Earnings call transcript: illumin Holdings Q3 2025 sees revenue rise 5.2%

illumin Holdings reported its financial results for the third quarter of 2025, revealing a 5.2% increase in total revenue year-over-year. Despite this growth, the company faced a net loss of CAD 2.1 million, wider than the CAD 1.1 million loss reported in the same period last year. The stock price showed a modest increase of 1.82% following the announcement, closing at CAD 1.12.

Key Takeaways

• Total revenue increased by 5.2% year-over-year to CAD 38.2 million.
• Exchange service revenue surged by 103% year-over-year.
• Gross margin declined to 38% from 47% in the previous year.
• The company is focused on transitioning to a fully generative AI self-service solution by 2026.
• illumin Holdings repurchased 744,108 shares as part of its issuer bid.

Company Performance

illumin Holdings demonstrated a mixed performance in Q3 2025. While the company achieved a notable increase in total revenue, driven by a significant rise in exchange service revenue, it faced challenges with declining gross margins and a widening net loss. The company is navigating a competitive landscape, focusing on AI-driven solutions and targeting larger agencies and "challenger brands" to differentiate itself in the market.

Financial Highlights

• Total Revenue: CAD 38.2 million, a 5.2% increase year-over-year.
• Exchange Service Revenue: CAD 20.5 million, up 103% year-over-year.
• Self-Service Revenue: CAD 8.3 million, stable year-over-year.
• Managed Service Revenue: CAD 9.4 million, a decline from the previous year.
• Gross Margin: 38%, down from 47% last year.
• Adjusted EBITDA: CAD 0.2 million, down from CAD 1.9 million.
• Net Loss: CAD 2.1 million, compared to a CAD 1.1 million loss last year.

Outlook & Guidance

Looking ahead, illumin Holdings has set three key priorities for 2026: scaling exchange and self-service offerings, investing in its product roadmap, and completing operational restructuring. The company anticipates an improvement in gross margins in the fourth quarter and continues to invest in product innovation to enhance its managed services positioning.

Executive Commentary

Simon Cairns, CEO of illumin Holdings, emphasized the company's strategic direction: "We are in the hero-making business. The market is clearly moving away from traditional DSPs and towards AI-powered, outcomes-based platforms." He also highlighted the company's restructuring efforts: "We are not just cutting costs. We're fundamentally restructuring operations to drive profitability."

Risks and Challenges

• Declining gross margins pose a challenge to profitability.
• The competitive landscape with traditional DSPs requires strategic differentiation.
• Economic pressures may impact marketing budgets and spending.
• The transition to AI-driven solutions involves significant investment and execution risk.
• Managing operational restructuring effectively is crucial for future success.

Q&A

During the earnings call, analysts inquired about the company's product innovation strategies, particularly in AI and incrementality measurement. The discussion also touched on the challenges faced in managed services, with executives clarifying the cyclical versus structural issues and elaborating on the revenue mix and customer targeting strategies.

Full transcript - illumin Holdings Inc (ILLM) Q3 2025:

Steve, Unspecified, illumin Holdings: Good morning, everyone. Before we begin the official remarks, I will read the cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable security laws, including, among others, statements concerning the company's objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated.

Please refer to the cautionary statement and the risk factors identified in our filings with SEDAR for a more detailed explanation of the inherent risks and uncertainties that could affect such forward-looking statements. Following the presentation, we will conduct a Q&A session. I would now like to turn the conference call over to Simon Cairns, Chief Executive Officer.

Simon Cairns, Chief Executive Officer, illumin Holdings: Thank you, Steve. Welcome, everyone, and thank you for joining us on today's third quarter 2025 earnings call. I'll start by reviewing the operational highlights for the quarter, then discuss how our strategic pivot towards an integrated outcomes-based platform is meeting growing industry demand. After that, I'll turn the call over to our Chief Financial Officer, Elliot Muchnik, who will review the financial results in detail. Then we'll be happy to take your questions. Our third quarter results demonstrate that our strategic pivot towards an integrated outcomes-based platform in exchange and self-service, supported by managed services, is meeting growing industry demand. Revenue rose 5% year over year to CAD 38.2 million, driven by exceptional 103% year-over-year growth in exchange service revenue. Exchange now represents 54% of our total sales at CAD 20.5 million, more than doubling from the prior year period.

