- Revenues of US$8.0 million in
Q2-2023, up 11% compared to US$7.2
million in Q2-2022
- Connected TV/OTT sales as a category increased by 57% to
US$5.0 million, compared to
US$3.2 million in the prior year's
quarter
- Gross Margin increased to 60% Q2-2023 from 59% in
Q2-2022
- Continues to gain market share as Connected TV/OTT revenues
continue to outpace key competitors and industry averages
TORONTO, Aug. 21,
2023 /CNW/ -- Sabio Holdings Inc. (TSXV:
SBIO)(OTCQX: SABOF) (the "Company" or "Sabio"), a
leading provider of connected TV ("CTV")/over-the-top ("OTT")
advertising platforms validated by performance, is pleased to
announce its unaudited financial results for the second quarter
ended June 30, 2023. Unless
otherwise indicated, all amounts are expressed in U.S.
dollars.
"We are pleased to have once again delivered double-digit
revenue growth in a challenging economic environment, led by a 57%
increase in our CTV/OTT business," said Aziz Rahimtoola, Chief Executive Officer.
"Supported by our highly differentiated, end-to-end CTV/OTT
technology stack, under which the majority of Sabio's CTV
impressions are delivered through direct supply, we continue to
gain market share and outpace industry averages1 in
the category."
Sajid Premji, Chief Financial
Officer, added, "In a testament to the stability and scalability of
our sales model, 74% of consolidated revenues in the first half of
2023 were from repeat customers, as we continue to attract and
retain customers at high rates, resulting in larger average deal
sizes and acquisition-cost efficiencies. Moreover, management's
ongoing focus on reducing costs and increasing efficiencies has
offset continued investments in our technological capabilities,
including a new programmatic offering anticipated to launch in the
first half of 2024. Our ability to maintain strong gross margins,
combined with the stability in our cost structure, positions Sabio
well for Adjusted EBITDA (as defined below) gains in the second
half of the year and into 2024. Subsequent to quarter end, we
strengthened our cash position with the closure of a non-brokered
CAD$1.7 million convertible note
offering. Meanwhile, the renewal of our loan facility with
Avidbank continues to progress well. Amendments under an executed
term sheet include a potential US$3
million increase to the facility, subject to approval from
the bank's loan committee."
1 eMarketer (June
2023)
Second Quarter 2023 Financial Highlights
- Sabio delivered revenues of US$8.0M in Q2-2023, up 11% from US$7.2M in Q2-2022.
- CTV/OTT sales as a category increased by 57% to US$5.0 million, compared to US$3.2 million in the prior year's quarter.
CTV/OTT sales accounted for 62% of the Company's sales mix,
compared with 44% in the prior year's quarter.
- Mobile display revenues of US$2.9million in Q2-2023, down 24%, from
US$3.9 million in Q2-2022, as our
legacy mobile display campaigns continued to shift their spend with
Sabio from mobile display to higher-margin mobile OTT streaming,
which is recognized under the Company's CTV/OTT revenue
category.
- Gross Profit of US$4.8 million in
Q2-2023, up from US$4.3 million in
Q2-2022. Gross Margin improved on a year-over-year basis, from 59%
in Q2-2022 to 60% in the completed quarter. The increase is
attributable to several efficiency and direct sales improvements
within the CTV/OTT channel as well as our App Science business.
- Adjusted EBITDA1 loss of US$1.7 million in Q2-2023 compared to a loss of
US$1.4 million in Q2-2022. The loss
was primarily driven by overhead added during and subsequent to the
second quarter of 2022, which included the continued expansion of
our sales and marketing apparatus in the prior year and costs
associated with transitioning our workforce back to the office. On
a sequential basis, second quarter operating expenses, normalized
for commissions, were flat in comparison to the first quarter of
2023 as cost efficiencies implemented by management offset
incremental headcount additions to our salesforce to position
ourselves for the 2024 U.S. elections.
- As of June 30, 2023, the Company
had cash of US$1.7 million, as
compared to US$2.4 million on
June 30, 2022.
- As of June 2023, the Company had
US$6 million outstanding under its
credit facility with Avidbank.
1 See "Use of Non-IFRS Measures" below
Second Quarter 2023 Business Highlights
- App Science worked with an agency representing a top global
automotive brand to integrate App Science with 18 new CTV/OTT
platforms. Management believes these integrations will not only
solidify recurring revenues from the partner agency but will
enhance App Science's overall value proposition to source
recurring, third-party direct revenues.
- Vidillion continues to add new demand and supply sources,
increasing on a sequential basis, its demand-side integrations by
39% and supply-side integrations by 19% from the first
quarter.
