RedCloud Holdings plc Q4 FY2025 earnings call

This is Red Cloud's first earnings call as a public company, with the first half of 2025 focused on building a foundation for future scaling:

Core Business Model & Competitive Advantage

• Red Cloud builds AI-powered software that automates manual decision-making for consumer goods distributors (inventory levels, pricing, delivery routes, credit terms), addressing an estimated $2 trillion annual global waste from legacy manual processes.
• Proprietary transaction data from over $5 billion in total historical platform volume, covering 184,000 FMCG products across 6,700 brands in 4 existing markets, creates a unique data moat that competing AI firms cannot replicate, improving model accuracy over time.

Strategic Expansion Model

• The company uses a capital-efficient, de-risked JV licensing model for new market expansion: local JV partners fund all local operations, bear market risk, and provide access to their existing industry relationships, while Red Cloud provides AI infrastructure in exchange for recurring license fees and future profit sharing. This model requires minimal capital deployment from Red Cloud.
• First half 2025 saw the execution of a 10-year up to $50 million license agreement with a Turkish JV partner (no Red Cloud capital outlay), and a finalized JV agreement with a Saudi Arabian partner.

Leadership & Capital Structure Updates

• Added two key C-suite leaders: Magdalena Gonzalez (new CFO, starting January 3, 2026) with deep B2B payments and audit experience, and Raju Dattler (Chief Strategy Officer) with global technology and finance experience.
• Completed a major balance sheet de-risking: converted $66.9 million in shareholder loans to equity, reducing total liabilities from $86.3 million at end-2024 to $21.4 million as of June 30, 2025. Total stockholders' deficit improved from $68.8 million to $8 million over the same period.
• Post-balance sheet: secured a £2 million revolving credit facility, raised $13.5 million in new share issuance in July 2025, and received $3.1 million in proceeds from partial warrant exercise as of November 2025. Current total shares outstanding is 55.3 million.

Operational Investment

• Reduced transaction fees (take rates) in existing markets to acquire higher transaction volumes and more training data to refine AI models and productize the platform for licensing deals, leading to 28% TTV growth with a slight decline in total marketing/incentive spend, showing improved efficiency.

Red Cloud Technologies operates across four core geographic markets and a new JV licensing segment for the first half 2025 reporting period:

1. Nigeria: The company's oldest and largest core market, drove total 12% year-over-year revenue growth and is the source of the majority of current revenue. Performance is ahead of 2024 levels, and aligns with or exceeds first half 2025 expectations.
2. Argentina: Revenue declined approximately $4 million year-over-year in first half 2025, a result of the company's strategic decision to reallocate capital to higher-return opportunities including the new JV licensing model. Operations remain active to generate AI training data, and management expects improved growth and performance in 2026.
3. South Africa & Brazil: Both markets are performing ahead of 2024 levels, in line with or better than first half 2025 expectations. Both are next in maturity after Nigeria, with Brazil and South Africa expected to approach breakeven after Nigeria.
4. New JV Licensing Segment: The company signed its first 10-year JV licensing deal with a Turkish partner for up to $50 million in total recurring revenue (with a $5 million annual minimum) requiring no capital outlay from Red Cloud. A Saudi Arabian JV is finalized and awaiting final licensing terms, expected to go live in December 2025.

Aggregate first half 2025 total company revenue was $17.9 million, a 12% year-over-year increase from $16.1 million in first half 2024. Total transaction volume (TTV) grew 28% year-over-year to $1.2 billion.

• Full year 2025 revenue guidance is maintained at $51 to $53 million, with the majority of second half revenue coming from the core Nigeria market.
• 2026 full year revenue is targeted at $100 million, an upward revision from prior implied expectations. This target is broken down as: ~$60 million from existing core markets, $10-$11 million from guaranteed JV licensing fees, and ~$30 million from operational JV revenue in new Turkey and Saudi markets.
• EBITDA breakeven was previously expected in second half 2025, and has been revised to Q2 2026 (April-May 2026 timeframe), as capital was reallocated to prioritize JV technology buildout.
• Turkey is expected to go live by the end of January 2026, and Saudi Arabia is expected to go live mid-December 2025.
• Management is comfortable with near-term liquidity, and will opportunistically evaluate capital market opportunities to support growth plans.

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections, including risks related to new market entry, macroeconomic conditions in operating markets, and partnership execution. Key risks are detailed in the company's SEC filings.
• Macro economic instability in core and new markets (including currency and interest rate volatility in Argentina and Turkey) creates ongoing operating uncertainty.
• Data sovereignty requirements for new markets (such as Saudi Arabia) require additional infrastructure investment that could increase costs and impact profitability timelines.
• Achieving the $100 million 2026 revenue target depends on fast ramp-up of new JV partner operations, which depends on the local partner's existing market penetration and execution, not just Red Cloud's technology delivery.

Q: What is the total addressable market for Red Cloud's new capital-light JV model, and how do these JVs benefit the core business? / A: Turkey and Saudi Arabia are both regional trading hubs, giving Red Cloud access to both large domestic markets and adjacent regional trade opportunities. Each market has a total addressable market for Red Cloud's offering in excess of $100 billion, with exponential growth opportunities from adjacent geographies and verticals. The JVs leverage Red Cloud's existing proven AI infrastructure and data moat, allowing the company to expand into high-demand markets without taking on local operating or market risk, and generate high-margin recurring license revenue plus additional revenue share from operations.

Q: How does the JV revenue model work, and who covers operating costs for new JV markets? / A: Each JV has two revenue streams: a guaranteed minimum annual recurring licensing fee for access to Red Cloud's AI platform, and 50-50 revenue sharing on all operational revenue generated by the JV above the minimum license fee. All local operating, sales and marketing capital requirements are covered by the local JV partner; Red Cloud only bears minimal incremental infrastructure costs to host and deliver the AI platform, resulting in immediate profitability for the license portion of the revenue, with scale economies improving margins as more JVs are added.

Q: How does the $100 million 2026 revenue target break down, and what supports confidence in this ramp? / A: The 2026 target is split into three clear buckets: ~$60 million from organic growth in existing core markets, $10-$11 million in guaranteed minimum licensing revenue from newly signed JVs, and ~$30 million in shared operational revenue from the new Turkey and Saudi JVs. Saudi Arabia will go live in mid-December 2025, and Turkey will launch by the end of January 2026, giving a full year of revenue contribution from the new markets. JV partners already have deep pre-existing relationships with major FMCG manufacturers and established distribution networks, enabling a faster ramp than organic greenfield expansion.

Q: When will Nigeria reach cash flow profitability, and when will other core markets reach breakeven? / A: Nigeria, Red Cloud's most mature core market, is already seeing reduced marketing incentive spend while maintaining solid revenue growth, confirming the flywheel effect of the data investment. Nigeria is expected to reach cash flow profitability in the second half of 2025. Brazil and South Africa are the next most mature markets, with both on track to reach breakeven after Nigeria, and already have active pipelines for potential local JV partnerships to accelerate growth.