AcuityAds Reports First Quarter 2020 Financial Results

Generated $24.2 million in Revenue, $1.8 million in Adjusted EBITDA, Net Income of $0.2 million and Positive Cash Flow

AcuityAds Holdings Inc. (TSX:AT) (OTCQX:ACUIF) (“AcuityAds” or “Company”), a technology leader that provides targeted digital media solutions enabling advertisers to connect intelligently with audiences across all digital advertising channels, today announced its financial results for the three months ended March 31, 2020.

“While the rapid emergence of the COVID-19 pandemic has led to unforeseen challenges that have impacted industries on a global scale, including the rapidly growing programmatic and digital advertising industry, the health and safety of our team members remains our primary focus,” said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds. “We have successfully implemented interim work-from-home policies designed to mitigate the risk to our team members and ensure continued service for our many customers, resulting in minimal disruption to our business.”

“Our first quarter performance reflects the positive impact of several initiatives we undertook over the past year before the COVID-19 pandemic to improve our profitability and cash flow generation. These initiatives included an acute focus on gross margins and diligent expense management. We are very pleased that these actions have been a success as we realized a 5% increase in gross margin and a 10% decrease in overall operating expenses year-over-year. In addition, the Company generated both positive net income and positive cash flow in the quarter. This solid performance in what has historically been the Company’s weakest quarter along with the recently announced increase in our credit facility with Silicon Valley Bank, has resulted in a stronger financial position for the Company that will enable us to better weather the economic downturn during Covid-19 and to respond quickly as economic activity and marketing spending returns.”

Mr. Hayek continued, “In line with trends across the digital advertising industry, the past month and a half has seen some campaigns paused or reduced, while our clients adjust to the impact of the COVID-19 pandemic within their own businesses. In response to this, we took several additional measures in March and April to further reduce our costs and significantly lower our cash flow break-even point. As the medical authorities work towards defeating the COVID-19 pandemic, we will continue to protect our team members, provide outstanding service to our customers and fortify the business to ensure it is positioned to prosper under almost any economic scenario.”

First Quarter 2020 Highlights

· Total revenue for the three months ended March 31, 2020 was $24.2 million compared to $27.9 million for the same period in 2019, a decrease of 13%. The decrease was the results of both a reduction in client spend in March 2020 due to the COVID-19 pandemic and Management’s previously disclosed focus on reducing lower margin customer campaigns.

· Total Self-Serve revenue for the three months ended March 31, 2020 was $4.9 million, compared to $6.3 million for the same period in 2019, a decrease of 22%.

· Total Connected TV revenue grew approximately 200% from Q1 2019.

· Gross margin (revenue less media costs margin) was 50% for Q1 2020 compared to 45% for Q1 2019.

· Gross profit (revenue less media costs) was relatively flat at $12.2 million for Q1 2020 compared to $12.4 million for Q1 2019.

· Adjusted EBITDA increased 77% to $1.8 million for the three months ended March 31, 2020 compared to Adjusted EBITDA of $1.0 million for the same period in 2019.

· Net income for the three months ended March 31, 2020 was $0.2 million compared to net loss of $2.8 million for the same period in 2019.

· Adjusted Net Income for the three months ended March 31, 2020 was $1.0 million compared to an Adjusted Net Loss of $0.5 million for the same period in 2019.

· Cash flow generated during the three months ended March 31, 2020 totaled $0.4 million compared to cash flow used of ($1.4 million) for the same period in 2019.

· As at March 31, 2020, the Company had cash of $7.8 million and additional availability of approximately $5 million under its borrowing facilities.

Subsequent to the Quarter

· On April 14, 2020, the Company amended its credit facility with Silicon Valley Bank to increase the availability under that facility to US$21.85 million from US$18 million. These arrangements now include a revolving credit facility that will mature on April 1, 2022, and a term loan facility that matures on April 17, 2024. Approximately $5 million of the proceeds from the amended facility were used to repay the Company’s 12% subordinated debt that had previously been outstanding.

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

Three months ended

Three months ended

March 31,

March 31,

2020

2019

Net income (loss) for the period

$204,774

$(2,781,250)

Adjustments:

    Finance costs

602,392

609,009

    Foreign exchange gain (loss)

(1,514,296)

209,914

    Depreciation and amortization

2,166,344

1,807,798

    Income taxes

103,865

69,541

    Share-based compensation

143,124

258,397

    Acquisition integration costs

808,442

    Severance expenses

96,365

34,373

Total adjustments

1,597,794

3,797,474

Adjusted EBITDA

$1,802,569

$1,016,224

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

Three months ended

Three months ended

March 31,

March 31,

2020

2019

Net income (loss) for the period

$204,774

$(2,781,250)

Adjustments:

    Depreciation and amortization

2,166,344

1,807,798

    Share-based compensation

143,124

258,397

    Foreign exchange gain (loss)

(1,514,296)

209,914

Total adjustments

795,172

2,276,109

Adjusted Net Income (Loss)

$999,946

($505,141)

 

Conference Call Details:

Date: Thursday, May 7th, 2020 Time: 9:00 AM Eastern Time

Participant Dial-in Numbers: Local – (+1) 416 764 8688 Toll Free – (+1) 888 390 0546 Conference ID: 49204413

Recording Playback Numbers: Local – (+1) 416 764 8677 Toll Free – (+1) 888 390 0541 Passcode: 204413 # Expiry Date: Thursday, May 14th, 2020 at 11:59pm Eastern Time

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 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 powerful and holistic solution for digital advertising across all ad formats and screens to amplify reach and Share of Attention® throughout the customer journey. Via its unique, data-driven insights, real-time analytics and industry-leading activation platform based on proprietary Artificial Intelligence technology, AcuityAds leverages an integrated ecosystem of partners for data, inventory, brand safety and fraud prevention, offering unparalleled, trusted solutions that the most demanding marketers require to be successful in the digital era.

AcuityAds is headquartered in Toronto with offices throughout 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 relate to the Company’s future financial outlook, financial position, anticipated events, results, success of its work from home policies or the effect of the COVID-19 pandemic on the Company’s business and operations. 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. Also, 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 5, 2020 for the fiscal year ended December 31, 2019 (the “AIF”) and the Company’s Management

Discussion and Analysis for the three months ended March 31, 2020 dated May 7, 2020 (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.

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.

For further information, please contact:

Tal Hayek Chief Executive Officer AcuityAds Holdings Inc. 416-218-9888 tal.hayek@acuityads.com

Jonathan Pollack Chief Financial Officer AcuityAds Holdings Inc. 416-218-9888 jp@acuityads.com

Babak Pedram Investor Relations Virtus Advisory Group Inc. 416-644-5081 bpedram@virtusadvisory.com

 

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