Mr. Aziz Rahimtoola reports

SABIO DELIVERS DOUBLE-DIGIT Q1-2023 REVENUE GROWTH, LED BY 63% INCREASE IN CONNECTED TV/OTT SALES

Sabio Holdings Inc. has released its unaudited financial results for the first quarter ended March 31, 2023. Unless otherwise indicated, all amounts are expressed in U.S. dollars.

"Our ability to post double-digit revenue growth in a challenging economic environment is a testament to our ability to retain existing customers at high rates while securing new Fortune 500 logos," said Aziz Rahimtoola, chief executive officer. "Approximately 21 per cent of first quarter revenues were generated from new logos, up from 12 per cent in the prior year's quarter, presenting a significant opportunity to turn these first quarter tests into larger campaigns in the latter half of the year. Meanwhile, we continue to grow our connected TV/OTT business well above industry averages and take market share, making us one of the fastest-growing connected TV/OTT companies in North America."

Sajid Premji, chief financial officer, added: "While delayed starts to customer planning cycles had a pronounced impact during the first two months of the quarter, we delivered double-digit revenue growth in the first quarter, including a 63-per-cent increase in connected TV/OTT sales. With a return to significant revenue growth in March, our ability to improve quarterly gross margins and the expedited implementation of cost-efficiencies culminated in Sabio delivering positive adjusted [earnings before interest, taxes, depreciation and amortization] for the month of March. While we expect some monthly variability, our ability to post monthly positive adjusted EBITDA at the earliest point in our company's history, despite the infrastructure investments and Vidillion overhead added since the prior year's period, positions us well for the rest of the year. Consistent with prior years, over 80 per cent of our annual revenues are expected to be generated over the next three quarters."

First quarter 2023 financial highlights:

• Sabio delivered revenues of $6.5-million in Q1 2023, up 16 per cent from $5.6-million in Q1 2022.
• Connected TV/OTT sales as a category increased by 63 per cent to $3.8-million, compared with $2.3-million in the prior-year quarter. Connected TV/OTT sales accounted for 59 per cent of the company's sales mix, compared with 42 per cent in the prior-year period.
• Mobile display revenues were $2.5-million in Q1 2023, down 23 per cent from $3.25-million in Q1 2022, as its legacy mobile display campaigns continued to shift their spend with Sabio from mobile display to higher-margin mobile OTT streaming, which is recognized under the company's connected TV/OTT revenue category.
• App Science revenues of $187,000 (up from $2,000 in the prior-year quarter) included a direct test on a recurring revenue contract with an agency representing a top-10 automotive brand.
• Gross profit was $4.0-million in Q1 2023, up from $3.4-million in Q1 2022. Gross margin was 62 per cent compared with 61 per cent in Q1 2022. The increase in gross margin benefited through Sabio's expanded use of Vidillion connected TV supply, the ability to continue to shift legacy mobile customers into connected TV/OTT and continued revenue growth in the company's App Science business.
• Adjusted EBITDA (1) loss was $2.2-million in Q1 2023 compared with a loss of $900,000 in Q1 2022. While delays in customer planning cycles during the first two months drove the quarter-over-quarter increase in loss, the company was able to offset the elimination of COVID-19-related spending with new logos, underpinning a return to significant revenue growth in March.
• As of March 31, 2023, the company had cash of $3.3-million, as compared with $4-million on March 31, 2023.
• As of March 31, 2023, the company had $5-million outstanding under its credit facility with Avidbank, with $2-million of untapped credit available.

(1) A non-international financial reporting standard measure.

First quarter 2023 business highlights:

• In January, 2023, the loan obligation under the Wisper Ventures Leasing LLC promissory notes, comprising all principal and interest owned until the maturity dates, was settled in full and discharged.
• On Feb. 6, 2023, Sabio London Ltd., a wholly owned subsidiary of the company, was incorporated in London, the United Kingdom, for the company's business expansion in the United Kingdom and European markets.
• On March 17, 2023, the TSX Venture Exchange accepted a notice filed by the company to implement a normal course issuer bid, whereupon the company may, during the 12-month period commencing March 22, 2023, and ending March 21, 2024, purchase, for cancellation, up to 754,571 shares in total, being 5 per cent of the total number of 15,091,425 common shares outstanding as at Feb. 15, 2023. There were no share repurchases during the quarter.

Events subsequent to March 31, 2023:

• On April 4, 2023, 330,000 share options of the company were granted to certain directors and employees of the company at an exercise price of 99 Canadian cents, and 353,793 restricted share units of the company were granted to certain officers and employees of the company at the grant date fair value of the company's common shares of 99 Canadian cents. The options will vest quarterly from the grant date over a three-year vesting period. The RSUs will vest over three years with one-third vesting at the one-year anniversary of the grant and quarterly vesting over the next two years.

