AT AcuityAds Holdings Inc

AcuityAds Holdings Inc. (TSX:AT) (NASDAQ:ATY) (“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 months ended March 31, 2022.

First Quarter 2022 Highlights

• Total revenue for the three months ended March 31, 2022, was $23.8 million, a 13.4% decrease year over year. The year over year comparison was primarily affected by an unusually large client campaign in Q1 2021 that was not repeated in Q1 2022.
• illumin revenue was $7.9 million for the first quarter of 2022 or 33% of overall revenues, up 145% year over year.
• Q1 total Connected TV segment revenue grew approximately 131% year-over-year.
• Gross margin for the three months ended March 31, 2022 was 50.0%, compared to 52.3% for the same period in 2021. The decrease was due to mix as self-serve revenues increased as a percentage of overall revenue.
• Net revenue or gross profit (revenue less media costs) for the three months ended March 31, 2022 was $11.9 million, compared to $14.4 million for the same period in 2021.
• Adjusted EBITDA was $0.2 million for the three months ended March 31, 2022, compared to $4.5 million for the prior year period, reflecting lower Q1 revenue and strategic investments to support the Company’s long-term growth strategy, including scaling the business and capitalizing on illumin market momentum.
• Net loss for the three months ended March 31, 2022 was $4.5 million, compared to net income of $1.4 million for the three months ended March 31, 2021. The first quarter loss was mainly due to non-cash charges (depreciation and amortization, share-based compensation and foreign exchange loss) Operating cash flow for the three months ended March 31, 2022, was $1.8 million, compared to $6.2 million for the same period in 2021.
• At March 31, 2022, the Company had cash and cash equivalents of $99.5 million, compared to $102.2 million as of December 31, 2021. Most of the decrease was related to foreign exchange movements in the quarter, which, subsequent to the quarter has been reversed.

“While Q1 2022 total revenue was lower year-over-year, revenue from illumin, our innovative advertising automation platform, grew 145%, reaching $7.9 million or 33% of total revenue,” said Tal Hayek, Co-Founder and Chief Executive Officer of AcuityAds. “We saw expansion in our illumin client base, both overall as well as specifically with tier one clients. illumin clients grew 259% year-over-year, reaching 61 clients in total, while tier ones were up 150% from the prior year, totaling 20 clients by quarter end. We believe our success with illumin adoption reflects increasing recognition of the benefits of both the insights provided into the consumer’s advertising journey and the increased return on advertising spend.”

Mr. Hayek continued, “Looking ahead in 2022, we remain committed to supporting illumin’s long-term success through strategic investments in R&D, sales and marketing. We have already begun to see benefits from these strategic investments following the quarter end, including positive customer feedback and increased illumin sales momentum. We anticipate seeing further benefits from these initiatives throughout the course of 2022, particularly in the second half of the year. Additionally, we continue to have confidence in our prospects and generating long-term value for our shareholders.”

Elliot Muchnik, AcuityAds’ Chief Financial Officer, commented, “During the first quarter, Acuity continued to generate positive operating cashflow. Given the strength of our balance sheet, we recently announced our intention to make a normal course issuer bid (“NCIB”) to purchase up to 5,500,000 common shares of the Company, which was approved by the Toronto Stock Exchange on May 4th. Management firmly believes, given the strong prospects for the business, the NCIB represents an attractive and appropriate use of available funds. At the same time, our strong balance sheet and considerable liquidity enables us to continue prioritizing strategic M&A to bolster our growth trajectory.”

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

	Three months ended			Three months ended
		March 31,			March 31,
			2022			2021
Net income (loss) for the period		$	(4,490,393)		$	1,363,881
Adjustments:
Finance costs			145,855			274,880
Foreign exchange loss			1,791,102			568,483
Depreciation and amortization			1,203,999			1,383,026
Income taxes (recovery)			(47,541)			30,243
Share-based compensation			1,478,997			864,392
Severance expenses			13,649			56,549
Other expenses			79,132			-
Total adjustments			4,665,193			3,177,573
Adjusted EBITDA		$	174,800		$	4,541,454

Conference Call Details:

Date: Thursday, May 12, 2022 Time: 8:30AM Eastern Time To register for the conference call webcast and presentation, please visit https://www.acuityads.com/investors/q1-2022/

Participant Dial-in Numbers: Canada – (+1) 778 907 2071 US – (+1) 646 558 8656

Webinar ID:812 4871 0409

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 “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, 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 powerful and holistic solution for digital advertising across all ad formats and screens to amplify reach and Share of Attention® 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, 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 10, 20221 for the fiscal year ended December 31, 2021 (the "AIF") and the Company’s Management Discussion and Analysis for the three months ended March 31, 2022 dated May [x], 2022 (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.

