Momentum Continues to Accelerate: Revenue
up 61%, ARR up 65%
VANCOUVER, Aug. 21, 2019 /CNW/ - MediaValet Inc. (TSX-V:MVP)
(the Company), a leading provider of cloud‐based digital asset
management ("DAM") and creative operations software, is pleased to
report its results for the three and six months ended June 30, 2019.
Summary of Quarterly Results
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3 months
ended June
30, 2019
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3 months
ended June
30, 2018
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6 months
ended June
30, 2019
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6 months
ended June
30, 2018(1)
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Revenue
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$
1,118,946
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$
696,420
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$
2,115,022
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$
1,311,463
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% Increase from
prior year period
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61%
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31%
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61%
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31%
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Gross
Margin
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962,258
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529,154
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1,812,920
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1,020,627
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Gross Margin
%
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86%
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76%
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86%
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78%
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Operating
Expenses(2)
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1,642,319
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1,575,062
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3,121,955
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2,942,869
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%
Increase
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4%
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1%
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6%
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(4%)
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EBITDA
Loss(3)
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(680,061)
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(1,045,908)
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(1,309,035)
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(1,922,242)
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%
Decrease
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(35%)
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(6%)
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(32%)
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(14%)
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Net
loss
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(927,947)
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(1,176,631)
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(1,753,612)
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(2,291,177)
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%
Decrease
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(21%)
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(17%)
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(23%)
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(15%)
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Loss per
share
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(0.00)
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(0.01)
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(0.01)
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(0.02)
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As at
June
30,
2019
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As at
December 31,
2018
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Annual Recurring
Revenue ("ARR")4
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$
4,729,274
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$
3,511,967
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% Increase over
prior year
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65%
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41%
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Modified Working
Capital (excluding Deferred
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Revenue and
Debt)
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178,604
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( 164,546)
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Deferred
Revenue
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2,997,400
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2,323,742
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% Increase over
prior year
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100%
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57%
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Total
assets
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2,448,866
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1,980,184
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Lease
Liabilities
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585,097
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-
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Total Long-Term
and Convertible Debt
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4,203,144
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3,150,000
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Shareholder
Deficiency
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(6,680,826)
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(
5,174,656)
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"Our momentum continues to increase as we refine our go to
market strategy and expand our product offering," commented
David MacLaren, Founder and CEO of
MediaValet. "In Q2, our customer acquisition rate continued to
accelerate, our average deal size continued to increase, and our
customer retention remained strong. Our ARR is now at
$4.73 million, up 65% over last year
and up 15% sequentially, and we don't see this trend slowing
anytime soon. Our net additions to ARR for the quarter were
$601,000, second only to our record
level in Q1'19, and up 155% over Q2 last year. Year to date we've
added $1.22 million to ARR, an
increase of 221% over the first half last year."
Mr. MacLaren continued, "This is a paradigm shift for the
business that shows a clear path to cash positive operations
through the annual renewal of our customer base and continued new
customer acquisition levels we're now achieving. The momentum
shift is a direct result of our new V4 platform and our strategic
feature releases since May 2018.
These product enhancements have enabled us to further differentiate
MediaValet and firmly establish us as a leader in the global
enterprise DAM space."
Continued MacLaren, "I'm happy to report that Q2 was our fourth
consecutive million plus billings quarter. Net Billings5
were $1.26 million, up 83% over Q2'18
and more than double year to date. This is another trend that we
see persisting in the coming quarters."
Mr. Rob Chase, Executive Chair
and Chief Financial Officer added, "In addition to yet another
strong quarter of growth, we are pleased to announce a $3.5 million financing round at a premium to the
market. I am happy to report that we have already received
commitments for a majority of the financing. This is a significant
milestone for us on many fronts. While we have been delivering
exciting growth over the past four quarters, we believe our
valuation has been hampered by our capitalization, high number of
shares outstanding and debt position. Our intended financing and
15:1 consolidation announced today puts all of these concerns to
rest. Based on our current trajectory following our fourth
consecutive quarter of sales growth and reduced Adjusted EBITDA
loss, this financing provides ample growth capital to sustain us to
cash positive."
Mr. Chase continued, "This capital also provides us the funding
to consider accelerating our growth through additional R&D and
sales resources should we believe it is warranted. With our
exciting operational momentum, and with our balance sheet and share
count consolidated, we believe we are well positioned to maximize
value for our customers, employees and shareholders."
