Sabio Holdings Inc. (SABOF) Q2 2026 Earnings Call Transcript

Good morning everyone and welcome to Sabio Holdings Q2 conference call. The financial statements and management discussion and analysis are available on the CEDAR Plus website. Today is third is today, August the 20th. Joining us are Founder and Chief Executive Officer Aziz Ramatula and Chief Financial Officer Sajid Primji. After management's remarks, we will open the call for questions. Analysts may raise your virtual hand and investors may submit questions in the question and answer window. Before we begin, please note that today's remarks may contain forward-looking information. These statements involve known and unknown risks and uncertainties. Please refer to the filings on CDR Plus for more information. All figures are stated in U.S. dollars unless unless otherwise noted. With that, I turn it over to Aziz.

Thank you, Martin. Good morning, everyone. Q2 demonstrates how effectively we've been leveraging our tech stack and data backbone to scale our US programmatic and EMEA ad-supported streaming business. The growth of our US programmatic and EMEA momentum couldn't happen at a better time. We're benefiting from three shifts happening simultaneously. Client need to be in ad-supported streaming, transact it programmatically, while having the option to scale it globally. 49% of Q2 revenue came from U.S. programmatic and EMEA expansion, growing at a strong 290% year-to-year rate. We're not achieving this by sacrificing margins. We're actually expanding them sequentially to 61%. And we're growing it through new logos against the backdrop of political and advocacy, historically skewed 70% in the second half of the year. We're executing and growing across all key metrics while becoming a leaner organization thanks to AI-driven efficiencies. I'm now going to hand it to Sajjap Premji, our CFO, to dig into the numbers.

Thank you, Aziz. In Q2, we began to see the investments in efficiency work that we've been driving all year show up in the numbers, with a larger impact still to come in the second half. Growth and adjusted EBITDA margins expanded meaningfully, and our loss narrowed sequentially. Our newest growth channels, U.S. Programmatic, and our international platform covering Europe, the Middle East, and Africa, or EMEA, continue to scale at a robust pace, with a 77% increase in new customer logos. Meanwhile, our more mature ad-supported streaming managed service business continues to underpin a strong 82% reoccurring revenue rate, including 92% in the U.S. While we face some of the same seasonal headwinds we called out last quarter, Savio's underlying business is moving in the right direction. Consolidated gross revenues were $9.7 million U.S., down from $11.7 million U.S. a year ago, primarily due to the absence of approximately $2.5 million U.S. in higher margin political and advocacy revenue, which in election years is historically concentrated in the second half. normalized for that political advocacy spend our brand business grew six percent year over year driven by continued strength in the in our top logos even as we absorbed that seasonal shift as supported streaming our foundational business came in at 6.2 million u.s compared with 7.9 million u.s a year ago once again though normalized for political and advocacy spend brand results were largely flat, down about 2%, and that slight decline was due to an existing customer, a top global brand, shifting a specific high-dollar campaign into our new digital out-of-home offering, which we began monetizing this quarter. Excluding that shift, course-driven growth would have been positive, and as further evidence, our mobile business benefited from that same shift. Mobile growth sales were 3.5 million US compared with 3.6 million a year ago and normalized for political advocacy. Brand mobile sales were up 32 percent year over year driven by that shift into our new digital out of home offering. US programmatic in EMEA again drove the growth story this quarter. US programmatic sales reached 2.9 million US up 240 percent year over year and now representing 30 percent of consolidated growth sales. Our U.S. programmatic customer count grew 116 percent year over year with 90 percent of Q1 programmatic customers renewing into Q2 and 79 percent of repeat U.S. programmatic customers increasing their spend. EMEA sales reached 1.9 million U.S. up 386 percent year over year. On a first half basis EMEA sales reached 5 million and have already matched our full year 2025 EMEA revenue over that 12-month period. 54% of second quarter EMEA logos were new, up 343% year over year, and together U.S. Programmatic and EMEA represented 49% of our second quarter gross sales, up 10% from a year ago. Globally, new customer logos grew 77% year-over-year, representing 35% of our Q2 logo base. And reoccurring revenue represented 82% of total revenues and 92% in the U.S., underscoring the visibility and predictability of our domestic revenue base. Gross margins came in at 61%, up 8 points sequentially from 53% in the first quarter, driven by improved supply agreements, tech efficiencies, and an improving sales mix. We expect continued margin improvement through the second half, supported by these factors and the return of higher margin political and advocacy spend. Adjusted EBITDA was a loss of $2.7 million, narrowing sequentially from a loss of $3.4 million in Q1, an improvement of 14 percentage points on a margin basis. Our cost reduction initiatives are expected to deliver more than $2 million annualized once fully implemented. As we head into the second half, we've already secured more than $5 million U.S. in political and advocacy commitments. Seasonality is meaningful for Savio's business. In 2025, 88% of EMEA revenue and 82% of U.S. programmatic sales came in the second half, and in our last political year, 2024, 69% of total revenues came in the second half of the year. With improving margins, a linear cost structure, strong customer retention, and a substantial pipeline of second-half political and advocacy commitments, we believe that Savio was positioned for adjusted EBITDA to return to profitability in the second half of 2026. Turning to capitalization, Savio ended the quarter with $1.5 million U.S. in cash, up by $500K in Q1. Debt outstanding under our U.S. and U.K. credit facilities was roughly flat at $6.1 million compared to $6.2 million U.S. at the end of Q1. and down from $9.1 million at year-end. Sabio's receivables continue to show very low loss rates, driven by a customer base made up primarily of major global brands and leading ad agencies. As collections come in, they're used to repair facilities, which can be drawn on an ongoing basis for working capital needs, giving us a self-replenishing source of liquidity. On the strike of our international EMEA business during the quarter, SABIO was approved for an increase in its UK credit facility from 3 million British pounds to 5 million British pounds. We also supplemented this with a 900k Canadian convertible debt note, the proceeds of which were used to secure higher margin direct supply. That supply held drive gross margins to 67% in June, our strongest margin month of the year. Subsequent to quarter end, we further struck in their position by raising 1.5 million U.S. through a non-dilutive term loan secured by certain assets of our EMEA operations. Together, these steps give Sabio greater balance sheet flexibility as we enter what is historically our strongest sales quarters of the years, including the capacity to secure a more higher margin direct supply ahead of the political season. Aziz, back to you.

