Adcore Reports Continued Strong Performance with Third Quarter Financial Results

Adcore CEO, Omri Brill, commented, “I am delighted to report to shareholders another strong operating quarter and continued positive business momentum in both sales, cash flow, margins, new products and new business wins.  The $8.2 million in revenues generated this past quarter was 10% higher than the $7.5 million in revenues from the third quarter in 2022, and significantly higher sequentially from our 2023 second quarter results of $6.9 million in sales.  During the quarter, we also added multiple notable new clients including, Toys R Us, Runway The Label, while expanding prior relationships with important existing customers. Another major win and further evidence of our continued execution in our growth strategy was securing a new digital advertising contract with a budget of up to CAD $10 million dollars with a leading Australian health and wellness company just after quarter end. Other major milestones achieved this quarter included the launch of our new marketing cloud app, Media Blast, to help support our small business customers with their digital advertising needs.  

We are also happy to report that our margins remained strong for the quarter and in line with our prior guidance of 40%-45% and thus, contributed to continued increases in both positive cash flow and our total cash position.  We concluded the quarter with CAD$7.5 million in cash compared to CAD$6.2 million in the previous quarter and a total working capital of CAD$7.7 million. 

Having virtually no debt and a very healthy cash position allows us cash flexibility which we will continue to use wisely to build long term shareholder value, including given the current undervalued share price, using some excess cash to buy back shares through our NCIB.  As Adcore continues to grow its business and secure its place atop the digital advertising landscape, I want to thank all our staff that make this all possible.  Whether it’s signing new clients, expanding existing client relationships, or releasing new products, I am excited for what the future holds and look forward to sharing our continued successes in the next quarter,” concluded Mr. Brill.

Third Quarter Highlights:

• Revenue for the three months ended September 30, 2023, was CAD$8.2 million compared to CAD$7.5 million for the three months ended September 30, 2022, a 10% increase. 

• Gross profit for the three months ended September 30, 2023, was CAD$3.3 million compared to CAD$3.4 million for the three months ended September 30, 2022, a 5% decrease. 

• Gross margin for the three months ended September 30, 2023, was 40% compared to 46% for the three months ended September 30, 2022. 

• Adjusted EBITDA for the three months ended September 30, 2023, was CAD$240,000 compared to CAD$734,000 for the three months ended September 30, 2022, a 67% decrease.

• North America revenue for the three months ended September 30, 2023, was CAD$1.65 million compared to CAD$2 million for the three months ended September 30, 2022, an 18% decrease.

• EMEA revenue for the three months ended September 30, 2023, was CAD$3.91 million compared to CAD$3.24 million for the three months ended September 30, 2022, a 20% increase. 

• APAC revenue for the three months ended September 30, 2023, was CAD$2.66 million compared to CAD$2.24 million for the three months ended September 30, 2022, a 19% increase. 

• An increase of 192% in cash flow used for operating activities compared to the three months ended September 30, 2022.

• Total accumulated NCIB purchases the company made until 31/10/2023 was 1,782,000 shares.

• Working Capital for the nine months ended September 30, 2023, was CAD$7.7 million compared to CAD$9.2 million as of December 31, 2022.

Adjusted EBITDA:

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ADCORE INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Conference Call and Webcast Information

The Company will host a conference call and webcast to discuss these results on November 9th at 10AM ET.

To register for the conference call/webcast click here: https://us02web.zoom.us/webinar/register/WN_SnO_MzwYSZmLxz5-KDbXdg

or visit: https://click.adcore.com/q3-2023-conference-call

Use of Non-IFRS Measures

Management uses Adjusted earnings before interest, income taxes, depreciation, and amortization (“Adjusted EBITDA”) as a key financial metric to evaluate Adcore’s operating performance and for planning and forecasting future business operations. Adjusted EBITDA excludes significant items that are non-operating in nature in order to evaluate Adcore’s core operating performance against prior periods. Adjusted EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for net earnings, overall change in cash or liquidity of the business as a whole. Management believes the use of Adjusted EBITDA allows investors and analysts to understand the results of the continuing operations of the Company and its subsidiary, by excluding certain items that have a disproportionate impact on Adcore’s results for a particular period. Management’s method of determining non-GAAP financial measures is evaluated periodically and may differ from other companies’ methods and therefore may not be comparable to those used by other companies.

The following table reconciles the non-IFRS measure to the most comparable IFRS measure for the three months ended September 30, 2023. This measure does not have any standardized meaning under IFRS and is not a measure of financial performance under IFRS, and therefore, may not be comparable to similar measures presented by other companies.