PR Newswire | Nov 3, 2021 07:02AM EDT

11/03 06:00 CDT

AcuityAds Reports Third Quarter 2021 Financial Results TORONTO and NEW YORK, Nov. 3, 2021

Generated $27.5 million in Revenue and $4.4 million in Adjusted EBITDA

illumin Revenue Up 42% Sequentially to $7.4 million

Strong Cash Flow Generation Leads to Record Cash Balance of Over $100 Million

TORONTO and NEW YORK, Nov. 3, 2021 /PRNewswire/ - AcuityAds Holdings Inc. (TSX: AT) (Nasdaq: ATY) ("AcuityAds" or "Company"), the technology leader in consumer journey based advertising automation, today reported financial results for the three and nine months ended September 30, 2021. Unless otherwise specified, all amounts are in Canadian dollars.

Third Quarter 2021 Highlights

* Third quarter 2021 total revenue was $27.5 million, a 5.4% increase year-over-year, and an 11.3% increase on a constant currency basis. This revenue growth was achieved largely due to strong sequential revenue growth from illumin, which more than offset lower advertising spend partly related to supply chain disruptions from some of our legacy customers. Revenue growth was also aided by newer emerging verticals such as pharmaceutical, technology, automotive and direct-to-consumer brands. * illumin third quarter 2021 revenue was up over 42% sequentially to $7.4 million, or 27% of total revenues in the quarter. On a trailing twelve-month basis, as of September 30, 2021, revenue from illumin totalled $17.3 million. * Total Connected TV segment revenue for the third quarter of 2021 grew over 220% compared to the third quarter of 2020. * Gross margin for the three months ended September 30, 2021 was 51.9%, in line with the same period in 2020. * Net revenue or gross profit (revenue less media costs) for the three months ended September 30, 2021 was $14.3 million, a 5.4% increase compared to $13.5 million for the third quarter of 2020. * Adjusted EBITDA was $4.4 million for the three months ended September 30, 2021, compared to $4.0 million during the comparable prior year period, an increase of 9.5%. Adjusted EBITDA margin as a percentage of total and net revenue was 16.1% and 31%, respectively. Adjusted EBITDA for the trailing 12-month period totaled $22.2 million, a 58.8% increase from the comparable period last year. * Net Income was $3.4 million for the three months ended September 30, 2021, a 265% increase compared to net income of $0.9 million for the same period in 2020. * Operating cash flow for the third quarter of 2021 was $9.5 million, an increase of 41.8% compared to operating cash flow of $6.7 million for the same period in 2020, driven by strong collections during the period. * At September 30, 2021, the Company had cash and cash equivalents of $100.3 million, compared to $22.6 million as of December 31, 2020.

"We are very pleased to report another quarter of strong sequential illumin revenue growth, as this revenue stream continues to become a more significant percentage of our total revenue. I am incredibly proud that since the launch of illumin only one year ago, the Company has already seen cumulative revenue of $17.3 million from this innovative software offering. We also saw further signs of recovery this quarter in COVID-affected industries such as travel, leisure and entertainment. In addition, the Company generated very strong operating cash flow, which further strengthened our balance sheet. I want to once again thank all of our team members for their hard work and dedication without which this performance would not have been possible," said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds. "As we look to the fourth quarter, based on our current pipeline, we expect to generate year-over-year total revenue growth and strong adjusted EBITDA."

Mr. Hayek continued, "On its one-year anniversary, the illumin platform continues to lead our future growth and is fundamentally transforming the programmatic advertising industry. illumin's sales grew over 42% sequentially during the third quarter and, as importantly, new Tier 1 clients grew 53% sequentially. This strong sequential Tier 1 client growth demonstrates the success of our efforts to engage with larger global brands and bodes well for further illumin revenue growth in the future. With the strong revenue and pipeline growth we have already achieved and the overwhelming positive feedback we continue to receive from clients, we expect illumin to finish 2021 on a strong note and continue to grow in 2022. We continue to put additional marketing, sales and product development resources behind illumin to not only extend our leading marketplace position, but also to enhance its long-term growth trajectory."

