Good morning, ladies and gentlemen, and welcome to the AcuityAds Holdings Inc. First Quarter 2020 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, May 7th, 2020 . I would now like to turn the conference over to Jonathan Pollack. Please go ahead.
Good morning, everyone. Before we begin, I would like to remind listeners that certain statements made during this call will contain forward-looking information within the meaning of applicable securities laws, including statements concerning the Company's 2020 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, business, results of operations, circumstances, performance, or expectations that are not historical facts. Forward-looking information will also include our statements in relation to the possible effect of the COVID-19 pandemic on the company's business and operations. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and is subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated.
I would now like to turn the conference call over to Tal Hayek, the Co-founder and Chief Executive Officer of Acuity Ads, to update you on the operations of the business.
Thank you, Jonathan, and welcome to Q1 2020 Investor Conference Call. First, let's start by saying that this is the first time we've ever done this from home. So we're all in our homes. I believe everybody on the call is from home and never done this before, so we're very positive about the fact that there's not gonna be any technical issue or glitches here and everything is going to move smoothly. I hope that everyone on the call is safe and healthy. Same thing to your family and friends. This has been the toughest time to be a leader. Not so much now, because now it feels a lot better than it was a couple of weeks ago.
but I can tell you, a few weeks ago, this has been the toughest time for me personally, as a leader of this organization or any other organizations in the past. I think it's mostly because a lot of the things that we're going through, we have zero control over. We have control over some things, but there's hasn't been a lot of things we can do about the drops that we've been seeing. Okay. Acuity was founded 10 years ago. After building the technology, we delivered eight consecutive years of aggressive growth. So most of the time at Acuity was good. I mean, we've gone through a couple of times that we had some issues, some challenges that we needed to deal with.
The executive team did an amazing job, and we were able to rise above those challenges and do what we needed to do in order to fix the things we need to fix. Here, it's different, obviously. Throughout the years, we've made a lot of investments into AI. So everybody that knows us know that we have the best AI out there. We have the AI that delivers positive ROI to our customers. You know, Dr. Nathan Mekuz and his team built this absolute masterpiece that is in charge of not delivering our revenue, also is in charge of our retention of customers and in charge of getting new customers, and a lot of times is in charge of getting incrementals from those customers. So that is obviously one of our biggest strengths as a company.
In the last couple of years, we also made a lot of investments in advertising automation. Some of you guys know me, know that this is my personal passion, and I believe that this is what's going to change the way that programmatic gets executed in the future after we launch this, and we're going to have a whole bunch of updates about this during this call. In Q4 of last year, we started shifting some of our focus into profitability. How do we do that? Well, you watch the top line. You make sure your margins are higher by building better algorithms to deliver even better ROI. And then you also watch carefully your expenses, and so we were able to deliver, you know, CAD 6 million in EBITDA, CAD 2 million in net profit. That was an amazing quarter for us.
We were going into Q1. That was also going to be an amazing quarter for us. And it started fantastic. January was an absolutely great month. February was a great month. Margins were higher. Expenses were in line where we were supposed to be. Revenue was higher. Everything worked really well. We were above expectation. Then mid-March happened, and then we started seeing drops. We'll talk about the drops in a second, but I'm gonna say, with all these drops from 15 days of the quarter, with all that, in Q1, we still delivered over CAD 24 million in revenue and CAD 1.8 million in EBITDA and net income of CAD 200,000. So that's really an amazing achievement for the Acuity team and the Acuity family.
I would like to personally thank a ll our team members for delivering such an amazing quarter under those types of circumstances. So let's talk about the decline we started seeing in March. Obviously, we saw a major decline. Well, it started with travel and hospitality, that pretty much went to zero, and then went to general advertisers that just simply panicked. That's what happens. There's uncertainty, there's fear, and advertisers started pausing campaigns. And that was a very tough time because you know, as we were trying to get new campaigns and new revenue, we're losing more than we're getting in. Obviously, that's something that was hard to deal with, but you know, I'm very part of the executive team that dealt with it very well.
