AcuityAds Holdings Inc.

Good morning, everyone. Before we begin the official remarks, I will read the cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable security laws, including, among others, statements concerning the company's 2021 objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Please refer to the cautionary statements and the risk factors identified in our filings with CDAR for a more detailed explanation of the inherent risks and uncertainties that could affect such forward-looking statements. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference call over to Tal Hayek, the co-founder and chief executive officer of Acuity Ads, to update you on the operations of the business.

Happy birthday, Illumen! Happy birthday, Illumen!

Illumin is so young, but already started changing the world of advertising. It gives the ability for advertisers to plan and execute on a consumer journey, just like they always dreamed they can, but now they can actually do it. So I'd like to thank the Acuity family for designing and creating such an amazing concept. And to all our partners, customers, investors for being along the journey with us. Thank you, everyone. Good morning everyone and welcome to Acuity's Q3 investor presentation. Wow, I can't believe it's been a year since we launched Illumen. Illumen is changing the world of advertising and it's certainly changed the way Acuity is. I'm so proud of the Acuity family for delivering such an amazing quarter of growth for Illumen, which is up 42% sequentially from Q2. to $7.4 million. Again, this is the fourth quarter of Illumin and look at the runway that we're already seeing it. So thank you from the bottom of my heart to the ACQUITY family for delivering this amazing growth. Q3, we have seen a modest growth. Yes, it was less than we expected the growth. And I can tell you there's a few reasons why. One, it's partly due to the legacy client experiencing some supply chain issues. So needless to say, when clients are experiencing shortage of product, they're pushing advertising less on a temporary basis until they get the supply sources back in play. And we've seen a number of existing customers doing that and then a number of potential customers that are excited about future integration are just slowing down their plan. We all know this is a temporary issue and it will come back big time and that problem is going to be solved. The other thing is we've been focusing since the launch of Illumine on tier one brands. Well, tier one brands has a longer sales cycle and we're happy about the long sales cycle because it means deeper integrations and much, much better relationship with those brands in the long run. And we're going to go into that a little bit more in the future. We are continuing to be super, super focused on Illumine and we're very happy with the progress that we're seeing so far. And I have to say, and I tell to everybody at Acuity, in the last year, in the past 12 months, we've done amazing things. Things that we've never done before. Well, we IPO'd to the NASDAQ, we straightened our balance sheet, and the most important part is we launched Illumin. Illumine, not only that it's changing the world, it's giving us a differentiator that we've never seen before. It gives us the ability to have the kind of conversations with the type of brands that are in our pipelines that we've never seen before. So I do believe that this company is its best position it's ever been. And we now have the ability to think long-term. I want to share the way we think about the market. Really, there's three segments that we're looking at the market. There's the enterprise segment, there's the mid-market, and there's the small to medium-sized business market. So, let's start with the enterprise. So, enterprise is what we've been focusing on since we launched Illumin. We're having tons of conversations with the enterprise brands And they're loving it. In fact, we have many of them that are using the system today, mostly testing it for much bigger integrations in the future. We expected the sales cycle to be long, but it's proving to be even longer than we expected. And I do believe it's going to start hitting next year sometime. In our pipeline, we have eight auto manufacturers that are talking to us for deeper integration. That's not a big surprise because auto is one of those things that you think consumer journey and you start Thinking that way before the purchase happened. So that's that's a brilliant place. We have a very large insurance there we have Home improvement retailer in there all those are great great customers that are in a pipeline and again do believe some of those Integrations will happen next year mid market So mid-market is interesting. Mid-market is what's driving the revenue of Acuity today, or Illumina, I would say, today. so mid-market are still large brands but uh not as large as the fortune 1000 brands and they're more flexible and they move faster and they try the lumen and they've seen the success of illumine and they're increasing their spend on illumine and so we're turning a little bit more attention to them as well so we can see even uh bigger growth from that market i'd like to share some examples of uh all those mid-market companies So there was an e-commerce company that started using Illumine in Q1 of this year. They spent $22,000. They liked it so much that in Q3 they spent $152,000. A clothing retailer that spent only $5,000 in Q1 spent $175,000 in Q3. A large auto manufacturer started with $98,000 and in last quarter spent $216,000 on this. And a healthcare company that spent $194,000 in Q1 spent $648,000 in Q3. Purina, which we were vocal about before, spent 49,000 in Q1 and 169,000 in Q3. So as you can see, it's working. They try it, they really like it, they see the ability to control the consumer journey, to have the conversation with their consumers, and then they see the insights and the learning they get from it, all that with the fact that it's very easy to use, very intuitive, brings them back for more and spending more and more and more, and we expect that trend to continue. And then there's the small, medium-sized businesses. And let me be a little bit more precise about it. For me, it's more the small businesses like the pizza stores that want to log in and spend $500 a month to target a five-mile radius around their store. let me tell you something this is a complete wide open space when it comes to programmatic nobody's doing it well why because it's extremely complex to run programmatics today and illumine has the best chance of infiltrating that why