Innovid Reports Q3 2023 Financial Results

• Q3 revenue increased to $36.2 million, up 5% year-over-year
• CTV revenue from Ad Serving and Personalization, up 9% year-over-year
• Company raises full year 2023 guidance

NEW YORK, Nov. 8, 2023 /PRNewswire/ -- Innovid Corp. (NYSE:CTV) (the "Company"), an independent advertising platform for delivery, personalization, and measurement of converged TV across linear, connected TV (CTV), and digital, today announced financial results for the third fiscal quarter ended September 30, 2023.

"I am pleased to report we delivered a strong third quarter - exceeding our prior guidance for both revenue and Adjusted EBITDA*, positioning us to raise our full year guidance," said Zvika Netter, Co-Founder and CEO. "Importantly, we significantly increased Adjusted EBITDA* margins to 18%, up from 8% in the prior year period and we generated $4.1 million in positive Free Cash Flow* this quarter. Our Q3 results are evidence of our increased operational efficiency and our focus on profitable growth. Looking ahead, we are optimistic about future growth and our ability to expand our moat as a leader in building critical technology for the future of TV advertising." 

Third Quarter 2023 Financial Summary

• Revenue increased to $36.2 million, reflecting year-over-year growth of 5%.
• CTV revenue, from Ad Serving and Personalization, increased to $14.4 million, up 9% year-over-year.
• Measurement contributed $8.4 million, up 8% year-over-year, representing 23% of revenue.
• Net loss was $2.7 million, compared to a net loss of $11.8 million for the same period in 2022.
• Adjusted EBITDA* more than doubled to $6.5 million, compared to $2.9 million for the same period in 2022, representing 18% Adjusted EBITDA margin.
• Free cash flow* increased 78% to $4.1 million, compared to $2.3 million in the same period in 2022.
• Cash and cash equivalents as of September 30, 2023 increased from the prior quarter by $4.3 million, to a total of $47.7 million.

Recent Business Highlights

• CTV accounted for 55% of all video impressions served in Q3 2023.
• Significant customer wins this quarter included Revlon, Fanatics, Bausch Health, and OnRunning.
• Existing premium publisher partners such as NBC Universal expanded their usage commitment for our measurement solution to help prove the value of their inventory to advertisers.
• We announced the launch of Instant Optimization, a machine-learning solution that empowers converged TV marketers with the ability to immediately optimize ad performance as the campaign is running.
• Innovid will be hosting an Investor Day detailing the company's vision, market opportunities, and product innovation on November 30, 2023 in New York City. Please find additional information here.

Financial Outlook

Innovid is providing the following financial guidance for Q4 and full year 2023:

• Q4 2023 revenue in a range between $35 million and $37 million.
• Q4 2023 Adjusted EBITDA* in a range between $5.5 million and $7.5 million.

FY 2023 revenue in a range between $136 million and $138 million.

• FY 2023 Adjusted EBITDA* in a range between $16.6 and $18.6 million for the full year with an Adjusted EBITDA margin* of at least 12% for the full year.

*See Use of Non-GAAP Financial Information and Reconciliation of GAAP to Non-GAAP Financial Measures table.

Conference Call

The Company will host a conference call and webcast to discuss third quarter 2023 financial

results today at 8:30 a.m. Eastern Time. Hosting the call will be Zvika Netter, Co-founder and Chief Executive Officer and Anthony Callini, Chief Financial Officer. The conference call will be available via webcast at investors.innovid.com. To participate via telephone, please dial 877-407-3211 (toll free) or 201-389-0862, and click here for international dial-ins. Following the call, a replay of the webcast will be available for 90 days on the Innovid Investor Relations website.

Non-GAAP Measures and Certain Operational Metrics

Innovid prepares unaudited interim condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP"). Innovid also discloses and discusses non-GAAP financial measures such as Adjusted EBITDA and Adjusted EBITDA margin and Free Cash Flow.

We use Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow as measures of operational efficiency to understand and evaluate our core business operations. We believe that these non-GAAP financial measures are also useful to investors for period-to-period comparisons of our core business.  Additionally, these figures provide an understanding and evaluation of our trends when comparing our operating results, on a consistent basis, by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Some of the limitations of these measures are:

• they do not reflect changes in, or cash requirements for, our working capital needs;
• Adjusted EBITDA does not reflect our capital expenditures or future requirements for capital expenditures or contractual commitments;
• they do not reflect costs of acquiring and integrating businesses, which will continue to be a part of our growth strategy;
• they do not reflect one-time, non-recurring, bonus costs and third party costs associated with the SPAC merger transaction and regulatory filings;
• they do not reflect goodwill impairment;
• they do not reflect severance costs;
• they do not reflect income tax expense or the cash requirements to pay income taxes;
• they do not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt; and
• although depreciation and amortization are non-cash charges related mainly to intangible assets and amortization of software development costs, certain assets being depreciated and amortized will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

Adjusted EBITDA is defined as net loss attributable to Innovid, excluding (1) depreciation, amortization and long-lived assets impairment, (2) goodwill impairment, (3) stock-based compensation, (4) finance (income) expenses, net, (5) transaction related expenses, (6) acquisition related expenses, (7) retention bonus expenses, (8) legal claims, (9) severance cost, (9) other, and (10) taxes on income.

