Sabio Secures 2024 Revenue Commitments of over US$27 million; Announces Fourth Quarter and Full Year 2023 Financial Results
NOT FOR DISTRIBUTION TO
-
Q4/2023 revenues of
US$12.7 million , adjusted EBITDA 1 ofUS$2.1 million and gross profit margin of 61%. - Renewal rate of 90% for top customers in 2023.
-
Annual 2024 upfront revenue commitments and political & advocacy insertion orders (on campaigns between the Q2/2024 and Q4/2024) from major brands and agencies of over
US$27 million , compared toUS$4.3 million for fiscal 2023. -
Recently announced multi-year renewal with
Pivot Marketing Group to leverage App Science™ AI capabilities for continued support of top brands, includingToyota . -
Execution on Q3/2023 cost cutting initiatives continue to improve operational efficiencies; still expected to drive
~US$4 million in annualized cost savings and a path to profitability by end of 2024.
"Despite being a challenging comparable with our success from the 2022 U.S. election cycle and industry-specific events, such as the auto workers strike affecting our number one revenue vertical, Sabio's resolve to return to meaningful profitability drove over
He continued, "It's this segmentation that also explains why Sabio continues to win new business with nameplate clients, like McDonald's, and retain and expand on existing customer relationships, as illustrated by our recently announced multi-year renewal with Pivot and
As brands and agencies continue to become more aware of and familiar with the versatility of our product offerings, we are witnessing larger deal sizes, larger upfront commitments, higher retention rates, and more predictability in our sales pipeline over time. Additionally, with the
He continued, "Management responded to macro and category-specific challenges in 2023 by implementing
1 See "Use of Non-IFRS Measures" below.
2 eMarketer, Pay TV Households & Viewers, US Forecast,
Fiscal 2023 Annual Financial Highlights
- Consolidated revenues of
US$35.9 million , down 15% from FY2022. The 15% decrease in sales was primarily driven by pronounced declines in political and advocacy spending compared with the prior year's period, which benefited from theU.S. mid-term election cycle. - CTV/OTT streaming generated revenues of
US$24.1 million in FY2023 down 3% fromUS$24.8 million in FY2022. The year-over-year growth in the Company's branded media business was offset by a decline in political and advocacy spending. Excluding political and advocacy, Connected TV/OTT sales grew 18% from the prior period, driven by increased spending across several verticals, including CPG, Entertainment, Finance, Lotto, Retail, and Quick-service Restaurants. - Mobile generated revenues of
US$11 million , down 35% fromUS$16.9 million in FY2022. Legacy mobile display campaigns continued to shift their spend with Sabio from mobile display to higher-margin mobile OTT streaming, recognized under the Company's Connected TV/OTT revenue category. Additionally, category-specific events, such as the auto workers andScreen Actors Guild strikes, contributed to the decline. - Gross profit of
US$21.8 million , down 14% over FY2022 with gross margin of 61% in 2023, up from 60% in the previous period. Competitive pricing pressures were countered through Sabio's expanded use of Vidillion CTV supply, the Company's ability to continue to shift legacy mobile customers into CTV/OTT, and direct sales generated by its App Science business, which included a recurring revenue contract with an agency representing a top 10 automotive brand. - Adjusted EBITDA loss of
US$1.82 million compared to positive Adjusted EBITDA ofUS$1.3 million in FY2022. The year-over-year decrease was primarily driven by a 15% decrease in revenues, the full cost impact of the Company's investments in its sales and marketing apparatus made in the prior year, and costs associated with transitioning its workforce back to the office. As ofDecember 31, 2023 , the Company's cash position wasUS$2.6 million , as compared toUS$4 million onDecember 31, 2022 .