because illumina is easy to use intuitive and it takes only a few minutes to set up a campaign adding a few extra tools to it like a creation tool payment system, and a few other small integration and simplification will make it very ready for that market. So I'm very excited about this market. We don't have the right infrastructure in the organization today to execute on it, but on our strategic roadmap, we are we are very much including and bringing innovation to this segment to the market. We are also focusing on the business operation as we are enhancing our executive team to make sure we have the right focus and alignment. Two new additions to the family, we brought in a new COO, One that will help us tie the whole organization together, all the big projects that we're doing and bringing together and help all the departments succeed as well. You know, that's something that's very important as we're preparing for mega growth in the future. And it's something that I believe we are lacking. And the second innovation we brought in is a chief empowerment officer, which I believe it's so important in this time. Generally speaking, not Acuity, but all industries, we've seen many people working from home. We've seen many people disconnect from one another. We've seen global crisis when it comes to labor. We've seen more and more problems with emotional strength of people. And this is something that also happens at Acuity. It's harder and harder to connect the team as a family. I think we're doing it better than most, but there's still a lot of work to be done there. And we brought in a chief environment officer strictly for that reason. And it's already proving itself to have very positive impact. So I'm very proud that Acuity is investing in the emotional power of people and that will pay back tremendously for the business in the future. So I can tell you that we are now turning our attention to hyper growth starting next year. That's our attention. So we're working on many different elements that are related to it, but obviously it all has to do with Illumin. And I can tell you the founders of Acuity, the executive of Acuity and the rest of the family members of Acuity did not create Illumin to do $50 million in revenue or a hundred million or 200 million. We created Illumin to take over the world of advertising and to do a lot more than that. And this is what we're focusing on. And we believe that this is coming in the next few years. Well, let's drill down a little bit more on Q3 results. So we delivered $27.5 million in revenue. That's up 5.4% year over year. When you look at it on a constant currency basis, which is important to look at it that way, because most of our revenues are in US dollars, Most of our cost is in US dollars, but we are reporting in Canadian dollars. So sometimes there's a disconnect. But when you look at it that way, we're at 11.3% year-over-year growth. Still not where we want to be, but needless to say, we talked about some of the reasons why we're seeing lower growth, and we do believe it's a temporary situation. We've done phenomenal on an EBITDA basis, so we now deliver $22.2 million in LTM EBITDA. Obviously, keep improving the financial situations of the company into the future and add more money in the bank account. We have over $100 million in the bank account, so increases our possibility for investment in different areas. CTV, another great place to concentrate on because we do believe it's a major growth factor into the future. We've seen 220% growth in Q3 over Q3 of last year, and we predict that CTV is going to continue being a major growth. And Illumina Revenue, again, 42% up sequentially, again, another mega growth quarter on a sequential basis to $7.4 million, just to show you how customers are really, really loving the product. And the clients that we have on Illumine, we now have 49 clients on Illumine at the end of Q3. We had about 40 at the end of Q2. And we have 26 Tier 1 clients versus 17 Tier 1 clients that we had at the end of Q2. So we're adding more clients. The clients are spending more. Very good recipe for the future. We have completely different segments across the board. We have media, we have politics, we have healthcare, consumer products, retail, tech, electronics, manufacturing, the whole gamut. And again, Illumina is a platform that could work on any type of industry. Naturally, the industry that are spending more online is where we're going to see the most strength on. But it could really work on anything. And the majority of the Illumine revenue is still coming from new businesses, new logos to Acuity. Again, opened up a lot of doors for us with companies that would never speak to us before. And that's what we're seeing. Next year, sometimes we will start turning our focus on bringing our legacy clients into Illumine at the end of next year. I don't want to have the legacy product in play anymore. And we're continuing to see very strong growth in the pipeline. In fact, we're seeing more and more demos We're seeing more and more requests, incoming balance requests coming into the system on a regular basis. And our team is very busy on filling those. And tier one clients talk to us all the time about it. We are the experts in the consumer journey today. So we're very happy to be in that state and looking really, really excited about what we see in the future on the Illumin side. And just to reiterate, we launched the Lumen Q4 of last year. $1.5 million in revenue, and Q1 was $3.2 million, Q2 was $5.2 million, and then Q3 $7.4 million. That's a major achievement, even without the major brands signing multi-year deals with us, which we do believe that's coming next year. A few weeks ago, we demoed the Lumen product to sell-side analysts. They asked for it. We thought it was a great idea. Why? Because our sales team is not using so much PowerPoints anymore when they go in to make a sale. They're demoing the product. As soon as they demo the product, people get really excited. So we showed it to the analyst and they got really excited and they started to understand the difference between the legacy system and the Illumine system. And we wanted to show at least a snippet of that to you guys today. I mean, we're not going to take a lot of time. It's going to be a very short and precise demo. But we have the longer version if you'd like to see it on our website, on our YouTube channel. And you're welcome to go and see it more. And you're always welcome to request your own demo. We'll be happy to do it for you. Max is going to do the demo for us. Thank you, Max, for joining us. Please take it away.