Thank you, Sajid. To recap, in terms of our outlook ahead, core business is positioned strong for a growth back half. Our AI power programmatic capabilities continue delivering strong results with 90% renewal rate and growing. Internal expansion is continuing, international expansion is continuing to accelerate. And then finally, 5 million employee advocacy is already committed to and secured. We expect this second half to be very similar to what we saw in 2024, where 70% of our revenue was in the second half of this year. So on that note, we will take additional, we'll take questions.

We will now open the line for questions. Analysts, you may raise your virtual hand. Investors, please submit questions into the question and answer window. gross margin has rebounded to 61 percent due to better supply agreements and technology efficiencies do you see further room for expansion above 61 percent as higher margin political revenue scales in the second half at this point i you know what we're we want to focus in on expanding the business and so 61 percent is a is a good margin for us yeah sure you know as was just about to say there is an opportunity to expand more but we are comfortable with the 61 margin and really our focus is to now get the top line revenue moving in the right direction

at a double digit clip as we were in the past that's really our primary focus so we do feel good with 61 but we're not focusing on the margin at this point we need to scale on the top line.

Yeah, and I guess, you know, into that note, we definitely expect more consistency in our margin on a month-by-month basis in the second half of the year, which will benefit our business. You know, as we kind of pointed out in the transcript, our best month of the year on a margin basis was June, where it was around 67%. You know, that was on the back of new supply deals that we were able to secure using the small financing that we did in April. and, you know, with the one that we closed a couple of weeks ago, that will enable us to get more direct supply in to really secure that margin.

We will now take some questions from analysts. I'm opening the line for Daniel Rosenberg.

