Ionik Announces Third Quarter 2023 Results

/NOT FOR DISTRIBUTION TO US WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

Q3 Revenue of $37.6 million - Year-over-year growth of 48% in Q3 and 87% for the nine months year-to-date

Q3 Adjusted EBITDA¹ of $3.9 million - Year-over-year growth of 30% in Q3 and 60% for the nine months year-to-date 

(All figures in US dollars, unless otherwise indicated)

TORONTO, Nov. 27, 2023 /CNW/ - PopReach Corporation (dba "Ionik", or the "Company") (TSXV: INIK) (OTCQX: INIKF), a data-driven marketing technology company, announced its financial results for the three and nine months ended September 30, 2023. 

Financial Highlights for the Third Quarter 2023

• Revenue of $37.6 million, compared to $39.1 million for the three months ended June 30, 2023 and $25.5 million for the three months ended September 30, 2022, with growth driven by the acquisition of Ubiquity in September 2022 and SCS and OpenMoves in April 2023.
• Gross profit of $15.1 million, compared to $16.2 million for the three months ended June 30, 2023 and $11.3 million for the three months ended September 30, 2022.
• Adjusted EBITDA¹ of $3.9 million, compared to $4.0 million for the three months ended June 30, 2023 and $3.0 million for the three months ended September 30, 2022.
• Adjusted Free Cash Flow¹ of $2.0 million (51% Adjusted Free Cash Flow conversion rate¹), compared to $3.7 million (91% Adjusted Free Cash Flow conversion rate¹) for the three months ended June 30, 2023 and $2.5 million (83% Adjusted Free Cash Flow conversion rate¹) for the three months ended September 30, 2022. The reduction in the third quarter of 2023 is primarily attributable to $1.4 million of 2022 cash taxes paid, which changed the conversion rate from 87% to 51%.
• Net loss of $2.4 million, versus $5.0 million net loss for the three months ended June 30, 2023 and $1.9 million net loss for the three months ended September 30, 2022. The decrease in quarter over quarter net loss was due to lower finance and debt extinguishment costs related to the Company's new credit facility which closed in May 2023. The increase in year-over-year net loss was due to higher finance costs associated with these financing arrangements.
• Cash as at September 30, 2023 was $8.9 million compared to $8.4 million at June 30, 2023, an increase of $0.5 million. In the three months ended September 30, 2023 the Company generated cash flow from operations of $5.9 million, which was well in excess of principal and interest payments of $4.0 million. At September 30, 2023, the Company had not drawn on its revolving facility of $10.0 million and had available to it $48.5 million of its $105.0 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 September 30, 2023 was $64.9 million, including $54.4 million of senior lender debt, $9.0 million of convertible debt, and $1.5 million in a vendor take-back loan, compared to $67.0 million in total debt as at June 30, 2023. The decrease results from principal payments made on senior lender debt in the current quarter.

1 Please refer to "Non-IFRS Measures" section of this press release

"Q3 was an eventful quarter which positioned us to complete a meaningful acquisition post-quarter end with SHIFT44," said Ionik CEO, Ted Hastings. "We made $4 million in debt principal and interest payments while increasing our cash position through the quarter, which is a testament to our financially resilient business model. We rebranded the company, and added two new executives soon after the quarter which will accelerate our ability to achieve cost savings integrations.  As the industry deals with perennial change, we're staying focused on our long-term vision of creating a data-driven marketing technology company that is profitably assembling a robust, proprietary, first party data warehouse which will be a key element of our platform and our success."

Significant developments in Q3 2023 and subsequent to quarter end

• On September 14, 2023, the Company announced a rebranding and leadership transition. Moving forward the Company will operate under the new, unified brand name of Ionik. Ted Hastings was appointed as Chief Executive Officer effective October 1, 2023, and Ben Colabrese was appointed as Board Chair.
• On October 2, 2023, the Company announced the appointment of Lois Norris as Chief Financial Officer and Reena Bains as Chief People Officer.
• On November 20, 2023, the Company acquired substantially all of the assets of S44 LLC "Shift44", a first party data acquisition, lead generation and performance marketing platform, for an aggregate purchase price of approximately $40.0 million

Non-IFRS 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 to 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 ("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 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 reconciliation of Adjusted EBITDA in the table below.

