Q4 2023 illumin Holdings Inc Earnings Call
Unknown Executive: and is 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 Cedar and Edgar for a more detailed explanation of the inherent risks and uncertainties that could affect such forward-looking statements.
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 SEDAR and Edgar 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 tell hike, the cofounder and Chief Executive Officer.
Good morning, everyone and welcome to our Q4 last year and 2023.
Investor presentation. My name is <unk> and I'm, the CEO and co founder of Illumina.
I'd like to start by thanking the lumen community.
Thank you and the Illumina community for delivering a year of transformation, it's not an easy transformation to change the DNA of the company from the managed side of business to self serve so I truly truly think.
The community for delivering such a successful year of transformation in 2022, we had virtually no illumined self serve revenue with no long term contracts and no self serve pipeline.
Unknown Executive: Following the presentation, we will conduct a Q&A session. I would now like to turn the conference call over to Tal Hayek, the Co-Founder and Chief Executive Officer. Good morning, everyone, and welcome to our Q4 slash year-end 2023 investor presentation. My name is Tal Hayek, and I'm the CEO and co-founder of Illumine.
And look where we are today in 2023 over $20 million in alumina self serve revenue.
Most these are long term contracts and a massive self serve pipeline. This is where the future of our business is okay. The growth numbers are masked by the decline in our managed business and we always communicated that we feel that the managed business is going to decline, but the value of ILUVIEN is alumina self serve.
And we're seeing.
Great great great indication for the future.
My prediction is that by the end of this year of 2020 for our self to a run rate is going to be higher than managed and that's you know one of the main reasons why I personally bought over $1 million worth of shares recently, because I believe in this company so much.
Let's talk about the search for the new CEO we are.
Well into the search we're seeing some amazing candidates and having great conversations we havent made any specific decisions yet, but I do think that we're making great progress. It's a very very important decision to make so we don't take that lightly and we will communicate once we have some news on that.
Tal Hayek: I'd like to start by thanking the Illumine community, thanking the Illumin community for delivering a year of transformation. It's not an easy transformation to change the DNA of a company from a man inside of business to self-serve. So I truly, truly thank the community for delivering such a successful year of transformation. In 2022, we had virtually no Illumin self-serve revenue. We had no long-term contracts and no self-serve pipeline.
I believe that Illumina is making huge steps.
On the way to a success.
Again by seeing the success that we're seeing on the so self serve numbers the self serve clients that we're bringing in whereas share more into that let's look at revenue. Our total revenue for Q4 of 2023 was $37 million, that's down seven 5% from the year before that.
Our full year 2023, and 126 million that's up four 4% when you zoom in and look at where we're growing and where we're losing we're growing in the right places. So we've seen over 271% growth on a self serve revenue, which is the most important part of our business, we're seeing declines in managed.
But we're seeing more and more revenue coming out of our self serve and we're seeing all the great signs that we're going to be.
Tal Hayek: And look where we are today. In 2023, over $20 million in Illumin self-serve revenue will be generated. Most of this revenue is in long-term contracts and a massive self-serve pipeline. This is where the future of our business is. The growth numbers are masked by the decline in our managed business. And we have always communicated that we feel that the managed business is going to decline.
Heading that way very very soon this year.
Illumined self serve revenue, particularly let's start in Q4 of 22022, when we saw $2 $4 million in revenue.
Q1 of $23 million to $2 million.
Q2, $5 $4 million Q3, $5 $1 million in Q4, $8 $9 million. So that's a that's a growth of 75%.
Quarter over quarter from Q4 to Q3, and 271% on an annual basis says year over year.
Let's talk about the Illumina late stage demo, we are tracking that because that's a great indication to see our future revenue in Q4 of 'twenty. Two we've seen a 103 demos Q1 of 23 140 demos than in Q2, we saw 178 demos in Q3 hundred 62 there.
And in Q4, 229 demos again, a great indication for us for the future and new logos. So a lumen self serve logos before I share the exact numbers here I'd just like to let you know that in in 'twenty. Three we we were really focused on bringing in a lot of.
<unk>. It was just the beginning of the way I want to bring it out of logos and in order to get feedback from clients make improvements to the system, but also to see which what type of clients. It resonates. The most with and then we are now focusing more and more on the ones that it resonates the most with and seeing the best success.
So in Q4 of 'twenty two we've seen 27, new logos in Q1 of 'twenty 340, New logos Q2, 51, and then we started going down in Q3 33 and in Q4.
We saw 33 again again Bill goes we're focusing on the right clients for us.
Pipeline growth again this is specifically for Illumina self serve in Q4 of 22 114.
In Q1 of 'twenty three to honor and eight in Q2 to 45, Q3 316 and in Q4 327.