Tatiana Kresling, AcuityAds' Interim Chief Financial Officer, commented, "Despite global supply chain disruptions and their effect on some of our legacy customers, we were able to grow overall revenues on a year-over-year basis in the third quarter due to the rapid adoption of illumin in the marketplace. Company revenues grew over 11% on a constant currency basis, while net income grew 265% compared to the same period in the prior year. As a result of very strong operating cash flow generation in the quarter, our cash position grew to a new record of $100.3 million. We expect to generate substantial cash flow again in the fourth quarter, which will provide additional financial strength to execute on both our organic and M&A growth strategies in the years ahead."

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

Three months ended Nine months ended TTM Ended

Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,

2021 2020 2021 2020 2021 2020

Net income (loss) for the period $3,362,127 $921,220 $8,087,580 $(474,410) $12,252,979 $1,520,834

Adjustments:

Finance costs 263,220 251,159 797,074 1,304,195 1,155,918 1,875,887

Foreign exchange (gain) loss (1,864,926) 350,743 (2,599,487) (530,959) (1,930,193) (302,467)

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

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

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

Depreciation and 1,172,334 2,217,626 3,816,994 6,640,617 6,070,551 9,250,831amortization

Income taxes - (29,324) 231,600 113,284 337,317 150,265

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

Share-based compensation 1,465,706 252,335 3,954,217 485,151 4,467,373 706,626

Acquisition costs - - - - - -

Severance expenses 20,875 70,643 111,633 241,134 115,864 358,765

Non-recurring expenses - - - 199,137 287,907 265,209

Total adjustments 1,057,209 3,113,182 6,312,031 8,452,559 9,966,601 12,469,365

Adjusted EBITDA* $4,419,336 $4,034,402 $14,399,611 $7,978,149 $22,219,579 $13,990,199

Conference Call Details:

Date: Wednesday, November 3, 2021Time: 8:30 AM Eastern TimeTo register for the conference call webcast and presentation, please visit https://www.acuityads.com/q3-2021/

Participant Dial-in Numbers:Canada - (+1) 778 907 2071US - (+1) 646 558 8656Webinar ID: 892 4366 9957

Please connect at 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/q3-2021/

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 "net revenue", "revenue less media costs" and "Adjusted EBITDA" (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 and 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.

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(r) 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 Company's strategy with respect to the illumin platform, results of the Company's application to list its shares on NASDAQ 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 September 30, 2021 dated November 3, 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 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.

AcuityAds Holdings Inc.Condensed Interim Consolidated Statements of Financial Position(Unaudited)

(expressed in Canadian dollars)

Sept 30, Dec 31,

2021 2020

$ $

Assets

Current assets

Cash and cash equivalents 100,297,463 22,638,300

Accounts receivable 24,525,463 31,859,306

Prepaid expenses and other 3,132,237 1,901,067

Investment tax credits receivable - 21,922

127,955,163 56,420,595

Non-current assets

Property and equipment (note 3) 5,943,241 7,945,110

Intangible assets (note 4) 3,127,292 3,197,953

Goodwill 4,869,841 4,869,841

141,895,537 72,433,499

Liabilities

Current liabilities

Accounts payable and accrued liabilities 19,816,614 23,232,661

Term loans (note 16) 2,444,544 2,481,550

International loans (note 17) 852,232 1,092,297

Lease obligations (notes 5) 2,248,982 2,850,497

25,362,372 29,657,005

Non-current liabilities

Term loans (note 16) 3,964,185 5,796,454

International loans (note 17) 569,522 887,932

Lease obligations (notes 5) 2,577,356 4,041,520

32,473,435 40,382,911

Shareholders' Equity (notes 7) 109,422,102 32,050,588

141,895,537 72,433,499

AcuityAds Holdings Inc.Condensed Interim Consolidated Statements of Income (Loss)(Unaudited)

