Sabio is on a roll, Beacon says

Following the release of the company’s second quarter results, Beacon Securities analyst Gabriel Leung says things are looking better for Sabio Holdings (Sabio Holdings Stock Quote, Chart, News, Analysts, Financials TSXV:SBIO).

On August 21, SBIO reported its Q2, 2024 results. The company posted EBITDA of negative $282,000 on revenue of $8.9-million, a topline that was up 11.4% year-over-year.

“As our Q2 results illustrate, we continue to execute on our 2024 narrative and key operating attributes that will drive a sustainable and profitable growth model for the back-half of the year and going forward into 2025,” CEO Aziz Rahimtoola said. “Our commitment to driving higher growth in Connected TV/OTT revenue, securing larger upfront commitments, and improving operating efficiencies has laid a strong foundation for our success. Our full tech stack — including App Science’s unique reach and insights with data integrity and fidelity at its core — has been instrumental in achieving a 91% customer retention rate. This positions us optimally as we enter our historical peak sales quarters for 2024.”

Leung says this quarter sets up SBIO for a strong second half of 2024 and a good 2025.

“In terms of the outlook, the company continues to expect record sales and profitability thanks to seasonal trends and the election cycle in H2 CY24, combined with previous upfront media commitments,” he said. “The company’s discussion with existing advertisers also suggest that spend should continue to improve as we go into CY25 across all key verticals (including those that have been challenged recently such as auto and QSR). Recall as well that ~91% of H1 CY24 revenues were from existing customers suggesting good forward visibility. We believe organic growth could also be augmented by new products such as Sabio’s new programmatic offerings, which is expected to launch in Q3. (to augment its existing managing services offering).”

In a research update to clients August 22, Leung maintained his “Buy” rating and price target of $0.70 on Sabio, implying a return of 100% at the time of publication.

The analyst thinks the company will generate EBITDA of $2.8-million on revenue of $43.2-million in fiscal 2024. He expects those numbers will improve to EBITDA of $3.5-million on a topline of $46.6-million in fiscal 2025.

Disclosure: Sabio is an annual sponsor of Cantech Letter