AcuityAds Holdings Inc
Q3/22 Results - Slightly Below Expectations; illumin Adoption Continues
TSX: AT | CAD 2.05 | Sector Perform | Price Target CAD 5.00
Sentiment: Neutral
Our view
Q3/22 results were slightly below our expectations. Despite rising macro headwinds, management expects positive YoY revenue growth in Q4/22 along with continued illumin adoption. We view the results as neutral for the shares.
First impression
• Q3/22 slightly below expectations. Revenues and adjusted EBITDA were $28.9MM (+5.3% YoY) and $1.6MM (-62.9%) versus our estimates of $30.3MM and $1.7MM (consensus is $30.3MM and $2.4MM). Excluding media costs, net revenue of $14.8MM was slightly below our estimate of $15.3MM but largely in line with consensus of $15.0MM. Please see Exhibit 1 for a summary of Q3/22 results versus expectations.
• illumin adoption continues. illumin revenues were $13.2MM in Q3/22, representing 46% of total revenues and up +29.4% sequentially versus $10.2MM in Q2/22, and up +78.4% YoY versus $7.4MM in Q3/21. illumin self-serve revenue increased +20% sequentially to $1.2MM with the number of self-serve clients up +42% sequentially.
• Other notables. (i) Management continues to expect the benefits of ongoing reinvestments in sales and marketing, R&D and talent to flow through with positive YoY revenue growth expected in Q4/22 despite macro headwinds; (ii) 1.8MM shares were repurchased for $5.9MM in Q3/22 at an average per-share price of $3.23; (iii) the company had cash of $88.2MM as of Q3/22; and (iv) Nadeem Ahmed joined the company as Chief Revenue Officer and Tony Vlismas joined as VP of Marketing.
• Issues in focus for the 8:30am ET call. (i) The extent to which rising macro headwinds are having an impact on revenue growth; and (ii) an update on strategic and FCF priorities given the changing macro environment.