Results of Operations
Key Financial Metrics:
- Grew revenue to $1.12 million in
Q2 2019, up 61% from $0.70 million in
Q2 2018, and up 12% sequentially from Q1 2019. For the year-to-date
("YTD") period, revenue of $2.12
million is up 61% from $1.31
million last YTD. With over 90% of revenue from annual
subscriptions, the growth reflects the increasing deferred revenue
and ARR from customer acquisition and retention. These increases
are a direct result of new feature development, such as Advanced
Search and Creative SPACES, and implementation of industry leading
sales and marketing strategies.
- Increased Gross Margins to $0.96
million, up 82% from $0.53
million in Q2 2018, and up 13% sequentially. The YTD Gross
Margin increased 78% to $1.81
million. As a percent of revenue, Gross Margins were 86% for
Q2 2019, up from 85% in Q1 2019 and 78% last YTD. The improved
margin is due to launch of MediaValet V4 in May 2018, migration of existing customers to V4
in September 2018, increased sales
volume, improved operating efficiencies, and new paid feature
add-ons.
- Incurred Operating Expenses of $1.64
million in Q2 2019, a 4% increase (2018 proforma 7%) from
$1.58 million in Q2 2018 and up 11%
from $1.48 million in Q1 2019. YTD
Operating Expenses were $3.12
million, an increase of 6% from $2.94
million in H1 2018 (2018 proforma 10%). Excluding the impact
of IFRS 16, the increases from the prior periods are primarily due
to increased sales and marketing expenses as the Company targets
its spend in line with its current stage of development and team
size. In addition, R&D costs were increased from Q1 2019 levels
for projects required for enterprise grade security initiatives
such as SOC II audit and single sign-on. This is in response to the
Company's growing traction within the enterprise segment of the DAM
market. Note that "2018 proforma" percentages are provided where
applicable to provide the change from prior periods had IFRS 16
been applied with retroactive restatement.
- Reported a Q2 2019 EBITDA loss of $0.68
million, a 35% improvement (2018 proforma 30%) from a loss
of $1.05 million in Q2 2018, and up
8% from Q1 2019. The YTD EBITDA loss of $1.31 million improved 32% (2018 proforma 27%)
compared to $1.92 million last YTD.
The reduced loss reflects continued revenue growth as a result of
the Company's growing recurring revenue base and efforts to manage
operating cost levels.
- Increased Annual Recurring Revenue ("ARR") to $4.73 million, an increase of 65% compared to
$2.87 million at June 30, 2018, and an 15% sequential increase
from March 31, 2019. The increase
reflects a higher rate of new customer acquisition – which the
Company has been consistently achieving since Q3 2018 – and
increased customer usage and adoption statistics that have led to
growth in the existing customer subscription base. The net
additions to ARR in Q2 were $0.60
million, an increase of 155% over Q2 2018, and a 2%
sequential decline from Q1 2019 (due to the seasonal cycle inherent
in existing customer renewals). YTD, the net additions to ARR were
$1.22 million, a 221% increase over
the prior YTD. The increases over last year are a direct result of
the May 2018 launch of V4, Advanced
Search, Multi-Library and Creative SPACES.
- Ended the quarter with $0.04
million of cash on hand (December
2018 - $0.12 million),
modified working capital (excluding deferred revenue, lease
liabilities and debt) of $0.18
million (December 2018 –
negative $0.16 million), lease
liabilities of $0.56 million,
long-term debt of $3.00 million, and
convertible debt of $1.20 million at
carrying value (December 2018 – total
debt of $3.15 million).
Technology and Product:
- MediaValet first launched its new V4 platform along with its
unique Advanced Search (artificial intelligence), Multi-Library and
Creative SPACES modules in May 2018.
Since then it has continued to enhance each of these components,
doing incremental releases on a weekly and monthly basis. In the
first quarter of fiscal 2019, this continued commitment to
innovation and advancement led to a number of announcements,
including:
- June 5 and July 11, 2019: announced two new large customer
wins with world leading organizations in Sports and Entertainment
and Global Sales and Marketing Services. Both new customers
purchased DAM + Creative SPACES to empower their marketing teams
and solve their challenges with supporting mission-critical digital
content needs – from creation and injestion, to management, access
and distribution. At $100,000+ in recurring revenue, both are new
top 10 customers for MediaValet and are examples of increasing
adoption by world leading mid-enterprise size organizations.
