Acuity Conference call summary! Ok, for those of you who did not get a chance to listen to the conference call, I have read the transcript and copied and pasted important pieces of the conference call that everyone should be aware of. Also my favourite quote from the entire call is below - the best is yet to come!!!!
"We are very pleased with our results this quarter and are on track for a strong fourth quarter. We believe the best is yet to come for the business and our shareholders."
Update on Illumin
We always said and communicated that the majority of revenue is going to start mid next year. Why, because we're going after the bigger brands with illumin and we believe the sales cycle is six to nine months and so everyone and everyone is very, very prepared that the majority of revenue from illumin is going to come in mid next year. But I feel little surprised and we will have revenue for illumin in Q4. In fact we're middle of running revenue for illumin as we speak. So we believe it's going to be approximately CAD1 million of revenue running in Q4 and every quarter this number is going to aggressively grow. And I believe personally, that's going to be a massive growth next year for the illumin revenue and therefore for the entire company
So our goal is to start to bring new clients use illumin and maintain more or less our existing business impact. Now, that's our goal. It's never going to actually work that way because so many other existing clients are excited about illumin as well, and there's no reason why, not to let them use it. But so far what we've seen in a new client or increase of dollars from existing clients, so for me it's all new revenue and the pipelines are building up greatly. I didn't expect the pipeline to be so for, at this point of the game.. I didn't expect the pipeline to be so for, at this point of the game. I really thought that we're going to see most of it at mid-next year. And again, I still believe that the major, major clients are going to come in this next year because it is a longer sales cycle. But we hope so -- the sales team is so excited by the customers as they kind of look. We have people coming to us, that's something that we've never seen before. We've always had to go out and close business. Now, people are coming to the companies -- big companies. They're coming to us, wanting to see the demos, interested in running the program and look at the new platform.
Update on industry:
Today, the overall ad industry is CAD614 billion. Out of that, CAD127 billion is programmatic. Remember, programmatic expired about 10 years ago and grew very aggressively to get to the CAD127 billion. More importantly, in the next few years, the overall advertising space is going to be trillion dollar business. And most of it is going to be transacted programmatic. So, as you can see, the size of the market, size of the opportunity here is absolutely huge. We are very, very excited about the fact that is going to -- that we are in the right space for that.
Acuity 2020 business update on Covid
Acuity, we had a very tough end of Q1, mid-March when advertisers started to just cancel campaign out of pure pending and then it's went into April. But then something happened in May, In May, we've seen a major comeback and then again in June, even more and every month since we're seeing more and more revenue coming back and every month is aggressively going from the previous month. Why? Because advertisers are now more than ever demanding to see results. So demanding to see ROI from their investments [ph]. And I'm going to repeat this because I said it before, but there is no better company out there, there is no better technology, there is no better AI engine to deliver this positive ROI all measured in real time than Acuity has. So we are very, very happy to be out there and to help companies recover and grow.
Acuity comment on Q3 performance
Form a financial performance of Q3, like I said, absolutely fantastic performance, again thank you for the Acuity team. We delivered CAD26 million in revenue, almost flat as the same as last year, major come back from our Q2 numbers, and we're seeing that trends, we are continuing to grow our revenue very aggressively.
Now, net revenue was higher than the year before, were higher, our EBITDA was CAD4 million versus CAD1.6 million, same time last year. Adjusted net income was CAD3.7 million versus CAD700,000 at the same time last year. And I think very important, this is the fifth quarter in a row that we brought in positive cash flow. So every quarter we are improving the situation, the financial situation of the company, paying down debt and improving the balance sheet. You can kind of see from this. This is the trailing 12 EBITDA we've been very, very focused on that and you can see that we're growing every quarter and we intend to continue that trend moving forward.
Balance sheet update:
The balance on our line of credit over the past six quarters is shown on the left hand side of this slide. As of Q3 2020, the outstanding balance of our revolving line of credit fell to CAD2.2 million compared to CAD16.8 million as of September 30, 2019. And today, we're pleased to note that, that balance is now zero as we maintain our ability to generate positive operating fee -- we still have access to our operating line and can draw down as needed, affording us as a financial flexibility for the future. On the right side of the chart, you can see the cash on hand as of Q3 2020 has increased the same time as our debt has decreased. As of September 30, our cash balance stood at CAD9.5 million. With positive working capital and sharply reduce debt levels, our balance sheet has never been in better shape. And we see this improving in future.
Q4 2020 Guidance
Given the recovering programmatic industry, strong secular tailwinds and the launch of our new revolutionary new platform illumin, we look forward to continue to grow revenue and being able to generate even higher levels of cash flow in the coming quarters. We are very pleased with our results this quarter and are on track for a strong fourth quarter. We believe the best is yet to come for the business and our shareholders. We also want to echo once again our ongoing commitment, to focus on margins, cost containment, generating operating cash flow and continuing to improve our financial strength.
Looking ahead to the fourth quarter, as previously mentioned a few minutes ago, we continue to see increasing monthly revenues, which should allow us to show another quarter of strong sequential revenue growth. This should also translate into another quarter of increasing EBITDA and investor net income allowing Acuity to end 2020 very strong from a financial operating and market perspective.
Travel and Entertainment industry impact on Q4:
Travel and entertainment does have a big Q4. That will affect year-over-year revenues slightly in some respects. But we are very focused on growing our EBITDA, both sequentially and year-over-year and that's going to be a big driving point for us. So even if revenues might not be exactly where they were last year, I expect us to achieve higher profit.
Update on Nasdaq listing progress:
As a management team, we are very focused on what is in the best interest of our shareholders, and part of this mandate includes acting on opportunities, provide additional visibility and liquidity for new and existing investors in Acuity. We have recently crossed the threshold to uplist on to US exchange and we believe there is significant value for Acuity and for our shareholders in doing so. We continue to work with our auditors and lawyers, as well as several US investment banks, interested in the Acuity story, but still early in our evaluation, we continue to assess this opportunity and will keep our shareholders updated on any developments going forward.
You know it's really, really an exciting time to be at Acuity and we're still in the exploratory stages. We will do what is going to be best for Acuity and for the shareholders and we're getting it by far our major shareholders. We're building our relationship with the US banks and we believe it's going to be time sometime next year, but it remains to be seem.