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MediaValet Reports First Quarter 2022 Results

Carlie Hill

Vancouver, BC -May 11th, 2022 - MediaValet Inc. (TSX:MVP) (the Company), a leading provider of cloud-native enterprise digital asset management (“DAM”) and creative operations software, is pleased to report its results for the three months ended March 31, 2022. All figures in Canadian dollars (“CAD”) unless otherwise stated for figures in U.S. dollars (“USD”, “U$”).

Summary of Quarterly and Annual Results

Three months ended
March 31,
2022 2021
Annual Recurring Revenue (“ARR”)1 $  11,995,487 $   9,015,574
    % Increase over prior year (CAD) 33% 31%
    % Increase over prior year (USD) 39% 32%
Net new ARR (“NNARR”)    1,154,458    375,631
    % Increase (decrease) over prior year 207% (4%)
Revenue $   2,816,831 $  2,171,953
    % Increase 30% 26%
Gross Margin 2,330,424 1,774,379
    Gross Margin % 83% 82%
Operating Costs2 4,956,546 3,144,033
    % Increase 58% 45%
EBITDA Loss3 (2,626,122) (1,369,654)
    % Increase 92% 83%
Net loss (3,056,906) (1,577,151)
    % Increase 94% 68%
Loss per share ($0.08) (0.04)
  As at March 31, 2022 As at December 31, 2021
Modified Working Capital ex. of Deferred Revenue and Debt $    6,710,044 $   9,150,883
Deferred Revenue 7,721,346 7,339,991
    % Increase over same period last year 37% 28%
Total assets 10,648,347 12,743,902
Lease liabilities 722,042 777,530
Bank Indebtedness (undrawn $7M facility) and Short-term Debt (Repaid April 2022) 1,000,000 1,000,000
Shareholder Equity (742,254) 1,663,961

 

“We’re pleased to report a record start to our Fiscal 2022, and the best quarter in our history,” commented David MacLaren, Founder and CEO, “Attaining a record $1.15 million in NNARR, surpassing all prior records, is a significant achievement at this point in time, and one that we’re extremely proud of. As 2022 begins, we’re starting to see the impact of the investments we made in 2021. Our expanded team is now hitting their stride as they’re entering the ‘norming and performing’ stage of team evolution. For fiscal 2022, this means the velocity of our product development is ramping up and will continue to accelerate throughout the year, and that we’re beginning to tap into the excess capacity of our sales team.”

Mr. MacLaren continued, “At the same time, we’re seeing positive momentum in the DAM market. While the overall economic climate remains uncertain, the underlying long-term market shift towards a digital-first strategy is accelerating faster than previously expected by industry analysts. From our experience with hundreds of customers across a wide variety of industries and geographies, we strongly believe that all organizations must initiate a digital-first strategy today to stay competitive. While there are many components to a successful digital strategy, they all rely on high-value media, corporate and brand assets. Thus, without a highly scalable and secure DAM platform at the core of an organization’s digital strategy and IT infrastructure - one that can meet the current and future scalability, security, compliance and continuity needs of the organization - their digital strategy is due to have major challenges in the near future. With massive changes in workplace dynamics and pandemic-related disruptions easing, we believe there’s a pent-up demand for cloud-native DAM solutions. In Q1, we saw some of this reflected in our results with our average deal cycle shortening significantly; and our win rate, average deal value and new customer additions hitting all-time highs. We believe this is a strong validation of both our product and go-to-market strategies.”

Dave Miller, CFO also commented, “Frankly, as Q1 began, we didn’t expect to deliver quarterly NNARR above U$1 million until the second half of 2022. This is unprecedented for a first quarter, and importantly, was a balanced result in terms of deal size: ranking second in our history of greater-than U$50K new customer wins and first in less-than U$50K new customer wins. We also set a record for new customers signed at 41, building on our prior record of 34 wins in Q4’21 and bringing our customer count to 425. In addition to performance gains from our team, the result also reflects an improvement in our average deal cycle dropping below 100 days for the first time since the start of the pandemic. Lastly, with our Billings4 increasing 55% over Q1’21 to $3.20 million, we’re well ahead of our 2022 plan. We have also begun to receive additional capital from the exercise of warrants, that enabled us to repay our $1.0 million of short-term debt in April, and combined with our undrawn $7 million operating line, we are confident that we can fund our operations through to cash positive levels.”

