Total Second Quarter Revenue of $29.2 Million; illumin Self-Service Revenue up 61% YoY and Represents 30% of Total Revenue; Adjusted EBITDA Improvement of 11% YoY
(All monetary figures are expressed in Canadian dollars unless otherwise stated)
TORONTO – August 8, 2024 – illumin Holdings Inc. (TSX: ILLM) (OTCQB: ILLMF) (“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 second quarter ended June 30, 2024.
Second Quarter 2024 Highlights
- Second quarter 2024 revenue was $29.2 million compared to $33.2 million in Q2 2023, reflecting a decline in managed service revenue and programmatic revenue, primarily in Latin America.
- illumin self-serve revenue was $8.8 million in the quarter, up 61% year-over-year and represented 30% of total revenue compared to 16% in Q2 2023. This growth was driven largely by new customer relationships.
- The Company onboarded 33 net new illumin self-serve clients during the quarter, resulting from sales initiatives targeting higher-spend customers.
- Second quarter 2024 gross margin was 48%, which was consistent with Q2 2023 and a mild improvement from Q1 FY 2024.
- Net revenue, or gross profit (revenue less media-related costs), for the second quarter ended June 30, 2024 was $14.0 million, compared to $15.9 million in Q2 2023, reflecting lower sales.
- Adjusted EBITDA was $0.5 million, an increase of 11% compared to the same period in 2023 despite the decline in revenue, which was primarily attributable to lower operating costs.
- Q2 2024 net loss was $1.0 million, compared to a net loss of $5.6 million in Q2 2023. This improvement was mainly due to lower operating costs, a net foreign exchange gain versus a loss in Q2 2023, and lower income taxes.
- On November 13, 2023, the Company commenced a new normal course issuer bid (“NCIB”) to purchase for cancellation up to 4,330,226 of its outstanding common shares. During the three and six months ended June 30, 2024, the Company purchased and cancelled 1,342,344 and 2,490,686 of its common shares under the NCIB at an average price of $1.64 and $1.65 per share, totaling $2.2 million and $4.1 million, respectively.
- In June 2024, the Company upgraded the trading of its common shares from the OTC Pink Market to the OTCQB Venture Market (the “OTCQB”) in the United States, which is intended to provide shareholders and investors with improved accessibility, liquidity, and transparency on the Company.
Simon Cairns, illumin’s Chief Executive Officer, commented, “In the second quarter, we saw good growth both year-over-year and sequentially in illumin self-service, along with a good sequential increase in managed services. As we listen closely to customers who value our services, we believe there may be untapped potential in creating a complimentary portfolio of products and services including both self-service and managed services. Our rebuilding of the leadership team reflects our intent to be market responsive and focused on delivering results for our customers and performance for our investors.”
Mr. Cairns added, “Complementing this, we have been refining our sales activities, including honing our illumin self-serve go to market strategy. So, even while our sales and marketing spending fell year-over-year, our illumin self-serve revenue still grew rapidly as our sales efforts became more productive. We also continued to prioritize increasing our managed service sales efficiency, as we consider this to be an area with untapped potential. Together, we believe these actions will drive our long-term revenue growth and improve our profitability.”
Elliot Muchnik, illumin’s Chief Financial Officer, commented, “As we have been carefully managing our expenses and reallocating our internal resources to areas where we see the most growth potential, we maintained our overall focus on operational discipline. This effort has contributed to a total operating expense decline of over 10% and an Adjusted EBITDA improvement of 11% compared to the same period last year. With our improved operating efficiencies, we are able to support a number of sales initiatives that should support year-over-year growth in the third quarter.”
The following table presents a reconciliation of net loss to Adjusted EBITDA for the periods ended:
(unaudited, in thousands of Canadian dollars)
| Three months ended | Six months ended | |||
| June 30, | June 30, | June 30, | June 30, | |
| 2024 | 2023 | 2024 | 2023 | |
| Net loss for the period | $ (1,014) | $ (5,608) | $ (2,152) | $ (9,170) |
| Adjustments: | ||||
| Finance income, net | (469) | (265) | (975) | (982) |
| Foreign exchange loss (gain) | (556) | 2,403 | (1,942) | 2,459 |
| Depreciation and amortization | 1,387 | 1,449 | 2,752 | 2,939 |
| Income tax expense (benefit) | (491) | 166 | (113) | 236 |
| Share-based compensation | 1,108 | 1,671 | 1,807 | 3,013 |
| Severance expenses | 10 | 205 | 100 | 248 |
| Nasdaq-related costs1 | 313 | 444 | 736 | 957 |
| Other expenses | 227 | – | 316 | – |
| Total adjustments | 1,529 | 6,073 | 2,681 | 8,870 |
| Adjusted EBITDA | $ 515 | $ 465 | $ 529 | $ (300) |
- Nasdaq-related costs are listing fees and directors’ and officers’ insurance specific to the Company’s Nasdaq listing and have been reclassed below Adjusted EBITDA as they are not recurring.
Conference Call Details:
Date: Thursday, August 8, 2024
Time: 8:30AM Eastern Time
To register for the conference call webcast and presentation, please visit https://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 at https://illumin.com/investor-information/
Non-IFRS Measures
This press release makes reference to certain non-IFRS Accounting Standard measures (“non-IFRS measures”). These measures are not recognized measures under IFRS Accounting Standards (“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 (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.
