Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sabio Holdings Inc (SABOF, Financial) reported its best second-quarter results as a public company, with sales increasing by 11% to USD8.9 million.
- The company's Connected TV and OTT ad-supported streaming sales grew by 39%, significantly outpacing the estimated 16% growth rate for the US CTV industry.
- Sabio Holdings Inc (SABOF) achieved a 91% recurring revenue rate, with 70% of top brand customers increasing their spend from the previous year.
- The company has successfully transitioned to a more cost-efficient ad-supported streaming sales model, reducing operating expenses by 13% compared to the previous year.
- Sabio Holdings Inc (SABOF) is launching new programmatic and performance products, expected to drive additional revenue without affecting bottom-line efficiencies.
Negative Points
- Mobile display sales decreased by 36% from the previous year, indicating a shift in customer spending preferences.
- Despite improvements, the company still reported an adjusted EBITDA loss of under USD300,000 for the quarter.
- Political spend in Q2 was cautious due to the unusual 2024 US election cycle, with heavy spend expected later in the year.
- The transition to programmatic offerings may pressure gross margins, although it is expected to improve EBITDA margins.
- There were additional restructuring charges in the quarter, although the company claims most heavy lifting is complete.
Q & A Highlights
Q: Can you provide more details on the new offerings expected to launch in Q3 and Q4?
A: Aziz Rahimtoola, CEO: We are expanding into programmatic advertising, which is becoming a significant part of the CTV/OTT space. This new offering will allow us to retain customers interested in managed service campaigns while expanding our share of wallet through programmatic. We believe this will generate additional revenue without cannibalizing our existing business.
Q: Have you seen political spend start to flow in for the second half of the year?
A: Sajid Premji, CFO: Yes, we have seen positive traction. We expect heavy political spend post-convention through election day. We've already had more political spend this quarter than in all of Q2 and more than in 2022.
Q: What is your confidence level for growth in 2025, excluding political spend?
A: Aziz Rahimtoola, CEO: We are optimistic due to positive consumer sentiment and potential interest rate reductions. Our core business is strong, with a 90% recurring rate, and we are launching a new programmatic offering. These factors, along with our App Science differentiation, position us well for 2025.
Q: Are you done with restructuring, and is this the baseline operating expense?
A: Sajid Premji, CFO: Most of the heavy restructuring is complete. We have transitioned from a mobile to a streaming company, and while we will continue to fine-tune, the major restructuring is done.
Q: What are your capital allocation plans with the new credit facility?
A: Sajid Premji, CFO: The facility provides insurance, but we do not need to finance growth through debt. We expect to be EBITDA profitable in the second half of this year, and growth initiatives will be funded through our operating performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