Fourth Quarter 2023 Financial Highlights
- Consolidated revenues of
US$12.7 million in Q4/2023, a decrease of 28% compared toUS$17.6 million in Q4/2022. The decrease in sales was primarily driven by pronounced declines in political and advocacy spending compared with the prior year, which benefited from theU.S. mid-term election cycle. Fourth quarter revenues were also impacted by category-specific events, such as the auto workers strike, that impacted short-term advertising budgets before reaching a resolution. - CTV/OTT generated revenues of
US$9.2 million in Q4/2023 compared toUS$12.7 million in Q4/2023 — a decrease of 27% over the prior year's quarter. The decrease was primarily driven by pronounced declines in political and advocacy spending compared with the prior year's quarter. CTV/OTT sales accounted for 73% of the Company's sales mix, compared to 72% for Q4/2022. - Mobile generated revenues of
US$3.1 million in Q4/2023, a 36% decrease compared toUS$4.8 million in Q4/2022, as more mobile campaigns shifted from mobile display to mobile video, recognized under the Company's CTV/OTT revenue category. - Gross Profit of
US$7.7 million in Q4/2023, compared toUS$10.4 million in Q4/2022. Gross Margin was 61% in Q4/2023, up from Gross Margin of 59% in Q4/2022 as Sabio continued to leverage its differentiated end-to-end technology stack, including the use of Vidillion CTV supply. - Positive Adjusted EBITDA of
US$2.1 million in Q4/2023, compared toUS$2.4 million in Q4/2022. The quarter-over-quarter decrease in profit was primarily driven by a decrease in consolidated revenues, that was substantially offset through several cost and operational efficiency initiatives implemented during the second and third quarters of 2023. As ofDecember 2023 , the Company hadUS$7.1 million outstanding under its credit facility with Avidbank.
Fourth Quarter 2023 Business Highlights
- On
October 10, 2023 , the Company entered into a strategic partnership with MediahubU.S. , an award-winning global media agency, across both companies' portfolio of brands. - On
October 11, 2023 , the Company launched SabioTV, a free, creator-first content streaming platform built to promote diverse voices and increase representation among the greater streaming industry. - On
October 20, 2023 , 87,500 share options of the Company were granted to certain officers and employees, at an exercise price of CAD$0.40 and 272,000 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 . - To manage the applicable requirements relating to foreign private issuer status under
United States securities law, onOctober 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. - On
October 30, 2023 , the Company disclosed that it won overUS$9.0 million in upfront commitments for 2024 from major agencies and was continuing to negotiate further commitments. Subsequent to the release, the Company has won overUS$3 million in additional, branded-campaign upfront commitments and has signed close to overUS$13M in additional political & advocacy insertion orders, for an aggregate of overUS$27 million . - During the quarter, arrangements were agreed to between the Company and certain Canadian, arms-length parties, pursuant to which, and subject to any applicable
TSX Venture Exchange approvals, would affect the exercise of an aggregate of 2,804,702 share purchase warrants at an exercise price ofCAD$0.21 previously issued by the Company onJanuary 11, 2021 . These arrangements include the provision of promissory notes (the "Notes") between the Company and warrant holders. The principal amount outstanding under the three-year term would bear interest at the Prime Rate and mature onDecember 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 compliance with the applicable requirements relating to foreign private issuer status underUnited States securities law.
Events Subsequent to
- On
February 6, 2024 , the Company appointed President of GroupM MulticulturalGonzalo Del Fa as an independent member of the Board of Directors. As President of GroupM Multicultural,Del Fa plays a key role in all aspects of multicultural marketing, diverse media, and inclusive investment efforts across GroupM, WPP's media investment group. In addition to his role at GroupM, he is the Past-Chairman of theHispanic Marketing Council . Prior to joining GroupM,Del Fa worked atAmerican Express Argentina , BBVA,Hachette Filipacchi , and Editorial Televisa. - On
February 15, 2024 , the legal entity name ofVidillion Corp. was changed toFWD Tech Inc. - On
February 29, 2024 , the Company announced a strategic collaboration withMcDonald's USA , through a partnership with Publicis Groupe. McDonald's will leverage Sabio's CTV/OTT inventory, customized audience segments and App Science's proprietary, 55 million household graph data, to effectively connect with and reach the growingU.S. multicultural audience. - On
March 26, 2024 , theTSX Venture Exchange accepted a notice filed by the Company to implement a Normal Course Issuer Bid, whereupon the Company may, during the 12-month period commencingApril 02, 2024 and endingApril 01, 2025 , purchase, for cancellation, up to 852,184 Shares in total, being 5% of the total number of 17,043,687 common shares outstanding as atMarch 19, 2024 . The Company also had 33,026,891 issued and outstanding convertible restricted voting shares as of this date. - On
April 22, 2024 , Sabio's App Science™ subsidiary announced a multi-year renewal withPivot Marketing Group to support clients includingToyota Motor North America . App Science's cross-platform measurement solutions will empower Pivot to reach, engage, and validate their audiences and their behaviors at a deeper level, and will leverage the platform's AI capabilities. - On
April 23, 2024 , the Company and Avidbank agreed on terms for a 90-day extension untilAugust 21, 2024 for the bank's credit facility. The facility, which will be assessed for a longer term renewal during the extension period, and is based on certain factors including the adequacy of cash reserves, is secured against assets of the Company including, but not limited to, its Accounts Receivable and continues to provide for an Accounts Receivable Line of Credit, with$6,500,000 maximum loans outstanding, at an interest rate of the greater of theWall Street Journal prime rate plus 1.00% to 4%, with a floor between 9.5% and 12.5%.
