Performance Marketing Specialist Remains Well
Positioned for Growth and Profitability at Scale, With a Unique
Balance of Brand Direct and Marketplace Solutions Across Industry
Verticals
- DMS Reaffirms Financial Outlook for Fiscal 2020 and Fiscal
2021
- DMS Pay-for-Performance, Diversified Business Model Proving
Resilient in Current Environment
- Robust Demand Driven by Digital Transformation Results in
Continued Momentum and a Strong Finish in the Second Fiscal
Quarter
- Previously Announced Transaction Will Introduce DMS as a
Publicly Listed Company to Trade on the NYSE
- Leo Holdings and DMS Merger Vote Date Scheduled for July 14th,
with Closing Expected Shortly Thereafter
Leo Holdings Corp. (NYSE: LHC), a Cayman Islands exempted
Special Purpose Acquisition Company (“Leo”), and Digital Media
Solutions LLC (“DMS”), a leading provider of technology and digital
performance marketing solutions leveraging innovative,
performance-driven brand and marketplace solutions to connect
consumers and advertisers, jointly announced today the
reaffirmation of the 2020 and 2021 financial outlook for DMS. As
previously announced on April 23, 2020, Leo and DMS entered into a
definitive business combination agreement (the “Business
Combination Agreement”).
“Our business is experiencing powerful tailwinds as the secular
shift of advertising dollars from traditional offline and broadcast
channels to online digital channels continues to gain momentum,”
said Joe Marinucci, CEO of DMS. “Our unique combination of
innovative brand direct solutions and leading marketplace offerings
are contributing to strong business performance in the second
fiscal quarter, including outsized growth in the insurance
vertical. Our reaffirmed Fiscal 2020 and Fiscal 2021 financial
outlook reflects our confidence in our ability to grow profitably
at scale.”
DMS Company Highlights
DMS leverages proprietary technology solutions, significant
proprietary media distribution and data-driven processes to help
large brands steadily acquire more customers. DMS helps clients
de-risk marketing spend across digital channels through its
pay-for-performance model, meaning DMS is paid to deliver customer
conversions rather than simply impressions. As a result, brands are
assured to make money on each dollar spent on the DMS platform and
are able to achieve a level of predictability and scale that
traditional ad campaigns cannot match.
DMS delivers results using a diversified portfolio of owned and
operated vertical marketplaces, which match consumers with relevant
offers within each vertical, as well as full-funnel customer
acquisition programs where DMS targets, attracts and converts
customers on a brand’s behalf. DMS primarily works with brands with
large-scale marketing needs to engage and acquire customers,
serving a variety of verticals such as Insurance, Consumer Finance,
Education, Health & Wellness, Home Services, eCommerce, Retail,
Direct-to-Consumer (DTC) Subscription and more. With a vertical
agnostic approach, DMS addresses a much larger addressable market
than most of its comparable publicly traded peers, while limiting
its exposure to verticals impacted by unpredictable market
shifts.
DMS has developed significant barriers to entry including its
proprietary, privacy-compliant database of over 150 million
consumer profiles built via over $1 billion of ad spend on the DMS
platform, and its white label software tools that embed DMS’
position inside marketing departments with integration of data and
capabilities within existing CRM and martech systems. DMS has
consistently proven its ability to produce results and meet
marketing KPIs for large brands, as evidenced by DMS’ 95% customer
retention rate.
Recent DMS Developments
The COVID-19 crisis has resulted in unprecedented challenges and
broader macroeconomic volatility. While DMS saw some modest
disruption in the first fiscal quarter, DMS’ sector agnostic model,
focus on brands within the early phases of digital transformation,
and limited exposure to the most impacted verticals, like
hospitality and travel, have resulted in the resumption of growth
trajectory in line with DMS’ expectation in the second fiscal
quarter. Concurrently, the current environment has added pressure
for marketers to spend their dollars as effectively as possible,
driving the need for brands to quickly pivot to digital channels in
order to optimize marketing spend and performance to match a rapid
shift in audience preferences. For DMS, this trend is being
demonstrated particularly in the insurance vertical, where DMS is
seeing outpaced growth both inside of its brand direct solutions as
well as marketplace solutions, contributing to a strong close in
the second fiscal quarter.