Results of Operations

Key Financial Metrics:

  • Achieved NNARR of $1.15 million, bringing our Q1 2022 ARR to $12.00 million, an increase of 33% (39% in U.S. dollars) compared to $9.02 million at March 31, 2021 and a 11% increase (11% in U.S. dollars) from $10.84 million at December 31, 2021. NNARR increased 207% from $0.38 million Q1 2021 and increased 38% from $0.84 million in Q4 2021. The increase reflects the Company’s operational expansion completed in 2021, which has increased its sales capacity and marketing reach, bolstered its product development capacity and expanded its customer success programs. In addition, it reflects improved market conditions for digital asset management and an accelerating shift toward digital transformation by organizations of all sizes and industries.
  • Revenue grew to $2.82 million, up 30% from $2.17 million in Q1’21, and up 10% sequentially, and increasing from the 22% growth rate attained in Q4’ The accelerating rate is due the increases in ARR and deferred revenue from ramping customer acquisition and net retention performance.
  • Gross margins remained strong at 83% ($2.33 million) compared to 82% ($1.77 million) in Q1 2021 and 82% ($2.10 million) in Q4 2021.
  • Incurred Operating Costs of $4.96 million, a 58% increase from $3.14 million in Q1 2021, and a sequential increase of 5% compared to Q4 2021. The increases reflect the normalized impact of the operational expansion completed in fiscal 2021, variable cost increases with revenue growth and inflationary adjustments to payroll.
  • Reported a Q1 2022 EBITDA loss of $2.63 million, a 250% increase from $0.75 million in Q1 F2021. The increased annual loss was expected and is primarily due to the step-increase in Operating Costs in line with the Company’s long-term growth strategy. Management believes this growth investment is aligned with the Company’s available capital resources.
  • Ended the period with modified working capital (excluding deferred revenue, lease liabilities and debt) of $6.71 million (December 2021: $9.15 million), total lease liabilities and short-term debt of $1.72 million (December 2021: total lease liabilities and debt of $1.78 million). In addition, the Company has a $7.0 million revolving credit facility available and undrawn.

Technology and Product:

MediaValet’s continued commitment to product innovation and advancement has led to an increase in new customer win-rates, as well as customer retention and expansion. The Company recently announced a number of customer wins, providing examples of the impact of its innovative feature development.

  • New customer win announcements including: a well-known global developer, manufacturer and distributor of pharmaceutical and skincare products with first year Billings of $133,000; a leading manufacturer of physical security products with first-year Billings of $75,000; an award-winning brand advertising agency to fulfil the digital asset management needs of one of their major U.S. tourism clients, with first year Billings of $139,000; a premier sports-related not-for-profit foundation that provides learning and leadership programs to minority college students with first year Billings of $130,000. All of these new customer wins have contracts commencing in March 2022.
  • Customer expansion: announced a $63,500 expansion on March 28, 2022 by one of its largest not-for-profit customers, and 100% net retention in Q1 2022 for the second consecutive quarter.

Operations and Corporate:

  • Employees exercised 25,554 options (January 13, 2022) at an average exercise price of $0.80 per share and proceeds of $20,443; Shareholders exercised 380,047 warrants (March 25, 2022) with an exercise price of $0.90 per share and proceeds of $342,042.
  • A $7 million revolving senior credit facility was announced on January 18, 2022, with the TD Bank Group, providing the Company with a flexible growth capital option.

Subsequent Events:

  • The Company repaid the existing secured debentures of $1,000,000 on April 1, 2022.
  • Employees exercised 34,833 options in April 2022 for proceeds of $38,570.
  • Issued new hire stock options grants (April 14, 2022) to certain employees of 133,000 options, exercisable at $2.00 per share, have a term of five years, and a vesting term of four equal instalments on the first four annual anniversary dates from grant date.

1 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 at the US dollar exchange rate in effect at the time of invoicing. Substantially all of the Company’s ARR is denominated in USD, therefore we have presented our USD ARR growth rate as management believes it represents a more meaningful measure of the underlying growth rate. The average US dollar exchange rate of ARR was C$1.2612 at March 31, 2022, C$1.2656 at December 31, 2021 and C$1.3157 at March 31, 2021.   

2 The Company defines Operating Costs to include Sales & Marketing, Research & Development and General & Administrative expenses, which aligns with the expenses included in EBITDA. This is a non-IFRS measure and represents operating expenses less share-based compensation and depreciation.

3 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. Refer to the Results of Operations section for further information on the calculation and definition of EBITDA.

4 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), and are disclosed in Note 7 to the Financial Statements. Management believes Billings are an important measure for understanding the business, as given that the related revenue is deferred and amortized, Billings provides a measure of the amount of cash generated from customers in the period.

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-native, software-as-a-service digital asset management and creative operations industries. Built exclusively on Microsoft Azure and available across 61 Microsoft data center regions in 140 countries around the world, MediaValet delivers unparalleled enterprise-class security, reliability, redundancy, compliance, and scalability; while offering the largest global footprint of any DAM solution. In addition to providing enterprise cloud-native DAM capabilities at a global scale, desktop-to-server-to-cloud support for creative teams, and overall cloud redundancy and management for all source, WIP and final assets, MediaValet offers industry-leading integrations into Slack, Adobe Creative Suite, Microsoft Office 365, Workfront, Wrike, monday.com, Drupal, WordPress and many other best-in-class 3rd party applications.