Mr. Ted Hastings reports

IONIK ANNOUNCES RECORD FOURTH QUARTER AND FISCAL 2023 RESULTS

Popreach Corp. (doing business as Ionik) has released its financial results for the three and 12 months ended Dec. 31, 2023. All figures are in U.S. dollars, unless otherwise indicated.

Fiscal 2023 annual financial highlights:

• Record revenue of $140.6-million during its fiscal year 2023, as compared with $98.1-million for the prior 12 months ended Dec. 31, 2022, an increase of 43.3 per cent. Revenue growth was primarily driven by the acquisitions of Schiefer Media Inc. (SCS) and OpenMoves LLC in Q2 and S44 LLC (SHIFT44) in Q4.
• Record gross profit of $55.5-million in its fiscal year 2023 ($38.6-million for the prior 12 months), representing a 43.7-per-cent increase from the comparable period in the prior year, driven by the increase in revenue.
• Gross margin percentage of 39.5 per cent in fiscal year 2023 (39.4 per cent for the prior 12 months).
• Record adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $14.9-million ($9.8-million for the prior 12 months), an increase of 51.3 per cent. Adjusted EBITDA growth was predominantly related to the three 2023 acquisitions as well as operating expense reductions.

Financial highlights for the fourth quarter 2023:

• Revenue of $38.5-million, an increase of 12.7 per cent versus $34.2-million for the prior quarter with growth driven by the acquisition of SHIFT44 in November, 2023.
• Gross profit of $17.5-million (45.3-per-cent margin), compared with $12.9-million (37.8-per-cent margin) for the prior quarter and $14.8-million (33.3-per-cent margin) for the same period of 2022 (Q4 2022).
• Adjusted EBITDA of $5-million, compared with $3.7-million for the prior quarter, with growth derived from 2023 acquisitions.
• Adjusted free cash flow of $4.8-million (95-per-cent adjusted free cash flow conversion rate), compared with $1.9-million (52-per-cent adjusted free cash flow conversion rate) for the prior quarter and $3.8-million (95-per-cent adjusted free cash flow conversion rate) for Q4 2022.
• Net loss after tax from continuing operations of $44.7-million, versus $2.3-million net loss for the prior quarter and $14.7-million net loss for Q4 2022. The increase in net loss was primarily driven by a $41.3-million impairment of intangible assets and goodwill recorded in the fourth quarter 2023, compared with a $14.3-million impairment charge in the previous year.
• Cash as at Dec. 31, 2023, was $7.4-million compared with $8.9-million at Sept. 30, 2023, and $7.8-million at Dec. 31, 2022. During the three and 12 months ended Dec. 31, 2023, the company generated cash flow from operations of $2-million and $8.5-million, respectively. At Dec. 31, 2023, the company had not drawn on its revolving facility of $10-million and had available to it $30.8-million of its $105-million term loan facility. Management believes that its current capital position is sufficient to execute its current business and operational strategies.
• Total undiscounted debt as at Dec. 31, 2023, was $98-million, including $70-million of senior lender debt, $26.5-million of convertible debt and $1.5-million in a vendor take-back loan, compared with $65.6-million in total debt as at Sept. 30, 2023. The increase resulted from $17.75-million drawn on the senior debt term facility and $16.75-million of convertible debentures to finance the SHIFT44 acquisition, net of principal payments made on senior lender debt in the current quarter.
• Ionik announced the sale of substantially all of its mobile games portfolio on April 29, 2024 (see significant developments below), which has been recorded as discontinued operations in the fourth quarter results. Revenue from discontinued operations was $3.1-million for the quarter and $14.2-million for fiscal 2023. Adjusted EBITDA for discontinued operations was $200,000 for the quarter and $1.3-million for fiscal 2023.

Ted Hastings, Ionik's chief executive officer, commented: "Fiscal 2023 was a transformational year as Ionik went through a rebranding to better align our company and focus on being a data-driven performance marketing technology company. We completed three strategic acquisitions, delivered $14.9-million in adjusted EBITDA, secured a new syndicated debt facility of $115-million, generated $8.5-million in cash from operations and made significant progress on the integration of our series of acquisitions. We are enthusiastic about our outlook for 2024. With our cash on hand, bolstered by the recent sale of the Popreach Games business, and capacity on our operating line and syndicated debt facility, we are well positioned to continue taking advantage of strategic opportunities."

Significant developments for the three months ended Dec. 31, 2023, and subsequent to quarter-end:

• On Nov. 20, 2023, the company acquired substantially all of the assets of SHIFT44, a first party data acquisition, lead generation and performance marketing platform, for an aggregate purchase price of approximately $40-million.
• On April 29, 2024, the company announced the sale of substantially all of its mobile games portfolio, including its subsidiary, Popreach Technologies Pvt. Ltd., a live operations games studio located in Bangalore, India, to Phoenix Games Holdings U.K. Ltd. for a total aggregate purchase price of up to $9.8-million.

2024 outlook

Ionik expects to achieve record revenue and adjusted EBITDA in 2024 through a combination of organic and inorganic top-line growth as well as continued reduction of operating expenses and gross margin expansion as acquisitions are fully integrated. The company is now well positioned from a geographical coverage perspective and with its expansive product and services suite to become a leading trusted full-service advertising platform.

The company's key goals for 2024 include:

• Thoughtful integration of acquired companies including growing the company's consolidated first party data asset;
• Continue generating cash from operations to pay down debt and redeploy as accretive and strategic opportunities are identified, evaluated and executed upon;
• Build awareness in the capital markets by increasing engagement with the investment community and evaluating opportunities for increasing shareholder value.

Financial statements and MD&A

Ionik's financial statements for the three months and 12 months ended Dec. 31, 2023, and management's discussion and analysis for the same period, are posted on its corporate website and available on the company's profile on SEDAR+.

About Popreach Corp.

Ionik, a Tier 1 issuer on the TSX Venture Exchange, with shares also trading on the OTCQX Best Market, is a data-driven performance marketing technology company focused on assembling the most effective and complete suite of advertising, marketing and monetization solutions for brands, advertisers and publishers while building an extensive proprietary repository of opted-in first party data.

We seek Safe Harbor.