Shareholder letter
Page 1
Pivotree Inc. The Frictionless Commerce Company To our shareholders, employees and customers - Q2 2026 Thank you to the Pivoters around the world for another quarter of disciplined execution during a deliberate transition year. Our first-half objective was to build AI-enabled capability across our service catalog, put it in front of clients through demos and proofs of concept, and prove it in production. Q2 results reflect exactly that: revenue and bookings have not turned yet but the underlying work of converting our catalog and our people to an AI- augmented delivery model reached a number of important milestones. The quarter also delivered our strongest qualified pipeline build since Q2 2024, a leading indicator we believe positions us for improved bookings conversion in the second half. We continue to maintain strong financial controls while we invest in our transformation, adding another $600k in cash to the balance sheet taking us to $13 million, the highest we have been since Q1 2023. Closer look at Q2 2026 results MIPS revenue of $3.5 million was in line with recent quarters and grew 1.2% on a first-half basis. The revenue mix inside MIPS is changing as more of our AI augmented PS are starting to convert into AI assisted managed services and we are seeing existing client uptake on these new service capabilities. TCV Bookings1 of $12.5 million was a modest bounce back over Q1 reported results, benefitting from the deals that slipped from Q1 into Q2 as I highlighted in my last letter. We had our strongest quarter in almost 2 years in the qualified pipeline added in Q2. A single quarter of strong pipeline adds is too early to call a trend so the focus will remain on building more pipeline and converting it. Cash flow from operating activities was $1.2 million, and we ended the quarter with $13.0 million in cash and an $18.7 million working capital surplus, with no long-term debt — our balance sheet remains a source of strength as we invest through this transition. Operating environment Economic uncertainty, tariff volatility, and cautious enterprise IT spending continued to lengthen sales cycles and push out new-logo decisions, particularly in Professional Services. We also see a real spectrum of aggressive AI forward clients demanding more use of AI with expected cost and timing benefits compared to the other extreme of clients requiring a very slow and measured approach to the use of AI. What is generally common to all of our clients is they are less interested in the technology discussion and more interested in the impact or outcomes - “better, cheaper, faster resonates but “look at what AI can do” does not. AI is now embedded in a significant portion of our delivery methodology but frankly isn’t always the reason the client chooses Pivotree yet. Strategic progress: RI + AI The more important story this quarter is progress on our 2026 thesis: Real Intelligence — our people's decades of domain expertise — amplified by AI. We have converted the majority of our service catalog to AI-enabled delivery, with eight new or transformed AI-enabled services launched so far this year and only a handful of existing offerings left to convert; we expect that by Q4, everything we sell will carry an AI-enabled component or be completely deliverable with AI. Seven AI-built solutions originated outside our product team — spanning catalog
Page 2
enrichment, code generation, and business-rule automation —are now live in customer deployments, evidence that force multiplication is spreading across delivery rather than sitting in a single team. On the people side, 100% of Pivoters have completed basic AI training and 63% are now using AI daily in their roles, ahead of our internal Q2 milestone; our Q3 focus shifts to building the next tier of advanced practitioners who can push AI-enabled delivery into more complex, differentiated work. We have aggressively pursued capability building which is yielding differentiated solutions in our existing service space. We have been proving these capabilities to ourselves and our clients with well documented savings and shrinking delivery timelines. The challenge now is broadening our reach in the market and attracting new customers with continued efforts to improve and advance our go to market engine. Summary We spent the first half of 2026 building capability, proving it in front of clients, and converting the catalog. That sets up a different kind of second half, though we remain intentionally cautious about the pace of conversion — pipeline growth is encouraging, but signature timing on larger deals remains the dominant variable in any given quarter, and we do not want to overstate a strong quarter of pipeline build is a good leading indicator but the conversion to bookings is the real leading indicator for revenue growth. Our balance sheet, our client relationships, and the progress our people have made adopting AI give us real confidence in the direction we are headed, even as we stay intellectually honest about the work still ahead. 1. EBITDA, Adjusted EBITDA and Total Contract Value (TCV) Bookings are Non-IFRS measures. See “Non-IFRS Measures” at the end of the letter. Bill Di Nardo Chief Executive Officer Forward-looking Information This letter contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information may relate to the Company's future financial outlook and anticipated events or results and may include information regarding the Company's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, bookings, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which the Company operates is forward- looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects”, “budgets”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projects”, “prospects”, “strategy”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will” occur. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. The forward-looking information contained herein includes, but is not limited to, the proposed expansion of the Company's market position, potential acquisitions, the conversion of sales pipelines to confirmed bookings, and the achievement and maintenance of profitability metrics, such as Gross Profit, Gross Margin, EBITDA, Adjusted EBITDA, Net Income, and Comprehensive Income.
Page 3
Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable as of the date of this letter, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to: our ability to execute on our growth strategies; our ability to create and protect unique intellectual property and enter new markets; the impact of changing conditions in the global e-commerce market, including increasing competition and changes in approach in the e-commerce software as a service solution or infrastructure market; changes in the expectations, financial condition and demand of our target markets; changes in the expectations, competitive positioning and demand amongst major cloud providers; changes or increases in the difficulty of avoiding cyber or data security threats, or compliance with data security regulators that may impact our business; our ability to continue to execute accretive acquisitions; our ability to maintain and build our reputation with clients; our ability to achieve confirmed bookings from our sales pipeline and the risk that customers in our sales pipeline move their business to one of our competitors; fluctuations in currency exchange rates and volatility in financial markets; developments and changes in applicable laws and regulations; and such other factors discussed in greater detail under the “Risk Factors” section of the prospectus of the Company dated October 23, 2020 (the “Prospectus”). If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in forward-looking information. The opinions, estimates or assumptions referred to above and the risk factors described in the “Risk Factors” section of the Prospectus should be considered carefully. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to the Company or that the Company presently believes is not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as of the date made. Forward-looking information contained in this letter represents the Company's expectations as of the date of this letter (or as of the date they are otherwise stated to be made), and are subject to change after such date. The Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. Non-IFRS Measures and Reconciliation of Non-IFRS Measures This letter makes reference to certain non-IFRS measures including key performance indicators used by management and typically used by our competitors in the technology industry. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures and technology metrics are used to provide investors with supplemental measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including technology industry metrics, in the evaluation of companies in the technology industry. Management also uses non-IFRS measures and technology industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation. The non-IFRS measures and technology industry metrics referred to in this letter include “Total Contract Value Booking”, “EBITDA” and “Adjusted EBITDA”. Definitions of these terms, as well as reconciliation of these items to the nearest IFRS measure (where applicable), are located in Pivotree's MD&A. Pivotree, 6300 Northam Drive, Mississauga, ON L4V 1H7, Canada