So my first question just comes around the outlook for the second half. You mentioned 5 million in secured sales already booked. You also alluded to 2024.

I'm just wondering how that 5 million looked at this point who cares to your 2020 for experience good morning daniel thank you for uh for the question um at this point we really haven't seen a whole lot of that just yet um as we mentioned seventy percent of our um political and advocacy as well as what we're seeing in in top line growth from our brand business usually in political years happens in second half so we haven't seen a lot of that but we know we are being told it's it's coming in and it's going to be coming in strong so we're feeling pretty bullish about about that amount and then maybe anecdotally obviously 2024 was a massive second half so 16 million and 18 million in q3 and q4 um so as you think about the momentum going into that quarter like is this the baseline that you're thinking about or um you know where should we set our expectations the the difference in in there's two key differences in in 24 versus this year first of which is obviously as you mentioned it's it was a national election cycle and what happens is in 24 during a national election cycle the two candidates already decided everything is squared away and so what will happen is you will get some of those dollars you know a heavier portion of it also coming in in q3 and then q4 will uh will continue that um specifically obviously um october and in a uh in a season where you have a lot of primaries and a lot of different candidates um you will see that uptick in q3 but you know what we're seeing is advocacy tends to like backload in the second half of the year and so we're going to see a really strong push in Q4. And so we do feel is it going to be perfectly aligned to what we saw in 24? Probably not. But we're going to see very similar patterns. We do believe, though, that Q4 will be heavier this year, simply because we also have the benefit of international. And so international continues to accelerate. And what we saw last year in international revenue was that Q3 started off strong specifically at September, but really Q4 is where a lot of that additional uptick was taking place. So we're uniquely positioned this year because of international as well. So yeah, political advocacy is exciting for us and it's going to be a great election cycle, but really in on top of it, this international growth, and then you add in programmatic is big. Sajj, anything you want to add to that?

Yeah, no, I think that was what was said. I think that Zeese pointed out that one big difference this year is that we do have these two big pillars in U.S. programmatic and EMEA International that wasn't there in 2024. And as Zeese correctly pointed out, you know, last year, close to 90% of international sales were in the last half of the year. 50% of that, 50% of full year sales in international came in Q4. U.S. Programmatic, a very similar story, where more than 80% of second half sales last year came in the second half of the year, with Q4 being the biggest quarters. So, you know, we really are set up to benefit from those two tailwinds. And then you're adding political on top of that, which is going to come in through that $5 million commitment, plus other ones that we're working on as well. So we are expecting a base second half. That's all going to be a lot more diversified than we were in the past.

And Daniel, I don't know if we, you know, mentioned this enough, but there were cost efficiencies that were recognized in the earlier part of this year. Those cost efficiencies are also going to hit in Q3, Q4. So, you know, that is really where the brunt of we're going to see some of these efficiencies come in. So similar pattern that we did in 24. What did we do? We tightened our belt at the end of 23 going into 24. we then accelerated up with cost efficiencies and, and really, you know, starts dropping more to the bottom line. So we're, we're, we're aiming for the same type of strategy here as we did in 24.

That's correct. Yeah. We generated, you know, if you look at 24, we generate about 5 million in a, you know, between the second half of the year. And we use that to significantly reduce our payables and, and really right-sized our balance sheet.

And, you know, we're seeing a similar kind of uh game uh game plan this time around so then turning to the balance sheet you know one difference is i would say you're in a different position today than you are in the back then i know you did a financing post quarter but can you walk me through what you know those liabilities look like in the near term um i think you have within a year a number of things too and just how you intend to bridge um to get that paid off Yeah, yeah.