I like to say that my chairman, Sheldon Pollack, always tells me, is the first order of business is to stay in business, in any situation. So in this case, the first order of business was to make sure that our team is safe, and the second order of business was to make sure we stay in business. So how do we do that? The team is safe by working from home, and to be fully operational working from home, and then do what we need to do to reduce our expenses to be in line with revenue. So let's talk about working from home. I was never a big believer in working from home. I believe that when people are working together, it's a community, there's a positive energy. We can create a lot of things in working together.
I was so happily surprised that within day one of moving to working from home, we were at 100%. 100% from a technology standpoint. Our platform was not down for even one minute, and everything else was up as well. From customer service to our sales department, to our technology people, to all our operations, accounting, marketing, every single department is firing on all cylinders. I'm getting also word from our executives that some of the areas were actually being more productive than normal. They were going faster. Things like our advertising automation business was going faster. Every time I see a demo of it, I get more amazed of how fast we're moving on it. That has been very, very good.
The other thing that we've done is we've created a company-wide meeting every week or two weeks. In that company meeting, we, the first thing that I try to do is be very, very transparent. Tell people about the situation, where we are, where we think we're going to be. Also, tell people what we don't know and what we don't know what's going, what we were not sure what, how the future is gonna look when we're, when we don't know, but this was a time to be transparent. Really, people really appreciated that, and also it was time to just share. Like, everyone in Acuity, around the world, just takes this call and share about their different experiences, business and personal. Now, the second part, when we're talking about expenses.
So first of all, I have to say that we've seen tremendous pressure to disassemble the organization that we built so hard and so many years to get to where it is today. Where is this pressure coming from? Well, the pressure came from seeing many other companies, general companies, and companies in our space, that are going through massive layoffs, that are firing people, that are trimming down, that are going back and reducing the salaries to the entire organization. Really hitting the bones of the organization. And the second place that we saw a lot of that was really the grim outlook of the future from news and media and people in general.
People see a lot of uncertainty and a lot of fear, and it affects everybody, everybody's mood, even my mood. And people tell me I'm always positive. I had some challenging moments throughout this. But the decision that we made is that we are going to act on facts, and facts alone. This is a storm, and we need to weather the storm, and we're gonna come out of it better than we were before. And that was our guiding principle throughout this. So when we started, that was in, at the end of March, we started looking at April, and we said: Okay, what is our April book revenue look like? How much are we going to lose out of that? Is there going to be additional pauses? How much more are we going to win?
And we made an assumption of what April is gonna look like. And once we made that assumption, we said: Okay, we want April to be EBITDA positive. This is what we're going to achieve. And then we started looking at expenses. So the obvious expense reductions are things like travel and entertainment. Okay, clearly, there's not any travel. There's very little entertainment. You know, we sent some gifts to clients and things like that, but it's virtually close to nothing. Bonuses. Bonuses are clearly a majority of bonuses are not gonna be paid in Q2. There's also gonna be less commissions. There's less revenue.
Then we started talking to our vendors, our partners, and said: Okay, well, we need your help, so we need you not to charge us in April, or we need you to charge us a substantially lower amount in April. As you know, we've been partners for a while, and we need your help. Happy to report that people were okay with that. People were understanding it. Vendors were saying, "Yes", I don't think anybody said no. Everybody has said yes. So I'm very, very thankful for those vendors for doing that. Then salary reduction to executives and VPs. So we've done a 20% salary reduction to all the executives and all the VPs of the organization.
It was one of the toughest times and to be a leader in the business, but it was also a very rewarding time. Because when I saw the reaction of people, when I asked them to take a 20% cut, that was amazing to see. Like, people were like, "100%, no question asked. Of course, I'm gonna take this cut. Not only that, if you need to take more, so to support the organization, cut more. Not only that, you know, we're happy to do it, so we don't have to go through a mass layoff." So all that was extremely positive. I wanna again thank the executive team and the VPs that were so gracious in their response on that.
