illumin Holdings Inc T.ILLM

RBC

[retiredcf]

July 26, 2023

illumin Holdings Inc.
Announces Substantial Issuer Bid and Provides Q2/23 Guidance

TSX: ILLM | CAD 2.47 | Outperform | Price Target CAD 3.50

Sentiment: Positive

Details

illumin announced it will launch a substantial issuer bid (SIB) to purchase for cancellation up to 15.8MM of its common shares through a Dutch Auction with a purchase range between $2.53 to $2.65/share for an aggregate purchase price not exceeding $40MM. The offer commences on July 27, 2023 and will expire on August 30, 2023 (unless extended or withdrawn). In addition, illumin announced its intention to delist from the Nasdaq (illumin's shares will continue to trade on the TSX) following the expiry of the offer, indicating the company: (i) has no intention to raise additional capital in the short to medium-term; (ii) has not attracted a significant number of long-term U.S. investors through its Nasdaq listing; and (iii) incurs high administrative costs associated with a continued Nasdaq listing. Lastly, the company provided Q2/23 guidance: (i) revenue and adjusted EBITDA of $33MM and $0.02MM; (ii) illumin self-serve revenue of $5.4MM; and (iii) cash of $66MM as of Q2/23.

Implications

We view these announcements as positive for the shares at current levels with Q2/23 guidance indicative of growing illumin traction and improving execution. Revenue and adjusted EBITDA of $33MM (+16.8% YoY) and $0.02MM, respectively, exceed our estimates of $31.2MM and -$0.45MM and compares to consensus of $30.5MM and $0.6MM while illumin self-serve revenue of $5.4MM is up +440% YoY and +145% sequentially. We believe results are indicative of significant investments made in the leadership team, illumin platform capabilities and functionality, and sales and marketing. Furthermore, the announcement of an SIB at this juncture is consistent with the company's net cash position and what we believe is a continued strategic focus on accelerating organic growth opportunities with illumin versus M&A.