- On April 4, 2023, 330,000 share
options of the Company were granted to certain directors and
employees of the Company at an exercise price of CAD $0.99 and 353,793 restricted stock units ("RSUs")
of the Company were granted to certain officers and employees of
the Company at the grant-date fair-value of the Company's common
shares of CAD $0.99. The options will
vest quarterly from the grant date over a 3-year vesting period.
The RSUs will vest over three years with 1/3 vesting at the
one-year anniversary of the grant and quarterly vesting over the
next two years.
Events Subsequent to June 30,
2023:
- On August 16, 2023, the Company
closed a non-brokered private placement financing of secured
convertible notes (the "Secured Notes") in the aggregate principal
of CAD$1,200,000 and unsecured
convertible notes (the "Unsecured Notes" and together with the
Secured Notes, the "Notes") for aggregate gross proceeds of
CAD$537,850 for total gross proceeds
of CAD$1,737,850. The Notes will
mature on August 16, 2025. 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 Rahimtoola any time after twelve months
from the issuance. 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 Secured Notes can be prepaid in all or a part of the principal
plus accrued and unpaid interest without penalty or bonus.
1 See "Use of Non-IFRS Measures"
below
Sabio's interim consolidated financial statements, including
the notes thereto, and management's discussion and analysis
(MD&A) for the three months ended June
30, 2023, and June 30, 2022,
can be found under Sabio's profile on SEDAR
at www.sedar.com
Outlook
Despite what is traditionally the slowest half of the calendar
year due to the seasonal trends effecting the advertising industry,
the Company continued its expansion into the Connected TV/OTT
market by delivering 59% revenue growth in the category for the
six-months ended as we continue to substantially outpace the market
and take market share. Moreover, in the first half of the year,
approximately 74% of consolidated revenues came from repeat
customers as Sabio continues to attract and retain customers at
high rates, bringing more stability and larger deal sizes to its
revenue model and gaining cost efficiencies. Additionally,
our customer mix continues to become less transitory and more
predictable. Approximately 26% of the revenues in the first half
were generated from top logos that did not spend with Sabio
previously, successfully replacing Covid-19 and 2022 U.S.
election-related spending that dissipated in 2023.
While economic uncertainty, driven by macro interest rate
policies, continues to impact advertising budgets, management
remains cautiously optimistic as we enter the second half of the
year. The Company expects political and advocacy spending to
accelerate in the leadup to the 2024 U.S. elections. Further,
as a result of the Company's ongoing focus on cost optimization and
efficiencies, OPEX spend, normalized for sales commissions,
remained flat from previous quarters, with further efficiency gains
expected in the quarters ahead. Sabio's ability to maintain
strong gross margins, combined with the stability in our cost
structure, positions Sabio well for Adjusted EBITDA gains in the
second half of the year and into 2024. The majority of
Sabio's CTV impressions delivered are through direct supply gained
via the acquisition of Vidillion, making Sabio one of the highest
direct supply options in the CTV/OTT space, and supporting strong
gross margins.
Sabio continues to invest in technology to further enhance our
end-to-end CTV/OTT technology stack. Sabio expects to launch a new
programmatic CTV/OTT offering in the first half of 2024 which is
anticipated to drive further incremental revenue gains in 2024.
To the extent the Company finds suitable and attractive
acquisition candidates that are complementary to its long-term
objectives, Sabio may also pursue further inorganic growth through
strategic business acquisitions.
1 See "Use of Non-IFRS Measures"
below
Selected Financials
The tables below set out selected financial information relating
to Sabio's. and should be read in conjunction with Sabio's
condensed interim consolidated financial statements, including the
notes thereto, and MD&A for the three months ended June 30, 2023, and June
30, 2022, copies of which can be found under Sabio's profile
on SEDAR+ at www.sedarplus.ca.
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.
Conference Call:
The Company will host an investor conference call for the second
quarter ended June 30, 2023, at
9:00 a.m. ET on August 22, 2023. The webinar details are
below:
Date: August 22, 2023
Time: 9:00 a.m. ET (6:00 a.m. PT)
Webinar Registration: https://bit.ly/3YneYmH
Or
dial:
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dial a number based on your current location.
Canada:
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0387
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Please connect 5 minutes prior to the conference call to ensure
time for any software download that may be required.
About Sabio
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; App Science™ — our cutting edge, non-panel based,
real-time measurement and attribution SAAS platform; and Vidillion
— our cloud-based ad-insertion, and content distribution and
management platform.
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 months ended June 30, 2023 and June 30,
2022, copies of which can be found under Sabio Holdings
Inc.'s profile on SEDAR Plus
at www.sedarplus.ca
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.
Forward-Looking Statements
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
fiscal 2023 and 2024 and cash flow management, including the final
loan approval of its executed term sheet with Avidbank , 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.
App Science is a trademark or registered trademark of Sabio Inc.
in the United States, Canada, and other countries.
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SOURCE Sabio Holdings Inc.