Ionik Delivers Record Revenue and EBITDA in Second Quarter 2024

Rhea-AI Summary

Ionik (TSXV: INIK) (OTCQX: INIKF) reported record financial results for Q2 2024. Key highlights include:

- Revenue increased 26% year-over-year to $44.8 million
- Adjusted EBITDA grew 52% to $5.5 million
- Gross profit rose 20% to $16.7 million
- Net loss from continuing operations narrowed to $0.3 million
- Senior debt reduced by $2.8 million to $64.4 million

The company attributes growth to 2023 acquisitions and organic expansion. Cash flow from operations improved, allowing debt reduction. Ionik maintains a strong capital position with $6.8 million in cash and $40.8 million available credit. The company also announced the appointment of Jeff Collins as CFO, replacing Lois Norris.

Positive

• Record quarterly revenue of $44.8 million, up 26% year-over-year
• Adjusted EBITDA increased 52% to $5.5 million
• Gross profit grew 20% to $16.7 million
• Year-to-date operating cash flow improved to $1.7 million from $0.6 million
• Senior debt reduced by $2.8 million in the quarter
• Net loss narrowed significantly from $4.8 million to $0.3 million year-over-year

Negative

• Gross profit margin decreased from 39% in Q2 2023 to 37% in Q2 2024
• Adjusted Free Cash Flow conversion rate declined from 94% in Q2 2023 to 65% in Q2 2024
• Total debt remains high at $92.4 million despite recent reductions

Revenue increased 26% over prior year to $44.8 million

Adjusted EBITDA¹ increased 52% over prior year to $5.5 million

Reduced Senior Debt by $2.8 million

(All figures in US dollars, unless otherwise indicated)

Toronto, Ontario--(Newsfile Corp. - August 28, 2024) - PopReach Corporation (dba Ionik) (TSXV: INIK) (OTCQX: INIKF) ("Ionik", or the "Company"), a data-driven performance marketing technology company, announced its financial results for the second quarter ended June 30, 2024.

Financial Highlights for the Second Quarter 2024

• Revenue of $44.8 million, an increase of 26% over the same period of the prior year ("Q2 2023"), attributable to revenue generated from 2023 acquisitions including Schiefer Media, Inc. (SCS), OpenMoves, LLC and S44 LLC (SHIFT44). Revenue grew 6% over the prior quarter, with organic growth and seasonality.

• Gross profit growth in the quarter reflected top line revenue growth, increasing 20% to $16.7 million (37% margin), compared to $13.9 million (39% margin) in Q2 2023. Gross profit grew 16% compared to $14.4 million (34% margin) in the previous quarter.

• Adjusted EBITDA¹ of $5.5 million, an increase of 52% over Q2 2023, with growth derived mainly from 2023 acquisitions. Adjusted EBITDA¹ grew 62% over the previous quarter.

• Year-to-date cash flow from operating activities of $1.7 million, compared to $0.6 million at June 30, 2023. Cash generated from operations was predominantly utilized to pay down and service senior debt obligations.

• Adjusted Free Cash Flow¹ of $3.5 million (65% Adjusted Free Cash Flow conversion rate¹), compared to $3.4 million (94% Adjusted Free Cash Flow conversion rate¹) for Q2 2023. Adjusted Free Cash Flow¹ reported in the second quarter of 2024 was affected by income taxes paid totalling $1.9 million. Excluding these tax payments, Adjusted Free Cash Flow¹ was $5.4 million (99% Adjusted Free Cash Flow conversion rate¹).

• Net loss after tax from continuing operations of $0.3 million versus a net loss of $4.8 million for Q2 2023.

• Cash as at June 30, 2024 was $6.8 million, compared to $8.4 million at March 31, 2024 and $7.4 million at December 31, 2023, with normal course fluctuations in working capital. At June 30, 2024, the Company had not drawn on its revolving facility of $10.0 million and had available to it $30.8 million of its $105.0 million term loan facility. Management believes that its current capital position is sufficient to execute its current business and operational strategies.

• Total undiscounted debt as at June 30, 2024 was $92.4 million, including $64.4 million of senior lender debt, $26.5 million of convertible debt, and $1.5 million in a vendor take-back loan, compared to $95.2 million in total debt as at March 31, 2024. The decrease resulted from principal payments of $2.8 million on the senior debt term facility in the quarter. Senior debt net of cash was $57.7 million at June 30, 2024, compared to $58.8 million at March 31, 2023 and $62.6 million at December 31, 2023.

• Ionik recorded the sale of substantially all of its mobile games portfolio during the second quarter, with the results of this transaction reflected in discontinued operations.

¹Please refer to "Non-IFRS Measures" section of this press release

Ted Hastings, Ionik's CEO, commented, "We are pleased with our record quarterly financial results. During the second quarter we continued to grow revenue and Adjusted EBITDA¹, improve our net debt position and maintain a leverage ratio appropriate for our business model. We reduced our senior debt net of cash to $57.7 million. Year to date, we have reduced senior debt by $5.6 million, repaying our senior debt facility with operating cash flow. From a strategic perspective, in Q2 we closed the sale of the Games business. Overall, we continue to demonstrate the ability to manage and integrate our existing business while executing on strategic M&A activities that expand Ionik to meaningful scale. We remain confident in our ability to execute on our growth objectives in the second half."