So I think that, you know, we did lean on payables and the balance sheet more in 2025 and year-to-date in 2026. And that's, you know, is consistent with the working capital cycle that we have seen in non-political years, you know, that have been accentuated. But this does follow a pattern that we've seen before. You know, in 2023, payables increased all the way up to the second half of 2024. I mean, the first half of 2024. And then in the political spending return, we were able to make great headway. What's different now is that we do have U.S. programmatic in the MIA, and we continue to scale and diversify that revenue space. And looking into the second half of 2026, we expect a similar dynamic. But I guess, you know, the issue really is that to address is that why is our balance sheet structured at this point in time and how and how is that going to be corrected? Right. And that's the brand of your question there, Daniel. And, you know, the investments that we've been making since the beginning of twenty twenty five are really been aimed at getting the business out of that boom and bust cycle tied to the political cycle. Right. So looking at twenty twenty five, we had about ten million dollars of political advocacy revenue to replace. that was there in 2024 that dropped up in 2025. And we entered that year with no programmatic product at all, so zero sales there, and an international business that ended 2024 with 1.4 million U.S. of sales. So that's the base we had to absorb a $10 million loss in political sales. And you kind of compound that with tariff uncertainty that impacted second half spending, and that's exactly why 2025 was so difficult. The scale from a new law offering just wasn't there yet. And so what has fundamentally changed is that if we fast forward to today, to the first half of 2026, U.S. programmatic and international combined are running each about $5 million apiece, so $10 million combined. In 2025, both of those businesses did more than 80% of their sales the second half of the year. But let's say we take a conservative approach, say it's an even 50-50 split. But that's still a run rate of $20 million entering into 2027 versus the $1.4 million we had going to 2025. And so if 2027 brings a political step down similar to what we had in 2025, you know, we're still entering that base with a base that's 10 times larger to absorb it. And you kind of combine that with the cost-cutting that the disease pointed out, more than $2 million of anyone's cost-cutting. And that's what gives us the confidence that 2027 looks a lot more structurally different into 2023 or 25, and that we'll be able to meet those down obligations. So, yes, that transition has been a bit of a painful journey, and that shows up in the balance sheet in the first half of the year. But it had to be done, and the result is going to be a much more sustainable business.

And Daniel, just to add to that, Sajid talked about how there is the current, the legacy business which is our managed service ctv ott and how we are really kind of transforming this business in a couple of ways a programmatic is what our clients are looking to use versus the managed service that we used to see in the past and the reason for that is that it creates efficiencies for them and us the ability to uh activate campaigns quicker in shorter cycles and also turn off when need be as you know was caused during the tariffs the second thing is the diversification as Sajid pointed out on international that's growing at a fast rate and the third part which we haven't talked about a whole lot is also creative tv continues to expand and that is going to give us some new opportunities and revenue streams especially as it relates to we've already started seeing the impact of revenue but really that's going to be accelerating at the end of 26 and then 27 that's going to add us in. So we've really diversified this business. We've had to put those investments in to the company to ensure that this starts accelerating up. And I think today, while the numbers look single digit on a top line revenue, you know, in our brand business, that is what I think is missing in that whole picture is the fact that we are essentially moving out of this old business model of managed service very quickly and into a new AI driven programmatic capability that really is well suited for the marketplace and the growth that we're going to see in the coming years.

So we're feeling good about the second half and not only second half, but really the momentum in 27 to then take care of these outstanding debt payments and uh paybacks that we need to take care of um maybe touching on that um idea of ctv versus mobile I mean obviously a lot of competition coming on the in the streaming space um with the big platform streamers uh I was wondering if you could speak to how you see the business um along those lenses between mobile streaming? I guess basically the competitive dynamic that you're seeing.

