Nextech3D.AI (CSE:NTAR, OTCQX:NEXCF) CEO Evan Gappelberg joined Proactive to discuss the company’s preliminary second quarter financial results released this week.
Notably, the company achieved a 70% gross margin and grew its revenue to $1.2 million.
Proactive: The company just wrapped up its quarter, and you've put out your unaudited financial numbers. The quarter looks like it was going pretty well.
Evan Gappelberg: Yes. These are our preliminary numbers for Q2 ending June 30th, 2024. The highlight here is a 70% gross profit margin. We've never achieved that before. This is a major milestone for the company. We've been working very hard, building our technology over the past couple of years and working very hard with our new office in Hyderabad, India, and now it's all paying dividends. We're getting the results that we set out to achieve. We also achieved $1.2 million in revenue, which is a jump over Q1, which was right around $1 million. So things are starting to perk up on the revenue side.
The big news, of course, that I'm waiting for and all of our investors are waiting for is Seller Central opening upon Amazon. As you know, we are a certified 3D model supplier for Amazon. It is a very, very significant and pivotal certificate of excellence. Very few companies have that. So we see a lot of upside potential, starting really in August, and with this margin of 70% going to 80%, it really sets the stage for a tremendous second half of the year.
During the quarter, you were named a preferred partner of Amazon. What's ahead?
We are now part of a Seal team of elite 3D modeling providers for Amazon. We have been providing Amazon with 3D models for the past two years. We've supplied them with millions of dollars' worth. But that's just Amazon corporate. The reason why this news is so significant about us being one of their certified partners is that they're opening up their platform so that their sellers, the merchants, there's 10 million of them that control 300 million products, are going to be able to find Nextech on this list. There's only, I think, 20 on the list. I think it started out with 120, and now there's only 20 that survived for two years. Now all those merchants, starting very, very soon, will be able to get 3D models from Nextech.
The key piece here is that, unlike all the other 3D modelers on the planet, this elite group is essentially integrated into the Amazon tech stack. We are integrated so that we can push 3D models onto the Amazon platform and auto-approve. What does that mean? That means if you wanted to bring a 3D model onto the platform, you could try to get it approved yourself. But it's not an easy thing to do. Nextech has the ability to get it approved. And that's because of our unique relationship with Amazon. You want to just be selling more product.
The key again is ROI. ROI. You get A to Z. Amazon has proven that when you use 3D models versus 2D. And this goes back to the last three years I've been talking about this transition from 2D photos to 3D. It is happening. Why is it happening? Because the ROI is there. And this isn't Evan Gappelberg, you know, trying to Nextech horn this. Amazon is talking about 3D models on their platform showing a 200% increase in conversions.
Something that we talked about a few months ago when you were transitioning your office to Hyderabad, is not having a bunch of people waiting for growth to happen but adding the people when it has happened. Can you talk us through that?
Our office in Hyderabad is scalable. We can add more bodies to it. But the reality is that our technology has improved quite dramatically, and we're able to scale production with our existing tech, with our existing team. We can scale our production, and we could start without adding any additional cost. We could double our revenue without adding additional cost. As we get into doing $10 million plus a year in revenue, when we cross that threshold, we would have to hire and bring on more people. But for now, our costs are fixed, our profit margins have expanded. There's an additional 10% leverage in the margin. We think we can get to 80%. And once Amazon opens up the platform and the demand starts to accelerate in a bigger way, I think it's going to have a material impact on our bottom line and, of course, our stock.
Quotes have been lightly edited for clarity and style