So, moving on. The other assumption that we made is that April is going to be the worst month, and every month after April, starting in May, is gonna be better, slightly better than April. So based on those assumptions, we started acting, and we've done what we've done. And I am very happy to report that our assumption about April was right, and EBITDA in April is positive. We were able to achieve that because of all the actions that we took, and we are, we feel very, very blessed when we see other companies that are going down to zero or are losing so much money, and we were able to be EBITDA positive in April, which is, we believe is the worst month. That makes us very, very appreciative of our situation.
Let's talk about the second assumption we made, the part that we believe May is gonna get better. So let's start with a little study that was done by the IAB. One was done in mid-March, the other one was done in mid-April, and the results were that advertisers already see a four-point rebound in digital between March and April. Not only that, they also see a five-point drop in traditional marketing. That's not a big surprise because it's very, very logical for advertisers to start shifting their ad dollars from traditional marketing that is very, very hard to measure, to digital marketing, and specifically ones that can measure your ROI.
So that's that for me is very logical, and we're seeing that trend continue, and we believe after this is over and the world comes back, this is even gonna get be more pronounced. I'm also happy to report that our assumption about May looking like it's true. So at the moment, May looks better than April, and that's before the world has started to open. So logically, again, I think that June is gonna be better than May. Again, it's only logic at this point. We are monitoring those things on regular basis. I'm also gonna say that we've also seen that most of the temporary measures that we asked for in April were extended to May as well. So as the world starts to open, advertisers now need to reach consumers more than ever.
Why? Because they've lost a lot of their revenue, they've lost touch with their consumers. The consumers may have changed some habits. So those advertisers need to fight to connect to those consumers now more than ever. Acuity has direct access to 500 million consumers and an AI engine that delivers measured, superior, and proven ROI. And when that happens, then it makes a lot of sense for advertisers to shift more and more of their budget to us, because we just tell them more stuff with the same budget that they're using with our competitors. So I'd like to give you some examples of a few of those customers. So these are specific customers who are spending more in Q2 than Q1 in this year, and that's Q2 under these circumstances.
There's a direct-to-consumer brand that spent in Q1 of 2019 CAD 431,000 with us. In Q1 of 2020, they spent CAD 1.6 million with us. In Q2 of 2019, they spent CAD 600,000 with us. In Q2 of this year, right now, they're expected to spend over CAD 2 million with us, and maybe even more, because the kind of ROI that they're getting on their e-commerce system today, using our system, is so high that I'm amazed by it, to begin with. Also, we've seen the trend that this particular brand has a little bit of retail too, but the majority of what they sell is in e-commerce.
But clearly, when retail is closed, they shifted more and more of their budget into the e-commerce site, and then you do that with the people that give you the best ROI. A few other examples. A healthcare company in Q1 of this year spent CAD 76,000 with us, and in Q2 spent CAD 568,000 with us. An insurance company in Q1 spent CAD 8,000 with us, and in Q2, CAD 328,000. A wine company in Q1 spent CAD 200,000, and in Q2, CAD 300,000. That's not a huge surprise for me. I hear that people are consuming more alcohol for some reason.
That wasn't a huge surprise, but it's really nice to see more and more companies who are actually successful under these circumstances and are more successful than regular circumstances. I'd also like to share the fact that we've been gaining new customers. Obviously, our sales team suffered a loss at the end of March, even though it's only pauses, but losses for Q2. And you know, as hard as it is to get that, they are very resilient. They start looking for new types of advertisers that will shine out of these conditions, and we've been writing new business on a regular basis. Just to give you a couple of examples. Pest control company is a new customer that spent CAD 360,000 in Q2 along with us.
I guess more people are at home, and they don't want to be with pests, so that was a surprise for me, but it's logical. A closet company or a company who you can order, like, closet organizers from, spent CAD 200,000 with us in Q2, so there is some types of business that are excelling here, and then I'd like to give you some examples of customers that paused in March, relatively late March or mid-March, and are now back advertising with us, so there's a national hotel chain that are back spending money with us in May. Not the same amount that they used to spend before, but they're starting to thinking about what happens next.
