Record third quarter revenues of US$16.1 million in Q3/2024, up 82% compared to US$8.8 million in Q3/2023Connected TV/OTT ad-supported sales as a category increased 100% to US$12.3 million, compared to US$6.1 million in Q3/2023, representing 77% of the Company’s sales mixRecord positive Adjusted EBITDA1 up 37x to US$2.6 million in Q3/2024 compared to Q3/2023, with net income of US$1.75 million
TORONTO, Nov. 18, 2024 /CNW/ — Sabio Holdings Inc. (TSXV: SBIO) (OTCQB: SABOF) (the “Company” or “Sabio”), a Los Angeles-based ad-tech company specializing in helping top 100 global brands reach, engage, and validate (R.E.V) streaming TV audiences, is pleased to announce its unaudited financial results for the third quarter ended September 30, 2024. Unless otherwise indicated, all amounts are expressed in U.S. dollars.
“Our unrelenting focus on efficiency and growth culminated in both record top line growth and profits, which exceeded our preliminary third quarter results announced in October,” said Aziz Rahimtoola, CEO of Sabio. “While we benefited from the election spend across multiple races, our core business was the key, delivering three consecutive quarters of top line double digit growth with gains from our international expansion. We are extremely excited about the overall momentum of our core business in addition to new product launches that are already helping us positively shape the rest of this year and 2025.”
“We are pleased to report the highest quarterly Adjusted EBITDA1 result in Sabio’s history, led by a diversified set of revenue drivers and significant gains in operating leverage through a reduced cost structure,” commented Sajid Premji, CFO of Sabio. “Demonstrating the sustainability and predictability of our sales structure, revenues from our branded (excluding political & advocacy) advertising business grew 28%, as Sabio’s core offerings continue to fire on all cylinders. In addition, our robust 90% re-occurring revenue performance sets the stage for the business’s continued growth in the fourth quarter and into 2025. Moreover, the modest investments made in our political campaign apparatus culminated in material third quarter revenue contributions from multiple races, providing a diversified foundation to expand upon, including several key off-cycle contests in 2025.”
Third Quarter 2024 Financial Highlights
Sabio delivered consolidated revenues of US$16.1 million in Q3-2024, an increase of 82% from US$8.8 million in Q3-2023.Positive Adjusted EBITDA1 of US$2.6 million in Q3-2024 compared to US$0.1 million in Q3-2023 an increase of 37x. Sabio generated positive Adjusted EBITDA for the nine months ended September 30th, 2024 of US$1.0 million compared to an Adjusted EBITDA loss of US$3.9 million in 2023.Connected TV/OTT sales as a category increased by 100% to US$12.3 million, compared to US$6.1 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 70% in the prior year’s quarter.Mobile display generated revenues of US$3.5 million in Q3-2024, up 36% from US$2.6 million in Q3-2023.Political campaigns contributed approximately US$5.0 million to Q3-2024 consolidated revenues and US$5.5 million to consolidated revenues for the nine months ended September 30th, 2024. There were no consolidated revenues from political campaigns in the prior year’s comparative periods.Gross profit of US$10.1 million in Q3-2024, compared to US$5.2 million in Q3-2023. Gross margin was 63% compared to 59% in Q3-2023, as Sabio continued to leverage its end-to-end technology stack, including exclusive App Science™ (“App Science”) segments & analytics and the use of Sabio SSP supply.Improved operating leverage: Normalized for sales commissions and bonuses, operating expenses (“OPEX”) increased by single digits (8.4%).As of September 30th, 2024, the Company had cash of US$2.9 million, up from US$2.2 million on September 30th, 2023. Management believes it is well-funded, with sufficient cash on hand to meet its growth objectives.As of September 30th, 2024, the Company had US$5.5 million outstanding under its US$10 million credit facility with SLR Digital Finance. In comparison, Sabio ended the third quarter of 2023 with US$6.5 million outstanding under its previous credit facility arrangement with Avidbank.Under the Normal Course Issuer Bid (“NCIB”) accepted by the TSX Venture Exchange on March 26th, 2024, the Company repurchased a total of 2,500 shares on the open market during the third quarter of 2024 at prices ranging from CAD $0.425 to CAD $0.43 per share. The total cost of these purchases was CAD $1,080. The repurchased shares were cancelled subsequent to quarter-end.
1 See “Use of Non-IFRS Measures” below.
Third Quarter 2024 Business Highlights
On July 31st, 2024, the Company closed 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.
