Hello, and welcome to the Genius Group Third Quarter 2022 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Flora Hewitt. Please go ahead.

Hi, everyone, and thank you for joining our third quarter 2022 earnings conference call. With me today is Roger Hamilton, Genius Group's Chief Executive Officer and Erez Simha, our Chief Financial Officer. Following their prepared remarks, we will open the call for questions. Our press release, including financial table was issued pre-market opening and is posted on our Investor Relations website located at ir.geniusgroup.net where this call is being simultaneously webcast and where versions of our prepared remarks and supplemental slides are available. During this call, we will present both IFRS and non-IFRS financial measures. Please note that all growth percentages refer to year-over-year change unless otherwise specified. Additionally, all statements made during this call relating to future results and events are forward-looking statements based on current expectations. These forward-looking statements include, but are not limited to, statements regarding trends and their potential impact on our industry and our business, our ecosystem, platform, content, and partner relationships, our strategy and priorities, and our business model, mission, opportunities, outlook, and long-term financial framework. Actual results and events could differ materially from projections due to a number of risks and uncertainties discussed in our press release, SEC filings, and supplemental materials. These forward-looking statements are not guarantees of future performance and plans and investors should not place undue reliance on them. We assume no obligation to update our forward-looking statements. With that, I'd like to turn it over to Roger.

Thank you, Flora, and good morning, everyone. First, I'd like to welcome two senior hires that we made recently. Our first appointment is Saranjit Sagar, as the Chief Executive Officer for GeniusU. Saranjit was the CEO and Director of upGrad EMEA, where she led strategic business development in Africa, the UAE and also U.K., and diversified the business by introducing new products and developed a team of 144 employees. She also has experienced in other high growth tech companies such as Grab, where she launched grab kitchens in multiple countries and Honestbee, where she managed global cross functional teams to drive product strategies and streamline operations. So we're thrilled to have Saranjit join our global team and lead GeniusU. She has the right experience to boost the growth of our Edtech platform and improve customer experience and increase efficiencies. Our second appointment is Dr. Tracy Lynn West as the President of our University and which is the University of Antelope Valley. Dr. West has more than 17-years of experience in the higher education field with the most recent role being the Campus President of Concorde Career College, where she led more than 600 students and over 85 faculty and staff members. During her tenure, she helped students realize and achieve their aspirations of becoming successful healthcare professionals. And prior to this, she worked as an associate professor of the DeVry University and an adjunct professor at the University of Redlands, where she taught graduate courses in the Master of Science in Organizational Leisure Programs. Dr. West is a transformational leader, who helps students harness their strengths and capabilities, allowing them to advance their full professional potential. Vast leadership experience will be extremely valuable to running the University of Antelope Valley in California. We will continue on the topic about subsidiary,…

Thank you, Roger, and good morning, everyone. We continue to demonstrate strong growth across our platform, expanding the number of students, as well as the number of partners and this is reflected in our financials for the nine months ended September 30, 2022. For the nine months ended September 2022, Genius Group revenues on a standalone basis grew by 16.68% year-over-year to $14.42 million. This internal growth was driven by 24% increase in our digital education revenue and a 46% increase in campus revenue. The strong growth in campus revenue was due to an increased demand as a result of gradual lifting of COVID-19 restrictions. Our revenue on a pro forma basis reached $24.67 million in year-to-date September ‘22. The group gross margin had increased to 33.96% in year-to-date September ‘22. Our group margin has increased due to improved results from our campus business, which had a higher gross margin. To-date, we have been maintaining a balance between growth and a positive gross margin in which we are not being overly aggressive in our marketing spend and this is reflected in our current gross margin. Genius Group pro forma gross margin is 47.33% by owning the majority of our curriculum and courses, because all companies and acquisitions we are focused on maintaining low cost of content and high gross margin. The cost of revenue that we do incur is mainly our customer acquisition costs and our faculty costs. In the future, we will continue to focus on further improving our gross margins to synergies and higher efficiency. The Group had net operating expenses of $10.85 million and $17.5 million on a pro forma basis. Approximately 60% of our operating expenses is our start up with the remaining in development, marketing, rental and general expenses. The increase in our operating expenses…

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Hunter Diamond from Diamond Equity. Your line is now live.

Hi, everyone. Congratulations on the results. I wanted to get a little color on how to think about the conversion rate of the number of students, the number of paying students and how -- ways the company is exploring to increase that rate?

Hi, Brad. Sorry, hi Hunter. Good to have you on the call. And I would say that our biggest areas of focus at the moment is that first of all, when we are bringing people onto the platform and they are stepping into one of our campuses. We are doing a really good job right now of being able to take them through a segmentation process, where we know exactly what stage of their education pathway they run or they a student of the university student, exactly if they have a business, what size business it is as well. And one of the big things has happened over the last quarter is that we have become much better and then engaging each of those different avatars or our different student base in a way that then is bring them into additional programs as we go. Plus on top of that, the ways that we are developing the pathways for those students is part of what I was mentioning earlier in terms of the Genius formula. So I'll give you an example of that, when you actually look at the number of students that are applying at the university, for example, and the cost of acquisition of these students given that the very first step in terms of what they can actually purchase is the actual university degree itself, which is obviously extremely expensive and a very big life decision. What we're doing is actually now applying the same pathways that we're already finding work very, very well within our adult learning campuses, where the very first thing they're doing after they've actually had a number of free workshops is going to be something which is at an entry level of more like a $300 workshop or like a $1,500 membership…

No, it makes perfect sense. Thank you for the additional color. And I guess just going on that point, how do you kind of view marketing spend going forward, high level? I know a lot of the growth has been organic. Do you think investors should consider the company would use a lot of paid marketing, try to get paying students or non-paying students on the platform? Or do you view it, kind of, more word-of-mouth as it's been historical going forward?

