Sabio Delivers Positive Adjusted EBITDA(1) for Q32023; Secures Record Upfront Commitments for 2024
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- Initiatives aimed at creating operational efficiencies and reducing costs drove positive Adjusted EBITDA1 for Q3/2023 and are expected to yield close to
US$4 millionin annualized cost savings.
- Booked over
US$10.0 millionupfront commitments for 2024 from major agencies, compared to ~US$4.0 millionin the prior year.
"Despite challenging comparables to last year that was boosted by the 2022 U.S. mid-term election cycle where Sabio's topline growth markedly outpaced our key peer group, our CTV/OTT business continues to remain strong," said
"We are pleased to have delivered positive Adjusted EBITDA1, despite pronounced declines in political advocacy spending over the quarter and category-specific events, including the auto-workers strike," commented
Third Quarter 2023 Financial Highlights
- Sabio delivered revenues of
US$8.8Min Q3/2023, down 26% from US$11.9Min Q3/2022. The decrease was primarily driven by pronounced declines in political and advocacy spending compared with the prior year's quarter. 78% of consolidated revenue came from repeat customers as the Company retained 90% of its top 20 customers.
- Connected TV/OTT sales as a category decreased by 8% to
US$6.15 million, compared to US$6.7 millionin the prior year's quarter. The decrease was driven by a decrease in political and advocacy spend compared to the same quarter last year, where the category benefited from the 2022 U.S. midterm election cycle. Excluding political and advocacy sales, CTV/OTT revenues were up 29% as we continued to see strength across several verticals, including CPG, Finance, Agriculture, Food & Beverage and Quick-service Restaurants.
- Connected TV/OTT sales accounted for 70% of the Company's sales mix, compared with 56% in the prior year's quarter.
- Mobile display revenues of
US$2.6 millionin Q3/2023, were down 49%, from US$5.0 millionin Q3/2022. Legacy mobile display campaigns continued to shift their spend with Sabio from mobile display to higher-margin mobile OTT streaming, recognized under our Connected TV/OTT revenue category. Additionally, category-specific events, such as the auto workers and SAG-AFTRA strikes, led certain mobile display customers to shift campaign launches to the fourth quarter of 2023.
- Gross Profit of
US$5.2 millionin Q3/2023, down from US$7.3 millionin Q3/2022. Gross Margin was 59% compared to 61% in Q2/2022. Competitive pricing pressures were countered through Sabio's expanded use of Vidillion CTV supply, our ability to continue to shift legacy mobile customers into CTV/OTT, and direct sales generated by our App Science business, which included a direct test on a recurring revenue contract with an agency representing a top 10 automotive brand.
- Positive Adjusted EBITDA1 of
US$0.7 millionin Q3/2023 compared to US$1.2 millionin Q3/2022. Declines in revenues were partially offset through cost and operational efficiency initiatives implemented during the second and third quarters of 2023.
- As of
September 30, 2023, the Company had cash of US$2.2 million, as compared to US$3.6 millionon September 30, 2022.
- As of
September 30, 2023, the Company had US$6.5 millionoutstanding under its credit facility with Avidbank.
1 See "Use of Non-IFRS Measures" below
Third Quarter 2023 Business Highlights
August 16, 2023("issue date"), the Company closed a non-brokered private placement financing of secured convertible notes (the "secured notes") in the aggregate principal of CAD$1,200,000and unsecured convertible notes (the "unsecured notes" and together with the "secured notes", the "notes") for aggregate gross proceeds of CAD$537,850for total gross proceeds of CAD$1,737,850. The notes will mature on August 16, 2025("maturity date"). The notes will be convertible in whole or in part, at the option of the holder, into common shares in the capital of the Company ("common shares") at a price of CAD$1.00("conversion price") per common share at any time before or on the maturity date. The unsecured notes bear interest at the rate of fourteen percent (14%) per annum payable as of the maturity date, except that: (i) the interest on the unsecured note issued to Mr. Aziz Rahimtoola– the Company's Chief Executive Officer - will be payable monthly; and (ii) the Company may prepay the unsecured note issued to Mr. Aziz Rahimtoolaany time after twelve months from the issue date. The secured notes bear interest at the rate of fourteen percent (14%) per annum payable semi-annually in arrears in cash or common shares at the option of the Company and are secured against all personal property and assets of the Company. The security interests are structurally subordinated to the first lien security interest of Avidbank. The secured notes can be prepaid in all or a part of the principal plus accrued and unpaid interest without penalty or bonus, except for the case of repayment within the twelve months following the issue date, the holder will be entitled to receive a repayment amount that is equal to the principal amount and interest calculated for a period of twelve months from the issue date.
