Mr. Tal Hayek reports

ILLUMIN REPORTS FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS

Illumin Holdings Inc. has released its financial results for the fourth quarter and full year ended Dec. 31, 2023.

Fourth quarter 2023 highlights:

• Fourth quarter 2023 revenue was $37-million, down 8 per cent year-over-year, reflecting anticipated lower managed service revenue due to the company's continuing strategic shift to focus on the self-service business and challenging market conditions for advertisers, partially offset by a significant increase in Illumin self-service revenue derived mostly from new customer relationships.
• Over all, self-service revenue was up 38 per cent to $18.5-million, compared with $13.4-million in the year-ago period, and represented 50 per cent of total revenue, up from 42 per cent in Q3 2023. Self-service revenue growth was driven by an increase in new Illumin self-service customers and higher Illumin self-service platform utilization.
• Illumin self-service revenue was $8.9-million in the quarter, up 75 per cent from $5.1-million in the prior quarter and up 271 per cent versus Q4 2022. This represented 24 per cent of revenue in the fourth quarter, up from 6 per cent in the prior-year period, and was driven largely by new customer relationships and by increased Illumin platform utilization.
• The company onboarded 33 net new Illumin self-service clients during the quarter, similar to the prior quarter, reflecting sales initiatives targeting higher-spend clients and positioning the company for further Illumin self-service revenue growth in Q1 2024 on a year-over-year basis.
• Gross margin was 49 per cent, relatively flat compared with 48 per cent for the same period in 2022.
• Net revenue or gross profit (revenue less media-related costs) for the quarter ended Dec. 31, 2023, was $18-million, compared with $19.4-million for the same period in 2022, reflecting reduced sales in the period.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $2.4-million for the fourth quarter of 2023, similar to the same period in 2022, reflecting cost management initiatives which offset lower revenue versus the prior-year period.
• Q4 2023 net loss was $2.6-million, compared with a net loss of $800,000 in Q4 2022, primarily as a result of lower total revenue and a higher foreign exchange loss, partially offset by lower operating costs.
• On Nov. 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. Under this new NCIB, as of March, 2024, the company purchased and cancelled 1,273,947 of its common shares at an average price of $1.64 per share, totalling $2.1-million.

Fiscal year 2023 highlights:

• Full-year 2023 revenue rose to $126.3-million, up 4 per cent on a year-over-year basis, which included a 33-per-cent increase in self-service revenue, predominately driven by Illumin self-service client spend growth. This was partly offset by a decline in managed service revenue.
• Total self-service revenue increased to $53.4-million, compared with $40.1-million in the year-ago period and represented 42 per cent of total revenue, up from 33 per cent in 2022.
• Illumin self-service revenue was $21.6-million in 2023, up 279 per cent from $5.7-million in the prior-year period, and represented 17 per cent of total company revenue versus 5 per cent the year earlier.
• Gross margin for the year ended Dec. 31, 2023, was 48 per cent, compared with 50 per cent for 2022, largely due to an increased mix of self-service revenue.
• Net revenue, or gross profit (revenue less media-related costs), for the year ended Dec. 31, 2023, was $60.3-million, relatively flat compared with $60.8-million for the same period in 2022.
• Adjusted EBITDA was $1.3-million for the year ended Dec. 31, 2023, compared with $5.8-million for the prior year, primarily due to higher operating expenses and lower margin from business outside of North America.
• Net loss for the year ended Dec. 31, 2023, was $11-million, compared with a net loss of $800,000 for the year ended Dec. 31, 2022, due to the factors mentioned previously, and a weakened U.S. dollar compared with the prior-year period, partially offset by the recognition of a current income tax benefit from losses carried back with Illumin.
• During the year ended Dec. 31, 2023, the company repurchased for cancellation under the normal course issuer bid programs 1,146,476 common shares at an average price of $1.90 per share, totalling $2.2-million.
• Pursuant to the substantial issuer bid, the company purchased for cancellation 4,593,200 of its outstanding common shares at a purchase price of $2.65 per share for an aggregate purchase price of $12.2-million.
• At Dec. 31, 2023, the company had cash and cash equivalents of $55.5-million, compared with $85.9-million last year. This decrease was attributable to a combination of share repurchases, net loan repayments, lease payments and investments in the company's platform.

Tal Hayek, co-founder and chief executive officer of Illumin, stated: "During the fourth quarter, we continued to see considerable sequential and year-over-year growth in Illumin self-service revenue of 75 per cent and 271 per cent, respectively. That's because our Illumin platform provides a unique and differentiated solution for marketers and advertisers, giving them an effective and flexible self-serve approach to utilizing their advertising spend and managing the consumers' advertising journey. This was also evident in our annual results, as Illumin self-service revenue grew 279 per cent for the full year."

Mr. Hayek added: "We continue to be very encouraged by our Illumin self-serve growth, both in terms of new customer relationships and increased advertiser spend. To capitalize on this, we have further refined our sales efforts to target client demographics where we are seeing the greatest success. We also continue to focus on signing long-term self-serve contracts carrying guaranteed minimums and terms greater than one year, which will establish a sustainable and recurring self-service revenue stream for us."

Elliot Muchnik, Illumin's chief financial officer, commented: "Based on our growth in Illumin self-serve to date, we expect this be a key driver for us to deliver total company revenue growth again in 2024. We expect to achieve this growth even as we purposely reduce our relationships in certain markets that have generated lower-margin revenue and experienced significant volatility in exchange rates. In light of the larger overall macro environment, we also intend to keep monitoring our costs closely and do not expect to see an increase in operating costs in 2024 compared to last year. Furthermore, given our strong financial position, we expect to continue executing on our NCIB program, reflecting our positive long-term outlook."

Conference call details

Date:  Thursday, March 7, 2024

Time:  8:30 a.m. Eastern Time

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About Illumin Holdings Inc.

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.

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