illumin 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 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 statement and 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 Q&A session. I would now like to turn the conference call over to Mr. Simon Cairn, Chief Executive Officer.

Thank you, Steve. Welcome, everyone, and thank you for joining us for today's fourth quarter and full year 2024 earnings call. I'll start off by reviewing some of the highlights from the quarter, which demonstrate the success of the customer-centric approach we started applying in the second half of 2024. I'll also discuss the testing we're doing around enhanced marketing and sales initiatives, which have contributed to our growth in self-service, managed service, and our exchange services revenue lines. Then I'll turn the call over to our Chief Financial Officer, Elliot Muchnick, who will review the highlights of our fourth quarter and full year 2024 financial and operating results. After that, we'll be happy to take your questions. For the fourth quarter, we delivered strong year-over-year revenue growth of 35%. This growth was driven by increases across all our revenue lines, including self-service, managed service, and our exchange services businesses. Most notably, we continue to see considerable revenue growth in Illumine self-service, which grew 45% year-over-year and 55% sequentially. Illumine self-service represented 26% of total company revenue for the fourth quarter, up from 23% in the third quarter and 24% in the same period last year. What's important to point out is that this self-service growth came from a variety of inputs similar to what we saw in Q3. For example, during the fourth quarter, we onboarded 23 new self-service customers, driven by strong customer interest in both our standard self-service option as well as our newer hybrid or guided edition of self-service that we launched in Q3. In addition to new customers, revenue growth in self-service was also fueled by improving average revenue per customer. largely due to our customers finding more value in the new features we launched in Q3 and Q4, such as programmatic guarantee and our consistently improving support for CTV, which I'll talk about more shortly. Further supporting our revenue growth and self-service, existing customers have indicated they are very pleased with the recent platform enhancements we've made, including our integration with walled gardens like Meta, resulting in better customer stickiness. This integration extends our ability to drive exceptional campaign performance across both the open web and now into and through walled gardens. resulting in improved overall conversion for that brand and a lot less work for said brand when compared to the traditional legacy single channel focused campaign planning tools. This multi-channel approach we've been employing in self-service has been paying off with existing customers, increasing their stickiness as they stay on the platform longer, which was the core intent in originally launching self-service. As a second example of improving stickiness, More of our existing customers are now testing and trying out more advanced features such as Pathlight, an AI-driven tool that delivers real-time recommendations in the campaign planning and performance analysis stages, enabling quick adjustments and readjustments to get that extra awareness or conversion performance, all supported by our recently revised automated reporting, which enables our customers to focus on insights from reporting rather than just building reports. Our efforts are delivering better performance for customers with less effort on their behalf, and we believe this will drive even further stickiness over time. This product and platform focus on better conversion, better insights, and more automated workflows better positions us not just as another DSP or just another vendor, but rather as a key partner in our customers' marketing success, creating both a reliance on our technology and a trust in our team. This focus on conversion, insights, and more automated workflows are a manifestation of our customer-centric approach that we want to build upon to deliver more value to our customers, our investors, and ourselves over the next several quarters. Further complementing these platform improvements, we are also expanding the types of programmatic deals that advertisers want to use when planning their marketing campaigns, such as programmatic guarantee, or PG, for CTV channels, as well as our forthcoming forecasting tool that we expect to launch in Q2. As CTV grows on our platform in terms of adoptability, it's important we pre-position ourselves for a win here. Hence our efforts during the last couple of quarters to expand CTV audience support, allow for more automated reporting, and now providing support for more deal types such as programmatic guarantee. to drive further stickiness in the second half of 2025. In the near future, we expect to release our AI-driven forecasting tools for programmatic channels, including open web, CTV, and digital out of home. Until now, AI-driven forecasting has been available only to exclusive brands, willing to pay a premium within exclusive applications. With a Lumens campaign forecaster, self-service challenger brands and agency customers can access the convenience of integrated, cross-channel forecasts at no additional cost while up-leveling their speed to market and increasing their confidence in their digital marketing buys by utilizing