Record revenues of US$8.9 million in Q2/2024, up 11% compared to US$8.0 million in Q2/2023High re-occurring revenues with 91% of first-half sales from repeat customersRecord second quarter Connected TV/OTT ad-supported sales of US$6.9 million, up 39% compared to US$4.9 million in Q2/2023, and representing 77% of the Company’s sales mixGross Margin increased to 61% Q2-2024 from 60% in Q2-2023Improved operating leverage resulted in Adjusted EBITDA 1 Loss of US$0.3 million compared to a loss of US$1.7 million in Q2/2023
TORONTO, Aug. 21, 2024 /CNW/ — Sabio Holdings Inc . (TSXV: SBIO) (OTCQB: SABOF) (the “Company” or “Sabio”), a California -based ad-tech company that specializes in delivering highly targeted ads, insights, and services in ad-supported streaming to top Fortune 100 brands, is pleased to announce its unaudited financial results for the second quarter ended June 30th, 2024. Unless otherwise indicated, all amounts are expressed in U.S. dollars.
“As our Q2 results illustrate, we continue to execute on our 2024 narrative and key operating attributes that will drive a sustainable and profitable growth model for the back-half of the year and going forward into 2025,” said Aziz Rahimtoola, CEO of Sabio.
He continued, “Our commitment to driving higher growth in Connected TV/OTT revenue, securing larger upfront commitments, and improving operating efficiencies has laid a strong foundation for our success. Our full tech stack — including App Science’s unique reach and insights with data integrity and fidelity at its core — has been instrumental in achieving a 91% customer retention rate. This positions us optimally as we enter our historical peak sales quarters for 2024.
It’s still anticipated that the company will seasonally benefit from political ad-spending as the election cycle continues in the US until the November election date. This macro-backdrop, complimented with Sabio’s ability to continually capture market share within the fast-growing ad-supported streaming space, will help lead to record sales and profitability for the company in 2024.”
“Despite the seasonal trends of the advertising business, where close to 70% of our annual revenues are typically generated in the second half of the year, we are pleased to have exited the first half of 2024 with the lowest first-half Adjusted EBITDA1 loss since becoming a public company in November 2021,” commented Sajid Premji, Sabio’s Chief Financial Officer. “Sabio is firing on all cylinders as we enter the second half of 2024. Our 39% second-quarter sales growth in Connected TV/OTT ad-supported streaming continues to out-pace the market growth rate. Additionally, the predictability of our high reoccurring revenues, complimented with our recently announced record upfront commitments in our Q1 press release, will provide a springboard to near-term sales growth for the rest of 2024.
As we continue to focus on cost discipline to support a sustainable growth model, we expect material improvements in operating leverage in the second half of the year and a return to Adjusted EBITDA profitability.”
Second Quarter 2024 Financial Highlights
Sabio delivered record second quarter revenues of US$8.9 million in Q2/2024, an increase of 11% from US$8.0 million in Q2/2023.Connected TV/OTT sales as a category increased by 39% to US$6.9 million, compared to US$5.0 million in the prior year’s quarter, continuing the trend of Sabio’s dominant sales category, representing 77% of the Company’s sales mix, up from 62% in the prior year’s quarter. This represented the highest second quarter Connected TV/OTT ad-supported revenues in Sabio’s history.Mobile generated revenues of US$1.9 million in Q2/2024, down 36% from US$2.9 million in Q2/2023. More mobile campaigns continue to shift from mobile display to mobile streaming, which is recognized under the Company’s Connected TV/OTT revenue category.Gross profit of US$5.4 million in Q2/2024, compared to US$4.8 million in Q2/2023. Gross margin was 61% compared to 60% in Q2/2023, as Sabio continued to leverage its end-to-end technology stack, including the use of Sabio SSP supply.Adjusted EBITDA1 loss of US$0.3 million in Q2/2024 compared to a loss of US$1.7 million in Q2/2023. Despite the seasonal trends of the advertising business where the majority of spend typically takes place in the second half the year, Sabio’s focus on cost discipline and generating consistent & predictable revenue streams, driven by record upfront commitments, produced the lowest second quarter loss since becoming a public company in November 2021.13% decrease in second quarter OPEX, normalized for sales commissions and bonuses, compared to the prior year’s period.As of June 30, 2024, the Company had cash of US$1.6 million, as compared to US$1.7 million on June 30, 2023. Management believes it is well funded, with sufficient cash on hand to meet its growth objectives.As of June 30, 2024, the Company had US$5.6 million outstanding under its credit facility with Avidbank.
1 See “Use of Non-IFRS Measures” below.
Second Quarter 2024 Business Highlights
On June 4, 2024, the Company granted 210,000 stock options under the Company’s Omnibus Equity Incentive Plan to certain directors and officers of the Company to acquire an aggregate of 210,000 common shares in the capital of the Company. The Company does not currently pay cash to its independent directors.On April 22, 2024, Sabio’s App Science™ subsidiary announced a multi-year renewal with Pivot Marketing Group to support their clients including Toyota 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.
Events Subsequent to June 30, 2024:
On July 31, 2024, the Company closed of a new credit facility pursuant to the terms of a credit agreement between its U.S. operating subsidiaries including Sabio, Inc., AppScience, Inc. and FWD Tech Inc. and SLR Digital Finance (“SLRDF”). The facility replaces the Company’s existing credit facility with Avidbank and provides for a US$10 million senior-secured revolving credit facility at an interest rate of the greater of: (i) Prime rate plus 2.15%, or (ii) 8.5%. The facility has a three (3)-year term and is secured against all of the assets of the Company.