Again, a great indication for for future revenue and Microsoft favorite the lumen self serve run rate and this is where you take the last month of the quarter and you multiply by 12, so that indicates the run rate that we're seeing out of the quarter.
I'd like to speak about the stacking effect that we see even within a quarter, which is you retain your existing clients and new AD revenue from your new clients in Q1 of 'twenty three.
Tal Hayek: But the value of Illumin is Illumin self-serve, and we're seeing a great, great, great indication for the future. My prediction is that by the end of this year, 2024, our self-serve run rate is going to be higher than managed. And that's, you know, one of the main reasons why I personally bought over a million dollars worth of shares recently because I believe in this company so much. Let's talk about the search for the new CEO. We are well into the search; we're seeing some amazing candidates and having great conversations. We haven't made any specific decisions yet, but I do think that we're making great progress. It's a very, very important decision to make, so we don't take that lightly, and we will communicate once we have some news on that.
We had 12.
$12 million in Q2 $22 million in Q3 $25 billion in Q4.
44 million exit run rate from the quarter now lets go to Elliot to share our financial results.
Thank you tell welcome everyone and thanks for joining today's fourth quarter and year end 2023 earnings call as Tom mentioned earlier for the full year 2023, our total revenue increased to $126 3 million largely attributable to our higher alumina self service business, which during the fourth quarter.
<unk> searched upward by 75% sequentially and 271% compared to prior year.
These results are important but they only tell part of the story.
During 2023, as we continue to rollout our aluminum platform a significant part of our efforts also involves getting a deeper understanding of our customer base.
Specifically, we analyzed our sales data to identify which customer segments tend to spend more significantly on our platform.
And with this insight we began redirecting our sales focus towards these valuable customer profiles and this allows us to utilize our resources more effectively and efficiently and to focus on larger and more productive client relationships.
We are now starting to see the benefits of these actions and anticipate this will start to generate increased sales traction in 2024 and beyond as macroeconomic conditions steadily improve and alongside this more targeted sales approach.
We remain focused on cost management to ensure we are being efficient while prioritizing our ongoing transformation around self service.
And given this larger macroeconomic backdrop. We think this is only prudent and expect this will remain a priority for us throughout 2024.
By doing this we expect will remain on a path of stronger financial performance and continued innovation and with that I will now move to a more detailed review of our financial results in.
In Q4, we had total revenue of $37 million compared with $40 million for the same period last year. The reduction in quarterly revenue was primarily due to a drop in managed service revenue more so than the U S and overseas and this was largely a result of challenging market conditions for advertisers and our core focus on.
Tal Hayek: I believe that Illumine is making huge steps on the way to success. Again, by seeing the success that we're seeing in the self-serve numbers, the self-serve clients that we're bringing in, we're going to share more on that. Let's look at revenue. Our total revenue for Q4 of 2023 was $37 million. That's down 7.5% from the year before that, and for our full year 2023, 126 million. That's up 4.4%. When you zoom in and look at where we're growing and where we're losing, we're growing in the right places.
Self service growth.
We are beginning to observe more positive consumer and advertiser sentiment, which should be beneficial for the industry and improved topline growth for 2024.
For the fourth quarter managed services revenue was $18 5 million compared to $26 6 million in the same period last year.
Self service revenue grew substantially up 38% to $18 5 million compared to $13 4 million. The same period last year. The increase in self service revenue was driven both by an increase in new alumina self serve customers and higher alumina self serve platform utilization.
Asked how highlighted earlier, our alumina self service component was $8 9 million in the quarter up 75% from prior Q3, and 271% from Q4 of the prior year. We are encouraged by these results and it is clear indicator. We are on the right track gross profit was 18 million compared to.
The $19 4 million in the comparable prior year period operating expenses were $19 million down from $19 6 million in the prior year period as a percentage of revenue operating expenses were 51, 4% for the fourth quarter compared to 49% for the same period last year.
Adjusted EBITDA was $2 4 million relatively unchanged from the same period prior year, despite lower revenues and net loss for the fourth quarter was negative $2 6 million compared to 0.8 million loss in the same period last year lower revenues and foreign exchange laws being the key drivers.
The decline for the full year 2023.
As we also noted earlier total revenue for the 12 months ended December 31 was $126 3 million compared to $121 million of the prior year.
Tal Hayek: So we've seen over 271% growth in our self-serve revenue, which is the most important part of our business. We're seeing decline in managed services, but we're seeing more and more revenue coming out of our self-serve. And we're seeing all the great signs that we're going to be heading that way very, very soon this year.
Taking down our revenue results managed service revenue for the full year 2023 was $72 9 million a decrease of 10% compared to 81 million in the previous year totaled.
