- Total Revenue of $37.0 million for the Fourth Quarter
- Full year Self-Service Revenue up 33% YoY
- Q4 illumin Self-Service Revenue up 75% QoQ and 271% YoY
- (All monetary figures are expressed in Canadian dollars unless otherwise stated)
TORONTO – March 7, 2024 – illumin Holdings Inc. (TSX: ILLM) (“illumin” or “Company”), a journey advertising technology company that empowers marketers to make smarter decisions about communicating with online consumers, today announced its financial results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Highlights
- Fourth quarter 2023 revenue was $37.0 million, down 8% year-over-year, reflecting anticipated lower managed service revenue due to the Company’s ongoing strategic shift to focus on the self-service business and challenging market conditions for advertisers, partially offset by a significant increase in illumin self-service revenue derived mostly from new customer relationships.
- Overall self-service revenue was up 38% to $18.5 million, compared to $13.4 million in the year ago period, and represented 50% of total revenue, up from 42% in Q3 2023. Self-service revenue growth was driven by an increase in new illumin self-service customers and higher illumin self-service platform utilization.
- illumin self-service revenue was $8.9 million in the quarter, up 75% from $5.1 million in the prior quarter and up 271% versus Q4 2022. This represented 24% of revenue in the fourth quarter, up from 6% in the prior year period, and was driven largely by new customer relationships and by increased illumin platform utilization.
- The Company onboarded 33 net new illumin self-service clients during the quarter similar to the prior quarter, reflecting sales initiatives targeting higher-spend clients and positioning the Company for further illumin self-service revenue growth in Q1 2024 on a year-over-year basis.
- Gross margin was 49%, relatively flat compared to 48% for the same period in 2022.
- Net revenue or gross profit (revenue less media-related costs) for the quarter ended December 31, 2023 was $18.0 million, compared to $19.4 million for the same period in 2022, reflecting reduced sales in the period.
- Adjusted EBITDA was $2.4 million for the fourth quarter 2023, similar to the same period in 2022, reflecting cost management initiatives which offset lower revenue versus the prior year period.
- Q4 2023 net loss was $2.6 million, compared to a net loss of $0.8 million in Q4 2022, primarily as a result of lower total revenue and a higher foreign exchange loss, partially offset by lower operating costs.
- On November 13, 2023, the Company commenced a new NCIB, to purchase for cancellation up to 4,330,226 of its outstanding common shares. Under this new NCIB, as of March 2024, the Company purchased and cancelled 1,273,947 of its common shares at an average price of $1.64 per share totaling $2.1 million.
Fiscal Year 2023 Highlights
- Full year 2023 revenue rose to $126.3 million, up 4% on a year-over-year basis, which included a 33% increase in self-service revenue, predominately driven by illumin self-service client spend growth. This was partly offset by a decline in managed service revenue.
- Total self-service revenue increased to $53.4 million, compared to $40.1 million in the year ago period and represented 42% of total revenue, up from 33% in 2022.
- illumin self-service revenue was $21.6 million in 2023 up 279% from $5.7 million in the prior year and represented 17% of total company revenue versus 5% the year earlier.
- Gross margin for the year ended December 31, 2023 was 48%, compared to 50% for 2022, largely due to an increased mix of self-service revenue.
- Net revenue or gross profit (revenue less media-related costs) for the year ended December 31, 2023 was $60.3 million, relatively flat compared to $60.8 million for the same period in 2022.
- Adjusted EBITDA was $1.3 million for the year ended December 31, 2023, compared to $5.8 million for the prior year, primarily due to higher operating expenses and lower margin from business outside of North America.
- Net loss for the year ended December 31, 2023 was $11.0 million, compared to a net loss of $0.8 million for the year ended December 31, 2022 due to the factors mentioned previously, and a weakened U.S. dollar compared to the prior year period, partially offset by the recognition of a current income tax benefit from losses carried back with illumin Inc.
- During the year ended December 31, 2023, the Company repurchased for cancellation under the normal course issuer bid (“NCIB”) programs 1,146,476 common shares at an average price of $1.90 per share totaling $2.2 million.
- Pursuant to the substantial issuer bid, the Company purchased for cancellation 4,593,200 of its outstanding common shares at a purchase price of $2.65 per share for an aggregate purchase price of $12.2 million.
- At December 31, 2023, the Company had cash and cash equivalents of $55.5 million, compared to $85.9 million last year. This decrease was attributable to a combination of share repurchases, net loan repayments, lease payments and investments in our platform.
