Generated $26.1 million in Revenue, $4.0 million in Adjusted EBITDA, and Fifth Consecutive Quarter of Positive Cash Flow at $6.7 million
Launched Groundbreaking Self-Serve Platform, illumin®, on October 1
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 September 30, 2020.
Third Quarter 2020 Highlights
- Total revenue for the three months ended September 30, 2020 was $26.1 million, a decrease of 3% compared to the same period in 2019, but an increase of 33% from the second quarter of 2020. Revenues in the quarter reflect a substantial decline in spend from our travel and hospitality clients due to COVID-19 that was largely offset by significant growth in our direct-to-consumer (DTC) and e-commerce clients.
- Gross margin for the three months ended September 30, 2020 increased to 52% compared to 48% for the same period in 2019.
- Net revenue or gross profit (revenue less media costs) for the three months ended September 30, 2020 was $13.5 million as compared to $13.0 million for the same period in 2019, an increase of 4%.
- Adjusted EBITDA increased 150% to $4.0 million for the three months ended September 30, 2020 compared to $1.6 million for the three months ended September 30, 2019. Adjusted EBITDA for the nine months ended September 30, 2020 was $8.0 million compared to $3.7 million for the same period in 2019, a 115% increase. Adjusted EBITDA for the trailing 12-month period totalled $14.0 million.
- Total Connected TV segment revenue for the fiscal quarter grew by approximately 353% year-over-year and 50% sequentially from the second quarter of 2020.
- Total Self-Serve segment revenue was $7.3 million for the three months ended September 30, 2020 as compared to $6.7 million for the three months ended September 30, 2019.
- Net income for the three months ended September 30, 2020 was $0.9 million compared to a net loss of $1.4 million for the three months ended September 30, 2019. Net loss for the nine months ended September 30, 2020 was $0.5 million compared to a net loss of $7.6 million for the same period in 2019.
- Adjusted Net Income for the three months ended September 30, 2020 was $3.7 million compared to Adjusted Net Income of $0.7 million in Q3 2019. Adjusted Net Income for the nine months ended September 30, 2020 was $6.1 million compared to an Adjusted Net loss of $0.4 million for the same period in 2019.
- Operating cash flow for the three months ended September 30, 2020 was $6.7 million compared to operating cash flow of $1.6 million for the same period in 2019. Operating cash flow for the nine months ended September 30, 2020 totalled $16.0 million compared to cash flow used of $5.0 million for the same period in 2019.
- As at September 30, 2020, the Company had positive working capital of $6.4 million, compared to negative working capital of $0.9 million as at September 30, 2019 and positive working capital of $4.0 million as at June 30, 2020.
- As at September 30, 2020, the Company had cash and cash equivalents of $9.5 million compared to $5.9 million as at September 30, 2019. In addition, the Company’s operating line decreased from $16.8 million as at September 30, 2019 to $2.3 million as at September 30, 2020.
Subsequent to the Quarter End
- Acuity formally launched illumin™, the Company’s proprietary new Self-Serve platform.
“Our operating results for the third quarter reflect both improving business conditions as the global economy continued to recover from the COVID-19 pandemic and strong operating leverage in our business. As we expected, month-over-month advertising spend improvements, which began in May, continued throughout the quarter,” said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds. “In the current economic environment, advertisers tasked with achieving the highest possible return on advertising spend have been turning to our holistic omnichannel solution, with ROI that has now proven to exceed industry benchmarks. As the economy continues to recover, we expect to see sequential improvement in revenue in the fourth quarter along with improved profitability for the period.”
Mr. Hayek continued, “During the third quarter, we completed the beta testing for our new revolutionary Self-Serve platform, illumin. Following the platform’s strong performance in beta testing with a number of leading companies, the platform was debuted to the public on October 1st. I am delighted to report that interest from advertisers and advertising agencies has been high. In fact, we expect illumin to contribute to our fourth quarter revenues, nearly six months ahead of our previous internal forecasts. We believe illumin will fundamentally alter the way programmatic advertising is executed, offering advertisers unique and powerful capabilities, enabling seamless virtualization and management of the consumer journey. We further believe the new platform will help drive the Company’s growth in 2021 and beyond.”
Jonathan Pollack, AcuityAds’ Chief Financial Officer, commented, “Our financial strength continues to improve as we successfully execute on our initiatives to expand our gross margins and carefully manage our expense structure. Adjusted EBITDA in the quarter grew 150% year-over-year and over 90% sequentially from Q2 2020, while gross margins improved by close to 350 basis points year-over-year to 52%. In addition, during the third quarter, we received less than $0.1 million in Canadian government wage support as compared to approximately $0.8 million in Q2 2020. Once again, strong cash flow generation allowed us to further reduce our debt, while also increasing our cash balance to $9.5M in the quarter. The Company’s net working capital reached $6.4 million as at September 30, 2020.”
