Sabio Delivers 11% Q2-2023 Revenue Growth, Led by 57% Increase in Connected TV/OTT Sales

• Revenues of US$8.0 million in Q2-2023, up 11% compared to US$7.2 million in Q2-2022
• Connected TV/OTT sales as a category increased by 57% to US$5.0 million, compared to US$3.2 million in the prior year's quarter
• Gross Margin increased to 60% Q2-2023 from 59% in Q2-2022
• Continues to gain market share as Connected TV/OTT revenues continue to outpace key competitors and industry averages

TORONTO, Aug. 21, 2023 /PRNewswire/ -- Sabio Holdings Inc. (TSXV: SBIO)(OTCQX: SABOF) (the "Company" or "Sabio"), a leading provider of connected TV ("CTV")/over-the-top ("OTT") advertising platforms validated by performance, is pleased to announce its unaudited financial results for the second quarter ended June 30, 2023. Unless otherwise indicated, all amounts are expressed in U.S. dollars.

"We are pleased to have once again delivered double-digit revenue growth in a challenging economic environment, led by a 57% increase in our CTV/OTT business," said Aziz Rahimtoola, Chief Executive Officer. "Supported by our highly differentiated, end-to-end CTV/OTT technology stack, under which the majority of Sabio's CTV impressions are delivered through direct supply, we continue to gain market share and outpace industry averages¹ in the category." 

Sajid Premji, Chief Financial Officer, added, "In a testament to the stability and scalability of our sales model, 74% of consolidated revenues in the first half of 2023 were from repeat customers, as we continue to attract and retain customers at high rates, resulting in larger average deal sizes and acquisition-cost efficiencies. Moreover, management's ongoing focus on reducing costs and increasing efficiencies has offset continued investments in our technological capabilities, including a new programmatic offering anticipated to launch in the first half of 2024. Our ability to maintain strong gross margins, combined with the stability in our cost structure, positions Sabio well for Adjusted EBITDA (as defined below) gains in the second half of the year and into 2024. Subsequent to quarter end, we strengthened our cash position with the closure of a non-brokered CAD$1.7 million convertible note offering.  Meanwhile, the renewal of our loan facility with Avidbank continues to progress well. Amendments under an executed term sheet include a potential US$3 million increase to the facility, subject to approval from the bank's loan committee."

¹ eMarketer (June 2023)

Second Quarter 2023 Financial Highlights

• Sabio delivered revenues of US$8.0M in Q2-2023, up 11% from US$7.2M in Q2-2022.
  
  
• CTV/OTT sales as a category increased by 57% to US$5.0 million, compared to US$3.2 million in the prior year's quarter. CTV/OTT sales accounted for 62% of the Company's sales mix, compared with 44% in the prior year's quarter.
  
  
• Mobile display revenues of US$2.9million in Q2-2023, down 24%, from US$3.9 million in Q2-2022, as our legacy mobile display campaigns continued to shift their spend with Sabio from mobile display to higher-margin mobile OTT streaming, which is recognized under the Company's CTV/OTT revenue category.
  
  
• Gross Profit of US$4.8 million in Q2-2023, up from US$4.3 million in Q2-2022. Gross Margin improved on a year-over-year basis, from 59% in Q2-2022 to 60% in the completed quarter. The increase is attributable to several efficiency and direct sales improvements within the CTV/OTT channel as well as our App Science business.
  
  
• Adjusted EBITDA¹ loss of US$1.7 million in Q2-2023 compared to a loss of US$1.4 million in Q2-2022. The loss was primarily driven by overhead added during and subsequent to the second quarter of 2022, which included the continued expansion of our sales and marketing apparatus in the prior year and costs associated with transitioning our workforce back to the office. On a sequential basis, second quarter operating expenses, normalized for commissions, were flat in comparison to the first quarter of 2023 as cost efficiencies implemented by management offset incremental headcount additions to our salesforce to position ourselves for the 2024 U.S. elections.
  
  
• As of June 30, 2023, the Company had cash of US$1.7 million, as compared to US$2.4 million on June 30, 2022.
  
  
• As of June 2023, the Company had US$6 million outstanding under its credit facility with Avidbank.

¹ See "Use of Non-IFRS Measures" below

Second Quarter 2023 Business Highlights

• App Science worked with an agency representing a top global automotive brand to integrate App Science with 18 new CTV/OTT platforms. Management believes these integrations will not only solidify recurring revenues from the partner agency but will enhance App Science's overall value proposition to source recurring, third-party direct revenues.
• Vidillion continues to add new demand and supply sources, increasing on a sequential basis, its demand-side integrations by 39% and supply-side integrations by 19% from the first quarter.
• On April 4, 2023, 330,000 share options of the Company were granted to certain directors and employees of the Company at an exercise price of CAD $0.99 and 353,793 restricted stock units ("RSUs") of the Company were granted to certain officers and employees of the Company at the grant-date fair-value of the Company's common shares of CAD $0.99. The options will vest quarterly from the grant date over a 3-year vesting period. The RSUs will vest over three years with 1/3 vesting at the one-year anniversary of the grant and quarterly vesting over the next two years.