As previously announced, Leo and DMS entered into the Business
Combination Agreement on April 23, 2020. Leo and DMS have scheduled
a special meeting to approve the transactions contemplated by the
Business Combination Agreement (the “Business Combination”), to be
held on July 14, 2020, as described in the definitive proxy
statement/prospectus, dated June 24, 2020 (the “Proxy Statement”)
of Leo Holdings Corp. The parties expect to close the Business
Combination on or about July 15, 2020.
“We look forward to the benefits that a public company profile
will bring towards accelerating our momentum in a market that has
arguably reached the inflection point where digital has overtaken
traditional marketing mediums,” added Marinucci. “We believe our
industry leading technology assets, our diversified blue-chip
customer base, and our strong financial model offers a unique value
proposition and opportunity for investors to benefit from a balance
of both services and share of revenues across the entire realm of
digital marketing services. Our confidence in our runway for growth
is further bolstered by recent conversations with customers related
to our current marketing solutions stack along with our ability to
further execute with a proven M&A playbook in a sector that is
ripe for consolidation.”
Financial Outlook
Based on these strong trends, DMS and Leo are reaffirming DMS’
financial outlook as follows:
Revenue
EBITDA
Free Cash Flow
Fiscal 2020
$340 million
$57 million
$50 million
Fiscal 2021
$425 million
$75 million
$68 million
The Transaction
The total enterprise value of the Business Combination of $757
million represents a multiple of 10.1x fiscal year 2021 expected
adjusted EBITDA. Leo believes the valuation at consummation of the
transaction represents a meaningful discount to relevant public
comparable multiples. Additionally, Leo has secured $100 million in
commitments from a number of institutional investors to purchase
common equity in the post-combination company at $10.00 per share
in support of the Business Combination. Once the Business
Combination closes, DMS is expected to trade on the NYSE under
ticker “DMS”.
The management team owns 54% of DMS with private equity funds
managed by Clairvest Group, Inc. (TSX: CVG) owning the remaining
46%. The sellers are expected to retain a significant continuing
equity interest in the post-business combination company
representing over 40% of the economic interest in the company on a
combined basis, and over 65% of the voting interest. This
percentage is subject to change depending on the number of Class A
ordinary shares of Leo that are redeemed by Leo’s public
shareholders.
Completion of the proposed transaction is subject to
satisfaction of the closing conditions included in the transaction
agreement and approval of the transaction by Leo’s shareholders.
Accordingly, there can be no assurance that the proposed
transaction will be consummated.
About Digital Media Solutions LLC
Digital Media Solutions, LLC (DMS) is a leading provider of
technology and digital performance marketing solutions leveraging
innovative, performance-driven brand direct and marketplace
solutions to connect consumers and advertisers. DMS deploys a
robust database of consumer intelligence and leverages massive
proprietary media distribution to provide customer acquisition
campaigns that grow businesses. Continuing to experience explosive
year-over-year growth, DMS has been continuously recognized on the
Inc. 5000 list, securing its sixth consecutive ranking in 2019, and
the Entrepreneur magazine 360 list. Named one of America’s “Best
Places to Work” by Inc. magazine and awarded the Excellence in Lead
Generation Award by the LeadsCouncil, DMS brings together some of
the industry’s most knowledgeable people, efficient processes and
sophisticated technology across the digital marketing spectrum.
About Leo Holdings Corp.
Leo is a blank check company formed for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more
businesses.
Important Information About the Business Combination and Where
to Find It
In connection with the Business Combination, Leo has filed with
the U.S. Securities and Exchange Commission’s (“SEC”) a final
prospectus and definitive proxy statement. Leo will mail the
definitive proxy statement/prospectus and other relevant documents
to its shareholders. This press release is not a substitute for the
definitive proxy statement/prospectus or any other document that
Leo will send to its shareholders in connection with the Business
Combination. Investors and security holders of Leo are advised to
read the definitive proxy statement/prospectus in connection with
Leo’s solicitation of proxies for its extraordinary general meeting
of shareholders to be held to approve the Business Combination (and
related matters) because the definitive proxy statement/prospectus
contains important information about the Business Combination and
the parties to the Business Combination. Shareholders are also be
able to obtain copies of the definitive proxy statement/prospectus,
without charge, at the SEC’s website at www.sec.gov or by directing
a request to: Leo Holdings Corp., 21 Grosvenor Place, London SW1X
7HF, United Kingdom.