2024 Outlook
In a precursor to management's expectations for 2024, the cost and efficiency initiatives implemented by management during the second and third quarters of 2023 drove a 23% decrease in fourth quarter OPEX — normalized for sales commissions and bonuses — compared with the prior year's period, while consolidated revenues grew sequentially. This culminated in Adjusted EBITDA of
1 See "Use of Non-IFRS Measures" below.
Selected Financials
The tables below set out selected financial information relating to Sabio and should be read in conjunction with the Company's audited consolidated financial statements, including the notes thereto, and MD&A for the three months and twelve months ended
|
For the three months ended |
For the twelve months ended |
||
|
December |
December |
December |
December |
|
$ |
$ |
$ |
$ |
Revenue |
12,671,038 |
17,606,761 |
35,954,934 |
42,305,732 |
Gross profit |
7,749,748 |
10,358,531 |
21,780,302 |
25,350,591 |
Gross margin |
61 % |
59 % |
61 % |
60 % |
Adjusted EBITDA1 |
2,060,212 |
2,363,541 |
(1,816,631) |
1,326,107 |
Net increase in cash and cash equivalents during the period |
411,023 |
388,783 |
(1,387,290) |
719,067 |
Cash and cash equivalents - end of the period |
2,612,112 |
3,999,402 |
2,612,112 |
3,999,402 |
|
||||
|
||||
|
For the three months ended |
For the twelve months ended |
||
December |
December |
December |
December |
|
$ |
$ |
$ |
$ |
|
Income (Loss) for the period |
1,132,414 |
2,016,200 |
(4,764,536) |
(846,765) |
Finance Costs |
343,207 |
(35,968) |
1,049,140 |
417,362 |
Interest earned |
(7,514) |
- |
(7,514) |
- |
Transaction Costs |
- |
- |
- |
156,752 |
Amortization of intangible Assets |
47,127 |
55,651 |
162,261 |
378,043 |
Stock-based compensation |
253,071 |
97,041 |
721,285 |
667,722 |
Amortization of lease |
162,479 |
114,215 |
605,899 |
338,489 |
Income taxes |
(24,896) |
35,966 |
(8,445) |
38,640 |
Foreign exchange differences |
12,433 |
- |
16,588 |
- |
State and local taxes |
16,498 |
12,510 |
59,340 |
48,716 |
Loss on disposal of intangibles |
6,612 |
17,926 |
6,612 |
24,148 |
Severance expenses |
118,771 |
50,000 |
342,739 |
103,000 |
Adjusted EBITDA 1 |
2,060,212 |
2,363,541 |
(1,816,631) |
1,326,107 |
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 is for information purposes only and may not be appropriate for other purposes.
Conference Call:
The Company will release its financial results for the fourth quarter and full year in a press release prior to the investor conference call.
The webinar details are below:
Webinar Details
Date:
Time:
Webinar Registration:
https://bit.ly/3xytOgx
Or dial:
For higher quality, dial a number based on your current location.
|
|
+1 647 374 4685 ( |
|
|
+1 778 907 2071 ( |
|
|
Webinar ID: 8400 2574 6451 |
International numbers available: https://us02web.zoom.us/u/kbmWagiHz6
Please connect five minutes prior to the conference call to ensure time for any software download that may be required.
About Sabio
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 in the Company's MD&A for the three and twelve 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.
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, which is often, but not always, identified by the use of words such as "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" or the negative thereof and other similar expressions. All statements herein other than statements of historical fact constitute forward-looking information including, but not limited to, statements in respect of: the Company's operations, growth and sales expectations and business plans; the Company's outlook for the full-year fiscal 2024; balance sheet and cash flow management; renewal rate for top customers and achievement of record upfront commitments in 2024; Sabio's ability to obtain nameplate clients and retain and expand existing customer relationships; results from the partnership with McDonald's; Sabio's ability to deliver measurable ROI to its customers; Sabio's ability to generate valuable marketable insights within consumer audiences; the exercise of 2,804,702 share purchase warrants of the Company at an exercise price of
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
For further information:
SOURCE