AcuityAds Reports First Quarter 2021 Financial Results

Generated $27.5 million in Revenue and $4.5 million in Adjusted EBITDA

Self-Serve Advertising Automation Platform, illumin®, Generated $3.2 million in Revenue, Exceeding Expectations

Application to List on NASDAQ in Progress

AcuityAds Holdings Inc. (TSX:AT) (OTCQX:ACUIF) (“AcuityAds” or “Company”), the technology leader in consumer journey based advertising automation, today reported financial results for the three months ended March 31, 2021.

First Quarter 2021 Highlights

• Total revenue for the three months ended March 31, 2021 was $27.5 million, a 13.4% increase year-over-year. This growth was driven by our new advertising automation platform, illumin, and newer emerging verticals such as pharmaceutical, technology and direct-to-consumer brands, despite continued impact from COVID-19 on certain industries historically important to the Company, including travel, leisure and entertainment.
• Gross margin for the three months ended March 31, 2021 was 52.3%, compared to 50.3% in the prior year period, a 200-basis point improvement.
• Net revenue or gross profit (revenue less media costs) for the three months ended March 31, 2021 was $14.4 million, compared to $12.2 million for the same period in 2020, an increase of 17.9%.
• Adjusted EBITDA increased over 151% to $4.5 million for the three months ended March 31, 2021, compared to $1.8 million during the comparable prior year period. Adjusted EBITDA margin as a percentage of total revenue was 17% and as a percentage of net revenue was 32%. Adjusted EBITDA for the trailing 12-month period totaled $18.5 million, an increase of 76% from the comparable period last year.
• Total Connected TV segment revenue for the first quarter of 2021 grew approximately 987%, compared to the first quarter of 2020.
• Illumin first quarter 2021 revenue was $3.2 million, up over 100% sequentially and well ahead of initial expectations.
• Net income was $1.4 million for the three months ended March 31, 2021, an increase of 566% compared to net income of $0.2 million for the same period in 2020.
• Adjusted Net Income for the three months ended March 31, 2021 increased over 318% to $4.2 million, compared to Adjusted Net Income of $1.0 million in the prior year period.
• Operating cash flow for the three months ended March 31, 2021 was $5.7 million, compared to operating cash flow of $4.0 million for the same period in 2020.
• At March 31, 2021, the Company had cash and cash equivalents of $27.0 million, compared to $22.6 million as at December 31, 2020.
• The Company’s application to list its common shares on the Nasdaq Capital Market (“NASDAQ”) continues to progress.

“We were very pleased to resume year-over-year revenue growth during the first quarter, following a challenging period due to the impact of the global pandemic. I would like to thank all our team members for their hard work in making this achievement possible,” said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds. “Complementing our revenue growth, we also continued to generate strong cash flow and strengthened our balance sheet in the quarter. As we look to the second quarter, we expect revenue to accelerate ahead of pre-pandemic levels, growing over 50% on a year-over-year basis.”

Mr. Hayek continued, “One of the big growth drivers in the first quarter was illumin, which once again surpassed our most optimistic expectations, with sales growing in excess of 100% sequentially. We continue to see rapidly increasing interest for illumin and, to support this demand, we are ramping up hiring in several key areas.  Given its market momentum, we expect illumin to once again achieve very strong sequential revenue growth in the second quarter. This robust performance reinforces our unwavering belief that illumin is fundamentally altering the programmatic advertising landscape. We continue to work diligently to extend our marketplace lead, having just recently issued our sixth release of illumin, and to hone our consumer journey expertise so we may better serve our clients.”

Jonathan Pollack, AcuityAds’ Chief Financial Officer, commented, “We are proud to report yet another solid quarter, delivering both top and bottom-line year-over-year growth. Our revenues grew 13.4% while Adjusted EBITDA grew over 151% compared to the prior year.  As a result, cash grew to a record $27 million with working capital eclipsing $30 million, reflecting an even stronger balance sheet.  As we look forward, we anticipate strong quarterly revenue growth throughout the remainder of 2021. We also believe we will be able to further improve our solid financial position, while continuing to support illumin’s future growth. Finally, our application to list Acuity’s common stock on the NASDAQ is progressing well, and we expect that a listing on that exchange will be possible in the coming weeks.  We believe that a NASDAQ listing is an appropriate next stage in AcuityAds’ capital markets strategy, as it will allow us to broaden our investor base and enhance our brand image in one of our most important markets.“

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the periods ended:

The following table presents a reconciliation of net income (loss) to Adjusted Net Income (Loss) for the periods ended:

Conference Call Details:

Date: Tuesday, May 11^th, 2021.

Time: 8:30AM Eastern Time

To register for the conference call webcast and presentation, please visit: https://www.acuityads.com/q1

Participant Dial-in Numbers:

Canada – (+1) 647 374 4685

US – (+1) 646 558 8656

Webinar ID: 979 0282 2999

Please connect at 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

A recording of the conference call webcast will be available after the call by visiting the Company’s website at https://www.acuityads.com/q1.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures including “revenue less media costs”, “revenue less media costs margin”, “Adjusted EBITDA” and “Adjusted Net Income (Loss)” (as well as other measures discussed elsewhere in this press release).