This exceptional performance reflects strong execution by our commercial and technology teams in capturing publisher demand as they seek new value that traditional SSPs no longer provide. Self-service revenue was CAD 8.3 million, representing 22% of total revenue. Now, the headline number appears flat compared to CAD 8.4 million in the year-ago period, but that does not tell the full story. Our year-over-year comparison continues to be impacted by a single large client that paused spending in early 2025 due to their own restructuring. When you exclude the temporary impact, self-service sales were actually up 15% for the quarter and 34% year-over-year. That is the real trajectory of this line of business. Specifically, we onboarded 23 net-new self-service clients during the quarter, reflecting our sales initiatives, targeting higher-spend clients, and positioning us for long-term revenue growth.

These aren't just any clients; they're the type of customers who align with where the market is heading and where our platform capabilities provide the most value. In uncertain markets like we've seen through 2025, illumin is attracting new customers to its Exchange Service offering as publishers seek alternatives to older established SSPs. At the same time, more brands are shifting to self-service options with a goal of converting more of their ad spend to actual advertising rather than service fees. The market is clearly moving away from traditional DSPs and towards AI-powered, outcomes-based platforms with integrated retail media capabilities. This shift validates the strategic investments we've been making. To lead this transformation, we recently appointed Brian Geragan as our Chief Revenue Officer. Brian brings proven ad tech leadership and a track record of driving scalable growth, most recently transforming Simplify into a category leader.

We're excited to have Brian leading our global sales, account management, and client success efforts as we scale our platform. Our investments in leading in-app incrementality measurement are expected to be rolled out later this year and in the first half of 2026. Combined with our plan to transition self-service to a fully generative AI solution in 2026, these capabilities will enable us to add far more value to brands and marketers well beyond the historic customer profile and increase our growth trajectory. This isn't just about keeping up with the market; it's about positioning illumin to lead in an increasingly competitive landscape, particularly in incrementality measurement and AI-powered optimization. These are the capabilities that will differentiate winners from everyone else in our space. Now, managed service revenue was $9.4 million, down from the prior year.

As per earlier this year, market conditions have impacted advertisers' willingness to market on a full-funnel basis, which has impacted our managed sales. As such, we can't sugarcoat this. Managed is a challenge, but platform data indicates we have a very sellable solution. Our platform data indicates that we're attracting larger, premium-focused agencies as opposed to our traditional mid-market agencies. These agencies are willing to pay a premium for performance, and our managed services performance and pricing are as good or better than any of the larger brands in our industry. As a result, we are now refocusing our sales pitch around a revitalized managed, matched with some additional services that reach beyond our traditional DSP capabilities, and as a result, in Q4, we are already seeing better performance in our managed pipeline.

Furthermore, our managed services are now integrated with Exchange, so just like in self, we can offer compelling pricing and supply chain optimization to our managed service and self-service clients alike. This brings our managed services pitch in line with an outcomes-based approach to the platform that is proving itself out in both Exchange and self-service already. For too long, the managed line has been sold as us assisting you in producing great campaigns. You'll see us reposition the entire sales pitch under our new CRO to focus on outcome-based approaches and how it can serve as an upsell to self-service solution. Regardless of our revitalized approach in managed, given the year-to-date challenges in like-for-like managed sales, we've taken decisive actions to streamline operations through cost containment and to accelerate our shift towards scalable technology-led revenue with a focus on improved cash flow generation and protecting our balance sheet.