Total self service revenue for the full year 2023 rose considerably up 33% to $53 4 million compared with $40 1 million in the previous year and for the full year. Our alumina self service revenue was $21 6 million up almost $16 million from the prior year total of 5.7.
Turning to gross profit or net revenue, which is defined as total revenue less media related costs was $60 3 million for the full year compared slightly down from $60 8 million in the prior year and total operating expenses for 2023 were $71 7 million compared to 66.
$3 million last year as a percentage of revenue operating expenses were 56, 8% compared to 54, 8% in 2022.
Tal Hayek: Illumin self-serve revenue, particularly, let's start in Q4 of 2022, where we saw $2.4 million in revenue. Over to Q1 of 2023, $2.2 million. Q2 $5.4 million, Q3 $5.1 million, and Q4 $8.9 million. So that's a growth of 75% quarter over quarter from Q4 to Q3 and 271% on an annual basis year over year. Let's talk about the Illumine late stage demo.
And this year over year increase reflects the ongoing investments that I mentioned earlier in our technology and sales activities to support the continued growth and enhancements of our lumen platform.
Adjusted EBITDA for the full year 2023 was $1 3 million a decrease from $5 8 million in the prior year, reflecting those investments that I mentioned earlier in our platform and product road map and partially offset by cost management initiatives.
Net loss for the year was $11 million approximately compared to a net loss of 0.8 million in the previous year. This increase in the net loss reflects the factors I described earlier when discussing adjusted EBITDA as well as reflecting a 2.8 million FX loss versus a $6 3 million.
FX gain in the prior year.
Moving on to the next slide of a NASDAQ delisting as previously announced on September 11th 2023, the company voluntarily delisted and cease trading on the NASDAQ capital market.
Simultaneously, we initiated the deregistration process from the FCC, eliminating significant cost burdens and reporting requirements, which is consistent with our cost containment initiatives I referenced earlier and given today's macroeconomic environment. We feel these actions where appropriate and will allow us to utilize our capital more effectively to enhance over.
They're all shareholder value. However, we expect a significant portion of these savings will not be realized until 2025.
The company shares continue to be listed on the Toronto stock exchange in Canada under the trading symbol I L. L M.
And the company is currently well into the process of moving onto the OTC QB platform in the U S to facilitate broader and easier access by investors in the U S. We expect this process to complete shortly effective November 13, 2023, the company initiated a normal course issuer bid to buy back and cancel up to <unk>.
Tal Hayek: We are tracking that because that's a great indication of our future revenue. In Q4 of 22, we saw 103 demos. In Q1 of 23, 140 demos. Then in Q2, we saw 178 demos. In Q3, 162 demos.
$4 million at 330000 shares of its outstanding common stock as of December 31, 2023. The company has acquired 445000 common shares under this program with an average purchase price of $1 52, Canadian and ASIC you'd see on the next slide in 2023, we repurchased.
Over five 7 million shares for a total consideration of $14 4 million excluding related <unk> expenses as I noted in the previous slide our current and CIB initiative has acquired an additional 828000 shares since January one 2024 for now running total of one 3 million shares to date.
We are committed to this undertaking given the current valuations.
And as you heard Tom mention in his earlier remarks, there's all sorts of statute purchase of shares by insiders of the company.
Tal Hayek: And in Q4, 229 demos. Again, a great indication for the future. And new logos.
In total insiders purchased 793004 hundred shares for consideration of over $1 2 million or $1.51 a share throughout 2023 and this further demonstrates our alignment with our shareholders and shows management's strong belief and aluminum future prospects turning to our balance sheet.
Tal Hayek: So Illumine self-serve logos. Before I share the exact numbers here, I'd just like to let you know that in 23, we were really focused on bringing in a lot of logos. It was just the beginning.
As of December 31, 2023, our cash and cash equivalents stood at $55 5 million compared to $85 9 million as of December 31st prior year and this decline was attributable to a combination of net loan repayments and share repurchases, which together constitute a two thirds of that decline the.
The balance of the decrease is attributable to lease payments and targeted investments in our alumina platform, specifically in research and development and the overall decline in substantially impacted by foreign exchange volatility on our year end cash position looking at our shares outstanding as of December 31, 2023, lumen had 51.
Tal Hayek: I wanted to bring in a lot of logos in order to get feedback from clients, make improvements to the system, but also to see what type of clients it resonates with. And then we're now focusing more and more on the ones that it resonates with the most and seeing the best success. So in Q4 of 22, we saw 27 new logos. In Q1 of 23, we saw 40 new logos. Q2, 51. And then we started going down. In Q3, 33.
