Adcore (ADCO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $6.6M, down 4% from $6.9M year-over-year, with gross profit nearly flat at $2.9M and gross margin improving to 44% from 43%.

• North America revenue grew 22% to $2M, offsetting EMEA's 27% decline to $1.9M; APAC revenue increased 3% to $2.7M.

• MediaBlast app reached CAD 1M ARR within 12 months of launch, highlighting strong product-market fit and innovation.

• Operating cash flow usage improved to $250K from $400K+ year-over-year.

• Client diversification improved to 49%.

Financial highlights

• R&D expenses rose to $0.6M due to new intangible asset amortization; SG&A increased to $3.1M, partly from a Tel Aviv office move.

• Operating loss was $0.8M, up from $0.4M, mainly from higher R&D amortization.

• Net loss for Q2 was $0.7M, with EPS of (0.011), up from $0.5M and (0.009) year-over-year.

• Adjusted EBITDA for Q2 was -$173K, down from $112K, due to share-based payment adjustments.

• Cash and equivalents stood at $7.3M, with working capital at $6.4M as of June 30, 2024.

Outlook and guidance

• Management expects continued North America growth, with increased sales and marketing investment.

• EMEA weakness is seen as temporary, with recovery anticipated by late 2024 or early 2025.

• 2024 is expected to be a positive year, with the second half traditionally stronger for advertising.

• Cost reduction plans aim to save $1M–$1.5M over the next 12 months to improve efficiency.

• Management remains confident in executing the long-term growth strategy and further developing digital marketing technology.