Participants in the Solicitation
Leo and its directors, executive officers, other members of
management, and employees, under SEC rules, may be deemed to be
participants in the solicitation of proxies of Leo’s shareholders
in connection with the Business Combination. Investors and security
holders may obtain more detailed information regarding the names
and interests in the Business Combination of Leo’s directors and
officers in Leo’s filings with the SEC, including Leo’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2019,
which was filed with the SEC on March 13, 2020, as well as the
definitive proxy statement of Leo for the Business Combination.
Shareholders can obtain copies of Leo’s filings with the SEC,
without charge, at the SEC’s website at www.sec.gov.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Leo’s and DMS’ actual
results may differ from their expectations, estimates and
projections and consequently, you should not rely on these forward
looking statements as predictions of future events. Words such as
“expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Leo’s and DMS’ expectations with respect to future
performance and anticipated financial impacts of the proposed
Business Combination, the satisfaction of the closing conditions to
the Business Combination and the anticipated timing of the
completion of the Business Combination. These forward-looking
statements involve significant risks and uncertainties that could
cause the actual results to differ materially from the expected
results. Most of these factors are outside Leo’s and DMS’ control
and are difficult to predict. Factors that may cause such
differences include, but are not limited to: (1) the occurrence of
any event, change or other circumstances that could give rise to
the termination of the Business Combination Agreement; (2) the
outcome of any legal proceedings that may be instituted against Leo
and DMS following the announcement of the Business Combination
Agreement and the transactions contemplated therein; (3) the
inability to complete the proposed Business Combination, including
due to failure to obtain approval of the shareholders of Leo or
other conditions to closing in the Business Combination Agreement;
(4) the occurrence of any event, change or other circumstance that
could give rise to the termination of the Business Combination
Agreement or could otherwise cause the Business Combination to fail
to close; (5) the amount of redemption requests made by Leo’s
shareholders; (6) the inability to obtain or maintain the listing
of the post-business combination company’s common stock on the New
York Stock Exchange following the proposed Business Combination;
(7) the risk that the proposed Business Combination disrupts
current plans and operations as a result of the announcement and
consummation of the proposed Business Combination; (8) the ability
to recognize the anticipated benefits of the proposed Business
Combination, which may be affected by, among other things,
competition, the ability of the combined company to grow and manage
growth profitably and retain its key employees; (9) costs related
to the proposed Business Combination; (10) changes in applicable
laws or regulations; (11) the possibility that DMS or the combined
company may be adversely affected by other economic, business,
and/or competitive factors; and (12) other risks and uncertainties
indicated from time to time in the proxy statement relating to the
proposed Business Combination, including those under “Risk Factors”
in the Registration Statement, and in Leo’s other filings with the
SEC. Some of these risks and uncertainties may in the future be
amplified by the COVID-19 outbreak and there may be additional
risks that we consider immaterial or which are unknown. It is not
possible to predict or identify all such risks. Leo cautions that
the foregoing list of factors is not exclusive. Leo cautions
readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Leo does not
undertake or accept any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in its expectations or any change in events,
conditions or circumstances on which any such statement is
based.
No Offer or Solicitation
This press release is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy any securities or the solicitation of
any vote in any jurisdiction pursuant to the Business Combination
or otherwise, nor shall there be any sale, issuance or transfer or
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and otherwise in accordance with
applicable law.
Non-GAAP Financial Measure and Related Information
This press release references EBITDA and Adjusted EBITDA, which
are financial measures that are not prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”). These
non-GAAP financial measures do not have a standardized meaning, and
the definition of EBITDA or Adjusted EBITDA used by DMS may be
different from other, similarly named non-GAAP measures used by
others operating in DMS’ industry. In addition, such financial
information is unaudited and/or does not conform to SEC Regulation
S-X and as a result such information may be presented differently
in future filings by the post-business combination company with the
SEC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200625005233/en/
Investor Sherif Guirgis Leo
Holdings Corp. (310) 800-1005 guirgis@lioncapital.com
Edward Parker (646) 677-1864 edward.parker@icrinc.com
Media Jack Murphy (646)
677-1834 jack.murphy@icrinc.com
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