Events Subsequent to September 30th, 2024:
Subsequent to quarter-end, under the NCIB accepted by the TSX Venture Exchange on March 26th, 2024, the Company repurchased a total of 24,500 shares on the open market at prices ranging from CAD $0.475 to CAD $0.50 per share. The total cost of these purchases was CAD $12,027.50. Of these repurchased shares, 19,500 shares were subsequently cancelled on November 4th, 2024, with the remaining 5,000 scheduled to be cancelled during the fourth quarter.On October 18, 2024 (“Grant Date”), the Company granted of 270,585 restricted share units (“RSU”) to certain independent directors to acquire an aggregate of 270,585 common shares in the capital of the Company, under the Company’s Omnibus Equity Incentive Plan. The RSUs vest on the first anniversary of the Grant Date. These grants represent compensation to the independent directors for their service to the Company in 2024. The Company does not currently pay cash to its independent directors.
Outlook
Sabio exited the third quarter with record nine-month consolidated revenues, driven by its core, branded advertising business (excluding political & advocacy) that grew by 28% in the third quarter alone. Higher revenues, complimented with a leaner cost infrastructure, further culminated in the highest quarterly Adjusted EBITDA in Sabio’s history. As Connected TV/OTT ad-supported streaming continues to be one of the fastest-growing channels in advertising, Sabio’s 61% revenue growth in this category during the nine months ended September 30th, 2024, demonstrates that we continue to outpace the broader market and capture additional market share. Driven by a robust 90% re-occurring revenue rate through the first three quarters of the year, we expect our core business to drive further double-digit revenue gains and Adjusted EBITDA profitability in the fourth quarter ahead—providing a springboard to continued double-digit growth entering 2025.
The shift to a growing Connected TV/OTT streaming sales model and moving away from a mobile-display-dependent model has brought substantial cost efficiencies. These efficiencies have led to continued operating leverage gains in the nine months ending September 30th, 2024, and a sharp return to full-year Adjusted EBITDA profitability. As our operating infrastructure continues to become more efficient, our sales model is becoming increasingly predictable.
This predictability helps de-risk our revenue model moving forward and sets the stage for continued sustainable growth in 2025, as supported by:
Higher rates of reoccurring revenue, with 90% of consolidated revenues excluding political in the nine-months ended September 30th, 2024 coming from repeat customers (78% in the same period of 2023), driven by our proprietary App Science cross-screen graph capabilities. 70% of existing top brands increased their spend with Sabio compared to the prior year’s nine-month period;The ongoing addition of top-tier clients, with 36% of the brands that spent with us during the nine months ended September 30th, 2024 being new logos to Sabio; and,The most diversified vertical and revenue mix in Sabio’s history.
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 during the third quarter 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 newly launched programmatic Connected TV/OTT offering.
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 and nine months ended September 30th, 2024, and September 30th, 2023, copies of which can be found under Sabio’s profile on SEDAR+ at www.sedarplus.ca.
For the three months ended
For the nine months ended
September 30,
2024
September 30,
2023
September 30,
2024
September 30,
2023
$
$
$
$
Revenue
16,052,759
8,814,642
31,301,723
23,283,896
Gross profit
10,128,836
5,195,694
19,340,634
14,030,554
Gross margin
63 %
59 %
62 %
60 %
Adjusted EBITDA(1)
2,578,743
68,942
988,185
(3,876,843)
Net increase in cash and cash equivalents during the period
1,231,613
493,195
259,774
(1,798,313)
Cash and cash equivalents – end of the period
2,871,886
2,201,089
2,871,886
2,201,089
For the three months ended
For the nine months ended
September 30,
2024
September 30,
2023
September 30,
2024
September 30,
2023
$
$
$
$
Income (Loss) for the period
1,749,633
(738,411)
(1,305,403)
(5,896,950)
Finance Costs
335,461
294,425
963,289
705,933
Interest earned
(8,547)
–
(33,611)
–
Amortization of intangible Assets
47,594
42,169
148,615
115,134
Stock-based compensation
58,586
145,791
162,908
468,214
Amortization of lease
181,525
181,558
540,628
443,420
Income taxes
8,227
5,484
33,006
16,451
Foreign exchange differences
5,445
4,145
12,772
4,145
State and local taxes
11,535
(1,806)
40,883
42,842
Severance expenses
189,284
135,587
425,098
223,968
Adjusted EBITDA(1)
2,578,743
68,942
988,185
(3,876,843)
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 third quarter in a press release prior to the investor conference call.
The webinar details are below:
Webinar Details
Date: Tuesday, November 19th, 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: 876 6834 3879
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 Los Angeles-based ad-tech company specializing in helping top 100 global brands reach, engage, and validate (R.E.V) streaming TV audiences in a highly fragmented media ecosystem. Sabio leverages its complete end-to-end ad-supported streaming tech stack, which features App Science™—a non-cookie-based SaaS analytics and insights platform with a proprietary 55 million household graph and AI capabilities—alongside its ad-serving technology and direct supply. For more information, visit: sabio.inc.
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 September 30th, 2024 and September 30th, 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; the Company’s outlook for 2025, including expected revenue gains; expected continued sustainable growth in 2025; and management’s plans to allocate the Company’s cash flows and the effects thereof. 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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