Yes, it's a very good point, because we're actually seeing at the moment just how challenging it can be for any, kind of, company with a network effect to survive on marketing alone, right? Or actually to be dependent on the ads that are being run. And I think that a lot of the companies in the industry that are relying on digital advertising or paid ads are seeing the challenges that are happening not only in terms of the actual cost of acquisition of a customer becoming much higher, as customers have more and more choice, but also obviously the platforms themselves coming under scrutiny in terms of how they're tracking data and how they're managing privacy as well. So we've seen many companies that are education companies that before relied very much on Facebook ads, Google ads, YouTube ads, that simply can't do that anymore. They come to our model and they see that because we have such a high amount of number one word-of-mouth. And number two, pathways in which people are able to come and join us without that traditional ad spend, so two big areas. One is when we bring the new partner on board they're already coming with the trusted community. That entire trusted community comes and joins our platform. And we don't have to pay anything for them. In fact, we get paid because now we have a partner on board as well. So that is a really powerful way for us to actually bring trusted communities into our platform without having to rely on advertising at all. And the second thing that happens, which is a very big part of our personalization, is the assessments we do. If I see an ad for a course is very unlikely, I'm going to go…

No, that makes perfect sense, in terms of growth for the company. That's all I have in terms of questions. Again congratulations to the whole team on those strong results.

Thanks very much for that, Hunter. And if I could just add one extra thing in before we come to any other questions, it's the rationale of even the purchase, the most recent purchase of Revealed Films. Revealed Films is a perfect example of an education company that is reaching 100s of 1,000s in fact, they've got like well over a million on their database of students that are wanting to learn through documentaries, through high quality production, more than simply basically just like learning from a teacher or a lecturer in front of a hall. And the power of that is that again the shareability and also the cost of acquisition that they have for every student they've been working on for many years and they're really perfected. They've done a really good job of that. So there's a whole series of learning where obviously the two things I just mentioned, which was assessments or partners coming on board with their students, when you bring on documentaries with the star power that documentaries have and all those students come on board as well, that gives us another pathway of actually attracting students in that are coming for the right reason in exactly the same way that many of the YouTubers that we see out there. The influencers have got much, much bigger audiences that they're teaching to than even the best lecturer at university. But they obviously are part of a curriculum program, the way that we can develop a curriculum program. So there is a real, like power in the fact that by bringing onboard documentary company and then being able to actually link that as a front end that then leads into people then being able to then join the community and then go on to their additional learning at whatever level it happens to be, can actually be building through the documentary series as well. So I just want to share that as an additional way that we're thinking about where students actually are going, so that we're not having to chase students, but more they're the ones that are doing up to join us. I'll leave -- I'll turn it back to the operator for any other questions.

Thank you. Our next question is coming from Brad Sorensen from Zacks. Your line is now live.

Yes, thank you. Thanks for taking the questions, and great results and congratulations. And actually, it's just on what you were just talking about, it’s like you could just give some thoughts on what's your thinking about acquisitions going forward, that's obviously been a big part of your strategy in the past year? Are you -- is there a hole that you're looking to fill? Or are aggressively looking at more acquisitions? Or are you more concentrated on integrating the existing acquisitions at this point?

Yes, great question, because absolutely at the time of the IPO, we had a kind of a two-pronged strategy, which was obviously our organic growth and then the growth through acquisitions. And we've always had our internal targets of how we grow split between those two areas. Obviously, the markets have changed now and so we're in a position right now where it is a biased market when it comes to acquisitions and that there are universities out there, schools out there, that have certification programs already that are up for sale. There is the additional complexity at the moment as well, which is that because of the way the markets are, where things might be in six months, 12-months and what our cash requirements might be in terms of acquisitions. I think that will change as well. So we’re taking a cautious approach, our very, very first focus given that the market is moving this way, is to make sure that we are positive EBITDA and that we are not overstretching ourselves plus we are proving out the model of the acquisitions where we are creating some really, really great synergies with the current company that we have as well. So yes, we are still going to be continuing on the part of acquisitions. However, we are already seeing, which is good news, a whole way of growing that was not part of our main focus before, which was the number of partners that are now gravitating to us, who really want to use our platform and can be generating significant revenues without all the cost and complexities of acquisitions as well, where they actually are seeing us as their solution to how they can create a global classroom. So this coming year as we start providing guidance by…

Alright. Thank you. That's very helpful. And, yes, more strategic and, yes the market definitely is coming around to that. So thank you very much.

Thanks very much, Brad.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

I have no further comments on my side, Flora or Erez.

Yes, we just wanted to thank everyone for joining the call today.

That's great. Same from my side as well. Thanks very much everyone. Really appreciate it.

Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Thank you, Kevin.

Thank you, sir.

Thanks.