- April 30, 2019: Existing customer
usage and adoptions numbers increasing following migration of V4 in
September 2018, leading to strong
first quarter 2019 renewals and expansion. In particular – (i) an
Agency customer expanded its DAM package to enable it to support
more of its clients, resulting in a doubling of its subscription
value to US$125,000 in ARR; and (ii)
a Fortune 50 customer added a subscription for a seventh division,
increasing its subscription value from US$68,500 to US$95,000 in ARR.
Operations and Corporate:
- Subsequent to quarter end, on July 9,
2019, a Director provided a bridge loan ("Bridge") to the
Company in the amount of U$250,000. The Bridge bears interest at
18%, with a minimum interest payment of 5%, and is repayable on the
earlier of the anniversary date of the Bridge and completion of the
next financing.
- Subsequent to quarter end, on August 21,
2019, the Company announced it has engaged Cormark
Securities for a brokered private placement of $3.5 million of units ("Units") at a
post-consolidation price of $0.525
per Unit (the "Offering"). Each Unit will include one share
purchase warrant at a post-consolidation price of $0.90 per share for a period of 3 years. In
addition, the Company announced that subject to, and concurrently
with, the Offering, it intends to: complete a 15:1 share
consolidation; offer it's $1.55
million of 10% Convertible Debenture holders an option to
exchange their Convertible Debentures for Units on the same terms
as the Offering; and appoint Francis
Shen of Shen Capital to its Board of Directors. If the
Offering is fully subscribed and if all Convertible Debenture
holders exchange their debentures for Units, a total of 25,013,507
post consolidation shares will be outstanding (375,202,608
pre-consolidation), and a total of 9,620,499 post consolidation
deal warrants will be outstanding with a strike price of
$0.90. Agency fees to Cormark are 7%
of the Offering plus broker warrants equal to 3.5% of the gross
proceeds of the Offering divided by $0.90 post-consolidation.
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1
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Adoption of IFRS
16: Fiscal 2018 figures have not been restated for adoption of IFRS
16 as the changes were applied starting January 1, 2019 on a
retrospective basis. Had Fiscal 2018 figures been restated, the
percentage change from 2018 would be a 10% increase for Operating
Expenses, and a 27% decline for EBITDA Loss. IFRS 16 did not impact
the Net Loss. See "Adoption of New Account
Standards"
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2
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Operating Expenses
include Sales & Marketing, Research & Development and
General & Administrative.
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3
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EBITDA is a
non-IFRS measure that is used as a measure of profit and loss.
Management believes EBITDA provides a meaningful measure for
assessment of Company performance as it removes non-cash and
non-operating expenses such as financing costs.
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4
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Annual Recurring
Revenue (ARR) is a non-IFRS measure that provides an indication of
future revenue and billings from customers as of the reporting
date. ARR represents the sum of the annual recurring revenue from
existing customer contracts or commitments as of the reporting
period end date, and as such management believes ARR to be a
meaningful measure for assessment of Company performance. ARR is
recorded as deferred revenue when it is invoiced and is recognized
in revenue evenly on a monthly basis over the contract
term.
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5
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Net Billings are a
non-IFRS measure representing the sum of invoiced sales in the
period, including both existing customer renewal invoices and new
customer invoices with standard payment terms (generally net-30).
Net Billings are calculated by subtracting closing deferred revenue
from opening deferred revenue and adding recognized revenue for the
period. Management believes Net Billings are an important measure
for understanding the business, as given that the related revenue
is deferred and amortized, Net Billings provides a measure of the
amount of cash generated from customers in the
period.
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MediaValet's full financial statements and related MD&A are
now available on SEDAR.
About MediaValet, Inc.
MediaValet stands at the forefront of the enterprise cloud-based
digital asset management and creative operations industry. Built
exclusively on Microsoft Azure and available in 140 countries, 54
Microsoft data center regions, around the world, MediaValet
delivers unparalleled enterprise class security, reliability,
redundancy and scalability while offering the largest global
footprint of any DAM solution. In addition to providing all core
DAM capabilities and local desktop-to-cloud support for creative
teams, MediaValet offers industry leading integrations into Slack,
Adobe Creative Suite, Microsoft Office 365, Oracle Marketing Cloud
(Eloqua), Drupal 8, WordPress, Hootsuite and many other
best-in-class 3rd party applications.
"Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release."
SOURCE MediaValet Inc.