Tal Hayek, Co-Founder and Chief Executive Officer of illumin, stated, “During the fourth quarter, we continued to see considerable sequential and year-over year growth in illumin self-service revenue of 75% and 271%, respectively. That’s because our illumin platform provides a unique and differentiated solution for marketers and advertisers, giving them an effective and flexible self-serve approach to utilizing their advertising spend and managing the consumers’ advertising journey. This was also evident in our annual results, as illumin self-service revenue grew 279% for the full year.”
Mr. Hayek added, “We continue to be very encouraged by our illumin self-serve growth, both in terms of new customer relationships and increased advertiser spend. To capitalize on this, we have further refined our sales efforts to target client demographics where we are seeing the greatest success. We also continue to focus on signing long-term self-serve contracts carrying guaranteed minimums and terms greater than one year, which will establish a sustainable and recurring, self-service revenue stream for us.”
Elliot Muchnik, illumin’s Chief Financial Officer, commented, “Based on our growth in illumin self-serve to date, we expect this be a key driver for us to deliver total Company revenue growth again in 2024. We expect to achieve this growth even as we purposely reduce our relationships in certain markets that have generated lower margin revenue and experienced significant volatility in exchange rates. In light of the larger overall macro environment, we also intend to keep monitoring our costs closely and do not expect to see an increase in operating costs in 2024 compared to last year. Furthermore, given our strong financial position, we expect to continue executing on our NCIB program, reflecting our positive long-term outlook.”
The following table presents a reconciliation of Net loss to Adjusted EBITDA for the periods ended:
| Three months ended | Twelve months ended | |||
| December 31, | December 31, | December 31, | December 31, | |
| (in thousands of Canadian dollars) | 2023 | 2022 | 2023 | 2022 |
| Net loss for the period | $ (2,579) | $ (820) | $ (10,987) | $ (754) |
| Adjustments: | ||||
| Finance costs (income) | (528) | 115 | (2,122) | 544 |
| Foreign exchange loss (gain) | 2,034 | 958 | 2,827 | (6,270) |
| Depreciation and amortization | 1,110 | 1,326 | 5,482 | 4,853 |
| Income tax expense (benefit) | 82 | (470) | (1,095) | 962 |
| Share-based compensation | 1,141 | 1,245 | 5,725 | 5,851 |
| Severance expenses | 940 | 92 | 1,307 | 491 |
| Other expenses | 157 | – | 157 | 79 |
| Total adjustments | 4,936 | 3,266 | 12,281 | 6,510 |
| Adjusted EBITDA | $ 2,357 | $ 2,446 | $ 1,294 | $ 5,756 |
Conference Call Details
Date: Thursday, March 7, 2024
Time: 8:30AM Eastern Time
To register for the conference call webcast and presentation, please visit illumin.com/investor-information/earnings-call/
Please connect 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.
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-related costs”, “revenue less media-related 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-related costs margin” refers to the amount that “revenue less media-related costs” represents as a percentage of total revenue for a given period, while the term “revenue less media-related costs” refers to the net amount of revenue after deducting direct media costs and specific costs, such as data acquisition, validation and verification. Revenue less media-related 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 (income), impairment loss, fair value gain, income taxes, foreign exchange loss (gain), 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 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.
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 are relevant to their analysis of the Company.
About illumin
illumin is a journey advertising platform that enables marketers to reach consumers at every stage of their journey by leveraging advanced machine learning algorithms and real-time data analytics. The Company’s mission is to illuminate the path for brands to connect with their customers through the power of data-driven advertising. Headquartered in Toronto, Canada, illumin serves clients across North America, Latin America, and Europe.
Disclaimer with regard to forward looking statements
Certain statements included herein constitute “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. In particular, this news release contains forward-looking statements and information relating to the Company’s belief that the NCIB is in the best interests of the Company and its shareholders and that underlying value of the Company may not be reflected in the market price of the shares. Investors are cautioned not to put undue reliance on forward-looking statements. Except as required by law, illumin does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.
For further information, please contact:
Steve Hosein
Investor Relations Coordinator
illumin Holdings Inc.
416-918-5647
investors@illumin.com
Babak Pedram
Investor Relations –
Canada
Virtus Advisory Group Inc.
416-646-6779
bpedram@virtusadvisory.com
David Hanover
Investor Relations – U.S.