Significant developments subsequent to quarter end

Change of CFO

The Company has appointed Jeff Collins as the Company's Chief Financial Officer ("CFO"). Mr. Collins will continue to also serve as the Company's Chief Operating Officer. Mr. Collins succeeds Lois Norris who has been serving as the CFO since October 2, 2023.

Mr. Collins, who served as the Company's interim CFO from August 1, 2023 to October 2, 2023, has more than 20 years of experience managing private and public companies with extensive financial, strategic, operational and transaction experience in software, technology, and digital media industries. He co-founded Federated Foundry, which was acquired by the Company in connection with a reverse take-over transaction completed on April 28, 2022. Mr. Collins has previously served as the CFO of two Toronto Stock Exchange listed companies. He is also a CPA and a graduate of Wilfrid Laurier University.

"On behalf of the Ionik team and Board, we thank Lois for her contributions during a period of growth and transformation of Ionik," said Ted Hastings. "We are pleased to announce the appointment of Jeff Collins as our new CFO. Throughout his tenure with Ionik, Jeff has been an integral part of our team and a key contributor to our success. His close involvement with the finance team positions him well for a seamless transition, ensuring continuity as we remain focused on delivering our strategic priorities."

Mr. Collins' appointment remains subject to the Company's receipt of approval from the TSX Venture Exchange.

Non-IFRS Measures

The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"). However, the Company considers certain non-IFRS financial measures as useful additional information to assess its financial performance. These measures, which it believes are widely used by investors, securities analysts and other interested parties to evaluate its performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted EBITDA" and "Adjusted Free Cash Flow".

Adjusted EBITDA and Adjusted Free Cash Flow

Consolidated adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a non-IFRS measure of financial performance. Company management defines Adjusted EBITDA as IFRS Net income (loss) adding back finance costs, income taxes, depreciation and amortization, gain/loss on disposal of assets and extinguishment of loans, fair value gain/loss on financial liabilities and modification/extinguishment on loans, and excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings, such as impairments where the impairment is the result of an isolated, non-recurring event. It also excludes the effects of equity-settled share-based payments, foreign exchange gains/losses, and other extraordinary one-time expenses, such as transaction costs and other severance and restructuring costs. See reconciliation of Adjusted EBITDA in the table below.

Company management defines "Adjusted Free Cash Flow" as Adjusted EBITDA less capital expenditures, such as acquisition of property and equipment and additions to intangibles for capitalized development costs, and income taxes paid during the period. Similarly, Company management defines "Adjusted Free Cash Flow conversion rate" as Adjusted Free Cash Flow divided by Adjusted EBITDA. See reconciliation of Adjusted Free Cash Flow in the table below.

The presentation of these non-IFRS financial measures are not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS and may be different from non-IFRS financial measures used by other companies.

Management believes Adjusted EBITDA and Adjusted Free Cash Flow are useful financial metrics to assess its operating performance on a cash basis before the impact of non-cash and extraordinary one-time items.

The following tables presents the Company's calculation of Adjusted EBITDA and Adjusted Free Cash Flow for each period:

To view an enhanced version of this table, please visit:
https://images.newsfilecorp.com/files/6563/221315_24515079e4cdaa5c_001full.jpg

To view an enhanced version of this table, please visit:
https://images.newsfilecorp.com/files/6563/221315_24515079e4cdaa5c_002full.jpg

Financial Statements and MD&A

Ionik's Financial Statements for the three months ended June 30, 2024, and Management's Discussion and Analysis for the same period, are posted on its corporate website at www.ionikgroup.com and available on the Company's profile on SEDAR+ at www.sedarplus.ca.

About Ionik

Ionik, a Tier 1 Issuer on the TSX Venture Exchange, with shares also trading on the OTCQX Best Market, is a data-driven performance marketing technology company focused on assembling the most effective and complete suite of advertising, marketing and monetization solutions for brands, advertisers and publishers while building an extensive proprietary repository of opted-in first party data.

Additional information about the Company is available at www.sedarplus.ca.

PopReach Corporation (dba Ionik)
Sean Peasgood
Investor Relations
(647) 777-7564
Sean@SophicCapital.com

Jeff Collins
COO / CFO
(416) 583-5918
invest@popreach.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement Regarding Forward-Looking Information

Certain information in this news release constitutes forward-looking statements and forward-looking information under applicable Canadian securities legislation (collectively, "forward-looking information"). Forward-looking information includes, but is not limited to, statements with respect to and the business, financials and operations of the Company. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Forward looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements and future events to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the public documents of the Company available at www.sedarplus.ca. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Investors are cautioned that undue reliance should not be placed on any such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/221315

FAQ

What was Ionik's (INIKF) revenue for Q2 2024?

Ionik reported revenue of $44.8 million for Q2 2024, representing a 26% increase compared to the same period in the previous year.

How much did Ionik's (INIKF) Adjusted EBITDA grow in Q2 2024?

Ionik's Adjusted EBITDA grew by 52% to $5.5 million in Q2 2024 compared to Q2 2023.

Did Ionik (INIKF) reduce its debt in Q2 2024?

Yes, Ionik reduced its senior debt by $2.8 million during Q2 2024, bringing the total senior debt to $64.4 million.

Who was appointed as the new CFO of Ionik (INIKF)?

Jeff Collins was appointed as the new Chief Financial Officer of Ionik, succeeding Lois Norris. Collins will also continue to serve as the company's Chief Operating Officer.