350973 shares outstanding compared with $56 million 808921 as of the prior year insider ownership increased to over 18% in closing we are very pleased with the growing customer adoption of our alumina self service platform, which continues to.
Drive our revenue growth looking ahead, we will continue to invest in the growth of this unique advertising journey platform at the same time, we remain focused on driving efficiency and it will be containing and further rationalizing our costs. Despite the expected top line growth.
This will ensure our financial stability and with our strong balance sheet will give us the flexibility to be able to seize upon any potential market opportunities that may arise such as attractive acquisitions that can accelerate our growth.
All of this is in line with our commitment to build greater long term value for our shareholders and with that I'd like to charter it back over to the Tao for his closing remarks.
Thank you Elliot.
In closing there is tremendous reason for optimism in 'twenty, one 'twenty 'twenty four with strong cash balance and positive cash flow from operation.
Having identified ideal customer profile, we began to also engage with larger clients, while focusing on the growth of self serve.
Our newly initiated and CIB in November of 'twenty to 'twenty three allows us to reinvest in the value of our company. In addition.
We keep investing in the product itself, so a lumen.
Is always been about adding more and more items into the consumer journey out of home meta social integration that happen in 'twenty. Two 'twenty three has been a great step for moving it forward and we continue to enhance the product and invested it on regular basis.
Tal Hayek: And in Q4, we saw 33 again. Again, logos were focusing on the right clients for us. Pipeline growth, again, this is specifically for Illumin Self-Serve, in Q4 of 22, 114, in Q1 of 23, 208, in Q2, 245, Q3, 316, and in Q4, 327. Again, a great indication for future revenue. And my personal favorite, the Lumen self-serve run rate. This is where you take the last month of the quarter, and you multiply it by 12.
Also we continue to invest in the strength of our teams supporting our corporate objective and strategic direction.
The growth of alumina self serve.
Was and continues to drive our success I am still confident that Illumina is the best investment you can make and therefore this is why we are buying our shares back on regular basis, and I personally bought over $1 million worth of shares recently.
The market outlook for 'twenty 'twenty four is optimism.
And customer spending is projected to grow in 2024.
So all the signs are showing that we're moving in the right direction for me.
The number one indicator is the aluminum self serve revenue and we'll keep seeing that growth, bringing in more customers customers are liking the program and the system and spending more on it and therefore, we're seeing the growth in self serve revenue with that I will now open the floor for questions.
Good morning, everyone and thank you for joining the presentation of aluminum fourth quarter and full year 2020 through financial and operating results.
I would like to begin by reminding our analysts.
To present your question, we must first click on I would like to join the stage button at the top of your true.
Please limit your time to two questions would be appreciated.
Who is the patient while we assembled a questions.
Good morning, everyone.
Good morning, everyone. Our first question comes from Rob Goff of echelon wealth partners.
When you are ready.
Thank you for taking my question.
Hey, Rob good morning.
Tell you need amongst like Allianz.
But that you need a month like Elliott's he happens to have one right there.
All you have to do that.
All is complete.
Could you, perhaps talk a bit more about that.
Contract structures that you're putting in place on their seltzer.
Generally speaking.
You're talking about.
12 to 24 months contracts.
And.
There's different minimums in those contracts.
Sometimes.
Tal Hayek: So that indicates the run rate that we're seeing out of a quarter. I'd like to speak about the stacking effect that we see even within a quarter, which is you retain your existing clients, and you add revenue from your new clients. In Q1 of 23, we had $12 million in Q2, $22 million in Q3, $25 million in Q4, and a $44 million exit rate from the core. Now, let's go to Elliot to share a financial result. Thank you, Tal.
Sorry, sometimes we have.
And 90 day out clause, but.
It's an outcome so the customer has to exercise of the outflows.
So they use it as a proof of concept.
Okay.
With respect to the managed services could you talk to where you see.
A baseline or where you see a baseline being reached in terms of timing.
Yeah sure. So we've obviously always owned and managed service is a highly transactional source of revenue for us. So this predictability is substantially lower than ourselves.
It's critical to understand that that's why we're emphasizing our self serve alumina because we believe it's a much much more robust and sustainable source of revenue for us and one that we can see growing from a managed service perspective, I think we have a fairly stable structure.
Structure right now in terms of we had some changes that occurred throughout the year, which as you can see reflected in our results have held back and maybe as Tal said mask some of the growth that we've seen.
We are by no means deprecating managed service, we are focusing on maintaining where we have but our critical focus is to make sure we have the transformation in.
