On February 18, 2025, Atrium Research analyst Nicholas Cortellucci maintained a Buy rating and CA$0.90 target price on Sabio Holdings (SBIO:TSXV, SABOF:OTC), citing strong preliminary Q4 2024 results driven by growth in ad-supported streaming and expanded household graph coverage.
Sabio reported preliminary Q4 2024 revenue of US$18.0-18.2 million, representing 42% year-over-year growth and exceeding the analyst's estimate of US$16.4 million. Political revenue contributed US$2.4-2.5 million to the quarter's results. Gross margins came in at 59-61%, slightly below the estimated 62%. Adjusted EBITDA was $2.6-2.8 million (15% margin), in line with expectations of US$2.7 million. The company ended Q4 with US$3.3 million in cash and US$5.2 million drawn on its revolving credit facility.
For the full year 2024, Sabio achieved revenue of US$49.3-49.5 million, representing 37% year-over-year growth with approximately 60% gross margins. Adjusted EBITDA reached US$3.6-3.8 million (7-8% margin), a significant improvement from negative US$1.8 million in 2023. The company maintained strong customer retention at 85% throughout the year.
A significant development was the expansion of App Science's household graph to 80 million households, up from the previous 55 million, which now represents 70% of U.S. streaming households. This broader coverage strengthens Sabio's value proposition to clients and creates additional opportunities for revenue growth.
The analyst identified several compelling merits for Sabio's investment. The U.S. streaming TV ad spend market is growing at a 15% CAGR, providing strong tailwinds for the company. Sabio has successfully reduced its dependence on cyclical political revenue through international expansion while also improving EBITDA margins following cost-cutting initiatives. The company maintains a strong Fortune 500 customer base with 90% recurring revenue. Management alignment is robust, with CEO Aziz Rahimtoola holding 46% ownership and the management team and board holding an additional 9%.
Looking ahead, Cortellucci projects 7% revenue growth in 2025, noting this would be "a major win for the stock, as the market continues to discount SBIO's business quality and growth." The CA$0.90 target price represents a 43% potential return from the share price at the time of the report of CA$0.63.
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Disclosures for Atrium Research, Sabio Holdings, February 18, 2025
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