PR Newswire | Mar 2, 2021 07:31AM EST

03/02 06:30 CST

AcuityAds Reports Fourth Quarter and Full Year 2020 Financial Results TORONTO and NEW YORK, March 2, 2021

Generated $35.1 million in Fourth Quarter Revenue, $7.8 million in Fourth Quarter Adjusted EBITDA and $15.8 million in Full Year 2020 Adjusted EBITDA

Self-Serve Advertising Automation Platform, illumin, Exceeded Initial Expectations

TORONTO and NEW YORK, March 2, 2021 /PRNewswire/ - 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 and twelve months ended December 31, 2020.

Fourth Quarter 2020 Highlights

* Total revenue for the three months ended December 31, 2020 was $35.1 million, a decrease of 9% compared to the same period in 2019, but an increase of 35% from the third quarter of 2020. The decrease, when compared to the same period in 2019 was attributable to the continued impact COVID-19 has had on certain industries including travel, leisure, and entertainment, which had been very strong contributors in Q4 2019. Combined, the year-over-year decline in these sectors was approximately $5.5 million. * Net revenue or gross profit (revenue less media costs) for the three months ended December 31, 2020 was $18.3 million compared to $19.6 million for the same period in 2019. * Net revenue margin (gross margin) for the three months ended December 31, 2020 was 52.1% compared to 50.8% for the same period in 2019, an increase of 130 basis points. * Adjusted EBITDA increased over 30% to $7.8 million for the three months ended December 31, 2020 compared to $6.0 million for the three months ended December 31, 2019. Adjusted EBITDA margin as a percentage of total revenue was 22% and as a percentage of net revenue was 43%. * Total Connected TV segment revenue for the three months ended December 31, 2020 grew approximately 227% year-over-year and 42% sequentially from the third quarter of 2020. * Illumin Q4 revenue was in excess of $1.5 million, well ahead of initial expectations, as previously announced on January 11, 2021. * Net income for the three months ended December 31, 2020 increased 109% to $4.2 million compared to net income of $2.0 million for the three months ended December 31, 2019. * Adjusted Net Income for the three months ended December 31, 2020 increased over 35% to $7.1 million compared to Adjusted Net Income of $5.2 million in the prior year period. * Operating cash flow for the three months ended December 31, 2020 was $3.3 million compared to operating cash flow of $5.7 million for the same period in 2019. * As of December 31, 2020, the Company had cash and cash equivalents of $22.6 million compared to $7.4 million as of December 31, 2019. * As of December 31, 2020, the Company had working capital of $26.8 million, compared to $1.7 million as of December 31, 2019.

Fiscal Year 2020 Highlights

* Total revenue for the year ended December 31, 2020 was $104.9 million, a decrease of 12% compared to the same period in 2019. The decrease was attributable to the continued impact COVID-19 has had on certain industries including travel, leisure and entertainment, which had been very strong contributors in 2019. * Net revenue or gross profit (revenue less media costs) for the year ended December 31, 2020 was $54.1 million compared to $57.4 million for the same period in 2019. * Net revenue margin (gross margin) for the year ended December 31, 2020 was 51.6% compared to 48.2% for the same period in 2019, a 340-basis point increase. * Adjusted EBITDA increased 62.6% to $15.8 million for the year ended December 31, 2020 compared to $9.7 million for the year ended December 31, 2019. Adjusted EBITDA margin as a percentage of total revenue was 15% and as a percentage of net revenue was 29%. * Total Connected TV segment revenue grew approximately 287% year-over-year. * Net income for the year ended December 31, 2020 was $3.7 million compared to a net loss of $5.6 million for the year ended December 31, 2019. * Adjusted Net Income for the year ended December 31, 2020 increased 175% to $13.2 million compared to Adjusted Net Income of $4.8 million in 2019. * Operating cash flow for the year ended December 31, 2020 increased 2937% to $19.3 million compared to operating cash flow of $0.6 million for the same period in 2019.

"We ended an unprecedented year on a high note, thanks in no small part to the Acuity team. I want to personally thank them for their efforts, which have helped put the company in the strongest financial position ever in its history. Despite the challenging economic environment, we generated record annual Adjusted EBITDA of $15.8 million and operating cash flow of $19.3 million." said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds. "As expected, we saw a strong sequential improvement in our revenues in the fourth quarter. With 2020 now behind us, we are looking forward to resuming year-over-year revenue growth in 2021."

"We were very excited by the initial success we experienced with illumin. Following illumin's launch on October 1, 2020, it has performed extremely well in the marketplace surpassing all of our most optimistic internal forecasts. Given its growing pipeline and the increasing daily inbound interest that we receive, we expect illumin revenues to grow significantly in the first quarter." Mr. Hayek continued, "We take great pride in taking the consumer journey from a theoretical marketing construct to a powerful tool for our clients. We continue to believe illumin is fundamentally altering the programmatic advertising landscape, offering advertisers unique and powerful insights into their customers and empowering them with the capability to design, plan and execute consumer journeys in a simple and intuitive manner. Building upon our growing lead in the marketplace, we are continuously improving the platform, having already issued a second release which further enhances its capabilities and ease of use."