KCSA Strategic Communications
212-896-1220
dhanover@kcsa.com
Please note that the following financial information is an extract from the Company’s Consolidated Financial Statements for the twelve months ended December 31, 2023 and 2022 (the “Financial Statements”) provided for readers’ convenience and should be viewed in conjunction with the Notes to the Financial Statements, which are an integral part of the statements. The full Financial Statements and MD&A for the period may be found by accessing SEDAR+.
illumin Holdings Inc.
| December 31,
2023 |
December 31,
2022 |
|||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ 55,455 | $ 85,941 | ||
| Accounts receivable | 32,136 | 33,792 | ||
| Income tax receivable | 3,301 | 848 | ||
| Prepaid expenses and other | 4,123 | 3,153 | ||
| 95,015 | 123,734 | |||
| Non-current assets | ||||
| Deferred tax asset | – | 449 | ||
| Other assets | 63 | 248 | ||
| Property and equipment | 9,329 | 7,117 | ||
| Intangible assets | 7,618 | 5,229 | ||
| Goodwill | 4,870 | 4,870 | ||
| 116,895 | 141,647 | |||
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | 26,488 | 26,545 | ||
| Income tax payable | 717 | 43 | ||
| Borrowings | 131 | 4,032 | ||
| Lease obligations | 1,726 | 2,882 | ||
| 29,062 | 33,502 | |||
| Non-current liabilities | ||||
| Borrowings | 47 | 191 | ||
| Deferred tax liability | 1,001 | 1,060 | ||
| Lease obligations | 6,087 | 3,768 | ||
| 36,197 | 38,521 | |||
| Shareholders’ equity | 80,698 | 103,126 | ||
| 116,895 | 141,647 | |||
| 2023 | 2022 | |||
| Revenue | ||||
| Managed service | $ 72,874 | $ 80,978 | ||
| Self-service | 53,444 | 40,060 | ||
| 126,318 | 121,038 | |||
| Media-related costs | 66,023 | 60,251 | ||
| Gross profit | 60,295 | 60,787 | ||
| Operating expenses | ||||
| Sales and marketing | 26,104 | 24,043 | ||
| Technology | 19,695 | 16,805 | ||
| General and administrative | 14,666 | 14,753 | ||
| Share-based compensation | 5,725 | 5,851 | ||
| Depreciation and amortization | 5,482 | 4,853 | ||
| 71,672 | 66,305 | |||
| Loss from operations | (11,377) | (5,518) | ||
| Finance costs (income) | (2,122) | 544 | ||
| Foreign exchange loss (gain) | 2,827 | (6,270) | ||
| 705 | (5,726) | |||
| Net income (loss) before income taxes | (12,082) | 208 | ||
| Income tax expense (benefit) | (1,095) | 962 | ||
| Net loss for the year | (10,987) | (754) | ||
| Basic and diluted net loss per share | (0.20) | (0.01) | ||
| Other Comprehensive Loss | ||||
| Items that may be subsequently reclassified to net loss: | ||||
| Exchange loss on translating foreign operations | (1,860) | (901) | ||
| Comprehensive loss for the year | (12,847) | (1,655) |
| 2023 | 2022 | |||
| Cash provided by (used in) | ||||
| Operating activities | ||||
| Net loss for the year | $ (10,987) | $ (754) | ||
| Adjustments to reconcile net loss to net cash flows | ||||
| Depreciation and amortization | 5,482 | 4,853 | ||
| Finance costs (income) | (2,122) | 544 | ||
| Share-based compensation | 5,725 | 5,851 | ||
| Foreign exchange loss (gain) | 2,827 | (6,270) | ||
| Severance expense | 850 | 50 | ||
| Income tax (benefit) expense | (1,095) | 962 | ||
| Change in non-cash operating working capital | ||||
| Accounts receivable | (296) | (2,819) | ||
| Prepaid expenses and other | (2,906) | 125 | ||
| Other assets | 185 | (248) | ||
| Accounts payable and accrued liabilities | (1,811) | 1,881 | ||
| Income taxes received (paid), net | 99 | (1,985) | ||
| Interest received (paid), net | 2,658 | (409) | ||
| (1,391) | 1,781 | |||
| Investing activities | ||||
| Additions to property and equipment | (867) | (91) | ||
| Additions to intangible assets | (4,375) | (3,737) | ||
| (5,242) | (3,828) | |||
| Financing activities | ||||
| Repayment of term loans | (4,411) | (2,261) | ||
| Proceeds from international loans | 1,181 | 1,435 | ||
| Repayment of international loans | (1,435) | (1,886) | ||
| Payment of leases | (3,020) | (2,517) | ||
| Repurchase of common shares for cancellation | (15,313) | (14,500) | ||
| Proceeds from the exercise of stock options | 7 | 374 | ||
| (22,991) | (19,355) | |||
| Decrease in cash and cash equivalents | (29,624) | (21,402) | ||
| Impact of foreign exchange on cash and cash equivalents | (862) | 5,134 | ||
| Cash and cash equivalents – beginning of year | 85,941 | 102,209 | ||
| Cash and cash equivalents – end of year | 55,455 | 85,941 | ||
| Supplemental disclosure of non-cash transactions | ||||
| Additions to property and equipment under leases | 4,403 | 4,957 | ||
| Other non-cash additions to property and equipment | 734 | – |