a Lumens self-service, all without having to commit to big upfront contracts. We expect to launch this feature in the coming weeks. Accompanying these platforms, our quarterly results also reflect the success of our enhanced sales initiatives, which have been targeting higher spend clients. So, in addition to reaching more customers, we will continue to refine our sales and marketing efforts to be more strategic and effective, manifested in the revisions we're making to Illumine's self-service go-to-market strategy. We believe all these changes we've been implementing are expanding our addressable market and positioning our company for further Illumine self-service customer growth in both the near and long term. We are continually testing and refining our marketing, sales tactics, and product priorities, both to address customer feedback and to drive revenue growth. This is how we've been able to achieve the substantial growth that you've been seeing in recent quarters. Leveling up from the testing and refining what we've been doing, we plan to launch a new brand strategy in 2025, along with reinvigorated marketing and lead generation, which have been historic challenge points for us trying to carve out a unique and valuable part in the market that is vibrant and where our self-service solution can be of tremendous value. Simultaneously, we have continued to implement strategic shifts in our business transitioning from a transaction oriented revenue model with no contractual commitment to a more sustainable recurring self service model that favors longer term customer contracts. We continue to believe that in the long run, this strategy will give us the ability to deliver a consistent, sustainable revenue growth and profitability. In addition to self-service growth and after a few years of decline, the fourth quarter also represents our second consecutive quarter of resumed managed services revenue growth, which increased 28% as more companies recognize the complimentary purposes of both our managed service and our self-service products. As I've stated in our prior calls, customers are telling us that they have always valued us for managed services capabilities. And while self-service may indeed outpace managed services in the future, For now, our customers are telling us that managed services remains an important option for them. In line with this thinking, in the second half of 2024, we told customers that we will continue to offer managed services so long as there is meaningful demand and that we can genuinely add value. As our customer performance in both Q3 and Q4 clearly indicates, that was indeed the case. This also aligns with the more customer-centric approach we've been taking the past several months, which includes building complementary, interlocking, cross-gradable customer-facing options consisting of self-service, managed services, as well as a hybrid approach if that makes the most sense for the customer. All of these options are supported by the improvements to our platform that I mentioned earlier, combining to deliver better customer insights and added value to our customers. As our most recent quarterly results show, this approach has been working, helping more customers see the value in utilizing both self-service and more recently managed service products. We also found that this complementary set of solutions has opened a wider range of customer segments for us, including both agencies and brands, encompassing different sizes and spend profiles. We believe this wider applicability and early response indicates that both Illumine self-service and managed service options have greater potential growth opportunities than we've seen so far, giving us motivation to continue on this path. Complementing our self-service and managed service business, we continue to see substantial growth in exchange services, where revenue increased 39% in the fourth quarter compared to the prior year period. In the third quarter of 2024, we saw increased demand for our proven exchange services capabilities. Recognizing this opportunity, we successfully capitalized on that demand, and in Q4, we delivered 39% growth for the third revenue segment compared to the same quarter in the prior year, further diversifying our revenue sources and extending the value of our Lumen platform into publisher services. It is important to note that the publisher side is a very tight market, and so we are dedicating a focused effort to offer meaningful value and capture opportunities. but not derailing our focus from delivering on the promise of self-service. Our proprietary tech platform supports this type of test and prove expansion as we continue to leverage our existing platform and existing operations and abilities to offer new value to new customers. Moving down the income statement closer to the bottom line, adjusted EBITDA increased significantly during the quarter, growing 42% year-over-year compared to the same period in 2023 and 113% quarter-over-quarter. This improvement was due to our sales growth as well as enhanced sales productivity and improved operating efficiencies. Going forward, we will continue to focus on improving operational efficiencies throughout the business. As I mentioned earlier, we are still in the very early stages of refining our sales and marketing activities. But based on our Q4 results, these initial actions seem to be paying off. This is due in no small part to some of the key hires we made in 2024, including the additions of Liz Ritzkoven, our