is much healthier and stronger as a company.
Why are those profit margins so significant for the company?
The profit margin is the main event as it showcases the progression of our business. A significant factor contributing to this improvement is our pivot to India, which has effectively lowered our costs. Additionally, our AI technology is exerting a substantial impact on our profitability. As we move into Q2, we're witnessing another notable increase in profitability, a testament to our team's efforts and the efficacy of our technology. It’s exciting for us to show this kind of improvement, and is indicative of our long-term growth trajectory.
Are you anticipating the addition of more enterprise customers? Additionally, could you provide insights into the recent news regarding Seller Central and the potential positive developments it brings for the company?
In our 3D modeling sector, we maintain a strong foothold, consistently delivering numerous high-quality models to our primary client, Amazon, every month. Although Amazon remains our largest customer, we've diversified our clientele and successfully onboarded new enterprise customers. While we initially anticipated securing a few in Q1, our efforts continue to yield positive results. We have five more that we’re working on closing. These large enterprise customers are key to our business and we’re singularly focused on doing so right now.
Could you elaborate on the message you're conveying to shareholders with these latest numbers, and what plans does the company have for the future?
I think it's important for our investors to not look at one quarter as the be all, end all, but to look at the progression. While I'm not overly thrilled about reporting revenue of just over $1 million, I'm extremely excited about the achievements that led us here. This is the key message we want to convey to our shareholders.
In Q1, we were quite busy. We announced a new AI-powered 3D model search engine and expanded our AR tech team and office space in Hyderabad, India, demonstrating the growing recognition of our technology and capabilities to meet market demand. We also announced our entry into the jewelry industry and just received confirmation from a major jewelry manufacturer that they will start using our technology next week. Additionally, we formed an incubator for AI technology and received pivotal patents that allow us to generate 3D models from 2D images.
Looking at our business as a whole, we were always focused on driving top-line revenue, which was very expensive and turned into a high-cost, low-margin business in 2023. We've taken measures to drive only profitable revenue forward in 2024 and beyond by dramatically reducing our costs. It was difficult, but it worked, and now we're stronger than ever. We've strengthened our ability to be a profitable company and are very optimistic about the future. We're confident in the steps we've taken and believe they will yield significant benefits in the coming quarters. From a long-term perspective, the future of commerce is going to be 3D, and we believe our patented AI technology gives us a competitive edge that will drive profitability for years to come.
Quotes have been ligthly edited for style and clarity