They want to stay connected to their consumers, and they understand that they're gonna be opening up eventually, so they have to keep the brand alive and connect with their consumers. The car company paused in March, came back and reactivated in May. And there's a sports equipment supplier that does e-commerce, paused back then and reactivated now. And there's a whole bunch of examples. I'm not gonna bore you with all of them, but the trend is very positive. Let's talk about advertising automation. What is it? About a week and a half ago, I've seen a demo of it again, or maybe two weeks ago, and I was amazed by how amazing this product is.
I'm telling you, this product is going to change the way programmatic advertising gets executed. This is a system that aligns the way that the marketers think and plan to the way programmatic gets executed, which is not that way today. It also allows average users to be able to create campaigns within minutes, so advertisers will not have to hire very expensive, highly trained talent, as they need to today to run programmatic. You know, that's something that, first of all, it's been my personal project that I'm a true believer in it. I believe this is going to change to the positive the way that programmatic gets executed, and it's also gonna move Acuity to the next level.
We have now about thirty different companies applied to be in our beta program. We selected six so far. Some of them are big brands. We're going to reveal their names in the next few weeks once we're ready to show a demo. And so some of them are great partners and some are new brands that we did not work with before but are so excited about this product that they want to be a part of the team that shapes the way it comes out to market, so very very thankful to our partners here in this beta program. We started the alpha program in the beginning of the year. Beta was supposed to start a few months ago.
Because of this whole situation, we needed to delay it in May, which is happening right now. It was relaunched, and the beta tests are starting to happen. We now believe that full launch is going to happen in September. We are spending a lot of time on the strategic side of how to launch it on the branding of it, on the messaging of it, logos, new website, and a launch plan that is scheduled for September. So again, that's the thing that I'm mostly excited about for the future is our Advertising Automation platform. I'm looking forward to sharing more of that with you guys in the future. I also like to talk about our partner, our great partner, Silicon Valley Bank.
Silicon Valley Bank has done obviously a great financing deal with us. We were working on Jonathan. So Jonathan Pollack, our CFO, has been working on that deal for a while. We knew that deal was going to happen, but as uncertainty came into this world, we had our doubts if it's going to close because we believe people are getting nervous, banks are getting nervous. But I want to say a special thank you to Silicon Valley Bank, which I personally have a relationship with them for many, many years... and has been a great, great bank to work with through hard times and good times, for closing this financing and putting this company in a better position than it was before that.
So just before we close, I am now more bullish about the future than ever before. I'm seeing that the worst month was April. I am seeing that people are less afraid. Advertisers are spending more money with us. They're coming. Even the ones that paused are coming back and starting to spend again. We know that our engine and our team is extremely strong, very excited about the advertising automation platform that we're releasing to market. And the fact that we can remain profitable throughout all that's going on here and committed to continuing that way, really believe that the best is yet to come. I also wanna thank all our investors that I really, truly believe are partners, which I try to see on a regular basis and talk to on a regular basis.
Without you guys, we would not be able to get to where we were today and be able to invest in the future and get to great places in the future. So I wanna thank you for your support and for trusting us with your investment. And with that, I would like to pass the call to Jonathan Pollack, our CFO, to talk about financing. Thank you, everyone.
Thank you. As Tal discussed, and as we announced earlier this morning, we are very pleased with the strong financial results that we achieved in the first quarter of 2020 , in spite of the economic uncertainty that now exists and we started to realize in the middle of March. Notwithstanding, and as a result of the incredible hard work and dedication of the entire Acuity team, we have positioned ourselves well to weather the current storm. While we continue to see the impact of COVID-19 on our financial performance, we are confident that the actions we took in 2019 to improve efficiencies, as well as the actions we took at the start of this pandemic and continue to make on a daily basis, will allow Acuity to continue to grow and come out even stronger.
In addition, and as important, our recently announced increase, extended, and lower cost credit facility with Silicon Valley Bank also provides clear evidence that our financial performance is strong as we weather out this storm. With respect to our performance in Q1, we realized several key achievements, including a first Q1 with positive net income and positive cash flow. In addition, we grew our gross margin over five percentage points year over year and grew EBITDA close to 80% year over year. While quarterly revenue was lower in 2020 than in 2019 , our net revenue was essentially the same. This is in large part due to the latest version of our AI that was released in Q3 2019 , and our previously announced focus on reducing lower-margin customer campaigns.