The term “revenue less media costs margin” refers to the amount that “revenue less media costs” represents as a percentage of total revenue for a given period, while the term “revenue less media costs” refers to the net amount of revenue after deducting direct media costs.  Revenue less media costs is used for internal management purposes as an indicator of the performance of the Company’s solution in balancing the goals of delivering excellent results to advertisers while meeting the Company’s margin objectives and, accordingly the Company believes it is useful supplemental information.

“Adjusted EBITDA” refers to net income (loss) after adjusting for finance costs, impairment loss, fair value gain, income taxes, foreign exchange gain (loss), depreciation and amortization, share-based compensation, acquisition and related integration costs, severance expenses and adjustments to the carrying value of investment tax credits receivable. The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities before taking into consideration how those activities are financed and taxed and also prior to taking into consideration depreciation of property and equipment and certain other items listed above. It is a key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

“Adjusted Net Income (Loss)” refers to net income (loss) after adjusting for non-cash items such as impairment loss, fair value gain, depreciation and amortization, share-based compensation and foreign exchange gain/loss. The Company believes that Adjusted Net Income (Loss) is useful supplemental information as it provides an indication of the results generated by the Company’s main business activities on a cash basis. It is another key measure used by the Company’s management and board of directors to understand and evaluate the Company’s operating performance, to prepare annual budgets and to help develop operating plans.

These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers, and that these non-IFRS measures in particular are relevant to their analysis of the Company.

About AcuityAds:

AcuityAds is a leading technology company that provides marketers a one-stop solution for omnichannel digital advertising with best-of-category return on advertising spend. Its journey automation technology, illumin™, offers planning, buying and real-time intelligence from one platform. With proprietary Artificial Intelligence, illumin™ brings unique programmatic capabilities to close the gap between advertising planning and execution. The company brings an integrated ecosystem of privacy-protected data, inventory, brand safety and fraud prevention partners, offering trusted solutions with proven, above-benchmark outcomes for the most demanding marketers. AcuityAds is headquartered in Toronto with offices throughout Canada, the U.S., Europe and Latin America. For more information, visit AcuityAds.com.

Disclaimer in regards to Forward-looking statements

Certain statements included herein constitute “forward-looking statements” within the meaning of applicable securities laws. These statements may include “future-oriented financial information”, within the meaning of applicable securities laws, or relate to the Company’s future financial outlook, financial position, anticipated events, results, success of its work from home policies, the Company’s strategy with respect to the illumin platform, results of the Company’s application to list its shares on NASDAQ or the effect of the COVID-19 pandemic on the Company’s business and operations. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “intend”, “believe”, “estimate”, “consider”, “expect” “anticipate” and “objective” or other similar expressions concerning matters that are not historical facts.  Such forward-looking information is provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of the Company’s operations. Forward-looking information may not be appropriate for other purposes.

Forward-looking statements are necessarily based upon a number of estimates and assumptions, including with respect to expected growth, results of operations, performance and business prospects and opportunities. Specifically, in making projections with respect to Q2 revenue, we have made assumptions with respect to the availability of financing on reasonable terms and general business and economic conditions. While these assumptions are considered reasonable by management at this time, they are inherently subject to significant business, economic and competitive uncertainties and contingencies and may prove to be incorrect. In addition, given the evolving circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the adverse impact of the pandemic will be on the global and domestic economy, the business, operations and financial position of the Company’s clients and the business, operations and financial position of the Company. Investors are cautioned not to put undue reliance on forward-looking statements.

Many factors could cause the Company’s actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors discussed in the “Risk Factors” section of the Company’s Annual Information Form dated March 1, 2021 for the fiscal year ended December 31, 2020 (the “AIF”) and the Company’s Management Discussion and Analysis for the three months ended March 31, 2021 dated May [x], 2021 (the “MD&A”). A copy of the AIF, MD&A and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. In addition, the effects of COVID-19, including the duration, spread and severity of the pandemic, create additional risks and uncertainties for the Company. In particular, the impact of the virus and government authorities’ and public health officials’ responses thereto may affect: the Company’s actual results, performance, prospects or opportunities; domestic and global credit and capital markets and its ability to access capital on favourable terms, or at all; and the health and safety of its employees. The Company cautions that the list of risk factors and uncertainties described in the AIF and the MD&A are not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such information.

Any financial outlook and future-oriented financial information (as defined in applicable securities laws) contained in this press release regarding prospective financial performance, financial position or cash flows, is based on assumptions about future economic conditions or courses of action based on management’s assessment of the relevant information that is currently available. Future-oriented financial information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.

Except as required by law, AcuityAds does not intend, and undertakes no obligation, to update any forward-looking statement to reflect, in particular, new information or future events. All forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

For further information, please contact:

Kate Tumino

Public Relations

KCSA Strategic Communications

212-896-1252

ktumino@kcsa.com

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