Events Subsequent to June 30, 2023:

• On August 16, 2023, the Company closed a non-brokered private placement financing of secured convertible notes (the "Secured Notes") in the aggregate principal of CAD$1,200,000 and unsecured convertible notes (the "Unsecured Notes" and together with the Secured Notes, the "Notes") for aggregate gross proceeds of CAD$537,850 for total gross proceeds of CAD$1,737,850. The Notes will mature on August 16, 2025. The Notes will be convertible in whole or in part, at the option of the holder, into common shares in the capital of the Company ("Common Shares") at a price of CAD$1.00 ("Conversion Price") per Common Share at any time before or on the Maturity Date. The Unsecured Notes bear interest at the rate of fourteen percent (14%) per annum payable as of the Maturity Date, except that: (i) the interest on the Unsecured Note issued to Mr. Aziz Rahimtoola – the Company's Chief Executive Officer will be payable monthly; and (ii) the Company may prepay the Unsecured Note issued to Mr. Aziz Rahimtoola any time after twelve months from the issuance. The Secured Notes bear interest at the rate of fourteen percent (14%) per annum payable semi-annually in arrears in cash or Common Shares at the option of the Company and are secured against all personal property and assets of the Company. The Secured Notes can be prepaid in all or a part of the principal plus accrued and unpaid interest without penalty or bonus.

¹ See "Use of Non-IFRS Measures" below 

Sabio's interim consolidated financial statements, including the notes thereto, and management's discussion and analysis (MD&A) for the three months ended June 30, 2023, and June 30, 2022, can be found under Sabio's profile on SEDAR at www.sedar.com

Outlook

Despite what is traditionally the slowest half of the calendar year due to the seasonal trends effecting the advertising industry, the Company continued its expansion into the Connected TV/OTT market by delivering 59% revenue growth in the category for the six-months ended as we continue to substantially outpace the market and take market share. Moreover, in the first half of the year, approximately 74% of consolidated revenues came from repeat customers as Sabio continues to attract and retain customers at high rates, bringing more stability and larger deal sizes to its revenue model and gaining cost efficiencies.  Additionally, our customer mix continues to become less transitory and more predictable. Approximately 26% of the revenues in the first half were generated from top logos that did not spend with Sabio previously, successfully replacing Covid-19 and 2022 U.S. election-related spending that dissipated in 2023. 

While economic uncertainty, driven by macro interest rate policies, continues to impact advertising budgets, management remains cautiously optimistic as we enter the second half of the year. The Company expects political and advocacy spending to accelerate in the leadup to the 2024 U.S. elections.  Further, as a result of the Company's ongoing focus on cost optimization and efficiencies, OPEX spend, normalized for sales commissions, remained flat from previous quarters, with further efficiency gains expected in the quarters ahead.  Sabio's ability to maintain strong gross margins, combined with the stability in our cost structure, positions Sabio well for Adjusted EBITDA gains in the second half of the year and into 2024.  The majority of Sabio's CTV impressions delivered are through direct supply gained via the acquisition of Vidillion, making Sabio one of the highest direct supply options in the CTV/OTT space, and supporting strong gross margins.

Sabio continues to invest in technology to further enhance our end-to-end CTV/OTT technology stack. Sabio expects to launch a new programmatic CTV/OTT offering in the first half of 2024 which is anticipated to drive further incremental revenue gains in 2024.

To the extent the Company finds suitable and attractive acquisition candidates that are complementary to its long-term objectives, Sabio may also pursue further inorganic growth through strategic business acquisitions.

¹ See "Use of Non-IFRS Measures" below 

Selected Financials

The tables below set out selected financial information relating to Sabio's. and should be read in conjunction with Sabio's condensed interim consolidated financial statements, including the notes thereto, and MD&A for the three months ended June 30, 2023, and June 30, 2022, copies of which can be found under Sabio's profile on SEDAR+ at www.sedarplus.ca.

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 if for information purposes only and may not be appropriate for other purposes.

Conference Call:

The Company will host an investor conference call for the second quarter ended June 30, 2023, at 9:00 a.m. ET on August 22, 2023.  The webinar details are below:

Date:  August 22, 2023

Time: 9:00 a.m. ET (6:00 a.m. PT)

Webinar Registration: https://bit.ly/3YneYmH

Please connect 5 minutes prior to the conference call to ensure time for any software download that may be required.

About Sabio

Sabio Holdings Inc. (TSXV: SBIO) (OTCQX: SABOF) is one of the fastest-growing CTV/OTT technology and service providers in the high-growth ad-supported video-on-demand (AVOD) and FAST channel space. Its cloud-based CTV/OTT technologies provide publishers with distribution, monetization, and analytics while delivering ROI validation for brands and agencies. The Sabio Holdings portfolio is comprised of: Sabio — our trusted and transparent content monetization DSP; App Science™ — our cutting edge, non-panel based, real-time measurement and attribution SAAS platform; and Vidillion — our cloud-based ad-insertion, and content distribution and management platform.

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 under the "Selected Financials" section of this release and in the Company's MD&A for the three months ended June 30, 2023 and June 30, 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, including but not limited to the Company's operations, growth and sales expectations and business plans, the Company's outlook for fiscal 2023 and 2024 and cash flow management, including the final loan approval of its executed term sheet with Avidbank , that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts"  and other similar expressions. 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. 

SOURCE: Sabio Holdings Inc.

App Science is a trademark or registered trademark of Sabio Inc. in the United States, Canada, and other countries.

SOURCE Sabio Holdings Inc.

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