For further information, please contact:

Tal HayekChief Executive OfficerAcuityAds Holdings Inc.416-218-9888tal.hayek@acuityads.com	Babak PedramInvestor Relations – CanadaVirtus Advisory Group Inc.416-644-5081bpedram@virtusadvisory.com	David HanoverInvestor Relations – U.S.KCSA Strategic Communications212-896-1220dhanover@kcsa.com

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited)

(Expressed in Canadian dollars)

		March 31,2022$		December 31,2021$
Assets
Current assets
Cash and cash equivalents		99,535,834		102,208,807
Accounts receivable		24,868,007		30,972,608
Prepaid expenses and other		2,833,102		3,278,624
		127,236,943		136,460,039
Non-current assets
Deferred tax asset (note 16)		81,803		81,803
Property and equipment (note 3)		4,857,087		5,369,619
Intangible assets (note 4)		3,514,896		3,044,278
Goodwill		4,869,841		4,869,841
		140,560,570		149,825,580
Liabilities
Current liabilities
Accounts payable and accrued liabilities		19,246,939		24,853,497
Income tax payable		910,165		910,165
Borrowings (note 15)		3,024,696		2,946,150
Lease obligations (notes 5)		1,973,346		2,058,161
		25,155,146		30,767,973
Non-current liabilities
Borrowings (note 15)		3,139,138		3,852,891
Lease obligations (notes 5)		1,918,285		2,148,708
		30,212,569		36,769,572
Shareholders’ Equity (notes 7)		110,348,001		113,056,008
		140,560,570		149,825,580

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

For the three-month periods ended March 31, 2022, and 2021

			March 31,2022$		December 31,2021$
Revenue
Managed services			15,764,729		22,256,217
Self-service			8,056,159		5,198,375
			23,820,888		27,454,592
Media costs			11,901,430		13,090,500
Gross profit			11,919,458		14,364,092
Operating expenses
Sales and marketing (note 17)			5,388,432		4,554,024
Technology (note 11 and 17)			3,298,330		3,793,370
General and administrative (note 17)			3,150,677		1,531,793
Share-based compensation (note 7)			1,478,997		864,392
Depreciation and amortization			1,203,999		1,383,026
			14,520,435		12,126,605
Income (loss) from operations			(2,600,977)		2,237,487
Finance costs (note 8)			145,855		274,880
Foreign exchange loss			1,791,102		568,483
			1,936,957		843,363
Net income (loss) before income taxes			(4,537,934)		1,394,124
Income taxes (note 16)			(47,541)		30,243
Net income (loss) for the period			(4,490,393)		1,363,881
Basic net income (loss) per share (note 9)			(0.07)		0.03
Diluted net income (loss) per share (note 9)			(0.07)		0.03
Exchange (gain) loss on translating foreign operations			(234,091)		(339,282)
Comprehensive income (loss) for the period			(4,256,302)		1,703,163

AcuityAds Holdings Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited)

For the three-month periods ended March 31, 2022, and 2021

(Expressed in Canadian dollars)

		2022$		2021$
Cash provided by (used in)
Operating activities
Income (loss) for the period		(4,490,393)		1,363,881
Adjustments to reconcile net income to net cash flows
Depreciation and amortization		1,203,999		1,383,026
Finance costs (note 8)		145,855		274,880
Share-based compensation (note 7(c))		1,478,997		864,392
Foreign exchange loss		1,791,102		568,483
Change in non-cash operating working capital
Accounts receivable		6,439,893		4,416,125
Prepaid expenses and other		768,315		(140,352)
Investment tax credits receivable		-		21,922
Accounts payable and accrued liabilities		(5,457,444)		(2,287,367)
Interest paid – net		(112,114)		(241,264)
		1,768,210		6,223,726
Investing activities
Additions to property and equipment (note 3)		(337,726)		(40,313)
Additions to intangible assets (note 4)		(824,359)		-
		(1,162,085)		(40,313)
Financing activities
Net proceeds from term loans (note 15)		-		-
Repayment of term loans principal (note 15)		(777,261)		(616,722)
Additions to international loans (note 15)		536,690		154,303
Repayment of international loans (note 15)		(457,805)		(823,834)
Additions to leases		256,675		-
Repayment of leases		(571,913)		(876,442)
Proceeds from the exercise of warrants		-		61,723
Proceeds from the exercise of stock options		69,298		857,882
		(944,316)		(1,243,090)
Increase (decrease) in cash and cash equivalents		(338,191)		4,940,323
Foreign exchange impact on cash		(2,334,782)		(568,483)
Cash and cash equivalents – Beginning of period		102,208,807		22,638,300
Cash and cash equivalents – End of period		99,535,834		27,010,140
Supplemental disclosure of non-cash transactions
Additions to property and equipment under leases		256,675		-