Mr. Jon Walsh reports

POPREACH ANNOUNCES FIRST QUARTER 2023 RESULTS

Popreach Corp. has released its financial results for the three months ended March 31, 2023. (All figures are in U.S. dollars, unless otherwise indicated.)

"Our financial results for the first quarter of 2023 show that the portfolio of companies we've assembled is continuing to deliver strong organic revenue growth while generating significant adjusted EBITDA and free cash flow each quarter," said Jon Walsh, chief executive officer of Popreach. "The recent backing from a syndicate of four of Canada's leading banks for $115-million (U.S.) in credit facilities is another major validation of our expansion strategy. We are excited about the additions of SCS and OpenMoves in the second quarter and the potential for further synergies."

Financial highlights for the first quarter of 2023:

• Revenue of $36.5-million, a 152-per-cent increase from $14.5-million for the three months ended March 31, 2022;
• Revenue grew 17 per cent year over year on a pro forma consolidated basis;
• Gross profit of $13.9-million, a 116-per-cent increase from $6.5-million for the three months ended March 31, 2022;
• Net loss of $4.2-million, compared with a net loss of $800,000 for the three months ended March 31, 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $3.0-million (8.3 per cent of revenue), a 200-per-cent increase from $1.0-million (7.0 per cent of revenue) for the three months ended March 31, 2022;
• Adjusted free cash flow of $2.4-million (81 per cent adjusted free cash flow conversion rate), compared with $1.0-million (100 per cent adjusted free cash flow conversion rate) for the three months ended March 31, 2022;
• Cash as at March 31, 2023, was $4.7-million, compared with $7.8-million at Dec. 31, 2022. This decrease was largely due to debt repayments related to acquisitions;
• Total debt as at March 31, 2023, was $47.1-million, including $35.3-million of senior lender debt, $5.5-million of bank indebtedness and $6.3-million of convertible debentures, compared with $52.1-million in total debt as of Dec. 31, 2022.

Significant developments in Q1 2023 and subsequent to quarter-end:

• In February, 2023, Popreach Games soft launched Payday Crime War, the highly anticipated free-to-play mobile action game, in Australia and the Philippines, and extended the soft launch to Canada in May, 2023, with the global game launch scheduled for Q2 2023.
• On April 18, 2023, the company acquired 100 per cent of the shares of Schiefer Media Inc. (SCS), a brand transformation company, for an aggregate purchase price of approximately $14.9-million.
• On April 26, 2023, the company acquired 100 per cent of the membership interest of OpenMoves LLC, a performance and growth marketing company, for an aggregate purchase price of approximately $7.5-million.
• On May 25, 2023, the company closed a $115-million (U.S.) syndicated credit facility led by Bank of Montreal, and including National Bank of Canada, Export Development Canada and Toronto-Dominion Bank to replace and increase the company's previous $43-million (U.S.) senior secured credit facility with BMO to support the continued execution of the company's acquisition strategy.

Selected unreviewed and unaudited pro forma consolidated financial information

The pro forma consolidated revenue provided above is presented as if the reverse takeover transaction between Popreach and Federated Foundry Ltd., and the acquisition of each of Q1Media Inc., NotifyAI LLC, Crucial Interactive Holdings Inc. (Contobox) and Ubiquity Agency LLC (Ubiquity), were completed at the beginning of 2022.

The unreviewed and unaudited pro forma consolidated revenue provided above is derived from the revenue figures presented in Popreach's financial statements, and in the management's discussion and analysis, filed on the company's profile on SEDAR for the applicable periods (as reported revenue) after taking into account the following adjustments: (i) as reported revenue for the three-month period ending March 31, 2023, reflecting pro forma revenue for the period of $36.5-million; and (ii) as reported revenue for the three-month period ending March 31, 2022, increased by $16.7-million to reflect pro forma revenue for the period of $31.2-million.

Non-IFRS (international financial reporting standards) measures

The company prepares its financial statements in accordance with international financial reporting standards. However, the company considers certain non-IFRS financial measures as useful additional information to assess its financial performance. These measures, which it believes are widely used by investors, securities analysts and other interested parties to evaluate its performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable with similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include adjusted EBITDA and adjusted free cash flow.

Adjusted EBITDA and adjusted free cash flow

Consolidated adjusted EBITDA is a non-IFRS measure of financial performance. Company management defines adjusted EBITDA as IFRS net income (loss) adding back finance costs, income taxes, depreciation and amortization, gain/loss on disposal of assets and extinguishment of loans, fair value gain/loss on financial liabilities and contingent consideration, and excludes discontinued operations and the effects of significant items of income and expenditure that may have an impact on the quality of earnings, such as impairments where the impairment is the result of an isolated, non-recurring event. It also excludes the effects of equity-settled share-based payments, foreign exchange gains/losses, changes in deferred revenues, changes in deferred cost of sales and other extraordinary one-time expenses. See the reconciliation of adjusted EBITDA in the attached table.

Company management defines adjusted free cash flow as adjusted EBITDA less capital expenditures, such as acquisition of property and equipment, and additions to intangibles, and income taxes paid during the applicable period. See the reconciliation of adjusted free cash flow in the attached table.

The presentation of these non-IFRS financial measures are not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS and may be different from non-IFRS financial measures used by other companies.

Management believes adjusted EBITDA and adjusted free cash flow are useful financial metrics to assess its operating performance on a cash basis before the impact of non-cash and extraordinary one-time items.

The attached table presents the company's calculation of adjusted EBITDA and adjusted free cash flow for each period.

Financial statements and MD&A

Popreach's financial statements for the three months ended March 31, 2023, and its MD&A for the same period are posted on its corporate website and are available on the company's profile on SEDAR.

About Popreach Corp.

Popreach, a Tier 1 issuer on the TSX Venture Exchange, with shares also trading on OTCQX Best Market, is a multiplatform technology company focused on assembling the most effective and complete suite of advertising, marketing and monetization solutions for brands, advertisers and publishers. The company acquires, optimizes and scales market-leading digital technology businesses providing cross-platform, performance-driven advertising and data solutions to attract, engage and monetize high-value consumers. its portfolio includes: Popreach Games, a free-to-play mobile game publisher; NotifyAI, a push notification advertising platform; Q1Media, an industry-leading advertising and media service provider; Contobox, a leading-edge customer engagement platform; Ubiquity, a data-driven user acquisition and marketing technology platform; SCS, an integrated agency powering brand performance with data and creativity; and OpenMoves, a Google premier partner driving creative and growth across pay-per-click advertising and search engine optimization.

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