We were very pleased that our large Q1 customer came back in 2020, as we were focused on what part of their business we took, as we did not want to jeopardize our margins or profitability. This meant lower overall revenues, but higher overall gross margins and profit. In fact, with lower total Q1 year-over-year quarterly revenues of close to CAD 2.7 million, we were able to achieve relatively the same net revenues or gross profit, which is an important achievement. I also want to provide some context on how Acuity performed before the start of the pandemic in March. January and February of this year were both excellent months for Acuity, performing above budget in terms of revenue, margin, and EBITDA. The strength in the first two months allowed us to continue to outperform for the entire quarter, despite the slowdown that started in mid-March.
We expect this superior performance and momentum to return once the economy starts back again. With respect to the specific financial results for the first quarter of 2020, total revenue was CAD 24.2 million, compared to Q1 2019 revenue of CAD 27.9 million, a decrease of 13%. Revenue from self-serve totaled CAD 4.9 million, compared to CAD 6.3 million in Q1 2019. Revenue for our managed service business was down 11% in Q1 2020, at CAD 19.3 million, as compared to Q1 2019 Managed Service revenue of CAD 21.7 million. The decrease in overall revenue is directly related to both the large Q1 client mentioned previously and to certain customers reducing their advertising budgets in light of COVID-19 in both the managed service and self-serve segments of our business.
Gross profit margin was 50% for Q1 2020, compared to 45% last year. This growth in margin of five hundred basis points is directly related to both the new version of our AI platform, as well as management's focus on reducing lower-margin campaigns. Operating expenses for the three months ended March 31st, 2020, totaled CAD 12.8 million, compared to CAD 14.3 million for the same period last year, a decrease of 11%. Throughout 2020, we'll continue to evaluate opportunities to establish operational efficiencies throughout our business to ensure that we are maximizing our use of cash. Acuity Ads reported non-GAAP adjusted EBITDA of CAD 1.8 million in Q1 2020, compared to an adjusted EBITDA of CAD 1 million last year, an increase of approximately 80%.
Net income for the first quarter was CAD 200,000, as compared to a loss of CAD 2.8 million in 2019. This is an incredible achievement for Acuity, as Q1 is typically our lowest quarter of the year in terms of profitability. Adjusted net income for the first quarter of 2020 was CAD 1 million, compared to an adjusted net loss of CAD 500,000 for the same period last year. Adjusted net income reflects non-cash charges, including depreciation, amortization, foreign exchange, and stock-based comp. Cash flow generated for the three months ended March 31st, 2020, was CAD 400,000, compared to cash flow used of CAD 1.4 million for the same period last year, an improvement of close to CAD 2 million.
We are exceptionally pleased to report positive operating cash flow for this period, as we remain committed to generating significant operating leverage. Cash on hand as of March 31st totaled CAD 7.8 million, compared to CAD 7.4 million at December 31st, 2019. Including availability under our operating lines, we had close to CAD 13 million of capital as of March 31st, 2020. In addition, during the quarter, we paid down over CAD 2 million of debt, further reducing our overall leverage. And finally, as we announced a few weeks ago, we closed an important refinancing with Silicon Valley Bank, whereby we increased our overall credit facility, extended the term of our facility, and reduced our overall interest cost. We also repaid the previous CAD 5 million higher-cost debt. Today, Acuity's financial position is strong, allowing us the ability to weather this current global pandemic.
Before turning the call over to Q&A, I wanted to provide an update on the various government programs to support companies during this time. Over the past few weeks, we have applied for the Paycheck Protection Program, the PPP, through our bank in the U.S., applied for the Wage Subsidy Program in Canada, and also the same type of program in Spain for our operations there. We are cautiously optimistic that we will receive the support from each of these programs, support our team during this time. On that note, I'd like to open the floor for questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from William Urschel from Accord Partners. Please go ahead.