We calculate Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

We define Free Cash Flow as net cash provided by operating activities less capital expenditures.

Other companies in our industry may calculate the above described non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. You should compensate for these limitations by relying primarily on our US GAAP results and using the non-GAAP financial measures only supplementally.

Innovid has provided a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to net (loss) income, the most directly comparable GAAP measure, for historical periods in the appendix hereto. We also have provided reconciliation of Free Cash Flow to net cash provided by operating activities.  We are not able to provide a reconciliation of the projected Adjusted EBITDA or Adjusted EBITDA margin to expected net (loss) income attributable to Innovid for the fourth quarter of 2023 or the full-year 2023, without unreasonable effort. This is due to the unknown effect, timing, and potential significance of the effects of taxes on income in multiple jurisdictions, finance (income)/expenses including valuations, among others. These items have in the past, and may in the future, significantly affect GAAP results in a particular period.

Forward Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1996. The Company's actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," "aim,"  and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company's expectations regarding its future financial results and expected growth. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results, including Innovid's ability to achieve and, if achieved, maintain profitability, decrease and/or changes in CTV audience viewership behavior, Innovid's failure to make the right investment decisions or to innovate and develop new solutions, inaccurate estimates or projections of future financial performance, Innovid's failure to manage growth effectively, the dependence of Innovid's revenues and business on the overall demand for advertising and a limited number of advertising agencies and advertisers, the actual or potential impacts of international conflicts and humanitarian crises on global markets, the rejection of digital advertising by consumers, future restrictions on Innovid's ability to collect, use and disclose data, market pressure resulting in a reduction of Innovid's revenues per impression, Innovid's failure to adequately scale its platform infrastructure, exposure to fines and liability if advertisers, publishers and data providers do not obtain necessary and requisite consents from consumers for Innovid to process their personal data, competition for employee talent, seasonal fluctuations in advertising activity, payment-related risks, interruptions or delays in services from third parties, errors, defects, or unintended performance problems in Innovid's platform, intense market competition, failure to comply with the terms of third party open source components, changes in tax laws or tax rulings, failure to maintain an effective system of internal controls over financial reporting, failure to comply with data privacy and data protection laws, infringement of third-party intellectual property rights, difficulty in enforcing Innovid's own intellectual property rights, system failures, security breaches or cyberattacks, additional financing if required may not be available, the volatility of the price of Innovid's common stock and warrants, and other important factors discussed under the caption "Risk Factors" in Innovid's Annual Report on Form 10-K filed with the SEC on March 3, 2023,  as such factors may be updated from time to time in its other filings with the SEC, accessible on the SEC's website at www.sec.gov and the Investors Relations section of Innovid's website at investors.innovid.com. You should carefully consider the risks and uncertainties described in the documents filed by the Company from time to time with the U.S. Securities and Exchange Commission. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Most of these factors are outside the Company's control and are difficult to predict. The Company cautions not to place undue reliance upon any forward-looking statements, including projections, which speak only as of the date made. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

About Innovid

Innovid (NYSE: CTV) powers advertising delivery, personalization, and measurement across linear, connected TV (CTV) and digital for the world's largest brands. Through a global infrastructure that enables cross-platform ad serving, data-driven creative, and measurement, Innovid offers its clients always-on intelligence to optimize advertising investment across channels, platforms, screens, and devices. Innovid is an independent platform that leads the market in converged TV innovation, through proprietary technology and exclusive partnerships designed to reimagine TV advertising. Headquartered in New York City, Innovid serves a global client base through offices across the Americas, Europe, and Asia Pacific.  To learn more, visit innovid.com or follow us on LinkedIn or Twitter.

Contacts

Investor Contact
Brinlea Johnson
IR@innovid.com      

Media Contacts
Megan Garnett Coyle
megan@innovid.com 

Caroline Yodice
cyodice@daddibrand.com 

Key Metrics and Non-GAAP Financial Measures

In addition to our results determined in accordance with US GAAP, we believe that certain non-GAAP financial measures, including Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), Adjusted EBITDA Margin and Free Cash Flow are useful in evaluating our business. The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable financial measure prepared in accordance with GAAP.

Adjusted EBITDA

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities less capital expenditures.

Operational Metrics

In addition, Innovid's management considers the number of core clients,  annual core clients retention and  annual core clients net revenue retention in evaluating the performance of the business. These metrics are reported annually. Prior to our acquisition of TVS in 2022, our definition of a core client included only advertisers that generated at least $100,000 revenue in a twelfth-months period. Following our acquisition of TVS, we have included publishers as core clients.

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SOURCE Innovid LLC