To be clear, we're not just cutting costs. We're fundamentally restructuring operations to drive profitability and realize platform leverage. Our generative self-service version not only removes friction in customer adoption and spending but also creates new opportunities to realize that platform leverage. As we close 2025 and move into 2026, our priorities are crystal clear. First, continue scaling exchange and self-service through platform innovation and sales execution. The momentum is there. We need to capitalize on it. Secondly, continue to invest in our product roadmap to differentiate ourselves in an increasingly competitive market, particularly in incrementality measurement and AI-powered optimization. These are not nice-to-haves; they are must-haves for sustainable competitive advantages. Third, complete our operational restructuring to drive profitability and platform leverage.

The early benefits from restructuring and cost reduction initiatives we've been implementing this year are already visible, and these actions are helping us position the company for improved profitability as we move into 2026. We're confident this strategy will position Illumin for sustainable, profitable growth. Now I'll turn the call over to Elliot to provide detailed review of our third quarter financial results.

Elliot Muchnik, Chief Financial Officer, illumin Holdings: Thank you, Simon. Good morning, everyone, and thank you for joining our third quarter 2025 earnings call. Today, we reported our third quarter 2025 results that included sustained revenue growth driven by another quarter of exceptional performance in exchange service, which rose, as Simon mentioned, 103% year-over-year as our initiatives to drive adoption and expand demand continue to pay off. I will now provide additional details on our third quarter results. The third quarter revenue was CAD 38.2 million, up 15.4% compared to the CAD 33.1 million in the previous quarter and 5.2% compared to the CAD 36.3 million from Q3 of the prior year. Our year-over-year revenue growth continues to be driven mainly by strong performance in our exchange service business and stable revenue in our self-service, partially offset by a decrease in managed service revenue.

Our growth in Exchange Service was driven by adding new customers in this area, as well as an increased volume of spend by our clients. We are now seeing the benefits from our efforts over the past year to invest in key technology improvements, working with external partners to improve these capabilities, and by providing better service due to our expanded customer support team. Turning to Self-Service, revenue was CAD 8.3 million, relatively stable with last year's third quarter and representing 22% of total revenue for the quarter. Year-over-year comparison in Self-Service continued to be impacted, as mentioned earlier, by a large client that reduced spending this year due to their own specific circumstances, including undergoing a business restructuring. Excluding the spend of that client from both comparative periods, Self-Service revenue grew by 15% over the same period in last year and 34% over the nine months comparative.

We onboarded 23 new self-service clients during the quarter, reflecting sales initiatives targeting higher-spend clients. Our focus remains on targeting higher-spend clients as we see further progress in raising customer adoption, conversion, and spend performance in this segment. In managed service, revenue here was CAD 9.4 million for the third quarter compared to CAD 17.8 million in Q3 2024. This year-over-year change was mainly due to larger economic uncertainty, which has been influencing some customer marketing spend, and we anticipate to continue this in the near term. To mitigate the effects, we're already taking measures to reallocate resources in order to drive improved sales in this service line as part of a larger series of initiatives.

Gross profit or net revenue for the third quarter 2025 was CAD 14.4 million, compared to CAD 17.2 million in Q3 2024, reflecting increased media-related costs, which showed in the gross margin for the quarter as it was 38% compared to 47% for the same period in 2024. This year-over-year variance reflects a shift in our product mix, with a higher portion of revenue coming from service lines with lower margins, such as Exchange service. We expect gross margin to return to a level more consistent with prior quarters in Q4 based on our current pipeline. Total operating expenses for the third quarter of 2025 were CAD 17.5 million, compared to CAD 18 million during the same period in 2024. The year-over-year decrease reflected lower technology expenses, general and administrative costs, and share-based compensation.