Yeah, and we're seeing actually a CTV and ad-supported streaming, CTV and OTT is going to continue growing. I mean, we see that as a huge opportunity. Look, reflective of the fact that we actually increased margins. And so there's an opportunity here that that is going to continue growing. where it's growing at a faster rate than managed sorry faster rate is programmatic versus managed and when we first got into ctv ott and we did the transition to mobile we talked about how ctv was a new platform and we're seeing a tremendous amount of growth well we're still seeing that growth except that growth now is moving into programmatic so it's ctv ott which is that supported streaming into programmatic mobile is actually having another is having a resurgence as well as it relates to uh uh to to spend so um while it didn't show up this quarter we do expect mobile especially as it relates to political spending to start showing up and some of the advocacy to start showing up but really the way to think about this is ctv ott which is ad supported streaming has a way a long ways to go and a lot of upside and despite the fact sure there are going to be more competitors in the space and scale is going to be an issue but we are actually friendlies with the competitors in fact we've just hooked up supply deals with some of the biggest players out there including tubi which is now currently running directly from us in you know in our platform so there's a lot of direct supply deals that we're doing with these big streaming companies and the reason clients are using us is not simply for the supply that's not our value proposition and that's why you don't see us talking about simply selling inventory which is the ssp business model we've made a very intentional uh we've been very intentional in our approach to focus in on the higher margin business sure we can show you top line growth and just sell inventory that we don't own and arbitrage that that's not what we're where our value add is our value add continues to be this app science driven uh um demand that that our clients are looking for and that's why we work with the biggest brands in the world and our margins continue to grow because of that so the app science driven media is critical and and that's where we we um we see a lot of opportunity because in in the marketplace you're right there are going be big players out there that are going to provide supply but that does not mean uh they're going to be able to to have a differentiated offering whereas we do with app science and creator tv okay appreciate that uh last question for me i was just wondering if you could give us an up-to-date number on today's uh cash balance uh with that i know first quarter you did that to financing and then i'll pass the line thank you yes uh so it's uh you know while we don't kind of publicly disclose uh you know our history of of interim monthly cash balances it's very similar

to what it was uh when we ended when we ended uh q2 daniel thank you for your questions i will now open the call to uh nicholas cordellucci hey guys thanks for uh answering my questions and uh good morning here the first thing i wanted to ask about was some of the operating expenses so just just looking quarter over quarter we've seen a bit of an increase on s m and gna it's down year over year but but just wanted to get some color on on why it's increased quarter over quarter and what to expect going into the back half um so so the gna expenses that increased quarter over quarter that was that was tied to the uh to the high count reductions that we've done so we did a bit of a

of an internal or or restructure um and so there's costs involved in that and so those were one time in nature and so i think that uh if you're looking at the gna line item um that's where that kind of shows up although that was kind of uh reflected in there just to give you a number as well so i think that you know looking looking ahead and those costs should be normalized and we should expect you know gene a to be quite steady that makes sense and then maybe if you can you know show us some color on what sectors you're seeing positives from what sectors are are negative and taking away from your results um the sectors that are still challenged um

although we are seeing some turnaround there is automotive automotive has traditionally been our one of our largest sectors in the past automotive is still dealing with challenges associated with tariffs and that is across the board it's not just us it's across every company in the the ad space where we see the opportunities we're seeing a lot of continued growth in places like quick service restaurant, as well as areas such as healthcare and technology. So there are opportunities that are certainly growing at a faster rate, but we're, you know, we do believe there's, and also, you know, healthcare is, as we see by the jobless numbers in the U.S., healthcare continues to grow. That becomes, is becoming an area that we're seeing an opportunity to provide additional advertising capabilities to as well as quick search restaurant got it okay and then just last one was on um on the revenue segments you know mobile's been you know up and down uh ctv um you know it's shown some some steadiness but going forward into the second half how do you see that breakup between the the two segments ctv is just going continue growing ad supported tv is is streaming is going to continue growing that is the only reason you saw somewhat of a pullback in this uh q2 was because as sajian mentioned um that was

it was absent of the advocacy and political that tends to take a lot of ad supported streaming and so that will return in a bigger way the second half so you're going to see that growth up and then uh you will see mobile kind of moving up as well but really ad supported streaming is going be the the major driver so anything you want to add to that yeah yeah i think justin as we kind of put it out in the transcript too you know there was a a legacy um i supported streaming customer who who spends routinely on supported streaming who had a kind of a specific requirements for just the q2 to kind of shift that to our new direct at home offering and so you saw a bit of a one-time shift there and and that kind of underpinned that 32 increase in mobile sales but

you kind of think about that that's that's that those dollars are are traditionally as supported streaming dollars so as that kind of moves back to its more traditional footprint we expect that support is to continue to show more robust growth rates and that obviously the out-of-home includes video so not all of it is video but it does include video so the way we think about it is you know we're really looking at streaming ad-supported video or as reported streaming whether it's out of home or on digital. But we do see ad-supported streaming continuing to be the key driver. Understood. Okay, that's all for me.

