Q4/2022 as Sabio continued to leverage its differentiated end-to-end
technology stack, including the use of Vidillion CTV supply.
-- Positive Adjusted EBITDA of US$2.1 million in Q4/2023, compared to US$2.4
million in Q4/2022. The quarter-over-quarter decrease in profit was
primarily driven by a decrease in consolidated revenues, that was
substantially offset through several cost and operational efficiency
initiatives implemented during the second and third quarters of 2023. As
of December 2023, the Company had US$7.1 million outstanding under its
credit facility with Avidbank.
Fourth Quarter 2023 Business Highlights
-- On October 10, 2023, the Company entered into a strategic partnership
with Mediahub U.S., an award-winning global media agency, across both
companies' portfolio of brands.
-- On October 11, 2023, the Company launched SabioTV, a free, creator-first
content streaming platform built to promote diverse voices and increase
representation among the greater streaming industry.
-- On October 20, 2023, 87,500 share options of the Company were granted to
certain officers and employees, at an exercise price of CAD $0.40 and
272,000 restricted stock units ("RSUs") of the Company were granted to
certain independent directors of the Company at the grant-date fair-value
of the Company's common shares of CAD $0.40.
-- To manage the applicable requirements relating to foreign private issuer
status under United States securities law, on October 23, 2023, the
Company entered into a share exchange agreement with certain shareholders
(the "participating shareholders") whereby the Company agreed to purchase
from the participating shareholder for fair market value, on the terms
and conditions contained in the Share Exchange Agreement, 1,271,127
exchanged shares. The Company satisfied the purchase price for the
exchange shares by issuing to the participating shareholder an equivalent
number of convertible restricted voting shares in the capital of the
Company.
-- On October 30, 2023, the Company disclosed that it won over US$9.0
million in upfront commitments for 2024 from major agencies and was
continuing to negotiate further commitments. Subsequent to the release,
the Company has won over US$3 million in additional, branded-campaign
upfront commitments and has signed close to over US$13M in additional
political & advocacy insertion orders, for an aggregate of over US$27
million.
-- During the quarter, arrangements were agreed to between the Company and
certain Canadian, arms-length parties, pursuant to which, and subject to
any applicable TSX Venture Exchange approvals, would affect the exercise
of an aggregate of 2,804,702 share purchase warrants at an exercise price
of CAD$0.21 previously issued by the Company on January 11, 2021. These
arrangements include the provision of promissory notes (the "Notes")
between the Company and warrant holders. The principal amount outstanding
under the three-year term would bear interest at the Prime Rate and
mature on December 31, 2026, subject to the terms of the Note which
provide, in certain limited circumstances, accommodations including
potential forgiveness and/or share cancellation qualifications, should
the exercise price exceed public market values at the date of maturity.
The exercise is expected to benefit the Company's compliance with the
applicable requirements relating to foreign private issuer status under
United States securities law.
Events Subsequent to December 31, 2023
-- On February 6, 2024, the Company appointed President of GroupM
Multicultural Gonzalo Del Fa as an independent member of the Board of
Directors. As President of GroupM Multicultural, Del Fa plays a key role
in all aspects of multicultural marketing, diverse media, and inclusive
investment efforts across GroupM, WPP's media investment group. In
addition to his role at GroupM, he is the Past-Chairman of the Hispanic
Marketing Council. Prior to joining GroupM, Del Fa worked at American
Express Argentina, BBVA, Hachette Filipacchi, and Editorial Televisa.
-- On February 15, 2024, the legal entity name of Vidillion Corp. was
changed to FWD Tech Inc.
-- On February 29, 2024, the Company announced a strategic collaboration
with McDonald's USA, through a partnership with Publicis Groupe.
McDonald's will leverage Sabio's CTV/OTT inventory, customized audience
segments and App Science's proprietary, 55 million household graph data,
to effectively connect with and reach the growing U.S. multicultural
audience.
