Sabio Q2 gets thumbs up at Paradigm Capital

Paradigm Capital analyst Daniel Rosenberg reiterated a “Buy” rating and C$1.50 target price on Sabio Holdings (Sabio Holdings Stock Quote, Chart, News, Analysts, Financials TSXV:SBIO) in an Aug. 27 report, saying the company is proving out its differentiation in connected TV while positioning for strong growth in 2026.

Los Angeles-based Sabio provides advertising technology solutions for mobile and connected TV, offering reach, targeting and analytics tools.

For the second quarter of 2025, Sabio reported revenue of US$11.2-million, up 25.4% year over year and ahead of consensus at US$10.4-million. Growth was driven by an 88% increase in mobile revenue from its new performance marketing product, while connected TV rose 8%, or 13% excluding prior-year political spending.

Gross profit was US$6.8-million for a margin of 61%. The Adjusted EBITDA loss was US$1.2-million, wider than the consensus call for a US$0.9-million loss, which Rosenberg attributed to investment in new products and geographic expansion.

“We view the internal investments as necessary for Sabio to pursue its growth opportunities,” he said.

The company ended Q2 with US$2.2-million in cash and US$8.6-million in debt, compared with US$3.8-million and US$6.9-million, respectively, in the prior quarter. The increase was due to draws on its accounts receivable credit facility. Subsequent to quarter-end, Sabio raised C$1.8-million in unsecured debt maturing in six months to bridge to its stronger cash-flow quarters in the second half of the year, following repayment of a US$1.2-million convertible loan on August 16.

Rosenberg said macroeconomic headwinds and tariffs remain a drag on customer advertising decisions in 2025, but management expects double-digit growth to continue in 2026. Connected TV remains the primary growth driver, with its new programmatic offering expected to make a meaningful contribution next year.

“In addition to rapid organic growth, the company is seeing the benefits of increasing scale and investing in new growth avenues including international expansion,” he said. “We think valuation remains attractive for a growing, profitable business with differentiated technology.”

Rosenberg forecasts Sabio will generate Adjusted EBITDA of US$700,000 on US$52.9-million of revenue in fiscal 2025, down from his prior estimate of US$1.9-million on US$54.7-million. He expects those figures to improve to US$3.4-million on US$61.3-million in 2026, compared with his previous forecast of US$2.5-million on US$59.1-million.

Disclosure: Sabio is an annual sponsor of Cantech Letter

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