- Vidillion continues to add new demand and supply sources, increasing on a sequential basis its demand-side integrations by 32% and supply-side integrations by 10% from Q2/2023.
Events Subsequent to
October 10, 2023, the Company entered into a strategic partnership with Mediahub U.S., an award-winning global media agency, across both companies' portfolio of brands. The relationship reinforces Mediahub's commitment and support of minority-owned media and a focus on diverse audience insights, leveraging Sabio's unique data sets so their clients can effectively reach growing US multicultural audiences.
October 20, 2023("grant date"), 2,500 share options of the Company were granted to certain officers and 85,000 share options of the Company were granted to certain employees, at an exercise price of CAD $0.40and 270,000 restricted stock units ("RSUs") of the Company were granted to certain independent directors of the Company at the grant-date fair-value of the Company's common shares of CAD $0.40. 65,000 of the share options will vest quarterly over thirty-six months, while the remaining 22,500 of the share options will vest quarterly over 1 year. The RSUs will vest on the first anniversary of the grant date.
- To manage the applicable requirements relating to foreign private issuer status under
United Statessecurities law, on October 23, 2023, the Company entered into a share exchange agreement with certain shareholders (the "participating shareholders") whereby the Company agreed to purchase from the participating shareholder for fair market value, on the terms and conditions contained in the Share Exchange Agreement, 1,271,127 exchanged shares. The Company satisfied the purchase price for the exchange shares by issuing to the participating shareholder an equivalent number of convertible restricted voting shares in the capital of the Company.
October 30, 2023, the Company disclosed that it booked over US$9.0 millionin endeavor to spend upfront commitments for 2024 from major agencies and was continuing to negotiate further potential commitments. Subsequent to the release, the Company has secured over $1.0 millionin additional endeavor to spend upfront commitments, for an aggregate of over $10 millionsecured already for 2024.
November 16, 2023, the Company and Avidbank agreed on an extension of up to six-months ( May 2024) for the bank's credit facility. The bank will assess for a longer-term renewal by February 21, 2024. The current extension maintains a US$500,000increase in credit available, as amended for during the third quarter of 2023, and provides an Accounts Receivable Line of Credit, with $7,500,000maximum loans outstanding, at an interest rate of the greater of the Wall Street Journal prime rate plus 1.00% to 4%, with a floor between 9.5% to 12.5%.
November 20, 2023, arrangements were agreed to between the Company and certain Canadian, arms-length parties, pursuant to which, and subject to final execution of definitive documentation, would effect the exercise of an aggregate of 2,804,702 share purchase warrants at an exercise price of CAD$0.21previously issued by the Company on January 11, 2021. These arrangements include the provision of promissory notes (the "Notes") between the Company and warrant holders. The principal amount outstanding under the 3 year-term would bear interest at the Prime Rate and mature on December 31, 2026, subject to the terms of the Note which provide, in certain limited circumstances, accommodations including potential forgiveness and/or share cancellation qualifications, should the exercise price exceed public market values at the date of maturity. The exercise is expected to benefit the Company's endeavours to comply with the applicable requirements relating to foreign private issuer status under United Statessecurities law.