This was partially offset by increased depreciation and amortization attributable to an increase in capitalized costs, higher up funding received in the prior year period, and higher sales and marketing expenses, which were primarily related to the increased salaries and benefits, as well as commission and bonus costs associated with higher revenues for the quarter. Q3 2025 operating expenses as a percentage of revenue were 45.8% compared to 49.9% in Q3 2024. Third quarter adjusted EBITDA was $0.2 million compared to adjusted EBITDA of $1.9 million in the prior year period. Despite the higher revenues, the year-over-year decline was primarily attributed to lower gross margin as a result of product mix and higher sales and marketing expenses, partially offset by lower general and administrative expenses. Net loss for the third quarter of 2025 was $2.1 million compared to a net loss of $1.1 million in Q3 2024.

The year-over-year change reflects the lower adjusted EBITDA as mentioned above, higher depreciation and amortization expense, and higher severance expenses as part of our cost containment initiatives, partly offset by net foreign exchange gain versus a loss in the prior period. On December 23rd of 2024, the company commenced a normal course issuer bid, or NCIB, to purchase for cancellation up to CAD 3.9 million of its outstanding common shares. As of September 30th, a total of 744,108 shares had been repurchased under this facility at an average price of CAD 1.65 per share for a total cost of CAD 1.228 million. This includes 432,490 common shares during the third quarter of 2025 at an average price of CAD 1.57 per share for a total cost of CAD 680,123. The normal course issuer bid remains open and can continue until December 22nd, 2025, or until we reach our targeted repurchase limit.

Turning to some corporate information, on our balance sheet, we exited the quarter with CAD 43.2 million in cash versus CAD 48.3 million as of the end of the prior quarter. The quarter-over-quarter decrease was primarily attributable to investments in our platform, payments on leases, the repurchase of common shares, and negative cash flow from operations. The negative cash flow from operations is consistent with the seasonality of our business and industry and typically reverses in the fourth quarter. We continue to maintain a strong balance sheet in order to support our growth and to support our flexibility to develop our strategy despite ongoing difficult market conditions. As of September 30th, 2025, the total number of outstanding common shares stood at 51,821,042 compared to 51,612,725 as of June 30th, 2025.

The figure reflects the impact of shares issued through the exercise of vested equity instruments offset by our share repurchases during the quarter. On a fully diluted basis, our shares outstanding are approximately CAD 55.9 million, and our insider share ownership is at 25%. In conclusion, our third quarter results were fueled by strong performance in our Exchange Service business as a result of our targeted investments in this segment and stable performance in Self-Service revenue. As anticipated, operating expenses have started to decline as the majority of our growth investment designed to enhance our product platform, strengthen brand identity, increase client satisfaction, improve efficiencies, and drive sales are now behind us. In addition, we continue to implement various cost reduction and restructuring initiatives in order to better align ourselves with the current economic environment.

These actions are designed to drive sales growth, enhance our competitive position, and to improve efficiencies throughout the organization. We remain confident in our long-term growth prospects as we continue to balance cost management with investments in key growth initiatives to drive revenue and improve profitability. With that, I'll now turn the call back over to Simon for his closing remarks.

Simon Cairns, Chief Executive Officer, illumin Holdings: Thank you, Elliot. Let me summarize what Q3 tells us about where we're headed. Our third quarter results demonstrate real progress in our strategic transformation. Exchange service more than doubled, proving that our platform approach resonates with publishers seeking alternatives to traditional SSPs. When adjusted for temporary exit of one client, self-service revenue was up 34% year-over-year and 15% for the quarter. That's the underlying health of this business. Yes, we are navigating headwinds in managed services, but we address this head-on through operational restructuring that already is showing benefits while accelerating our shift towards a scalable technology-led revenue. The market shift towards outcome-based platforms with AI-powered optimization and integrated retail media capabilities validates our strategic direction. Our investments in incrementality measurement and generative AI for self-service will position us to capture that opportunity.

As we move into 2026, we're focusing on three things: scaling our high-growth services, differentiating through product innovation, and driving profitability through operational efficiency. These aren't just nice-to-have improvements. They are the foundation for sustainable, profitable growth. We appreciate your continued support and look forward to demonstrating continued progress on these priorities. Thank you all for joining us today. This concludes our formal remarks. We look forward to answering your questions.