“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 loss (gain). 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 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. 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
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 Condensed Interim Consolidated Financial Statements (unaudited) for the three and six months ended June 30, 2024 and 2023 (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+ at www.sedarplus.com.
| June 30,
2024 |
December 31,
2023 |
|||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 51,584 | $ | 55,455 |
| Accounts receivable | 26,707 | 32,136 | ||
| Income tax receivable | 3,186 | 3,301 | ||
| Prepaid expenses and other | 3,670 | 4,123 | ||
| 85,147 | 95,015 | |||
| Non-current assets | ||||
| Other assets | 65 | 63 | ||
| Property and equipment | 8,230 | 9,329 | ||
| Intangible assets | 8,376 | 7,618 | ||
| Goodwill | 4,870 | 4,870 | ||
| 106,688 | 116,895 | |||
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | 22,563 | 26,488 | ||
| Income tax payable | 571 | 717 | ||
| Borrowings | 113 | 131 | ||
| Lease obligations | 1,636 | 1,726 | ||
| 24,883 | 29,062 | |||
| Non-current liabilities | ||||
| Borrowings | – | 47 | ||
| Deferred tax liability | 665 | 1,001 | ||
| Lease obligations | 5,205 | 6,087 | ||
| 30,753 | 36,197 | |||
| Shareholders’ equity | 75,935 | 80,698 | ||
| 106,688 | 116,895 | |||
| Three months ended | Six months ended | |||
| 2024 | 2023 | 2024 | 2023 | |
| Revenue | ||||
| Managed service | $ 14,351 | $ 20,127 | $ 26,111 | $ 37,076 |
| Self-service illumin | 8,750 | 5,429 | 17,129 | 7,602 |
| Programmatic | 6,103 | 7,634 | 10,916 | 15,007 |
| 29,204 | 33,190 | 54,156 | 59,685 | |
| Media-related costs | 15,244 | 17,309 | 28,571 | 31,327 |
| Gross profit | 13,960 | 15,881 | 25,585 | 28,358 |
| Operating expenses | ||||
| Sales and marketing | 5,845 | 6,566 | 11,158 | 12,244 |
| Technology | 4,512 | 5,539 | 9,038 | 10,908 |
| General and administrative | 3,638 | 3,960 | 6,012 | 6,711 |
| Share-based compensation | 1,108 | 1,671 | 1,807 | 3,013 |
| Depreciation and amortization | 1,387 | 1,449 | 2,752 | 2,939 |
| 16,490 | 19,185 | 30,767 | 35,815 | |
| Loss from operations | (2,530) | (3,304) | (5,182) | (7,457) |
| Finance income, net | (469) | (265) | (975) | (982) |
| Foreign exchange loss (gain) | (556) | 2,403 | (1,942) | 2,459 |
| (1,025) | 2,138 | (2,917) | 1,477 | |
| Net loss before income taxes | (1,505) | (5,442) | (2,265) | (8,934) |
| Income tax expense (benefit) | (491) | 166 | (113) | 236 |
| Net loss for the period | (1,014) | (5,608) | (2,152) | (9,170) |
| Basic and diluted net loss per share | (0.02) | (0.10) | (0.04) | (0.16) |
| Other Comprehensive Loss | ||||
| Items that may be subsequently reclassified to net loss: | ||||
| Exchange (loss) gain on translating foreign operations | (144) | 248 | (308) | (53) |
| Comprehensive loss for the period | (1,158) | (5,360) | (2,460) | (9,223) |
| 2024 | 2023 | |||
| Cash provided by (used in) | ||||
| Operating activities | ||||
| Net loss for the period | $ (2,152) | $ (9,170) | ||
| Adjustments to reconcile net loss to net cash flows | ||||
| Depreciation and amortization | 2,752 | 2,939 | ||
| Finance income, net | (975) | (982) | ||
| Share-based compensation | 1,807 | 3,013 | ||
| Foreign exchange loss (gain) | (1,942) | 2,459 | ||
| Income tax expense (benefit) | (113) | 236 | ||
| Change in non-cash operating working capital | ||||
| Accounts receivable | 5,740 | (1,190) | ||
| Prepaid expenses and other | 1,032 | (1,164) | ||
| Other assets | (2) | (24) | ||
| Accounts payable and accrued liabilities | (893) | (5,437) | ||
| Income taxes paid, net | (166) | (121) | ||
| Interest received, net | 1,068 | 1,318 | ||
| 6,156 | (8,123) | |||
| Investing activities | ||||
| Additions to property and equipment | (1,042) | (421) | ||
| Additions to intangible assets | (2,465) | (2,824) | ||
| (3,507) | (3,245) | |||
| Financing activities | ||||
| Repayment of term loans | – | (4,411) | ||
| Proceeds from international loans | – | 304 | ||
| Repayment of international loans | (65) | (411) | ||
| Payment of leases | (1,129) | (1,691) | ||
| Repurchase of common shares for cancellation | (4,033) | (1,500) | ||
| Proceeds from the exercise of stock options | 4 | – | ||
| (5,223) | (7,709) | |||
| Decrease in cash and cash equivalents | (2,574) | (19,077) | ||
| Impact of foreign exchange on cash and cash equivalents | (1,297) | (1,197) | ||
| Cash and cash equivalents – beginning of period | 55,455 | 85,941 | ||
| Cash and cash equivalents – end of period | 51,584 | 65,667 | ||
| Supplemental disclosure of non-cash transactions | ||||
| Adjustments to property and equipment under leases | (23) | 56 | ||
| Unpaid additions (reversals) to property and equipment, net | (561) | – | ||
| Unpaid taxes on share repurchases | (81) | – |