(expressed in Canadian dollars)

Three Three Nine Nine months months months months

ended ended ended ended

Sept 30, Sept 30, Sept 30, Sept 30,

2021 2020 2021 2020

$ $ $ $

Revenue

Managed services 19,320,662 18,766,560 65,197,665 52,724,493

Self-service 8,164,158 7,297,762 20,026,969 17,112,239

27,484,820 26,064,322 85,224,634 69,836,732

Media costs 13,232,069 12,536,168 40,798,761 34,011,563

Gross profit 14,252,751 13,528,154 44,425,873 35,825,169

Operating expenses

Sales and marketing 5,260,944 5,043,490 14,982,171 13,623,418

Technology (note 11) 2,581,090 2,943,386 9,716,514 9,819,590

General and administrative 2,012,256 1,577,519 5,439,210 4,844,283

Share-based compensation (note 1,465,706 252,335 3,954,217 485,1517)

Depreciation and amortization 1,172,334 2,217,626 3,816,994 6,640,617

12,492,330 12,034,356 37,909,106 35,413,059

Income (loss) from operations 1,760,421 1,493,798 6,516,767 412,110

Finance costs (note 8) 263,220 251,159 797,074 1,304,195

Foreign exchange (gain) loss (1,864,926) 350,743 (2,599,487) (530,959)

(1,601,706) 601,902 (1,802,413) 773,236

Net income (loss) before income 3,362,127 891,897 8,319,180 (361,126)taxes

Income taxes (recovery) (note - (29,324) 231,600 113,28418)

Net income (loss) for the period 3,362,127 921,220 8,087,580 (474,410)

Net income (loss) per share (note 9)

Basic and diluted 0.06 0.02 0.14 (0.01)

AcuityAds Holdings Inc.Condensed Interim Consolidated Statements of Cash Flows(Unaudited)For the nine-month periods ended September 30, 2021 and 2020

(expressed in Canadian dollars)

2021 2020

$ $

Cash provided by (used in)

Operating activities

Income for the year 8,087,580 (474,410)

Adjustments to reconcile net income to net cashflows

Depreciation and amortization 3,816,994 6,640,617

Finance costs (note 8) 797,074 1,304,195

Share-based compensation (note 7(c)) 3,954,217 485,151

Change in non-cash operating working capital

Accounts receivable 7,333,843 14,523,223

Prepaid expenses and other (1,209,249) 4,696

Investment tax credits receivable - 304,821

Accounts payable and accrued liabilities (3,390,866) (5,694,479)

Interest paid - net (695,976) (1,102,249)

18,693,617 15,991,564

Investing activities

Additions to property and equipment (note 3) (779,828) (3,553,449)

Additions to intangible assets (note 4) (964,636) (351,686)

(1,744,464) (3,905,135)

Financing activities

Amount drawn from revolving line of credit (note 15) - 60,154,399

Repayment of revolving line of credit (note 15) - (74,138,115)

Net proceeds from term loans (note 16) - 9,205,581)

Repayment of term loans principal (note 16) (1,818,053) (6,613,249)

Additions to international loans 852,486 948,897

Repayment of international loans (1,410,960) (1,438,323)

Additions to leases 358,644 2,535,440)

Repayment of leases (2,345,510) (2,520,751)

Net proceeds from equity financing (note 7) 63,955,491 -

Proceeds from the exercise of warrants 61,723 1,171,285

Proceeds from the exercise of stock options 1,056,489 674,961

60,710,010 (10,019,875)

Increase (decrease) in cash and cash equivalents 77,659,163 2,066,554

Cash and cash equivalents - Beginning of year 22,638,300 7,407,122

Cash and cash equivalents - End of year 100,297,463 9,473,676

Supplemental disclosure of non-cash transactions

Additions to property and equipment under leases 447,869 2,821,959

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SOURCE AcuityAds Holdings Inc.