Moderator/Call Host: Good morning, gentlemen, and thank you to everyone for attending this morning's presentation of illumin Holdings' third quarter 2025 financial and operating results. I would like to begin by reminding our analysts that in order to present your question, you must first unmute yourself and select the raise-your-hand icon on your screen. Gentlemen, your first question this morning comes from Aravinda Galapalaiji at Canaccord Genuity. Aravinda, please proceed with your question when you're ready.

Thank you. Just two questions from me. First of all, maybe for Simon, can you just talk a little bit more about the innovations that you're looking to bring in? I mean, maybe explain the features and how they're different from what you see in the industry, specifically on the AI automation side of things that could potentially attract more self-service revenue. Secondly, I guess this is a quick question for Elliot. Can you just help us understand what the FX impact was? It looks like a lot of the exchange revenues are LATAM or Europe-based. I wanted to understand sort of what the constant currency revenue trend was. Sorry, just a third quick one on the margins. How different are the exchange services margins from self-service and managed? Just some general color on that. Thank you.

Simon Cairns, Chief Executive Officer, illumin Holdings: Thanks, Aravinda. I can go first. Just regarding the product, your questions around product innovation going forward. We have seen a material sort of shift in the DSP marketplace from the customer lens, moving away from inputs. In other words, help me spend my advertising dollars across a variety of channels towards really helping understand what value I'm getting for my marketing dollars. In other words, a shift from inputs to outcomes. From our point of view, we have found a very solid pathway through this shift based on some of the extensive investment that the company has made over the last several years in its self-service product, in particular, its Journey Canvas. First and foremost, we have found a path to really layer in what the industry calls incrementality. This fundamentally is creating a link between advertising spend and new business growth.

Most of the advertising industry is essentially approximation. Spend money over here, and you will get incremental business over there. We have found a solid pathway to do this within the experience in a near real-time basis as opposed to having to jump out to third-party applications or wait weeks at a time. I am very proud of the product team and what they're doing there to sort of start to roll this out, start to piece it together through Q3, Q4, and into early 2026. That is a solid shift in how the product has historically been positioned and the value prop that it historically offers. We are seeing climbing interest as a result of that. That also widens up our applicable customer base to a wider array of, in particular, direct brands. Brands are the ones that want to most solve this problem.

It does create a good link between revised brand marketing, revised product marketing, and a revised product stance around shifting to an outcome space. We found a pathway through. This layers into generative AI quite quickly. We have a lovely drag-and-drop canvas that has been a great wow factor with customers the last several years. Imagine just being able to interact directly with that, either through voice, either through keyboard, have the machine do a lot of the setup, a lot of the refinement. You always have control, of course.

We see a way to create a very intelligent and a very interactive and, most importantly, I think, an absolutely frictionless self-service campaign and orchestration and optimization, not just tool, but platform, that gives us a data layer that is quite compelling, that gives us an experience layer that I think is unique and different and certainly better than anything I have seen in the market right now. I like the fact that from an investor's point of view, we leverage a lot of the investment we have already made in the product the last several years to deliver on what I think is the full promise of self. Hopefully that gives you some commentary.

Elliot Muchnik, Chief Financial Officer, illumin Holdings: Was that okay with you, Aravinda? Do you want to move on to your second question?

Yeah, it's good. Yeah, just on the margin differentials. I was wondering if you can just sort of give us a sense of, and also the FX, yeah.

Yeah, absolutely. Thank you for that question. Good morning. The exchange FX is really because we bill in the U.S., the transactions happen in USD, and in Q3, I believe the exchange rate with CAD, the U.S. buck, strengthened against the Canadian from 1.36 to 1.39. That is part of the overall FX gain that you saw in the books. From a margin perspective, the exchange represents a margin profile that is lower than our other two lines, and particularly managed and self. It is generally in the low to mid 30% gross take position, but it also has additional SG&A expenses that follow with that business, and particularly the highly variable, such as hosting, which we do not see in our other lines where we can get more scale.

