PopReach Announces Year End Results and Record Quarterly Results for the Three Months Ended December 31, 2022

Record Revenue of $48.6 million for the quarter - 204% growth year-over-year

Pro Forma Consolidated¹ Revenue grew 42% year-over-year

Record Adjusted EBITDA² of $4.5 million for the quarter, a 62% increase year-over-year

Record Adjusted Free Cash Flow² of $3.9 million for the quarter, a 41% increase year-over-year

(All figures in US dollars, unless otherwise indicated)

/NOT FOR DISTRIBUTION TO US WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

TORONTO, May 2, 2023 /CNW/ - PopReach Corporation ("PopReach" or the "Company") (TSXV: POPR) (OTCQX: POPRF), a multiplatform digital technology company, announced its financial results for the three and fifteen months ended December 31, 2022.

"We are thrilled to report record financial results for the December quarter that clearly demonstrate the significant financial scale we've now achieved. We've achieved record pro forma results and are delivering strong cash flow generation while building a diversified organically growing business," said Jon Walsh, CEO of PopReach. "Our recent acquisitions of Schiefer Chopshop (SCS) and OpenMoves in 2023 further demonstrate our ability to execute strategic deals, as we work to build the most effective and complete suite of advertising and marketing solutions for brands and publishers to reach their customers."

Financial Highlights for the three months ended December 31, 2022

• Record Revenue of $48.6 million, a 91% increase from $25.5 million for the three months ended September 30, 2022, and a 204% increase from the three months ended December 31, 2021
• Revenue of $48.6 million represents a 32% increase from Pro Forma Consolidated¹ Revenue of $36.9 million for the three months ended September 30, 2022, and a 42% increase from Pro Forma Consolidated¹ Revenue of $34.3 million for the three months ended December 31, 2021
• Gross profit of $17.1 million, compared to $11.3 million for the three months ended September 30, 2022
• Net loss of $18.0 million ($(0.08) per basic and diluted share), which included year end non-cash charges for write downs of intangibles and goodwill of $17.5 million
• Record Adjusted EBITDA² of $4.5 million, compared to $3.0 million for the three months ended September 30, 2022, and an increase of 62% from the three months ended December 31, 2021
• Adjusted Free Cash Flow² of $3.9 million (85% Adjusted Free Cash Flow conversion rate), compared to $2.5 million (83% Adjusted Free Cash Flow conversion rate) for the three months ended September 30, 2022, and an increase of 39% from the three months ended December 31, 2021
• Cash as at December 31, 2022 was $7.8 million
• Total debt as at December 31, 2022 was $52.1 million, including $37.3 million of senior lender debt and $13.8 million of convertible debt

Change in Fiscal Year-End

In connection with the reverse takeover transaction completed by the Company on April 28, 2022 (the "RTO Transaction")  the fiscal year-end of the Company was changed from September 30 to December 31. As a result of the change, the Company has a fifteen month fiscal year ended December 31, 2022. The Company made the change to provide improved comparable information with its industry peers going forward.

However, comparative information between the fifteen month fiscal year ended December 31, 2022 and the fiscal period from the date of incorporation (January 25, 2021) to September 30, 2021 is not particularly relevant or useful. Therefore, the Company is only providing financial highlights for the fifteen months ended December 31, 2022 below without comparatives to the prior fiscal period.

Financial highlights for the fifteen months ended December 31, 2022:

• Revenue of $125.3 million
• Gross profit of $53.3 million
• Net loss of $23.9 million
• Adjusted EBITDA² of $14.1 million
• Adjusted Free Cash Flow² of $12.2 million (86% Adjusted Free Cash Flow conversion rate)

¹ Please refer to "Selected Unreviewed and Unaudited Pro Forma Consolidated Financial Information" section of this press release
² Please refer to "Non-IFRS Measures" section of this press release

Significant developments for the three months ended December 31, 2022

• On September 8, 2022, the Company acquired 100% of the membership interests of Ubiquity Agency, LLC ("Ubiquity"), an omnichannel marketing network and technology platform, for an aggregate purchase price of approximately $44.3 million.
• On September 8, 2022, the Company amended its senior credit facility with the Bank of Montreal to fully exercise the accordion option to increase the non-revolving term facility by $15 million to $40 million in order to fund the acquisition of Ubiquity. After the amendment, the facility consists of a $40 million non-revolving term facility and an unamended $8 million revolving facility. All other material terms of the facility remain unchanged.