Jonathan Pollack, AcuityAds' Chief Financial Officer, commented, "We are proud of the significant improvement we have seen in the business' bottom line and cash flow generation capabilities in 2020 in the face of such a difficult economic environment. Our financial strength improved throughout the year as we diligently executed on our stated objectives to grow Adjusted EBITDA and operating cash flow, and carefully manage our expense structure. Our Adjusted EBITDA increased over 60% in 2020 from the prior year and operating cash flow generation improved by over 2900%. This dramatic improvement in cash flow generation, along with a recent capital raise in the fourth quarter, has resulted in our cash balance increasing to $22.6M as of December 31, 2020. This was accomplished even as we paid down our bank line of credit in full. Additionally, net working capital reached a record $26.7 million as of December 31, 2020, which speaks to our very strong financial position as we enter 2021. As we look forward to resuming strong quarterly revenue growth on a year over year basis in 2021, we believe we will be able to further improve our solid financial position, while continuing to invest to grow our illumin business."

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

Three months ended Twelve months ended

Dec 31, Dec 31, Dec 31, Dec 31,

2020 2019 2020 2019

Net income (loss) for the $4,165,399 $1,995,245 $3,690,990 $period (5,607,405)

Adjustments:

Finance costs 358,844 571,692 1,663,039 2,493,711

Foreign exchange (gain) loss 669,294 228,491 138,335 699,968

PPP Loan Forgiveness (1,816,836) - (1,816,836) -

Impairment loss - 3,231,048 - 3,231,048

Fair value gain - (3,066,799) - (3,066,799)

Depreciation and 2,253,557 2,610,214 8,894,174 8,123,877Amortization

Income taxes 1,384,417 36,982 1,497,701 153,107

Share-based compensation 513,156 221,475 998,307 1,410,467

Acquisition costs - - - 1,289,920

Severance expenses 4,231 117,630 245,365 654,525

Non-recurring expenses 287,907 66,073 487,044 331,952

Total adjustments 3,654,570 4,016,806 12,107,129 15,321,776

Adjusted EBITDA* $7,819,969 $6,012,051 $15,798,119 $9,714,371

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

Three months ended Twelve Months ended

Dec 31, Dec 31, Dec 31, Dec 31,

2020 2019 2020 2019

Net income (loss) for the $4,165,399 $1,995,245 $3,690,990 ($5,607,405)period

Adjustments:

PPP Loan Forgiveness (1,816,836) - (1,816,836) -

Impairment loss - 3,231,048 - 3,231,048

Fair value gain - (3,066,799) - (3,066,799)

Depreciation and 2,253,557 2,610,214 8,894,174 8,123,877Amortization

Non-cash income tax 1,278,700 - 1,278,700 -adjustment

Stock Based Compensation 513,156 221,475 998,307 1,410,467

Foreign Exchange 669,294 228,491 138,335 699,968

Total adjustments 2,897,871 3,224,429 9,492,680 10,398,560

Adjusted Net Income $7,063,270 $5,219,674 $13,183,670 $4,791,155

Conference Call Details:

To register for the conference call webcast and presentation, please visit:

https://www.acuityads.com/q4.

Participant Dial-in Numbers:

Canada - (+1) 647 558 0588

US - (+1) 646 558 8656

Webinar ID: 965 8498 5150

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://www.acuityads.com/q4.

Non-IFRS MeasuresThis 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 "net revenue", "Adjusted EBITDA" and "Adjusted Net Income (Loss)" (as well as other measures discussed elsewhere in this press release).

The term "net revenue" refers to the net amount of revenue after deducting direct media costs. Net revenue 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 one-stop solution for omnichannel digital advertising with best-of-category return on advertising spend. Its journey automation technology, illumin(tm), offers planning, buying and real-time intelligence from one platform. With proprietary Artificial Intelligence, illumin(tm) brings unique programmatic capabilities to close the gap between advertising planning and execution. The company brings an integrated ecosystem of privacy-protected data, inventory, brand safety and fraud prevention partners, offering trusted solutions with proven, above-benchmark outcomes for the most demanding marketers.

AcuityAds is headquartered in Toronto with offices throughout Canada, the U.S., Europe and Latin America. For more information, visit AcuityAds.com.

Disclaimer in regard 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 Company's strategy with respect to 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 1, 2021 for the fiscal year ended December 31, 2020 (the "AIF") and the Company's Management Discussion and Analysis for the three and nine months ended December 31, 2020 dated March 1, 2021 (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 favorable 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.