Elliot Muchnik: Welcome, everyone, and thanks for joining today's fourth quarter and year-end 2023 earnings call. As Tal mentioned earlier, for the full year 2023, our total revenue increased to $126.3 million, largely attributable to our higher illumined self-service business, which surged upward by 75% sequentially and 271% compared to the prior year. These results are important, but they only tell part of the story.
In place are going and moving towards the self serve alumina. So the growth we're going to see in 2024 will come out of the self serve alone.
Part of our business.
So our agenda is to grow aggressively go self serve and maintain and manage.
Thank you I'll jump back in queue.
Thank you.
Thank you very much Rob next question gentlemen comes from our Winder Waller propulsion.
Canaccord Genuity.
Please go ahead with your question.
Good morning.
Good morning.
I'll start with I think where you left off in the prepared remarks, you talked about an improving outlook optimism around the backdrop that you referred to.
With that as well.
Some of your peers and I know it's mix, it's all over the place and some of the peers that have reported are starting to to into where in some cases, even guide to it.
Pretty strong ad growth.
Some cases double digits.
G&A kind of maybe press you to be.
Specific at least what you're seeing in Q1, given that we were in March.
Yeah. So as we discussed in the past, we focusing on our self so growth and we're seeing.
Really really good growth.
And in Q1 over Q1 of last year of course.
And.
So this is where we're seeing the great results.
On the other hand on the managed.
We're not seeing such great results. So.
Overall.
Sometimes masks.
<unk>.
I always say on the seltzer.
Okay. Thank you and then my second and last.
I'd be remiss, if I don't set a revision.
<unk> leadership.
Questions.
Okay.
Timeline as to when.
I know, it's not it's definitely not something when.
Elliot Muchnik: During 2023, as we continue to roll out our Lumen platform, a significant part of our efforts also involve getting a deeper understanding of our customer base. Specifically, we analyzed our sales data to identify which customer segments tend to spend more on our platform. With this insight, we began redirecting our sales focus towards these valuable customer profiles. This allows us to utilize our resources more effectively and efficiently and to focus on larger and more productive client relationships. We are now starting to see the benefits of these actions and anticipate this will start to generate increased sales traction in 2024 and beyond as macroeconomic conditions steadily improve. And alongside this more targeted sales approach, we remain focused on cost management to ensure we are being efficient while prioritizing our ongoing transformation around self-service. And given this larger macroeconomic backdrop, we think this is only prudent and expect this to remain a priority for us throughout 2024.
When you would have.
In place and then connected to that.
The press release last month.
<unk> had left as well.
Is that okay.
What are your plans.
We would like to.
I do.
And the search is ongoing and it's a very important decision and we don't take it lightly and we don't have anything to share at the moment, yet, but hopefully that'll be something so.
Okay. Thank you.
Thank you.
Thank you very much everyone and I. Appreciate the question gentlemen. Your next question comes from Daniel Rosenberg of paradigm capital Formula. Please proceed with your question when you are ready.
Hey, good morning, Colin Elliot.
Hey, good morning.
It was just around the how aggressive you are in terms of.
Selling the managed service clients into aluminum.
Is there any processes that you've put in place too.
But she's clients towards a lemon or are these.
Organic inbound demands.
Yes, most of our.
Illumined revenue comes from new clients the vast majority of it. So we're not really pushing but there is customers have clearly come to us and say, we're taking it in house.
<unk>.
You can you can more or less in self serve or will go somewhere else right. So.
Those are the customers that obviously, we take.
We put them on the self serve.
In her.
Her prepared remarks, how I answer.
Instead at some enterprise larger deals and get a little bit of detail on what that pipeline looks like.
The successes you had our challenges and getting larger.
I can say that.
I don't think Theres enterprise depends on the definition of enterprise I guess, but.
It's not.
I don't think we have any like fortune 500.
Companies are in there at the moment, we did changed the comp plan for the field team to start going after bigger accounts.
And so we should see that reflected in sales this year.
Okay I appreciate it I'll pass the line.
Thanks Daniel.
Thank you very much for the question Danielle much appreciate it as there are no further questions. At this time. This will conclude our presentation for this quarter thinking to our analysts and shareholders for our plumbing. This morning, who has join US next time as we present, our Q1 2024 financial and operating roles.
Faults.
Thank you everyone.
Yeah.
Yes.
Yeah.
Okay.
Yeah.
Yeah.
Elliot Muchnik: By doing this, we expect we will remain on a path of stronger financial performance and continued innovation. And with that, I will now move to a more detailed review of our financial results. In Q4, we had total revenue of $37 million, compared to $40 million for the same period last year. The reduction in quarterly revenue was primarily due to a drop in managed service revenue, more so in the U.S. than overseas.
Yeah.
Up.
