Operator: Good afternoon, ladies and gentlemen, and thank you for joining us today. Welcome to Paradium.AI's Q3 2026 earnings conference call. I would now like to turn the conference over to Morgan Fitzgerald, investor relations and social media. Ms. Fitzgerald, you may begin the conference.
Morgan Fitzgerald: Thank you and good afternoon. Hosting the call today are Paul Edmondson, Chief Executive Officer, and Geoffrey Wait, Principal Financial Officer. Before we begin, I'd like to note that some of the comments made during this call may include forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements.
Morgan Fitzgerald: Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning the company's business strategy, including our artificial intelligence strategy and the anticipated benefits of our rebranding as Paradium.AI, future revenues and income from continuing operations, anticipated audience reach, yield growth, and monetization improvements, cost reductions, market growth, liquidity, capital requirements, product introductions, and technological capabilities, search engine optimization, and expansion plans, as disclosed in our annual report on Form 10-K for the year ended 31 December 2025, filed with the SEC on 16 March 2026, the 2025 Form 10-K, and in our other SEC filings and publicly available documents. The company cautions investors that any forward-looking statements made in this call or that the company may make orally or in writing from time to time are based on the beliefs of, assumptions made by, and information currently available to the company.
Morgan Fitzgerald: Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond the company's control or ability to predict. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. The company disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. In addition, reference will be made to the non-GAAP financial measure, Adjusted EBITDA.
Morgan Fitzgerald: Information regarding reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon and can also be found on the Investor Relations page of our website at investors.paradium.ai. With that, I'll turn to CEO Paul Edmondson. Paul, the call is yours.
Paul Edmondson: Thank you for joining us today to discuss our Q3 2026 results. This quarter call marks our first as Paradium.AI and signifies a new era for our business. While the publishing industry as a whole continues to endure one of the most volatile and rapidly changing traffic environments that I've seen through my 20-plus years in the industry, we've been focused on executing and creating across the company and applying AI across our teams, products, and workflows. Last quarter, we announced the acquisition of InfoSentience, along with the launch of Cutter Studios. These AI technologies, as well as Encore, our proprietary data and monetization engine, have been catalysts for continued innovation, including a new AI task management product we'll be launching in Q4. More on that in a moment. Cutter Studios has gone from a concept to producing hundreds of pieces of content in roughly four months.
Paul Edmondson: This capability continues to show steady progress. Our team is working hard to fine-tune the technology's capabilities, and we anticipate it, along with InfoSentience, will grow significantly throughout Q4. Our brand licensing team also continues to make strides. We recently announced the launch of collaboration between PetHelpful and Trust Respect Love by Cesar Millan. This co-brand combines the credibility of celebrity expert Cesar Millan and the backing of Xcel Brands. With the audience engine of PetHelpful, Parade, and Millan's personal platforms, we're thrilled by this opportunity to extend PetHelpful off the page and into tangible experiences for audiences to connect with. Cutter Studios will also be used to drive reach by turning long-form content into engaging, shoppable videos and articles. This co-brand is targeted for 2027 retail launch, and we're excited to update you along the way.
Paul Edmondson: The through line of this is all our continuing commitment to reducing our dependency on referral traffic and capitalizing on the opportunity that AI creates for improving efficiencies and developing products. We're innovating across the organization. We're improving monetization, increasing content output, and expanding avenues for revenue as we move through the remainder of the year. Now, I'll pass it to Geoff to share the financial results for the quarter.
Geoffrey Wait: Thanks, Paul, and good afternoon, everyone. Revenue for Q3 2026 was $20.5 million, down 31% compared to $29.8 million in Q3 2025. We reported a GAAP net loss of $3.8 million in Q3 2026 compared to net income of $6.9 million in the same period a year ago. These results were impacted by the reversal of an employee retention tax credit asset in the amount of $1.3 million that was disallowed, a decision we plan to appeal. These results were also impacted by the timing of recognition of annual incentive compensation expenses of $1 million. Adjusted EBITDA was $2.4 million in Q3 2026 versus $11.9 million in Q3 2025. As a reminder, Adjusted EBITDA is a non-GAAP measure.