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 reconciliation of Adjusted Free Cash Flow in the table below. 

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 following tables presents the Company's calculation of Adjusted EBITDA and Adjusted Free Cash Flow for each period:

		For the three months ended
		September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2022
Net loss		$	(2,446)			$	(4,979)			$	(4,204)			$	(17,974)
Add:
Finance costs			2,053				3,359				1,269				1,274
Income tax expense			113				80				91				526
Depreciation and amortization			3,713				3,523				3,183				3,698
Impairment loss on intangibles and goodwill			—				—				—				17,548
Fair value loss (gain) on financial liabilities			—				—				1,782				(530)
Loss (gain) on disposal of property and equipment			(8)				—				—				1
Loss on modification/extinguishment of loan			—				1,129				—				—
Share-based compensation expense			242				296				400				386
Change in deferred revenue of in-app purchases			(280)				(56)				126				225
Change in deferred cost of sales			12				6				(45)				(110)
Extraordinary one-time expenses			372				576				184				187
Foreign exchange loss (gain)			86				89				229				(95)
Loan forgiveness			—				—				—				(617)
Non-recurring income			—				—				—				(2)
Adjusted EBITDA		$	3,857			$	4,023			$	3,015			$	4,517
Less:
Acquisition of property and equipment			(52)				(36)				(34)				(38)
Additions to intangible assets			(456)				(305)				(521)				(544)
Taxes paid			(1,374)				(32)				(22)				(76)
Adjusted Free Cash Flow		$	1,975			$	3,650			$	2,438			$	3,859

 

		For the three months ended
		September 30,				June 30,				March 31,				December 31,
		2022				2022				2022				2021
Net loss		$	(1,886)			$	(1,443)			$	(820)			$	(1,736)
Add:
Finance costs			688				673				688				864
Income tax expense (recovery)			282)				(356)				(672)				275
Depreciation and amortization			3,070				2,396				1,718				1,623
Fair value loss (gain) on financial liabilities			(33)				(5)				—				33
Gain on disposal of property and equipment			—				—				—				(1)
Loss on extinguishment of loan			—				1,216				—				—
Share-based compensation expense			353				131				—				—
Change in deferred revenue of in-app purchases			262				(62)				—				—
Change in deferred cost of sales			(56)				(100)				—				—
Extraordinary one-time expenses			245				469				518				1,688
Foreign exchange losses (gains)			39				(110)				(37)				44
Non-recurring income			—				—				(378)				—
Adjusted EBITDA		$	2,970			$	2,809			$	1,017			$	2,790
Less:
Acquisition of property and equipment			(21)				(13)				(15)				(6)
Additions to intangible assets			(466)				(202)				—				—
Taxes paid			(27)				(510)				—				(11)
Adjusted Free Cash Flow		$	2,456			$	2,084			$	1,002			$	2,773

Financial Statements and MD&A

Ionik's Financial Statements for the three months and nine months ended September 30, 2023, and Management's Discussion and Analysis for the same period, are posted on its corporate website at www.popreach.com and available on the Company's profile on SEDAR+ at www.sedarplus.ca.

About Ionik

Ionik, a Tier 1 Issuer on the TSX Venture Exchange, with shares also trading on the OTCQX Best Market, is a data driven 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. 

Additional information about the Company is available at www.sedarplus.ca.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement Regarding Forward-Looking Information
Certain information in this news release constitutes forward-looking statements and forward-looking information under applicable Canadian securities legislation (collectively, "forward-looking information"). Forward-looking information include, but are not limited to, statements with respect to and the business, financials and operations of the Company. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Forward looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements and future events to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the public documents of the Company available at www.sedar.com. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Investors are cautioned that undue reliance should not be placed on any such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

SOURCE PopReach Corporation

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