Elliot Muchnik: This was largely a result of challenging market conditions for advertisers and our core focus on self-service growth. However, we are beginning to observe more positive consumer and advertiser sentiment, which should be beneficial for the industry and improve top-line growth for 2024. For the fourth quarter, managed services revenue was $18.5 million compared to $26.6 million in the same period last year. Self-service revenue grew substantially, up 38% to $18.5 million compared to 13.4 million in the same period last year.
Yeah.
Yeah.
Okay.
Yeah.
Elliot Muchnik: The increase in self-service revenue was driven both by an increase in new Illumin self-serve customers and higher Illumin self-serve platform utilization. As Tal highlighted earlier, our Illumin self-service revenue component was 8.9 million in the quarter, up 75% from the prior Q3, and 271% from Q4 of the prior year. We are encouraged by these results, and it is a clear indicator that we are on the right track. Gross profit was 18 million compared to 19.4 million in the comparable prior year period. Operating expenses were 19 million, down from 19.6 million in the prior year period. As a percentage of revenue, operating expenses were 51.4% for the fourth quarter compared to 49% for the same period last year. Adjusted EBITDA was $2.4 million, relatively unchanged from the same period last year, despite lower revenues. And the net loss for the fourth quarter was negative $2.6 million, compared to a $0.8 million loss in the same period last year, lower revenues and then foreign exchange losses being the key drivers of the decline.
Yeah.
Okay.
Yeah.
Yeah.
Okay.
Yeah.
Up.
Elliot Muchnik: For the full year 2023, as we also noted earlier, total revenue for the 12 months ended December 31st was $126.3 million compared to $121 million for the prior year. Breaking down our revenue results, managed service revenue for the full year 2023 was $72.9 million, a decrease of 10% compared to $81 million the previous year. Total self-service revenue for the full year 2023 rose considerably, up 33% to $53.4 million compared to $40.1 million the previous year. And for the full year, our illumined self-service revenue was $21.6 million, up almost $16 million from the prior year total of $5.7 million. And turning to gross profit or net revenue, which is defined as total revenue, less media-related costs, was $60.3 million for the full year, compared slightly down from $60.8 million in the prior year.
Up.
Up.
Yeah.
Yeah.
Okay.
Elliot Muchnik: And total operating expenses for 2023 were $71.7 million, compared to $66.3 million last year. As a percentage of revenue, operating expenses were 56.8%, compared to 54.8% in 2022. And this year-over-year increase reflects the ongoing investments that I mentioned earlier in our technology and sales activities to support the continued growth and enhancements of our Illumine platform. Adjusted EBITDA for the full year 2023 was $1.3 million, a decrease from $5.8 million in the prior year, reflecting those investments that I mentioned earlier in our platform and product roadmap and partially offset by cost management initiatives. The net loss for the year was $11 million, approximately, compared to a net loss of $0.8 million in the previous year.
Yeah.
Yeah.
Okay.
Elliot Muchnik: This increase in the net loss reflects the factors I described earlier when discussing Adjusted EBITDA, as well as reflecting a $2.8 million FX loss versus a $6.3 million FX gain in the prior year. Moving on to the next slide of NASDAQ delisting, As previously announced, on September 11, 2023, the company voluntarily delisted and ceased trading on the NASDAQ capital market. Simultaneously, we initiated the deregistration process from the SEC, eliminating significant cost burdens and reporting requirements, which is consistent with our cost containment initiatives I referenced earlier. Given today's macroeconomic environment, we feel these actions were appropriate and will allow us to utilize our capital more effectively to enhance overall shareholder value. However, we expect a significant portion of these savings will not be realized until 2025.
Yeah.
Yeah.
Yeah.
Okay.
Yeah.
Up.
Elliot Muchnik: The company shares continue to be listed on the Toronto Stock Exchange in Canada under the trading symbol ILLM, and the company is currently well into the process of moving on to the OTCQB platform in the U.S. to facilitate broader and easier access by investors in the U.S. We expect this process to complete shortly. Effective November 13, 2023, the company initiated a normal course issuer bid to buy back and cancel up to 4,330,000 shares of its outstanding common stock. As of December 31, 2023, the company acquired 445,000 common shares under this program with an average purchase price of $1.52 Canadian.
Yeah.
Yeah.
Okay.
Yeah.
Yeah.