Geoffrey Wait: A reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon and can also be found on our investor relation website at investors.paradium.ai. Our cash position remains steady at over $10 million at quarter end, consistent with year-end 2025 levels. We believe the August extension of the maturity for our debt facility provides adequate runway to execute our strategic transition. Baseline operations continue to cover our debt service requirements, and we greatly value the continued partnership with our lender as we scale our new products. Our AI initiatives are generating early positive momentum. As we shared in our Q1 and Q2 earnings calls, we deliberately implemented monetization experiments earlier this year, and the findings from those experiments yielded results in September, with blended RPM rising 15% month-over-month to 28.99.
Geoffrey Wait: Further, content production expanded sequentially each month during the third quarter, up 15% over Q2 2026. This growth was fueled by the rollout of InfoSentience and Cutter Studios. Our priority is to aggressively scale these new AI-driven products. Now, I will turn the call back over to Paul for a strategic update.
Paul Edmondson: Thanks, Geoff. Moving into Q4, we are continuing to accelerate our AI vision, specifically outlined in our transition to Paradium.AI and away from a publishing-only company. The Paradium vision focused on empowering creators and media entrepreneurs and creating efficiencies within traditional publishing workflows has already begun to take root with actionable products developed. As we roll out Cutter Studios and InfoSentience, with more products in the pipeline, we are evolving beyond our roots as a traditional media company and engineering something fundamentally bigger. We are building a diversified platform with the ability to create value across a much broader range of markets, including SaaS, subscriptions, e-commerce, and B2B services that will change how we build and grow our business. By developing our own products and commercial relationships, we can reduce our reliance on third-party referral traffic while creating new, more sustainable revenue opportunities.
Paul Edmondson: In October, we upgraded our CMS with purpose-built AI tools for content creation, editing, and management. In the months following launch, the volume of words reviewed and edited per update more than doubled, reflecting deeper, more substantial refreshes to evergreen content. These updated articles are generating roughly 50% more page views within three weeks of being revised. Our newest product, Tablation, is an AI task management system built for development and content management. Tablation's initial use case was to streamline content management for our editorial teams, but we recognize that it is much more broadly applicable than that and can be used across sales, development, and much more. This is our first application that is geared toward enterprise, and we expect to launch the alpha version in Q4. We continue our efforts to optimize traffic levels, and we are expanding for the future.
Paul Edmondson: The ecosystem as a whole continues to evolve at a rapid pace with AI, and we intend to get ahead of what is next for creators and publishers. This quarter didn't come without challenges, but the energy and determination of our team and the groundwork that we have been building are coming together. With improvements in our monetization, InfoSentience, and Cutter Studios beginning to take off, and Tablation's launch on the horizon, we are excited to report back with continued updates on our initiatives and progress in our evolution as Paradium.AI. Thank you all for your continued interest in Paradium and for your time today. I will turn it back to the operator now to begin the Q&A session.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Ryan Meyers with Lake Street Capital. Please proceed with your question.
Ryan Meyers: Hey, guys. Thanks for taking my questions. First one for me, if we think about the sequential gross margin decline, can you just remind us what the factors of that were? How much of that was just fixed as it relates to lower traffic, that is where the lower margin came in, versus how much of that was just other items?
Geoffrey Wait: Hey, Ryan. Thanks for the question. A couple things that I do want to make mention of. As I said on the call, we did have two one-off items that impacted the quarter. One was the write-off of a tax credit asset that was disallowed, which we plan to appeal, and the other was some out-of-period compensation expenses that we recognized. The total impact of those was $2.3 million. Aside from that, we did see some margin compression with our declining ad revenue as well. It is a combination of both of those two factors that kind of leads us to the margin profile of Q3.
Ryan Meyers: Okay. Using that, if we think about what you guys have seen so far early on in Q4, have you seen margins rebound a little bit? Then maybe just also just an update on traffic, if you have seen that sort of stabilize and, coincidentally, what that margin impact will look like here in Q4.
Geoffrey Wait: I would expect the margin profile in Q4 to show a small bit of improvement, as we will have improved monetization in Q4 compared to Q3. But we have not seen any material recovery of traffic, and it continues to be a volatile and challenging referral traffic environment that we are facing here. We have continued headwinds, but we are aggressively scaling our new products, Cutter and InfoSentience, and our goal is to have both of those products contributing materially by the end of the year.
Ryan Meyers: Okay. Got it. Good to know. Thanks for taking my question.
Operator: Once again, if you would like to ask a question, please press star 1 on your telephone keypad. We have reached the end of the question and answer session. I would like to turn the floor back over to Paul Edmondson for closing comments.
Paul Edmondson: Thank you for joining our call today, and that concludes our call. Thank you.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