Sabio's interim consolidated financial statements, including the notes thereto, and management's discussion and analysis for the three months ended March 31, 2023, and March 31, 2022, can be found under Sabio's profile on SEDAR.

Outlook

In what is traditionally the slowest quarter of the calendar year due to the seasonal trends affecting the advertising industry, the company continued its expansion into the connected TV/OTT market by delivering 63-per-cent revenue growth in the category, driving Sabio's double-digit consolidated revenue growth for the quarter as it continues to outpace a growing industry and take market share. Despite delayed starts to customer planning cycles that led to monthly declines in January and February, significant revenue growth returned in March, reinforcing management's expectation of continued revenue growth and market share gains in 2023. Moreover, management has the ability to quickly adapt its operating infrastructure accordingly, as demonstrated by delivering positive adjusted EBITDA for the month of March. While it expects some monthly, short-term inconsistencies in adjusted EBITDA as macro interest rate policies and labour shortages continue to drive monthly spend variability, management notes that this is the earliest month in company history that monthly positive adjusted EBITDA was obtained despite the additional overhead from its acquisition of Vidillion (acquired in second quarter 2022) and the heavy investments in operating infrastructure completed through the first half of 2022. During the quarter, approximately 79 per cent of consolidated revenues came from repeat customers as Sabio continues to attract and retain customers at higher rates, bringing more stability to its revenue model and increasing its cost-efficiencies. Additionally, approximately 21 per cent of the revenue in the quarter was generated from logos that did not spend with Sabio previously (compared with 12 per cent in Q1 2022), presenting a potential opportunity to further expand the company's share of the wallet with these new nameplates, just as Sabio did with existing clientele in 2022. The company has also implemented several cost-cutting initiatives. Management believes the complete end-to-end CTV/OTT technology stack in combination with fiscal discipline will position the company well to maintain positive adjusted EBITDA for fiscal 2023. As Sabio becomes more efficient, its supply path optimization strategy, enhanced through its acquisition of Vidillion in April, 2022, benefited gross margins during the quarter. Approximately 70 per cent of Sabio's CTV impressions delivered are through direct supply, making Sabio one of the highest direct supply options in the CTV/OTT space. Furthermore, App Science analytics and insights are helping to deliver incremental spend on Sabio's DSP in a return-on-investment-driven environment.

Continuing the trend from the previous year, connected TV and OTT streaming was Sabio's dominant sales category and represented 59 per cent of its sales mix during the current quarter. The rapid growth of the category further validates the differentiated positioning of Sabio's ecosystem to continue capitalizing on the burgeoning connected TV/OTT streaming advertising market in 2023, particularly in the second half of the year, where, in a continuation of seasonal trends, the majority of the company's annual revenues is expected to be generated. In 2021 and 2022, over 80 per cent of the company's annual sales were generated between the second and fourth quarter of the year.

To the extent the company finds suitable and attractive acquisition candidates that are complementary to its long-term objectives, Sabio may also pursue further inorganic growth through strategic business acquisitions.

Selected financials

The attached table sets out selected financial information relating to Sabio and should be read in conjunction with Sabio's condensed interim consolidated financial statements, including the notes thereto, and management's discussion and analysis for the three months ended March 31, 2023, and March 31, 2022, copies of which can be found under Sabio's profile on SEDAR.

The financial disclosures in this news release are subject to a number of cautionary statements, assumptions, contingencies and risks as set forth in this news release. The foregoing outlook and expectations constitute forward-looking statements and financial outlook, and are qualified in their entirety by the forward-looking statement. Readers are cautioned that this release is for information purposes only and may not be appropriate for other purposes.

Conference call

The company will host an investor conference call for the first quarter ended March 31, 2023, at 9 a.m. ET, on May 31, 2023. The webinar details are as follows.

Date:  May 31, 2023

Time:  9 a.m. ET (6 a.m. PT)

Register for the webinar.

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Canada

Vancouver local:  1-778-907-2071

Toronto local:  1-647-374-4685

Webinar ID:  881 3888 2915

Please connect five minutes prior to the conference call to ensure time for any software download that may be required.

About Sabio Holdings Inc.

Sabio (TSX Venture Exchange: SBIO) (OTCQX: SABOF) is one of the fastest-growing CTV/OTT technology and service providers in the high-growth ad-supported video-on-demand (VOD) and streaming space. Its cloud-based CTV/OTT technologies provide publishers with distribution, monetization and analytics while delivering ROI validation for brands and agencies. The Sabio portfolio is composed of: Sabio -- its trusted and transparent content monetization DSP; App Science -- its cutting-edge, non-panel-based, real-time measurement and attribution software-as-a-service platform; and Vidillion -- its cloud-based ad-insertion and content distribution and management platform.

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