chief revenue officer, and Bridget Westerholtz, our SVP for marketing. Liz brings over 20 years of print, digital media, and software sales experience with industry-leading organizations to Illumine. Bridget is a global marketing leader with over 20 years of experience inside advertising agencies and inside brands. A lot of changes we've made to our sales and marketing activities to improve their effectiveness have been due to their efforts. I'm extremely happy with the results we've seen, and I want to thank them both and their entire teams for the success we've achieved so far. I believe the success is still only in the very beginning stages of what we can accomplish. To summarize, our fourth quarter results show the accumulated benefits of all the actions we've been taking since the second half of 2024 to drive revenue, improve our overall performance, and build a solid foundation for long-term growth. As these results show, we are seeing what I have been looking for, patterns of growth, most pleasantly growth in more than one area, as well as we are still delivering on EBITDA. Looking ahead, we are still in the very early stages of our strategic transformation. While we currently are facing demonstrable economic uncertainties with respect to tariffs and inflation, we intend to continue to utilize and capitalize on the customer-centric approach that has served us quite well so far. Our strengthened team will continue to focus on marketing and selling more effectively and efficiently to customers as we advance a Lumen self-service roadmap. For 2025, we have a specific track that is dedicated to increasing qualified opportunities, engaging in a more solution centric approach and removing friction from our selling process. Again, we are happy with what we've already achieved and our results show that. However, we believe we were still in the very early stages of growth. There's still ample marketing improvements, a new brand strategy, further improvements to our product line, better focus in selling and engagement, and ample friction to be removed within 2025. So in our minds, the best is still yet to come. And as such, we look forward to updating you on our continued progress. With that, let me turn the call over to Elliot to give a detailed review of our financial results.

Thank you, Simon. and good morning everyone and thank you for joining our earnings call today we reported our fourth quarter and full year 2024 results during the fourth quarter we delivered increases across all of our revenue lines and an adjusted EBITDA improvement of 42 percent compared to the prior year for the full year revenue increased 11 percent and adjusted EBITDA increased by 104 percent These financial results signify the strongest quarter in the company's history, and I'm pleased to provide additional details on our quarterly and full-year results. Fourth quarter 2024 revenue was $49.9 million, up 35% compared to $37 million in Q4 2023. As I mentioned earlier, this year over year growth reflects increases across all revenue segments, including self-service, managed service, and exchange services. Specifically, our self-service business showed strong growth during the quarter, rising 45% to reach $13 million compared to $8.9 million in Q4 2023. Simon noted, we are especially pleased with the factors that drove this terrific performance, including 23 new customer relationships and increased average revenue per client. And we have continually refined our focus on targeting customers with higher spend potential and a greater likelihood of benefiting from the unique attributes of our platform. And with our increased focus and enhanced sales efforts, as well as our investment in brand product management, we expect this momentum to continue as we see further adoption and utilization of our self-service platform. In addition to self-service, the fourth quarter of 2024 represents our third consecutive quarter of growth in our managed service revenue line, which reached 23.7 million, up 28% year over year and 33% sequentially from Q3 of this year. As discussed earlier, our clients appreciate and value the performance we delivered through our managed service business line, and we see continued opportunity to deliver meaningful results for our clients and the company in this segment. And finally, our exchange services business delivered strong results with revenue of $13.2 million, increasing 39% year-over-year with strong demand during a particularly active period, which included the presidential election cycle in the U.S. Gross profit or net revenue for the fourth quarter 2024 was $22.7 million compared to $18 million in Q4 2023. reflecting higher sales year over year. Gross margin for the quarter was 45% compared to 49% for the same period in 2023, driven by change in product mix and increased client activity in lower margin verticals. And going forward, our overall margins are expected to be more aligned with our full year gross margin of approximately 47%, but some anticipated further downward pressure due to increased self-service revenue growth. Total operating expenses for the fourth quarter of 2024 were 21.8 million compared to 19 million during the same period in 2023. The year-over-year increase reflects higher technology expenses related to higher variable data costs, higher sales and marketing expenses, and increased G&A expenses for higher recruiting and bonuses. Q4 2024 operating expenses as a percentage of revenue were 43.7% compared to 51.4% in Q4 2023. And again, as noted