It is a very solid, strong business for us, but it does represent a smaller proportion from a margin perspective, which is why you see the overall dip because of the proportion of exchange this quarter as a top line part. Does that answer your question?

Yes, it does. Thank you.

Thank you.

I'll pass the line.

Moderator/Call Host: Great. Thank you for that, Aravinda. I think there was a third part to your question. That was it? Okay. Thank you very much for that. Our next question comes from Drew McReynolds at RBC Securities. Drew, please proceed with your question when you're ready. Drew, thank you.

Elliot Muchnik, Chief Financial Officer, illumin Holdings: Hi, Simon. Can you hear me?

Simon Cairns, Chief Executive Officer, illumin Holdings: I can, yes. Can you hear me all right?

Elliot Muchnik, Chief Financial Officer, illumin Holdings: Yes.

Simon Cairns, Chief Executive Officer, illumin Holdings: Okay.

Elliot Muchnik, Chief Financial Officer, illumin Holdings: Good morning, Drew.

Yeah, I can hear you guys, if you can hear me. I think this is a first with our technology on our end, so nice to connect, any event. Some follow-ups for me, maybe starting with you, Elliot, just on cost efficiencies. Just where are you in terms of kind of realizing those cost efficiencies with Q3 and kind of how do they funnel in as we go forward? Then second question, maybe for you, Simon, on the managed services side. Obviously, there is a ton of change that's happening in the ad tech world. What do you see here in this segment as kind of cyclical versus structural? Maybe a third one, just on the self-serve, just remind me, when do we lap that pause in customer spend earlier this year? Thank you.

Thank you, Drew. Good morning. I am really happy that we both have our technology aligned this time around so we could hear each other clearly. To your question as to the cost efficiencies that we undertook at the end of the second quarter, we have actually been able to realize those cost efficiencies. There is some tail on that around real estate that is going to take probably until the end of the year to actualize here. For the most part, we are seeing that. One of the reasons that it has obviously impacted this year a bit is because it involved people. There was a severance charge that reduced the cash impact of those savings.

At the same time, as our margin profile changed, it obfuscated some of the savings on our SG&A that we were realizing by the fact that we have a lower gross profit and some additional expenses to support the business that is surging. We have done what we needed to do. At the end of the second quarter, we made substantive changes in our headcount, particularly in North America, and repurposed a lot of those investment focus, as Simon said, with our existing capital to support these innovations, with our existing people, and to focus on sales growth. From our perspective, we have accomplished what we needed to do with the cost savings. We are just looking at the profile of the business and seeing how it is progressing. In Q3, we saw a bigger fallback in our top line for managed than we had expected.

Does that answer your question, Drew?

Simon Cairns, Chief Executive Officer, illumin Holdings: I can take the question as.

Yep, that's great. Thank you. Yeah, maybe on to Simon on the managed services side.

Thanks, Drew. Thanks for the question. You asked about cyclical and then also structural. In terms of cyclical, through the first sort of calendar half or three quarters of this year, the way I would characterize the cyclical impact on managed is some of the opaqueness in the global trade economy, in particular, all goods going in and out of the United States, obviously.

Specifically, what I mean is if you're a marketer and you're trying to plan your fall or your holiday or your seasonal discounts, your offers to capture, say, consumer demand or new customer business in the second half of 2025, and you're starting your brand campaigns, your full-funnel campaigns out in January, February, March, and April in order to drive that demand, a lot of marketers told us that they suffer from being really unclear about what discounts, what offers they can have because they don't necessarily know what the margin is on their products, given tariffs, for example. Across the board, they sort of hit pause on some of the top-of-funnel advertising. This is primarily brand advertising, positioning advertising, and instead sort of just went with short-term practical tactical. They secured enough inventory for their products. They know what their price is.