Thank you for those questions. Savio generated approximately $5.1 million of international revenue during the first half of 2026, already exceeded the amount generated in all 2025.

What is driving the international growth and where do you see the greatest opportunity? yeah yeah yeah so i think that you know yeah so that the sales for 2025 the first half where you know it's correct it matched the full year sales of of so the first half 26 matched the full year sales of 2025 at five million dollars and i guess you know what what is driving that that that apparatus number one we are um have a a rapidly uh growing apparatus there we know we've invested in the area in the region um you know we started out with um with one employee um back in 2024 um 2023-24 uh that footprint has grown to around eight um you know as we as we continue to to to grow in the region uh those employees are being bolstered by now the the rollout of a app science hustle graph for the uk region and so now we're able to bring you know the similar value that we or provide our U.S. customers to international. And that's really is propelling, really enhancing and accelerating the sales over there in that region. And so that's why it makes us even more optimistic and bullish for the second half of this year and going to 27 is that if you think about it, our international sales were able to do what they've done without the help of a UK graph up until around April this year.

With that introduction, we've seen international sales continue on strong and we're seeing continued appetite for that those nuances and those targeting um so um we're very bullish on our prospects going forward and and keep in mind and to saj's point that graph is critical and it continues to be our differentiation and that's why what you're seeing is our margins are holding you know you'll see our competitors in the space and people are really kind of diving because it's been a challenging environment not just for ourselves but for a lot of other companies of media and so what are they resorting to just simply selling inventory we're not we refuse to sell inventory refuse to do that what we're focused in on is to sell targeted inventory backed by insights and analytics and now rolling out creator television which is expanding globally and so you know we have a differentiated offering doesn't always show up on the numbers in terms of growth but it is showing up on a margin profile relative to our competitors in the space and i think that's really what I would ask investors to look at. Look at exactly how we're holding while the whole marketplace continues to lose a margin in a big way. So, you know, we're getting stronger at it. We're getting better at it. And we're also some of the AI capabilities that we've implemented and we're just in the beginning of it. I mean, we are, I know a lot of folks are getting tired of hearing about AI, but we're just in the beginning stages of some of the most interesting things we're doing, including automating our DSP platform, being able to, in the next few months, provide a self-serve platform using agentic AI capabilities. So there's a lot of things that we have and efficiencies we've already seen that are going to help us. And when you add that to differentiated data and differentiated inventory, that is the key difference, not only just in the international market, but it's going to be a key difference in our US market. But that takes investment. And we've done those investments. And now we're starting to reap the benefits of that.

With the launch of the UK household graph in April, how quickly do you expect that infrastructure to drive local margin expansion similar to your more mature US operations?

Well, we didn't break it out. It already has started to do that. So we've already seen the benefits of that. And, you know, we're going to continue seeing that kind of. And we're going to continue adding to it, providing new value to our customers in the form of deeper insights and understanding that they didn't have before. And I think that's exactly what we're doing in the U.S. market in key categories. And Sajid mentioned this on the out-of-home product. We didn't want – we were – we saw an opportunity in the out-of-home space where there was a lack of insights and understanding, a major lack of insights and understanding. And so that's why we and we were asked by one of our clients to consider doing it because they saw the value of our insights and data on ad supported streaming. And that really necessitated our expansion there. And we've seen a lot of great success on multiple fronts because efficiency is the name of the game. And when you have something like app science, the 80 million household graph in the US and we have a separate graph now in the UK, efficiency is what our clients are looking for. They're not just looking for supply. They can buy supply from everybody. What they're looking for us is efficiency and targeting that helps them not only reach those audiences more effectively, but validate them.

Approximately 90% of programmatic customers renewed from Q1 to Q2. What specific attributes of AppScienceStack are driving this high retention?