-- On March 26, 2024, the TSX Venture Exchange accepted a notice filed by
the Company to implement a Normal Course Issuer Bid, whereupon the
Company may, during the 12-month period commencing April 02, 2024 and
ending April 01, 2025, purchase, for cancellation, up to 852,184 Shares
in total, being 5% of the total number of 17,043,687 common shares
outstanding as at March 19, 2024. The Company also had 33,026,891 issued
and outstanding convertible restricted voting shares as of this date.
-- On April 22, 2024, Sabio's App Science$(TM)$ subsidiary announced a
multi-year renewal with Pivot Marketing Group to support clients
including Toyota Motor North America. App Science's cross-platform
measurement solutions will empower Pivot to reach, engage, and validate
their audiences and their behaviors at a deeper level, and will leverage
the platform's AI capabilities.
-- On April 23, 2024, the Company and Avidbank agreed on terms for a 90-day
extension until August 21, 2024 for the bank's credit facility. The
facility, which will be assessed for a longer term renewal during the
extension period, and is based on certain factors including the adequacy
of cash reserves, is secured against assets of the Company including, but
not limited to, its Accounts Receivable and continues to provide for an
Accounts Receivable Line of Credit, with $6,500,000 maximum loans
outstanding, at an interest rate of the greater of the Wall Street
Journal prime rate plus 1.00% to 4%, with a floor between 9.5% and 12.5%.
2024 Outlook
In a precursor to management's expectations for 2024, the cost and efficiency initiatives implemented by management during the second and third quarters of 2023 drove a 23% decrease in fourth quarter OPEX -- normalized for sales commissions and bonuses -- compared with the prior year's period, while consolidated revenues grew sequentially. This culminated in Adjusted EBITDA of $2.1 million(1) for the fourth quarter of 2023, with Adjusted EBITDA margins improving to 16%, compared to 13% in the fourth quarter of 2022. Furthermore, our sales model continues to become increasingly predictable. Sabio entered 2024 armed with record upfront, branded-campaign commitments of over $12 million and over $15 million in additional signed political & advocacy insertion orders (on campaigns between Q2 and Q4), for an aggregate of over $27 million in committed revenues. The commitments under these endeavors already represents close to 75% of 2023's consolidated revenues. In addition, the Company boasts high rates of reoccurring revenue (approximately 76% of consolidated 2023 revenues came from repeat customers), the most diversified vertical mix in our Company's history and continuing gains in CTV/OTT market share. Management expects a return to double-digit consolidated revenue growth in 2024 over both 2023 and our record 2022 mid-term election year, and with a reduced operating infrastructure, improvements in operating leverage with a return to Adjusted EBITDA(1) profitability. Management expects to allocate material improvements in cash flows to bolster its working capital, through both debt repayment and improved cash reserves, which in combination with the continuation of our credit facility, will provide greater balance sheet flexibility as we drive towards continued growth on both the top and bottom-lines.
(1) See "Use of Non-IFRS Measures" below.
Selected Financials
The tables below set out selected financial information relating to Sabio and should be read in conjunction with the Company's audited consolidated financial statements, including the notes thereto, and MD&A for the three months and twelve months ended December 31, 2023, and December 31, 2022, copies of which can be found under the Company's profile on SEDAR+ at www.sedarplus.ca.
For the three months ended For the twelve months ended
December December December December
31, 2023 31, 2022 31, 2023 31, 2022
$ $ $ $
Revenue 12,671,038 17,606,761 35,954,934 42,305,732
Gross profit 7,749,748 10,358,531 21,780,302 25,350,591
Gross margin 61 % 59 % 61 % 60 %
Adjusted
EBITDA(1) 2,060,212 2,363,541 (1,816,631) 1,326,107
Net increase in
cash and cash
equivalents
during the
period 411,023 388,783 (1,387,290) 719,067
Cash and cash
equivalents -
end of the
period 2,612,112 3,999,402 2,612,112 3,999,402
For the three months ended For the twelve months ended
December December December December
31, 2023 31, 2022 31, 2023 31, 2022
$ $ $ $
Income (Loss) for
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