earlier, fourth quarter adjusted EBITDA rose 42% year-over-year to 3.9 million compared to 2.8 million in the prior year period. And this improvement was primarily attributable to higher revenue, strengthened U.S. dollar that were partially offset by higher operating expenses. Net income for the fourth quarter of 2024 was $4.1 million compared to a net loss of $2.6 million in the same period last year. This year-over-year increase was primarily a result of higher revenue and net foreign exchange gain versus a loss in the prior year period, which is partially offset by higher costs. Turning to our full year results, total 2024 revenue grew 11% to $140.4 million versus $126.3 million in 2023. The annual increase was driven by strong revenue growth in our self-service business, which increased by 78% from prior year to $38.4 million. Exchange services revenue increased by 8% from 2023 to $34.3 million. Managed services revenue declined 7% year over year to $67.7 million with our growth during the second half of 2024, mostly offsetting the declines earlier in the year. 2024 gross profit or net revenue was $65.5 million versus $60.3 million in 2023, an 8.6% increase due to higher revenues. and gross margins slightly declined to 47% compared to 48% last year, reflecting the higher portion of self-service revenue in the overall mix. Operating expenses for 2024 were $70.5 million, a $1.7 million increase versus the $71.7 million of the prior year, despite the growth we experienced in our top line. This outcome is consistent with the commitment management made at the beginning of 2024 to grow revenue while not sacrificing our focus on operational efficiency and cost management. The operating expenses in 2024 were 50% of revenue versus 57% in 2023. As a result of this focus on operational efficiency, our 2024 full-year EBITDA increased by 104% to $6.3 million compared to $3.1 million in the prior year. Net income for 2024 was 0.9 million, considerable improvement compared to the net loss of 11 million in 2023. And this increase was driven by better performance as described during my earlier comments and the reversal of a 2.8 million FX loss in the prior year to a 5.1 million gain in 2024. Turning briefly to our balance sheet. In Q4, we continued to strengthen our balance sheet by growing cash from $51.4 million at the end of Q3 to $56 million as of December 31, 2024, and an increase of half a million from the end of 2023. This year-over-year increase was primarily attributable to strong cash flow from operating activities, a favorable foreign exchange impact on cash and cash equivalents, which was partially offset by the repurchase of the company shares and further investments to enhance our platform as well as for property and equipment payments on leases. Our balance sheet continues to be a source of strength for Lumen. In addition to providing us necessary liquidity to support our growth initiatives, it also provides Lumen financial flexibility to consider strategic acquisition opportunities in a marketplace with increasingly more attractive and accretive expansion opportunities both in North America and beyond in areas where we already operate or see potential strategic fits. Also in the year, the company concluded the November 2023 Normal Course Issuer Bid, or NCIB, on November 12, 2024. Under this 2023 NCIB, during the year, the company repurchased 3.31 million shares at an average price of $1.61 per share, a total consideration of $5.3 million. On December 23, 2024, the company commenced a new NCIB to purchase for cancellation up to 3.9 million of its outstanding common shares. No repurchases were made under this facility between its commencement and the end of the fiscal year. This 2024 NCIB remains open and can continue until December 22, 2025 or until we reach our targeted repurchase limit. As of December 31st, 2024, the total number of our outstanding common shares stood at 51,238,056 shares. Following a series of strategic adjustments to our share structure compared to 51,350,973 as of December 31st, 2023. This figure includes the impact of our share repurchases during the year under the 2023 NCIB. It was offset by shares issued through the exercise of stock options and other vested equity instruments. On a fully diluted basis, our shares outstanding are 56.4 million and our insider share ownership percentage remains at just over 23%. In conclusion, during the fourth quarter, we delivered a significant year-over-year increase in total revenue, reflecting growth in all revenue lines including self-service, managed service, and exchange services, which was driven by our successful and enhanced sales initiatives. As we move ahead in 2025, we anticipate some short-term headwinds related to tariffs and persistent economic uncertainty. We expect 2025 to be a year of progressive growth, especially in our most active quarters during the second half of the year. Further, we expect to record higher expenses in the first half of the year, mainly from our continued investments to enhance our product platform, strengthen brand identity, and as well as for initiatives to increase our sales capacity and efficiency for the more profitable third and fourth quarters once these investments have been completed. Having said that, we continue to believe in our long-term growth prospects and intend to remain focused on generating strong, sustainable revenue growth across all our revenue lines for 2025. And with that, I'd like to turn the call back to Simon for his closing remarks.