You know, that's a harder question to answer just simply because of the fact that because the way the programmatic platform and how you interact with clients has significantly changed from how we would interact on managed service. From managed service, we would see all the different metrics and be able to look at all those metrics and then identify what we know is working is the data is working. The data is differentiated. Because in a programmatic environment, that is a lot more sink or swim than in managed. In managed, you could optimize the campaigns. The data is working. The differentiated capabilities in terms of the targeting is working. And that is, you know, they've told us, you know, their vote of confidence is the renewal. And that's all we get to see. We don't see anything. Now, certainly on our end, we're doing constant analysis and looking at what we potentially can do to increase those segments and increase the targeting capabilities. But really, we have no transparency into why those clients are using us. we do know that they are not only using us but using us over and over again and and that's the best part is once we get these clients hooked in it's very rare they stop um you know it is and when they do stop it has nothing to do with us there's some technical glitches between our pipes and the pipe that they're using and that is causing some issues but you know thus far we've had a lot of success and and it makes the business a little bit different in the sense that once we turn it on, we've seen more consistency in revenue spend. And I'll kind of juxtapose that from what happens in managed service. In managed service, you go out and you do a request for proposal every quarter, usually, unless you have a front deal, which we do with some folks, but let's assume we don't. You do a request for proposal every quarter and you resubmit paperwork, you resubmit ideas and opportunities. In programmatic, once that pipe turns on, it doesn't turn off you turn it on and it flows and then they decide whether they want to keep it or not or not and they're just keeping it on and like that number shows 90 renewal rate so you know our issue is not the execution our issue is just simply we haven't had enough capital to continue expanding the reach of the offerings we have and that's really the the biggest limitation for us It's not our execution. Our renewal rates are great. Our returning business is great. Our growth, our margin profile is amazing. Our challenge is just simply we are restricted with the capital. We can go out and get new customers.

Can you comment on how are your revenue sharing arrangements structured on the Creator TV network? And how do they impact net revenue margins recognized on those ad impressions?

Yeah, yeah. So I think that, you know, it typically is a rev share arrangement with the creators on, you know, based on what it would be a typical supply cost to the company. And so I think that, you know, the benefit of that business is that you are able to keep a bit more of that margin in-house. So, you know, while, you know, you may have this, you know, a margin of X on your service business, you might be able to have actually a bit higher of a margin on creator TV. just because you are keeping a bit more of that cash in-house within your own supply, right? You're basically serving the brand your own supply. So there's definitely a benefit there. And it's also a great tool we find in order to help drive further brand engagement with the Savio brand. Because now what differentiates Savio, right? I mean, AppScience is definitely a big differentiator for us in that household graph. And now we have something else. We have our own and operator supply, and that supply is a supply that's targeting a very desirable demographic, you know, younger in age, people who are spending and people who, you know, are really engaged with the celebrities of today, which are influencers. And so, you know, we're right in that wheelhouse.