Subsequent events

• On April 18, 2023, the Company acquired 100% of the shares of Schiefer Media, Inc. ("SCS"), a brand transformation company, for an aggregate purchase price of approximately $14.9 million.
• On April 26, 2023, the Company acquired 100% of the membership interests of OpenMoves LLC ("OpenMoves"), a B2B and B2C performance and growth marketing company, for an aggregate purchase price of approximately $7.5 million.

Selected Unreviewed and Unaudited Pro Forma Consolidated Financial Information

The Pro Forma Consolidated Revenue provided above is presented as if the RTO Transaction and the acquisition of each of Q1Media, Inc. ("Q1Media"), NotifyAI, LLC ("NotifyAI"),  Crucial Interactive Holdings Inc. ("Contobox"), and Ubiquity were completed at the beginning of the three month period ended December 31, 2021.

The unreviewed and unaudited Pro Forma Consolidated Revenue provided above (the "Pro Forma Revenue") is derived from the Revenue figures presented in PopReach's financial statements, and in Management's Discussion and Analysis, filed on the Company's profile on SEDAR at www.sedar.com for the applicable periods ("As Reported Revenue") after taking into account the following adjustments: (i) As Reported Revenue for the three month period ending September 30, 2022 increased by $11.4 million to reflect Pro Forma Revenue for the period of $36.9 million; and (ii) As Reported Revenue for the three month period ending December 31, 2021 increased by $18.3 million to reflect Pro Forma Revenue for the period of $34.3 million.

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 amortization, gain/loss on disposal of assets and extinguishment of loans, fair value gain/loss on financial liabilities and contingent consideration, 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, changes in deferred revenues, changes in deferred cost of sales, and other extraordinary one-time expenses. 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, and income taxes paid during the applicable period. 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 table presents the Company's calculation of Adjusted EBITDA and Adjusted Free Cash Flow for each period:

		For the three months ended
		December 31,				September 30,				June 30,				March 31,
		2022				2022				2022				2022
Net loss		$	(17,974)			$	(1,886)			$	(1,443)			$	(820)
Add:
Finance costs			1,274				688				673				688
Income tax expense (recovery)			526				282				(356)				(672)
Depreciation and amortization			3,698				3,070				2,396				1,718
Impairment loss on intangibles and goodwill			17,548				—				—				—
Fair value loss (gain) on financial liabilities			(530)				(33)				(5)				—
Loss on disposal of property and equipment			1				—				—				—
Loss on extinguishment of loan			—				—				1,216				—
Share-based compensation expense			386				353				131				—
Change in deferred revenue of in-app purchases			225				268				(62)				—
Change in deferred cost of sales			(110)				(56)				(100)				—
Extraordinary one-time expenses			187				245				469				518
Foreign exchange loss (gain)			(95)				39				(110)				(37)
Loan forgiveness			(617)				—				—				—
Non-recurring income			(2)				—				—				(378)
Adjusted EBITDA		$	4,517			$	2,970			$	2,809			$	1,017
Less:
Acquisition of property and equipment			(38)				(21)				(13)				(15)
Additions to intangible assets			(544)				(466)				(202)				—
Taxes paid			(76)				(27)				(510)				—
Adjusted Free Cash Flow		$	3,859			$	2,456			$	2,084			$	1,002

Financial Statements and MD&A

PopReach's Financial Statements for the three and fifteen months ended December 31, 2022, and Management's Discussion and Analysis for the same periods, are posted on its corporate website at www.popreach.com and available on the Company's profile on SEDAR at www.sedar.com.

About PopReach Corporation

PopReach, a Tier 1 Issuer on the TSX Venture Exchange, with shares also trading on OTCQX® Best Market, is a multiplatform technology company focused on acquiring, optimizing and growing companies and assets that provide services, technology or products within the digital media ecosystem. The Company's portfolio includes: PopReach Games, a free-to-play mobile game publisher; NotifyAI, a push notification subscription and monetization platform; Q1Media, a digital media advertising services provider; Contobox, an award-winning personalization, eCommerce and creative advertising technology platform; and Ubiquity,  an omnichannel marketing network and technology platform; SCS, a brand transformation service provider; and OpenMoves, a B2B and B2C performance and growth marketing platform.

Additional information about the Company is available at www.sedar.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 include, but are 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.sedar.com. 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.

SOURCE PopReach Corporation

PopReach Corporation, Dennis Fong, Investor Relations, [phone], [email protected]; Jon Walsh, CEO, [phone], [email protected]