VANCOUVER FINANCIAL DISTRICT

AcuityAds, EQ Works report Q1 financial results

Canadian players deal with increasing U.S. and global competition

Two Canadian ad tech companies listed on the TSX Venture exchange reported Q1 financials Tuesday. Their mixed results suggest a bit of belt-tightening in the programmatic sector, with growing competition from U.S. and global players and harsher scrutiny from clients concerned about fraud, ad quality and ROI.

AcuityAds, a programmatic trading company that offers both technology and managed buying services, saw revenues rise 10% year-over-year to $3.05 million, from $2.78 million in the same quarter last year.

However, its net loss nearly doubled, growing from $732,000 in Q1 2014 to $1.44 million this quarter.

Acuity CEO Tal Hayek credited revenue growth to increasing U.S. sales, up 54% over the same quarter last year, and to the success of Acuity’s software-as-a-service platform, which saw licensing revenues grow 157% to $588,000. Acuity is one of many ad tech companies looking to pivot to self-service technology licensing. SaaS not only has higher margins than managed buying services, but opens up more opportunities to work with agency trading desks, which prefer to have their own internal teams handle campaigns.

“The company is seeing significant signs for a strong second quarter,” Hayek said in a statement. “With this anticipated strong revenue growth in Q2 2015 and the rigorous cost cutting completed in early Q1 2015, we expect to return to EBITDA positive in the next few quarters.”

Through 2014, the first year the company was publicly listed, Acuity’s annual revenue grew 34%, to $13.7 million.*

The outlook was less positive for another of Canada’s programmatic tech companies, EQ Works, which offers performance-focused buying services. The firm posted a 54% revenue decline over Q1 2014, dropping to $920,000 from $2 million.

Though the numbers were up slighty (19%) over Q4 2014, EQ hasn’t fully recovered from an earnings slide over the course of the year, which saw total annual revenue fall to $4.9 million from $8 million in 2014.

EQ’s focus for much of last year was on reducing click-fraud and improving brand safety features, in partnership with Google verification provider Adometry. It also worked hard to push into mobile programmatic, looking to offer a cross-screen, location-targeted solution for buyers.

In Q1 this year, EQ was moved from the TSX to the TSX Venture, a separate exchange for startups and emerging technology companies.

Despite the lost revenue, EQ’s net loss shrank 45%, from $1.16 million in Q1 2014 to $795,000 this quarter.

Correction: This story initially misreported AcuityAds’ 2014 revenue as $11.8 million.

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