Mr. Jon Walsh reports

POPREACH ANNOUNCES SECOND QUARTER 2023 RESULTS

Popreach Corp. has released its financial results for the three and six months ended June 30, 2023 (all figures in U.S. dollars, unless otherwise indicated).

"We delivered another quarter with strong and consistent growth in adjusted EBITDA and adjusted free cash flow while completing two acquisitions that further diversify our revenue streams and customer base," said Jon Walsh, chief executive officer of Popreach. "This has provided the business with greater stability in a challenging macroeconomic environment and the breadth of the full stack digital offering we provide to advertisers sets us up for a seasonally strong second half of the year."

Financial highlights for the second quarter 2023:

• Revenue of $39.1-million, compared with $36.5-million for the three months ended March 31, 2023, and $20.7-million for the three months ended June 30, 2022;
• Revenue of $40.2-million was flat year over year on a pro forma consolidated (1) basis due in part to changes in the commercial terms of some significant customer contracts resulting in revenue being recorded on a net basis during the second quarter that would previously have been recorded on a gross basis;
• Gross profit of $16.2-million (41 per cent of revenue), compared with $13.9-million for the three months ended March 31, 2023 (38 per cent of revenue), and $10.5-million for the three months ended June 30, 2022 (51 per cent of revenue);
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (2) of $4.0-million, compared with $3.0-million for the three months ended March 31, 2023, and $2.8-million for the three months ended June 30, 2022;
• Adjusted free cash flow (2) of $3.7-million (adjusted free cash flow conversion rate of 91 per cent), compared with $2.4-million (adjusted free cash flow conversion rate of 81 per cent) for the three months ended March 31, 2023, and $2.1-million (adjusted free cash flow conversion rate of 74 per cent) for the three months ended June 30, 2022;
• Net loss of $5.0-million, compared with a net loss of $4.2-million for the three months ended March 31, 2023, and $1.4-million for the three months ended June 30, 2022, due to increased financing costs and amortization of intangibles;
• Cash as at June 30, 2023, was $8.4-million, compared with $4.7-million at March 31, 2023. The increase was largely due to funds received from the closing of the syndicate facility discussed below;
• Total debt as at June 30, 2023, was $67.0-million, including $56.5-million of senior lender debt, $9.0-million of convertible debt and $1.5-million in a vendor take-back loan, compared with $52.1-million in total debt as at Dec. 31, 2022.

(1) Please refer to the section on selected unreviewed and unaudited pro forma consolidated financial information of this news release.

(2) Please refer to the section on non-IFRS (international financial reporting standards) measures of this news release.

Significant developments in Q2 2023 and subsequent to quarter-end:

• 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 (BMO), 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.
• On Aug. 15, 2023, the company announced the integration of its subsidiaries SCS and Crucial Interactive Holdings Inc. (Contobox) to realize sales and operational synergies, and provide a full funnel marketing solution to retailers and brands that combines personalized ad tech with campaign creation, strategy and delivery.

Selected unreviewed and unaudited pro forma consolidated financial information

The pro forma consolidated revenue provided in this news release is presented as if the reverse takeover transaction between Popreach and Federated Foundry Ltd., and the acquisition of each of Q1Media Inc., NotifyAI LLC, Contobox, Ubiquity Agency LLC, SCS and OpenMoves were completed at the beginning of 2022.

The unreviewed and unaudited pro forma consolidated revenue provided in this news release is derived from the revenue figures presented in Popreach's financial statements, and management's discussion and analysis, filed on the company's profile on SEDAR for the applicable periods after taking into account the following adjustments: (i) as-reported revenue for the three-month period ending June 30, 2023, increased by $1.1-million to reflect pro forma revenue for the period of $40.2-million; and (ii) as-reported revenue for the three-month period ending June 30, 2022, increased by $19.5-million to reflect pro forma revenue for the period of $40.2-million.

Non-IFRS (international financial reporting standards) measures

The company prepares its financial statements in accordance with international financial reporting standards (IFRS). 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 earnings before interest, taxes, depreciation and amortization 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, 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, which 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, such as transaction costs, and other severance and restructuring costs. See a reconciliation of adjusted EBITDA in an 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. Similarly, company management defines adjusted free cash flow conversion rate as adjusted free cash flow divided by adjusted EBITDA. See a reconciliation of adjusted free cash flow in and 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.

Attached tables present 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 and six months ended June 30, 2023, and management's discussion and analysis for the same period, are posted on the corporate website and 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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