Well, and also, you know, one of the other ways that that business has continued to evolve too, where now we have the ability to do on-site events. and if you can imagine you know our most recent VidCon event the folks we had playing VidCon we had a VidCon pickleball tournament and VidCon is the biggest creator event in the U.S. and after that VidCon pickleball tournament that we did that we were invited by VidCon to do we had upwards of all of the the creators that were playing they had 800 million followers the the the creators we had played in a tournament had 800 million followers in terms of in their personal reach and if you think about how that translates to a brand business that is huge in a world where it's a fragmented media ecosystem and now the brand has an opportunity to activate on site in that kind of environment that helps us from a sales perspective on the sabio brand business but could you imagine if you were you know a major quick service restaurant brand and now you're going to be integrated into some of these events that level of exposure that is uniquely sabio is is going to be the opportunity and i think that's what we're doing and that's how the way we're going to be able to to to defend margin is not simply sending selling supply on a arbitrage basis we have to defend margin with the new product set and the ability of app science to do that on programmatic and creator tv to do that on on uh you know on a on-site and than a unique supply basis so we have a few different options that we are now kind of because sure everyone can have a high revenue business but what's the margin like we all know that at the end of the day if you cannot manage margins you don't have a real business and to clarify that you capture the higher margin because they are better targeted ads so the advertisers are willing to pay more for that yeah that that's exactly right um it is they're more efficient we can validate those ads using app science separately on the the creator side is simply that like you don't have this opportunity it's not available on other platforms and so you know we're still that creator tv impression count is still growing it's still but then also the activation of being able to participate in a VidCon, in a, you know, creator poker, poker, uh, poker tour event, uh, uh, creativity poker, poker tour, uh, which, which we did in collaboration with WPT. Those are unique opportunities that you can't get anywhere else. You can't get them on TV. You can't get them on, you know, Pluto, you can get them only on us. And so that allows us to, to move those uh you know the targeting and the margin and this is and you know one of the things we should highlight is we did but it's it's not said enough we increased margins without any high margin political advocacy a whole lot of it in q2 so you know as saja was saying his belief in the margins are going to go up he's absolutely right we do expect the margins to go up and rest of this year because political accuracy brings in higher margin business so we actually did the margin increase without any of the high margin business that is political advocacy which we're we're super excited about and then just coming back to your your question as well martin just to add to that and uh you know if a campaign came to us and they want to do some targeting if we didn't have app sign if you have to pay someone else for that kind of data right we having our own tech stock we're able to keep that in-house use our own in-house operation which will be cheaper for us than going to an outside source and be able to connect those analytics to out of home to mobile to ctv to creator content they're running not only on creator tv and ctv but then potentially youtube so this idea of connecting the dots is the real app science opportunity and if you're a brand you're saying to yourself yeah i spend money here on out of home and I'm spending separately here and no one is helping me connect the dots of efficiency and really connect the dots from a, you know, data perspective and a conversion perspective. We're doing that overall in the modern world. I mean, there's people who are obviously doing it on display, but we're actually doing it on, on the platforms that people are using today.

Thank you.

Will Sabio return to positive adjusted EBITDA in the second half of 2026 if so what gives you the confidence of this outlook yeah i mean i mean we we we feel that we're very well positioned to return adjusted dividend profitability in the second half of the year um you know as obviously as a company you can't make a sweeping statement like a guarantee but you know all the all the tools are in place right you basically have the cost cutting that we did this year that is going to save two million dollars of an annualized rate and the in the Brunson, that's going to be felt in Q3 and Q4. You have your gross margins increasing, as we saw, between Q1 and Q2. And as he's pointed out, that's before the return of higher margin political advocacy in the second half of the year. You have a $5 million commitment from political advocacy agencies for the majority of which will be spent in the second half of the year. And there's more spending in the scatter on top of that. And then that's not even counting your international business in EMEA, international business in EMEA and also your U.S. programmatic businesses you know each one of them you know either matched their full year sales last year or was close to matching their full year sales from last year at the end of the first half of this year and you know typically those businesses see do see a step up between this first half and the second half so while nothing is guaranteed if you look at all the the different ingredients in this pot of stew I mean it's all coming together. And so we've never been in a better position, I think, in our history to be profitable.

And with the exception of last year, traditionally in the 11 years I've been running this company, 60%, and this is an off election year, 60% of our revenue sits in Q3, Q4. The only reason that didn't happen last year is because the tariffs hit in May and June, and it was a surprise for a lot of our clients on the backside. So they had to deal with changes and pull back on spending specifically especially automotive last year in second half this year is a more normal cycle and if you know as we pointed out before in 24 70 percent of our revenue was in the second half of the year nothing is giving us an indication that that's going to be any different this year and so if that's the case then we are positioned really well uh to that second half but like i said in 11 years we've never seen it has always been at least 60 if not more in the second half of the year with the exception of last year because of the tariffs hitting uh uh in liberation day in may and june of last year and surprising everything in the second

half of the year yeah i mean last year was the only year since we went public where we weren't profitable in the second half of the year so there's great historical precedent there thank Thank you very much.

There are no further questions. Thank you for joining us today, everyone. And this concludes Savio Holdings earnings call.