Outlook
Sabio exited the first half of 2024 with the highest first-half consolidated revenues in its history, driven by double-digit revenue growth in the second quarter. The Company enters the second half of the year where, historically, close to 70% of annual revenues are typically generated, armed with record upfront commitments, high reoccurring revenues (91% in the first half) and lowest first-half Adjusted EBITDA1 loss as a public company. Management expects accelerating revenues and a lower cost infrastructure to culminate in the quarters ahead to a return to meaningful Adjusted EBITDA1 profitability for the year. As Connected TV/OTT ad-supported streaming continues to be one of the fastest-growing channels in advertising, Sabio’s 34% revenue growth in this category during the first half of 2024 demonstrates that we are continuing to outpace the broader market and take market share. In further testament to the strength of our core business, when normalized for advocacy and political spending, Connected TV/OTT streaming sales grew 52% in the second quarter alone compared to the same period last year.
The inherent cost efficiencies in transitioning to this growing Connected TV/OTT streaming sales model, away from one more dependent on mobile display, has resulted in continued gains in operating leverage in the first half of 2024, driving a $2.3 million reduction in our first half Adjusted EBITDA1 loss compared to the prior year’s six-month period. As our operating infrastructure continues to become more efficient, our sales model continues to become more predictable.
This predictability helps derisk our revenue model and sets the stage for continued sustainable growth, as supported by:
High rates of reoccurring revenue, with 91% of consolidated revenues in the first half of 2024 coming from repeat customers (up from 74% in the first half of 2023), driven by our proprietary App Science™ cross-screen graph capabilities. 70% of existing brands increased their spend with Sabio compared to the prior year’s period;The ongoing addition of top-tier clients, with 28% of the brands that spent with us during the first half being new logos to Sabio;Significant upfront commitments, including multi-million dollar political and advocacy insertion orders for campaigns running during the last half 2024; andThe most diversified vertical mix in Sabio’s history.
Management continues to anticipate a return to double-digit consolidated revenue growth in 2024, surpassing both 2023 and our record-setting 2022 mid-term election year. With a streamlined operating infrastructure, Sabio expects further improvements in operating leverage and Adjusted EBITDA1 profitability through the second half of 2024. Management plans to allocate its improved cash flows to strengthen working capital, through both debt repayment and increased cash reserves. Combined with the closing of a new, multi-year credit line which brings both increased liquidity and long-term stability to our balance sheet, these measures will enhance balance sheet flexibility as we capitalize on several near-term growth drivers, including a new programmatic Connected TV/OTT offering set to launch in the second half of the year.
Selected Financials
The tables below set out selected financial information relating to Sabio 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, 2024, and June 30, 2023, copies of which can be found under Sabio’s profile on SEDAR+ at www.sedarplus.ca.
For the three months ended
For the six months ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
$
$
$
$
Revenue
8,897,431
7,987,682
15,248,964
14,469,254
Gross profit
5,449,794
4,823,810
9,211,798
8,834,860
Gross margin
61 %
60 %
60 %
61 %
Adjusted EBITDA(1)
(281,774)
(1,724,781)
(1,590,558)
(3,945,785)
Net increase in cash and cash
equivalents during the period
(679,723)
(1,584,537)
(971,839)
(2,291,508)
Cash and cash equivalents – end of
the period
1,640,273
1,707,894
1,640,273
1,707,894
For the three months ended
For the six months ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
$
$
$
$
Income (Loss) for the period
(1,042,929)
(2,378,891)
(3,055,036)
(5,158,539)
Finance Costs
313,482
241,027
627,828
411,508
Interest earned
(16,972)
–
(25,064)
–
Amortization of intangible Assets
49,8174
35,825
101,021
72,965
Stock-based compensation
58,145
176,535
104,322
322,423
Amortization of lease
179,551
141,017
359,103
261,862
Income taxes
12,830
3,664
24,779
10,967
Foreign exchange differences
5,284
–
7,327
–
State and local taxes
9,480
12,647
29,348
44,648
Severance expenses
149,481
43,395
235,814
88,381
Adjusted EBITDA
(281,774)
(1,724,781)
(1,590,558)
(3,945,785)
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 second quarter in a press release prior to the investor conference call.
The webinar details are below:
Webinar Details
Date: Thursday, August 22, 2024
Time: 9:00 a.m. ET (6:00 a.m. PT)
Webinar Registration:
https://bit.ly/3LWdx9d
Or dial:
For higher quality, dial a number based on your current location.
Canada:
+1 647 374 4685 (Toronto local)
+1 778 907 2071 (Vancouver local)
Webinar ID: 826 4911 1596
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
Sabio Holdings (TSXV: SBIO, OTCQB: SABOF) is a technology and services leader in the fast-growing ad-supported streaming space. Its cloud-based, end-to-end technology stack works with top blue chip, global brands and the agencies that represent them to reach, engage and validate streaming audiences. Sabio Holdings’ companies consist of Sabio – a demand-side platform (DSP) powered through our proprietary ad-serving technology; App Science™ – a non-cookie-based software as a service (SAAS) analytics and insights platform with AI natural language capabilities; and Sabio SSP (formerly known as Vidillion); – an ad-supported streaming supply-side platform (SSP) that includes server-side ad-insertion (SSAI) technology.
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 months ended June 30, 2024 and June 30, 2023, 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, 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, market share, sales expectations, and business plans; results, including sales, expenses, and customer retention, of the Connected TV/OTT sales; positive adjusted EBITDA, and profitability in 2024; the Company’s outlook for the remainder of fiscal 2024, and balance sheet and cash flow management; and the effects of the upfront commitments. 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.
For further information: Sajid Premji, Chief Financial Officer, investor@sabio.inc, Phone: 1.844.974.2662; Aideen McDermott, Investor Relations, investor@sabio.inc
SOURCE Sabio Inc.
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