They know what margin they're going to make on their products. They know what discounts they can offer. They went practical, tactical. In Q2 and Q3, we see that where we see spending, for example, in brands and whatnot, active on, say, self-service products to achieve that. Managed offers both offer full funnel value, but managed usually gets more customers who want to do more full funnel work. They want to do a bit of that brand work plus a bit of the practical tactical. With that brand work sort of shifting downward across the first half of this year, that is the cyclical side that did impact managed for us here today. This is not unique to us. There are several industry reports that note that on the whole, full funnel advertising really took a beating the first half of this year.

Most people went practical tactical on the bottom of the funnel. You can use your self-service product for that at a cheaper rate. Both agencies and brands have because you can get as good or better results for a more competitive margin to make sense. That is part of the reason why on a like-for-like basis, we have seen year-to-date a 34% increase in sort of customers using self on a revenue basis. In terms of structural, slightly different story there. We have sort of seen brands and agencies adopt self and they are getting good results and the margin profile is different. Naturally, we have seen that the customers who are winning with us on managed, and that is really my lens, not so much are we winning, but are they winning with us? Are they getting good value? Are they sticking through?

Those customers are slightly different than our historic ideal customer profile. They're actually larger, bigger, more robust agencies who are willing to pay a premium for premium support, premium service, white glove support, insights, ideas, coaching. While the customer segment shows up in our results, it's definitively smaller, what we're seeing right now, which is why we are seeing a material decline in the managed results year-to-date. Those customers themselves are actually quite solid. This means that we do need to rebuild the pitch. We do need to reposition managed around sort of a bit more of a premium service, a bit more sort of what are the motivators of these larger agencies, for example, who are willing to pay the premium to get that extra differential with their customers.

With our new CRO and with some other platform innovation we are doing that I mentioned in the previous question, specifically related to outcomes, this is a big piece. We feel like we have got the cards now in our hands. Finally, I think to have a good, meaningful, outcomes-centric, performance-centric, up-market pitch on managed, it is essential for us to now push that out in the marketplace and get that managed pipe up and get the managed sales up in 2026, for sure. Hopefully that answers your question.

Yeah, that's a super explanation. Thank you for all that. Yeah, and then just lastly, just lapping the one customer.

Oh, sorry. I think I could say Q1, but Elliot may want to correct me on that.

Elliot Muchnik, Chief Financial Officer, illumin Holdings: No, that's absolutely right. This customer spend while throughout the year was particularly focused on the first half of the year and concentrated in the first quarter.

Okay. That's great. Thanks very much.

Thank you.

Moderator/Call Host: Thank you very much for your questions, Drew. Gentlemen, your next question comes from Thomas Hugh from Paradigm Capital. Thomas, please proceed with your question when you are ready.

Hey, good morning, Simon and Elliot. My question is just on the revenue mix. For this quarter, there were some shifts, and you guys are going through your transformation, and there was the effects from a large customer. My question is whether we could take this quarter as a baseline for maybe Q4. As we move further out into 2026 and into the future, where do you see your ideal revenue mix to be in the illumin business?

Simon Cairns, Chief Executive Officer, illumin Holdings: I don't know if it was guys sort of similar. I'll let Elliot sort of answer that in terms of Q4, but I will say that we do expect the gross margin in particular to bounce back in Q4. I would want to call that out and not have that necessarily buried under the lead of your question. We did see a decline in gross margin this quarter, partly due to some mix shift for sure. Also, again, we've had some larger customers on the DSP side, a larger customer particularly on the DSP side who are experimenting with us, testing with us, and at a lower margin profile, and that pulled it down. We do expect a bounce back in the gross margin in Q4.

I do want to call that out, but I'll let sort of Elliot provide probably a more adult answer just related to the Q4.

