TORONTO, Nov. 20, 2023 -- 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 third quarter ended September 30, 2023. Unless otherwise indicated, all amounts are expressed in U.S. dollars.
"Despite challenging comparables to last year that was boosted by the 2022 U.S. mid-term election cycle where Sabio's topline growth markedly outpaced our key peer group, our CTV/OTT business continues to remain strong," said Aziz Rahimtoola, Chief Executive Officer. "Excluding political and advocacy CTV/OTT spending, CTV/OTT revenues were up 29% compared to Q3/2022 as we continued to see strength across several verticals, including CPG, finance, and quick-service restaurant. Sabio is now more diversified on a regional, per seller and customer concentration basis than it was entering the year. Armed with a newly optimized cost structure and the most diversified CTV/OTT business in our Company's history, we expect a sequential step-up in fourth quarter revenues. Moreover, the return of political and advocacy spending in 2024 is expected to drive material growth and with the optimized cost structure in place result e in meaningful gains in operating leverage."
"We are pleased to have delivered positive Adjusted EBITDA1, despite pronounced declines in political advocacy spending over the quarter and category-specific events, including the auto-workers strike," commented Sajid Premji, Chief Financial Officer. "The implementation of our cost and operational initiatives as outlined in our press release of October 30, 2023, which are expected to yield close to US$4.0 million in annualized cost savings, had immediate beneficial impacts. Our ability to swiftly capitalize on the benefits associated with these initiatives is a testament to our ability to rapidly adjust our operating infrastructure in response to changes in market dynamics. Normalized for sales commissions, the initiatives drove a 12% reduction in Q3/2023 operating expenses compared with the prior year's period, and an 18% decrease in Q3/2023 operating expenses compared to Q2/2023. Ahead of 2024, Sabio has already secured over US$10 million in non-political, upfront, endeavor to spend commitments, representing close to 25% of 2022's annual revenues. By comparison, the Company had not secured any upfront commitments by the end of 2021, ahead of the 2022 US election cycle, and went on to see record revenues in 2022, strongly driven by the 2022 US midterm elections. As political and advocacy spending once again heats-up in the lead up to next year's U.S. Presidential election cycle, we are well-positioned for material Adjusted EBITDA gains in 2024, as we benefit from a more diversified sales mix, strong gross margins and a reduced break-even point, and better operating leverage."
Third Quarter 2023 Financial Highlights
1 See "Use of Non-IFRS Measures" below
Third Quarter 2023 Business Highlights
Events Subsequent to September 30, 2023:
1 See "Use of Non-IFRS Measures" below
Upcoming Changes in Issuer's Foreign Private Issuer Status:
As at June 30, 2023, Sabio determined that it no longer qualified as a foreign private issuer ("FPI") under U.S. securities laws due primarily to the amount of Sabio's securities held by residents of the United States. Management has enacted an action plan with the intention of regaining FPI status at the next testing date of June 30, 2024. While the loss of FPI status is not at this time expected to result in Sabio becoming a reporting issuer with the Securities and Exchange Commission, such loss may make it more difficult for Sabio to issue securities in the future should the Company be unable to regain FPI status. While Management believes the Company will be able to regain FPI status as of June 30, 2024, there can be no assurances that the Company will be successful in its endeavor.
Sabio's interim consolidated financial statements, including the notes thereto, and management's discussion and analysis "(MD&A") for the three months and nine months ended September 30, 2023, and September 30, 2022, can be found under Sabio's profile on SEDAR+ at www.sedarplus.ca
Despite facing challenging comparatives with the 2022 U.S. election cycle, the Company continued its expansion into the Connected TV/OTT market by delivering 23% revenue growth in the category for the nine months ended September 30, 2023, notwithstanding a material decline in political and advocacy CTV/OTT spend from the prior year's period. The decline was offset through continued strength across several verticals, including CPG, finance, and quick-service restaurant, as our core, non-political/advocacy CTV/OTT business continues to take market share during off-election cycles, growing 59% for the nine-month period compared to the prior year. 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 amongst OpenWeb platforms in the CTV/OTT space, and supporting strong gross margins.
Moreover, during the nine months ended September 30, 2023, approximately 78% of consolidated revenues came from repeat customers as Sabio retained 90% of its top 20 customers, 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 22% of the revenues in the nine months ended September 30, 2023 were generated from top logos that did not spend with Sabio previously, further diversifying our sales mix.
While the macro headwinds impacting overall advertising spend were pronounced in the third quarter, Sabio was able to deliver Adjusted EBITDA1 profitability for the three-month period, aided through cost and operational initiatives to optimize our operating infrastructure. Management remains optimistic as we enter not only the strongest quarter of the year, but more significantly, the 2024 U.S. election cycle ahead. Category-specific events including the auto workers strike that impacted third quarter performance, came to positive resolutions subsequent to quarter-end. Ahead of 2024, Sabio has already secured over $10 million in non-political, upfront endeavor to spend commitments, representing close to 25% of 2022's annual revenues. For comparison, during the fourth quarter of 2021, the Company had not secured any upfront commitments for 2022 – a year in which annual revenues eventually reached a Company record, propelled by the U.S. mid-term elections. As political and advocacy budgets once again increase in the leadup to the U.S. Presidential election and down-ticket ballot races, Sabio is well-positioned for meaningful Adjusted EBITDA1 gains in 2024, benefiting from a more diversified sales mix, strong gross margins and a reduced break-even point. OPEX spend in the third quarter of 2023, normalized for sales commissions, decreased by 18% compared to the second quarter of 2023, with further efficiency gains anticipated in the quarters ahead as the full benefit of our reductions are realized.
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.
The Company will host an investor conference call for the third quarter ended September 30, 2023, at 9:00 a.m. ET (6:00 a.m. PT) on November 21, 2023. The webinar details are below:
Date: Tuesday, November 21, 2023
Time: 9:00 a.m. ET (6:00 a.m. PT)
For higher quality, dial a number based on your current location.
+1 647 374 4685 (Toronto local)
+1 778 907 2071 (Vancouver local)
Webinar ID: 844 1873 5735
Please connect five minutes prior to the conference call to ensure time for any software download that may be required.
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 and nine months ended September 30, 2023 and September 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.
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 the fourth quarter of 2023 and full-year fiscal 2024, foreign private issuer status, and cash flow management, 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.
For further information: Sajid Premji, Chief Financial Officer, firstname.lastname@example.org, Phone: 1.844.974.2662; Sam Wang, Investor Relations, email@example.com; Hollis Guerra, Daddi Brand Communications, firstname.lastname@example.org