Consolidated Statements of Financial Position

As at December 31, 2020 and 2019 (expressed in Canadian dollars)

2020 2019

$ $

Assets

Current assets

Cash and cash equivalents 22,638,300 7,407,122

Accounts receivable 31,859,306 38,234,752

Prepaid expenses and other 1,901,067 2,477,651

Investment tax credits receivable (note 4) 21,922 286,883

56,420,595 48,406,408

Non-current assets

Restricted cash - 100,000

Deferred tax asset (note 22) - 1,262,014

Property and equipment (notes 3 and 5) 7,945,110 6,978,834

Intangible assets (note 6) 3,197,953 7,741,882

Goodwill (note 7) 4,869,841 4,869,841

72,433,499 69,358,979

Liabilities

Current liabilities

Accounts payable and accrued liabilities 23,232,661 26,330,763

Term loans (note 20) 2,481,550 1,210,500

Revolving line of credit (note 19) - 15,384,498

International loans (note 21) 1,092,297 1,006,653

Lease obligations (notes 8) 2,850,497 2,748,200

29,657,005 46,680,614

Non-current liabilities

Term loans (note 20) 5,796,454 2,241,831

International loans (note 21) 887,932 1,436,666

Lease obligations (notes 8) 4,041,520 3,400,403

40,382,911 53,759,514

Shareholders' Equity (notes 10) 32,050,588 15,599,465

72,433,499 69,358,979

Consolidated Statements of Income (Loss)

For the years ended December 31, 2020 and 2019 (expressed in Canadian dollars)

2020 2019

$ $

Revenue

Managed services 80,500,355 87,996,085

Self-service 24,393,693 31,138,144

104,894,048 119,134,229

Media costs 50,808,810 61,711,918

Gross profit 54,085,238 57,422,311

Operating expenses

Sales and marketing 18,127,414 27,019,494

Technology (notes 4 and 6) 13,156,538 13,801,435

General and administrative 5,918,740 7,873,489

Share-based compensation (note 10) 998,307 1,410,467

Acquisition costs - 1,289,920

Gain on contingent consideration - (3,066,799)

Impairment loss of goodwill (note 7) - 3,231,048

Depreciation and amortization 8,894,174 8,123,877

47,095,173 59,682,931

Income (loss) from operations 6,990,065 (2,260,620)

Finance costs (note 11) 1,663,039 2,493,711

Foreign exchange loss 138,335 699,968

1,801,374 3,193,679

Net income (loss) before income taxes 5,188,691 (5,454,299)

Income taxes (note 22) 1,497,701 153,107

Net income (loss) for the year 3,690,990 (5,607,406)

Net income (loss) per share (note 12)

Basic and diluted 0.07 (0.12)

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019 (expressed in Canadian dollars)

2020 2019

$ $

Cash provided by (used in)

Operating activities

Income (loss) for the year 3,690,990 (5,607,405)

Adjustments to reconcile net income (loss) to netcash flows

Depreciation and amortization 8,894,174 8,123,877

Finance costs (note 11) 1,663,039 2,493,711

Share-based compensation (note 10(c)) 998,307 1,410,467

Gain on contingent consideration - (3,066,799)

Impairment loss (note 7) - 3,231,048

Change in non-cash operating working capital

Accounts receivable 6,375,446 (4,252,158)

Prepaid expenses and other 676,584 (1,356,692)

Investment tax credits receivable 299,051 (20,794)

Deferred tax asset adjustment 1,278,700 -

Accounts payable and accrued liabilities (3,201,778) 1,998,048

Interest paid - net (1,381,698) (2,312,449)

19,292,815 640,854

Investing activities

Additions to property and equipment (note 5) (4,923,514) (6,935,818)

Additions to intangible assets (note 6) (393,007) (1,547,877)

(5,316,521) (8,483,695)

Financing activities

Amount drawn from revolving line of credit (note 67,340,097 77,372,07619)

Repayment of revolving line of credit (note 19) (83,066,960) (75,321,614)

Proceeds from term loans (note 20) 12,266,281 -

Repayment of term loans principal (note 20) (9,101,681) (1,815,750)

Additions to international loans 1,719,864 1,377,740

Repayment of international loans (2,182,955) (3,560,923)

Additions to leases 4,013,250 5,380,084

Earn-out - acquisition - (2,927,982)

Repayment of leases (3,417,975) (2,058,246)

Net proceeds from equity financing (note 10(b)) 10,617,887 7,998,402

Proceeds from the exercise of warrants 1,601,418 560,635

Proceeds from the exercise of stock options 1,465,658 230,872

1,254,884 7,235,294

Increase (decrease) in cash and cash equivalents 15,231,178 (607,547)

Cash and cash equivalents - Beginning of year 7,407,122 8,014,668

Cash and cash equivalents - End of year 22,638,300 7,407,121

Supplemental disclosure of non-cash transactions

Additions to property and equipment under leases 4,129,910 6,114,815

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SOURCE AcuityAds Holdings Inc.