1 See "Use of Non-IFRS Measures" below
Upcoming Changes in Issuer's Foreign Private Issuer Status:
Sabio's interim consolidated financial statements, including the notes thereto, and management's discussion and analysis "(MD&A") for the three months and nine months ended
Despite facing challenging comparatives with the 2022 U.S. election cycle, the Company continued its expansion into the Connected TV/OTT market by delivering 23% revenue growth in the category for the nine months ended
Moreover, during the nine months ended
While the macro headwinds impacting overall advertising spend were pronounced in the third quarter, Sabio was able to deliver Adjusted EBITDA1 profitability for the three-month period, aided through cost and operational initiatives to optimize our operating infrastructure. Management remains optimistic as we enter not only the strongest quarter of the year, but more significantly, the 2024 U.S. election cycle ahead. Category-specific events including the auto workers strike that impacted third quarter performance, came to positive resolutions subsequent to quarter-end. Ahead of 2024, Sabio has already secured over
1 See "Use of Non-IFRS Measures" below
The financial disclosures in this news release are subject to a number of cautionary statements, assumptions, contingencies and risks as set forth in this news release. The foregoing outlook and expectations constitute forward-looking statements and financial outlook and are qualified in their entirety by the "Forward-Looking Statements" cautionary statement below. Readers are cautioned that this release if for information purposes only and may not be appropriate for other purposes.
The Company will host an investor conference call for the third quarter ended
For higher quality, dial a number based on your current location.
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Webinar ID: 844 1873 5735
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Sabio Holdings Inc. (TSXV: SBIO) (OTCQX: SABOF) is one of the fastest-growing CTV/OTT technology and service providers in the high-growth ad-supported video-on-demand (AVOD) and FAST channel space. Its cloud-based CTV/OTT technologies provide publishers with distribution, monetization, and analytics while delivering ROI validation for brands and agencies. The Sabio Holdings portfolio is comprised of: Sabio — our trusted and transparent content monetization DSP;
For more information, visit: sabioholding.com
Use of Non-IFRS Measures
This press release makes reference to certain non-IFRS (International Financial Reporting Standards) measures including, but not limited to, Adjusted EBITDA. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other companies and should not be considered in isolation nor as a substitute for analysis of financial information reported under IFRS. Rather, these non-IFRS measures are provided as additional information to complement IFRS measures by providing a further understanding of operations from management's perspective.
Management uses adjusted earnings before interest, income taxes, depreciation, and amortization ("Adjusted EBITDA") as a key financial metric to evaluate Sabio's operating performance as a complement to results provided in accordance with IFRS. The term "Adjusted EBITDA", as defined by management, refers to net income (loss) before adjusting earnings for finance costs, income taxes, stock-based compensation, amortization, non-recurring items, and severance costs. Refer to reconciliation to Adjusted EBITDA under the "Selected Financials" section of this release and in the Company's MD&A for the three and nine months ended
Management believes that the items excluded from Adjusted EBITDA are not connected to and do not represent the operating performance of Sabio. Management believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by Sabio's main business activities prior to taking into consideration how those activities are financed and taxed as well as expenses related to stock-based compensation, depreciation, amortization, restructuring costs, other expense (income), and foreign exchange (gain) loss. Accordingly, management believes that this measure may also be useful to investors in enhancing their understanding of Sabio's operating performance. It is a key measure used by Sabio's management and board of directors to understand and evaluate Sabio's operating performance, to prepare annual budgets and to help develop operating plans.
This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, including but not limited to the Company's operations, growth and sales expectations and business plans, the Company's outlook for the fourth quarter of 2023 and full-year fiscal 2024, foreign private issuer status, and cash flow management, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events that may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including the effect of the macro-economic environment adversely impacting the Company's business more than anticipated, unexpected funding and cash flow management difficulties, and the other risk factors disclosed in the Company's filing statement and management's discussion and analysis (MD&A), which are publicly available on SEDAR Plus at www.sedarplus.ca. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Sabio Holdings Inc.
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SOURCE Sabio Holdings Inc
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