NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
TORONTO, April 24, 2024 /CNW/ -- Sabio Holdings Inc. (TSXV: SBIO) (OTCQX: 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 upfront commitments and executed insertion orders totaling over US$27 million for 2024, its audited consolidated annual results, and results for the fiscal fourth quarter ended December 31, 2023. Unless otherwise indicated, all amounts are expressed in U.S. dollars.
"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 US$2 million in adjusted EBITDA1 and improvements in gross margins and operating leverage in comparison to the prior year's quarter," said Aziz Rahimtoola, Chief Executive Officer. "Moreover, our 90% renewal rate for top customers and record upfront commitments so far in 2024 speak volumes to how Sabio continues to position itself as a leader within the ad-supported streaming space. Consumer brands continue to face challenges reaching, engaging, and validating audiences in a fragmented media ecosystem. With traditional pay TV households in the U.S. forecasted to fall 23.5% by 20282, Sabio is well-equipped to resolve these challenges through our ability to reach increasingly diverse cord-cutters with authenticity wherever they stream content. We've been able to successfully segment ourselves in the market by leveraging proprietary data to generate valuable marketable insights within consumer audiences that conform to a non-cookie-based platform. These insights drive a more powerful connection to target audiences in both brand and political advertising within the ad-supported streaming space. It's this refined execution approach that delivers measurable ROI spend to our customers."
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 Toyota ? one that comes off more than a year and a half of working closely with them and key clients to provide more efficiency ? that utilizes our App Sciencetm AI capabilities.
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 U.S. election year in full swing, and the return of political and advocacy spending in 2024, we are already observing higher seasonally adjusted revenue growth that we expect will provide a springboard to profitability by the end of the year. Overall, this will be a transformative year for Sabio, and I'm excited for the opportunities that lie ahead."
Sajid Premji, Sabio's Chief Financial Officer, noted that "similar to Olympic versus non-Olympic years in traditional broadcasting, our business continues to witness seasonal revenue growth associated with the political election cycle in the United States. Although this seasonally adjusted growth is becoming less varied as the company matures, we do typically witness a pronounced revenue acceleration entering these political election periods. In a continuation of these trends, Sabio enters the 2024 U.S. election year with annual branded-campaign commitments and signed political & advocacy insertion orders (between Q2 and Q4 2024) of over US$27 million, which already represents close to 75% of 2023's consolidated revenues. At no point in our company's history has Sabio had more visibility into our second-half revenue pipeline. In combination with fiscal discipline, management strongly believes that 2024's revenue growth and operating leverage are expected to generate record top-line and bottom-line numbers."
He continued, "Management responded to macro and category-specific challenges in 2023 by implementing US$4 million in annualized cost savings during the third quarter. We believe these measures, which culminated in over US$2 million in fourth quarter Adjusted EBITDA1 and a year-over-year expansion in quarterly Adjusted EBITDA1 margins, will ensure that a larger portion of top-line sales growth will fall to the bottom line, significantly improving operating leverage and driving a return to full-year Adjusted EBITDA1 profitability. Further bolstered by higher sales predictability through our strong customer renewal rates ? 76% in 2023 ? and the continuation of ad-supported streaming revenue growth within our core media business, management will use these improved cash flows to transform our future balance sheet position over the year. We expect to enter 2025 with lower debt, improved cash reserves, and the greatest level of balance sheet flexibility in our company's history."
1 See "Use of Non-IFRS Measures" below.
2 eMarketer, Pay TV Households & Viewers, US Forecast, February 2024
Fiscal 2023 Annual Financial Highlights
Fourth Quarter 2023 Financial Highlights
Fourth Quarter 2023 Business Highlights
Events Subsequent to December 31, 2023
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 $2.1 million1 for the fourth quarter of 2023, with Adjusted EBITDA margins improving to 16%, compared to 13% in the fourth quarter of 2022. Furthermore, our sales model continues to become increasingly predictable. Sabio entered 2024 armed with record upfront, branded-campaign commitments of over $12 million and over $15 million in additional signed political & advocacy insertion orders (on campaigns between Q2 and Q4), for an aggregate of over $27 million in committed revenues. The commitments under these endeavors already represents close to 75% of 2023's consolidated revenues. In addition, the Company boasts high rates of reoccurring revenue (approximately 76% of consolidated 2023 revenues came from repeat customers), the most diversified vertical mix in our Company's history and continuing gains in CTV/OTT market share. Management expects a return to double-digit consolidated revenue growth in 2024 over both 2023 and our record 2022 mid-term election year, and with a reduced operating infrastructure, improvements in operating leverage with a return to Adjusted EBITDA1 profitability. Management expects to allocate material improvements in cash flows to bolster its working capital, through both debt repayment and improved cash reserves, which in combination with the continuation of our credit facility, will provide greater balance sheet flexibility as we drive towards continued growth on both the top and bottom-lines.
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 December 31, 2023, and December 31, 2022, copies of which can be found under the Company's profile on SEDAR+ at www.sedarplus.ca.
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 EBITDA1 | 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: Thursday, April 25, 2024
Time: 9:00 a.m. ET (6:00 a.m. PT)
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About Sabio
Sabio Holdings (TSXV: SBIO, OTCQX: 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 Sciencetm - a non-cookie based software as a service (SAAS) analytics and insights platform with AI natural language capabilities; and Vidillion ? 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 and twelve months ended December 31, 2023 and December31, 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, 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 CAD$0.21 and expected associated benefits to the Company's compliance with United States securities law; TSX Venture Exchange approval; the Company's purchase for cancellation of common shares of the Company pursuant to its normal course issuer bid; Sabio's ability to drive powerful connections to target audiences; consumer brands continuing to face challenges reaching, engaging, and validating audiences and Sabio's ability to resolve these challenges; Sabio's position as a leader in the ad-supported streaming space; expectations regarding improved cash flows and use of cash flows to bolster working capital, through both debt repayment and improved cash reserves; the continuation of Sabio's credit facility; expectations regarding greater balance sheet flexibility and improved balance sheet position in 2024; expectations regarding entering 2025 with lower debt, improved cash reserves, and the greatest balance sheet flexibility in the Company's history; cost cutting initiatives continuing to improve operational efficiencies, Sabio's bottom line, operating leverage and driving full-year Adjusted EBITDA profitability; expected annualized cost savings of US$4 million in annualized cost savings; brands and agencies becoming aware of and familiar with the versatility of Sabio's product offerings; Sabio's ability to achieve larger deal sizes, larger upfront commitments, higher retention rates, and more predictability in its sales pipeline; higher seasonally adjusted revenue growth; 2024 being a transformative year for Sabio; expectations regarding a return to double-digit consolidated revenue growth in 2024 and reduced operating infrastructure; revenue acceleration from political election periods; achievement of record top and bottom line numbers; and achieving profitability by the end of 2024. 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, [email protected], Phone: 1.844.974.2662; Aideen McDermott, Investor Relations, [email protected]
SOURCE Sabio Inc.
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