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the periods ended:
|Three months ended||Nine months ended|
|Sept 30,||Sept 30,||Sept 30,||Sept 30,|
|Net income (loss) for the period||$921,220||$(1,360,006)||$(474,410)||$(7,602,650)|
|Fair value gain||–||–||–||–|
|Foreign exchange (gain) loss||350,743||(118,728)||(530,959)||471,477|
|Depreciation and amortization||2,217,626||1,865,521||6,640,617||5,513,663|
|Non recurring expenses||–||70,018||199,136||265,880|
The following table presents a reconciliation of net income (loss) to Adjusted Net Income (Loss) for the periods ended:
|Three months ended||Nine Months ended|
|Sept 30,||Sept 30,||Sept 30,||Sept 30,|
|Net income (loss) for the period||$921,220||($1,360,006)||($474,410)||($7,602,650)|
|Fair value gain||–||–||–||–|
|Depreciation and Amortization||2,217,626||1,865,521||6,640,617||5,513,663|
|Stock Based Compensation||252,335||352,209||485,151||1,188,992|
|Adjusted Net Income (loss)||$3,741,924||$738,995||$6,120,399||($428,518)|
Conference Call Details:
To register for the conference call webcast and presentation, please visit https://www.acuityads.com/q3.
Date: Wednesday, November 11th, 2020
Time: 8:30AM Eastern Time
Participant Dial-in Numbers:
Canada – (+1) 647 558 0588
US – (+1) 646 558 0588
Conference ID: 942 3335 0084
Please connect at least 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/q3.
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.
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, the benefits of the illumin platform, 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 and nine months ended September 30, 2020 dated November 11, 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:
Chief Executive Officer
AcuityAds Holdings Inc.
Chief Financial Officer
AcuityAds Holdings Inc.
Virtus Advisory Group Inc.
|AcuityAds Holdings Inc.|
|Consolidated Statements of Financial Position|
|Cash and cash equivalents||9,473,676||7,407,122|
|Investment tax credits receivable||22,302||286,883|
|Restricted cash (note 14)||–||100,000|
|Deferred tax asset||1,282,391||1,262,014|
|Property and equipment (note 3)||7,586,810||6,978,834|
|Intangible assets (note 4)||4,434,353||7,741,882|
|Goodwill (note 5)||4,869,841||4,869,841|
|Accounts payable and accrued liabilities||20,041,896||26,330,763|
|Term loans (note 16)||2,919,094||1,210,500|
|Revolving line of credit (note 15)||2,282,148||15,384,498|
|International loans (note 17)||1,087,542||1,006,653|
|Lease obligations (note 6)||3,058,079||2,748,200|
|Term loans (note 16)||4,897,594||2,241,831|
|International loans (note 17)||1,119,185||1,436,666|
|Lease obligations (note 6)||3,482,151||3,400,403|
|AcuityAds Holdings Inc.|
|Consolidated Statements of Income (Loss)|
|Sales and marketing||5,043,490||6,274,375||13,623,418||18,823,479|
|General and administrative||1,577,519||1,865,602||4,844,283||5,527,769|
|Share-based compensation (note 8(d))||252,335||352,209||485,151||1,188,992|
|Acquisition and integration costs||–||–||–||1,289,920|
|Depreciation and amortization (notes 3 and 4)||2,217,626||1,865,521||6,640,617||5,513,663|
|Income (loss) from operations||1,493,798||(938,137)||412,110||(5,093,029)|
|Finance costs (note 9)||251,159||546,446||1,304,195||1,922,019|
|Foreign exchange loss (gain)||350,743||(118,728)||(530,959)||471,477|
|Income (loss) before income taxes||891,897||(1,365,855)||(361,126)||(7,486,525)|
|Income taxes (recovery)||(29,324)||(5,849)||113,284||116,125|
|Net income (loss) for the period||921,220||(1,360,006)||(474,410)||(7,602,650)|
|Net income (loss) per share (note 10)|
|Basic and diluted||0.02||(0.03)||(0.01)||(0.17)|
|AcuityAds Holdings Inc.|
|Consolidated Statements of Cash Flows
|Cash provided by (used in)|
|Net loss for the period||(474,410)||(7,602,650)|
|Adjustments to reconcile net loss to net cash flows|
|Depreciation and amortization||6,640,617||5,513,663|
|Finance costs (note 9)||1,304,195||1,922,019|
|Share-based compensation (note 8(d))||485,151||1,188,992|
|Change in non-cash operating working capital|
|Investment tax credits receivable and deferred tax assets||304,821||(20,794)|
|Accounts payable and accrued liabilities||(5,694,479)||(6,858,543)|
|Interest paid – net||(1,102,249)||(1,778,584)|
|Additions to property and equipment (note 3)||(3,553,449)||(6,866,073)|
|Additions to intangible assets (note 4)||(351,686)||(1,297,877)|
|Proceeds from revolving line of credit (note 15)||60,154,399||57,637,876|
|Repayment of revolving line of credit (note 15)||(74,138,115)||(54,362,829)|
|Proceeds from term loans (note 16)||9,205,581||–|
|Repayment of term loans principal (note 16)||(6,613,249)||(1,513,125)|
|Proceeds from international loans||948,897||1,133,371|
|Repayment of international loans||(1,438,323)||(1,384,194)|
|Additions to lease obligations||2,535,440||5,135,085|
|Repayment of leases||(2,520,751)||(1,433,067)|
|Earn-out – acquisition||–||(2,927,982)|
|Net proceeds from equity financing||–||7,998,402|
|Proceeds from the exercise of warrants||1,171,285||560,635|
|Proceeds from the exercise of stock options||674,961||230,872|
|Decrease in cash and cash equivalents during the period||2,066,554||(2,119,262)|
|Cash and cash equivalents – Beginning of period||7,407,122||8,014,668|
|Cash and cash equivalents – End of period||9,473,676||5,895,406|
|Supplemental disclosure of non-cash transactions|
|Additions to property and equipment under lease||2,821,959||6,258,498|