Elliot Muchnik: And as you can see on the next slide, in 2023, we repurchased over 5.7 million shares for a total consideration of 14.4 million, excluding related SIB expenses. As I noted on the previous slide, our current NCIB initiative has acquired an additional 828,000 shares since January 1, 2024, for a running total of 1.3 million shares to date. We are committed to this undertaking given the current valuations, and as you heard Tal mention in his earlier remarks, there's also a substantial purchase of shares by insiders of the company. In total, insiders purchased 793,400 shares for consideration of over $1.2 million, or $1.51 a share, throughout 2023. This further demonstrates our alignment with our shareholders and shows management's strong belief in Illumina's future prospects. Turning to our balance sheet, as of December 31, 2023, our cash and cash equivalents stood at $55.5 million compared to $85.9 million as of December 31st the previous year. And this decline was attributable to a combination of net loan repayments and share repurchases, which together constituted two-thirds of that decline.
Yeah.
Yeah.
Okay.
Yeah.
Yeah.
Yeah.
Yeah.
Okay.
Elliot Muchnik: The balance of the decrease is attributable to lease payments and targeted investments in our Illumin platform, specifically in research and development, and the overall decline is substantially impacted by foreign exchange volatility on our year-end cash position. Looking at our shares outstanding, as of December 31, 2023, Illumin had 51,350,973 shares outstanding compared to 56,808,921 as of the prior year. Insider ownership increased to over 18%. In closing, we are very pleased with the growing customer adoption of our Illumin self-service platform, which continues to drive our revenue growth. Looking ahead, we will continue to invest in the growth of this unique advertising journey platform. At the same time, we remain focused on driving efficiency and will be containing and further rationalizing our costs despite the expected top line growth.
Okay.
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Yeah.
Yeah.
Okay.
Yeah.
Tal Hayek: This will ensure our financial stability and, with our strong balance sheet, will give us the flexibility to be able to seize upon any potential market opportunities that may arise, such as attractive acquisitions that can accelerate our growth. All of this is aligned with our commitment to build greater long-term value for our shareholders. And with that, I'd like to turn it back over to Tal for his closing remarks. Thank you, Elliot. In closing, there is tremendous reason for optimizing in 2024 with a strong cash balance and positive cash flow for operations. Having identified our ideal customer profile, we began to also engage with larger clients while focusing on the growth of self-serve.
Yeah.
Sure.
Tal Hayek: A newly initiated NCIB in November of 2023 allows us to reinvest in the value of our company. In addition, we keep investing in the product itself. So Illumine. It has always been about adding more and more items to the consumer journey.
Yeah.
Yeah.
Okay.
Yeah.
Yeah.
Yeah.
Sure.
Tal Hayek: Out of home, meta, and social integration that happened in 2023 has been a great step for moving it forward, and we continue to enhance the product and invest in it on a regular basis. Also, we continue to invest in the strength of our team, supporting our corporate objective and strategic direction. The growth of illumined self-serve has been and continues to drive our success. I am still confident that Illumina is the best investment you can make.
Yeah.
Tal Hayek: And therefore, this is why we are buying our shares back on a regular basis. And I personally bought over a million dollars worth of shares recently. The market outlook for 2024 is positive, and customer spending is projected to grow in 2024. So all the signs are showing that we're moving in the right direction. For me, the number one indicator is Lumen self-serve revenue. And we keep seeing that growth, bringing in more customers. Customers are liking the program and the system and are spending more on it.
Yeah.
Yeah.
Okay.
Okay.
Yes.
Unknown Executive: And therefore, we're seeing growth in self-serve revenue. With that, I will now open the floor for questions. Good morning, everyone, and thank you for joining us for the presentation of Illumina's fourth quarter and full year 2023 financial and operating results. I would like to begin by reminding our analysts that in order to present your question, you must first click on the I would like to join the stage button at the top of your screen. If you would please limit your time to two questions, it would be appreciated.
Unknown Executive: Please be patient while we assemble the questions. (Inaudible) Good morning, everyone. Good morning, everyone. Our first question comes from Rob Goff of Echelon Wealth Partners. Rob, please proceed when you are ready.
Unknown Executive: Thank you for taking my questions. Good morning. Good morning. Tal, you need a mug like Elliot's. What's that? You need a mug like Elliot's. He happens to have one right here.
Yeah.
Yeah.
Unknown Executive: All you have to do is ask. All is complete. Could you perhaps talk a bit more about the contract structures that you're putting in place on the self-serve? Generally speaking, you're talking about 12 to 24 months contracts, and there are different minimums in those contracts.
Yeah.
Yeah.
Yeah.
Yeah.
Yeah.
Unknown Executive: Sometimes... Sorry, sometimes we have... Aravinda Galappatthige, Laura Martin, Drew McReynolds, Nadeem Ahmed, Sheldon Pollack, So they use it as a proof of concept. And with respect to managed services, could you talk about where you see a baseline or where you see a baseline being reached in terms of timing? [inaudible] So, we've obviously always known that managed services is a highly transactional source of revenue for us. So, this predictability is substantially lower than our self-serve.