Good morning, gentlemen. Outstanding results. Congratulations. I'm really impressed.
Good morning. Thank you.
There's been some talk about the company eventually uplisting to Nasdaq. Is that still in the plan? And if so, what's the time horizon, and has it been affected by COVID at all?
As you know, we were on the venture for many years. Our first agenda was to move into the big board in Toronto, which we have. But we believe that eventually we should be on the Nasdaq, and therefore this is still a part of, I think, of our path, and I don't think that's going to change. It's. Again, it all depends what the overall long-term effects of this. So, you know, my view is that it's temporary, it's going to pass, and we're gonna go back to what we were expecting, and that's been a storm that we passed, but we don't know that for sure.
I think it really depends on how fast we're growing this year overall and where we can get to. Obviously, it's also a matter of size. We're way too small to go on the Nasdaq from a market cap perspective, so this is also something that we need to work on. And that's all about going out there and telling the Acuity story.
Great. Thank you.
Thank you. Ladies and gentlemen, as a reminder, if you have any questions, please press star one now. Please lift your handset if you're on a speakerphone to register the star one. The next question comes from Suthan Sukumar from Eight Capital. Please go ahead.
Hi, good morning, guys. It's Adhir on for Suthan. So I just had a couple of questions here. I know you kind of called out some client wins that you had, but in terms of the macro, in terms of like general industries, where are you seeing kind of a lot of strength in spending? And then conversely, where are you also seeing some of the most pullback as well?
For the most pullback, you're gonna see under travel, hospitality, things like, that depend on retail stores that are closed and things like that, right? So this is where you're gonna see the most pullback. The type of customers who are doing well, mostly the e-commerce type of customers. And so anybody that's sales online that can deliver. We also see pharma doing well. We see insurance doing well. So those are the type of industries that we still do well.
Okay, great. Thanks a lot. So just in terms of the SS platform, I can appreciate that it kind of got pushed back a little bit, but when it does eventually launch in beta, what sort of KPIs would you kind of be looking for in terms of calling it, like, let's say, successful?
Oh, there's so many KPIs. I mean, the basic is the usability of it. We wanna make sure that the usability flows and it's easy to use, and that it also measures the right results. Something that's extremely important is the insights. So the kind of insights report that it will produce, we feel that this is gonna be one of the most powerful part of it. We wanna know that it actually works the way we think it should work, so really works in practice out there. It's going to be all about moving consumers throughout the different cycles that the advertiser want them to move. So generally speaking, it's three stages, prospecting stages, engagement stages, and conversion stages.
The one big thing for me is you wanna be able to measure how much it costs you as an advertiser to move somebody from one side to the other part, to the third part, where you can convert them.
Okay, great, thanks. And then just kind of, excuse me, last one before, I pass the line here. So obviously, a lot of changes in terms of the cost base, but, in the event, let's say, that the crisis drags on, what additional areas do you see where you can kind of further optimize or that you're looking to optimize?
Here, Tal, I can take that one, and if you don't mind, can you just put your phone on mute because we can hear you typing, and I'm getting text messages from people asking?
Oh, apologies about that.
That's okay. So we have, as Tal mentioned, various plans to move forward with various cost efficiencies. We have different plans based on how we see the market going. Obviously, as already mentioned, we see May being a lot better than April, so we are monitoring that quite closely, and we think June will be the same. So at this point, we don't foresee any, but we continue to work with all of our suppliers. You know, our team continues to take the 20% compensation decline, but at this point, we are quite pleased with how May is looking and also the support that we're getting from the various governments. Our goal is not to lay off anybody.
Okay, great. Thanks, guys. I'll pass the line.
Thank you.
Thank you. Your next question comes from Gavin Fairweather from Cormark. Please go ahead.
Hey there. Good morning.
Morning.
You referenced the IAB survey that was done, I guess, in mid-April. And it sounds like from your perspective, it's a bit of a mixed bag on the customer front. Some, you know, ad spend declined, but then also some new customers and increased spend with other customers, also some kind of hard-hit customers starting to come back. And just with kind of the overall increased optimism about the economy is kind of opening back up, curious just, you know, for your thoughts on whether you think you can kind of outperform some of those forecasts provided by IAB in the second quarter?