Elliot Muchnik, Chief Financial Officer, illumin Holdings: Thank you, Simon. Good morning, Thomas. We do not believe that Q3 is representative of our going forward. We had particularly a quarter where managed fell off while others remained stable or grew. We believe that with what we are doing, with the effort that we are putting in and the things that Simon discussed in his remarks, those will help us kind of deal with the immediate headwinds in managed service. We believe that is a line that we could improve and thereby improving our gross margin overall and our bottom line performance as a result. I would not draw a line from Q3. From a proportionality perspective, it is quite out of line.

We think that we should be with managed and self-serve to have the largest proportion of our top line with exchange still a very strong participant, but perhaps not at the level that it has been in Q3.

Thanks for that. I guess my last question would be the focus on the ideal customers. I think you hinted on a couple of times that you're shifting towards larger agencies as well as brands. Maybe a little bit more about what you can share on that, that would be great.

Simon Cairns, Chief Executive Officer, illumin Holdings: We historically have gone after customers of a certain sort of lower mid-market spend profile, sort of maximum six figures. Where we're seeing better customer, first and foremost, interest in us. Then secondly, spend performance, the willingness to migrate from managed to self or from self to managed, whether they are an agency or a brand. These spenders are in the seven-figure grouping. The Trade Desk has a strong held position in the marketplace, and they're a key agency strategic partner. I'm not saying that, but we have found a strong interest in what we're doing from what we nickname challenger brands. This is not the category captain, for example, of the brand in the space, but they're the challenger brand. They have money to spend to get their brand out there, to get their product out there.

They are less subject to, say, the quarterly or the month-to-month whims of the economy. They are committed, perhaps on a one, two, three-year trajectory to build up their brand or build up their product line. They are not startups. I am not characterizing that. I think you know what I mean when I say a challenger brand. They are very established, and they are really trying to get, they are essentially trying to break through to that next level of market share in whatever it is that they are doing. That space is proving very interesting to us. It is a little underserved because it is a bit fluid. At the same time, it has a diverse range of needs. This is a place where national brands with local need, for example, find a home. This is a place where they are hearing from illumin. They are seeking illumin.

We are starting to sort of see that customer mix. From my point of view, I suffer from I want everything all the time right now, immediately. We cannot get there fast enough. We did a brand relaunch in Q3. If you saw us maybe at Ad Week or even on our website, we are focusing, first and foremost, much more on making a direct sort of human and productivity question between the product and the customer. Typically, historically, DSPs have been marketed as amazing tech and towards men. That is not who is in this space definitively. Secondarily, it is about helping. I always joke internally, we are in the hero-making business. That is sort of where we are repositioning the product line and the feature set. This resonates well with that seven-figure spending customer.

That is where I think we see a lot of interest that is going to emerge or is emerging around self. It is important to get managed in there. Again, I think we have been so focused on self the last little bit because that is where the demand is. Where attention goes, energy flows. We have identified that we see a similar, slightly different but similar pattern with agencies in particular around managed services who want that premium support. Slightly different story there, but similar enough. It is important to get managed into that arena quickly. The year 2026 is all about getting after this customer, helping make heroes out of them, really transitioning and getting the product, first and foremost, fully out there in terms of an outcomes-based position and approach, and then rolling into a generative solution. That generative piece, I get it.

Like everybody there is talking about AI, great, amazing on that. My actual goal is very simple. The fact that it can remove so much friction to helping people succeed, I think, is going to be a key. That canvas plus the generative, I think, is going to be a key long-term unlock in terms of creating value for the customers, which then should return value to the shareholders. Hopefully that helps your question.

Thank you.

Moderator/Call Host: Thank you very much for that, Thomas. I'll just take a quick pass through the audience to see if there are any follow-up questions for Simon and Elliot. As there are no further questions, this will conclude our presentation for this quarter. My thanks to Simon, Elliot, and a special thank you to our analysts and shareholders for attending this morning. Please join us next time as we present our fourth quarter and full year 2025 financial and operating results. Goodbye for now.

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