Yeah.
Unknown Executive: It's critical to understand that. That's why we're emphasizing our self-serve illumin, because we believe it's a much more robust and sustainable source of revenue for us and one that we could see growing. From a managed service perspective, I think we have a fairly stable structure right now in terms of some changes that have occurred throughout the year, which have, as you can see, reflected in our results, held back and maybe, as Tal said, masked some of the growth that we've seen. We are by no means deprecating managed services.
Yes.
Yeah.
Yeah.
Okay.
Yeah.
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Yes.
Unknown Executive: We are focusing on maintaining where we are, but our critical focus is to make sure we have the transformation in place ongoing and moving towards the self-serve illumin part of our business. So our agenda is to grow, aggressively grow, self-serve, and maintain and manage.
Yes.
Unknown Executive: Thank you. I'll jump back in here. Thank you. Thank you very much, Rob. Our next question, gentlemen, comes from Aravinda Galappatthige of CanaCore Genuineness. Aravinda, please go ahead with your question. Good morning, Tal. It's good to see you. I'll start with, I think, where you left off in your prepared remarks. Tal, you talked about sort of an improving outlook, you know, optimism around the backdrop, and I think Elliot, you refer to that as well. Some of your peers, and I know it's mixed, it's all over the place, but some of the peers that have reported are starting to hint towards, or in some cases, even guide towards, pretty strong ad growth on the digital side, in some cases, double digits.
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Unknown Executive: Can I kind of maybe press you to be a little bit more specific on at least what you're seeing in Q1, given that we're in March? Yeah, so as we discussed in the past, we're focusing on our self-serve growth, and we're seeing really, really good growth in Q1, over Q1 of last year, of course. And so this is where we're seeing great results. On the other hand, on managed... We're not seeing such great results, so the overall results sometimes mask the results that we see on self-serve.
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Sure.
Unknown Executive: And then my second and last question, you know. I'd be remiss if I didn't sort of revisit the leadership questions. Tali, do you have any kind of timeline as to when you would hope? I know it's not, it's definitely not something when you have a CEO in place and then connected to that, you know, you press-released it earlier last month that Nadeem had left as well.
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Unknown Executive: Is that role going to be replaced? What are your plans there? That's the flow we would like to do, and the search is ongoing. It's a very important decision, and we don't take it lightly.
Unknown Executive: And we don't have anything to share at the moment, yet, but hopefully, there's going to be something soon. Okay, thank you. Thank you, Aravinda. Thank you very much, Aravinda. I appreciate the question. Gentlemen, your next question comes from Daniel Rosenberg of Paradigm Capital. Daniel, please proceed with your question when you are ready. Good morning, Tal and Elliot. Good morning. It was just around how aggressive you are in terms of selling the managed service clients into Illumine. Are there any processes that you put in place to push these clients towards Illumine, or are these kind of organic, inbound demands? Yeah, most of our Illumine revenue comes from new clients, the vast majority of it.
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Unknown Executive: So we're not really pushing, but there are customers who clearly come to us and say, "We're taking it in house, and you can move us to self-serve, or we'll go somewhere else, right?" So those are the customers that we obviously take, and we put them on self-serve. Where's the other prepared remarks, Tal? You've hinted at some larger enterprise deals. Can you give a little bit of detail about what that pipeline looks like, the successes you have had, or challenges in getting larger-sized deals?
Yeah.
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Unknown Executive: I can say that I don't think there's enterprise here, depends on the definition of enterprise, I guess, but it's not. I don't think we have any Fortune 500 companies in there at the moment. We did change the comp plan for the field team to start going after bigger accounts, so we should see that reflected in the sales. Okay, I appreciate it. I'll pass the line. Thank you. Thanks, Daniel. Thank you very much for the question, Daniel. It is much appreciated. As there are no further questions at this time, this will conclude our presentation for this quarter.
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Unknown Executive: Thank you to our analysts and shareholders for attending this morning. Please join us the next time as we present our Q1 2024 financial and operating results. Bye for now. Thank you, everyone. Thank you. [inaudible] , , , , , , , , , , Aravinda Galappatthige, Laura Martin, Daniel Rosenberg, Sheldon Pollack, Daniel Rosenberg, Sheldon Pollack, Unknown Executive, Elliot Muchnik, Darren Aftahi, Drew McReynolds, None, Nadeem Ahmed, Sheldon Pollack, Daniel Rosenberg, Sheldon Aftahi, Drew McReynolds, Nadeem Ahmed, , , , , , , , , , [inaudible] , Robert Goff, Sheldon Pollack, Nadeem Ahmed, and Sheldon Pollack. [inaudible] ,.
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