Umm [crosstalk]
Yeah.
Go ahead.
It's tough to answer that question at this point because we're in early May, so it's really tough to do it without also giving guidance. All I can say is that if the trend continues, then we have a good shot at doing that. Obviously, we are looking at our. The data point that we're looking at it today is May. May is looking very positive. I can also tell you from a sentiment from our salespeople, and the pipelines that are growing and the kind of conversations that they're having now versus what they had a couple of weeks ago, it's a lot more positive. So I am positive about the future, but I'm sorry I can't answer that question yet.
No, that's fair. I understand.
But I would say, add one more point, Gavin, to it, which is, as we have reiterated, we think we're in a quite a strong financial position today, especially from our operational and our balance sheet. And we think that as the market continues and time goes by, our balance sheet and our strengths will allow us to outperform, because we see some of our competitors actually either losing business, folding up, et cetera. So we think we'll get a bigger piece of the pie when things do come back.
Yeah, that's helpful. And should we expect maybe a bit of a modest kind of decline in kind of gross margins into Q2 here, just given kind of some of the movement on, you know, CPM?
I wouldn't say that. I would say that based on how April and May is performing currently, it's pretty consistent with Q1. So we achieved 50%. I would like to say that we're gonna continue that throughout the rest of Q2.
Thank you.
So when you talk about declining CPM, that mostly affects publishers because they're on the supply side of things. So anybody that's on the supply side platform or an exchange would feel that more than us. We are on the more on demand side, and we are really driven by. That's all. I mean, obviously, we make money on the CPM prices we charge versus what we pay, but it's really driven by ROI. So, the better the AI is, and the more that the better the ROI is for our clients and the more that we can keep for margin.
Got it. That's helpful. And then, Jonathan, one, one for you. So just on the new credit facility with Silicon Valley Bank, for the term loan component, can you help me understand kind of the repayment cycle? Is there gonna be kind of a quarterly amortization, or is there, or is there a bullet at the end?
It's a 48-month amortization, so we pay it every month.
Okay, got it. That's it for me. Thank you.
Ladies and gentlemen, as a reminder, should you have any questions, please press star followed by one. Please lift the handset if you are on a speakerphone and take your phone off mute before pressing any keys. There are no further questions in the queue. I will now turn it back over for closing comments.
Thank you. Thank you very much. I'd like to just reiterate some of the things we've talked about in the past. I believe Acuity is in a great, great position to weather the storm. The investments we made in our AI throughout the years, which delivered that superior ROI, is really helping us a lot right now. Advertisers are just way more focused on ROI than ever before. And so that we believe that this is going to be a great positive for us. The investment into advertising automation, which is still happening, is very exciting, and we're really, really excited about the beta test that is happening right now and the full release that is planned for September.
As it relates to COVID, April, which was obviously a terrible month from a revenue perspective, but with the number of steps that we've taken, we managed to bring it to be EBITDA positive. So I think that's very encouraging. The fact that May is doing better than April is also very encouraging, and our assumption that it's gonna keep getting better throughout the month. So I'm extremely positive at this point. Again, I think I said earlier on that two, three weeks ago, it was much tougher time, but as we cross the eye of the storm and we're moving to the other side, we're starting to see great things happening from a lot of different places.
I wanna thank the Acuity family and the Acuity team again, wherever you are around the world, that went and became 100% operational on the first day as this was happening and was out there to serve our clients and in any way, shape, or form, even more than the normal times and the productivity level that's happening all around there. Really, really a big thank you also to the executive team and the VP level for taking great leadership and showing great example. Our partners and our vendors that really helped us a lot throughout this. Silicon Valley Bank, again, for what they've done with us, and to our investors, again, it's all.
Everything that I just mentioned now need to work well together in order to get a company to be successful. The spirit of Acuity is an all-time high, and we are just ready to keep moving forward and excelling. Thank you, everyone, and thanks for joining our call.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.