MediaValet Reports Annual and Fourth Quarter 2021 Results
10 min read
Vancouver, BC ‐ March 10, 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 and year ended December 31, 2021. All figures in Canadian dollars (“CAD”) unless otherwise stated for figures in U.S. dollars (“USD”, “U$”).
Summary of Quarterly and Annual Results
“I’m extremely proud of our team for rising above the headwinds of 2021 to increase our market share, growing our ARR (up 32% in constant currency) faster than that of the overall DAM market (estimated at 24%4), and by a healthy margin at that,” commented David MacLaren, Founder and CEO. “This is a testament to our innovative approach to DAM, as well as our commitment to our customers’ ongoing success. By the end of Q4’21, we largely completed our operational expansion, ensuring we continue to be well positioned to outpace the rapid growth expected of the global DAM industry over the next five years.
“Today, our team stands at 102; up from 59 at the end of 2020. In a challenging year for finding talent, I believe our team’s success in attracting key hires is a further testament to our vision for DAM, our cutting-edge technology, our market opportunity, and our ‘we care’ culture. We’re confident that we’ve set a good balance between our operational infrastructure, the market opportunity ahead of us, and our available capital resources. With significant insider ownership and a focus on building long-term shareholder value, it’s paramount to us to get this balance right – now and as we move forward.”
Shared Mr. MacLaren, “In terms of our key performance indicators (“KPIs”) for Fiscal 2021:
- We added more new customers in Fiscal 2021 than in any other year – up 53% from 2020 and up 10% from our prior record in 2019. This resulted in a record year for new customer billings and generated a 32% constant currency increase in ARR.
- We continue to attain an efficient new customer acquisition cost (“CAC”) ratio, resulting in a CAC Payback Ratio of under two years; outperforming SaaS industry averages5. This provides a good performance measure of our expansion in S&M, which, with our upfront annual Billing cycles, will be fully recovered on a gross margin basis upon the first renewal this time next year. With our high net retention rates, the result is a highly profitable long-term revenue stream.
- We have a strong and healthy customer base, thanks to our continued investment in customer success and product development. Our Net Promoter Score continues to be strong, as does our customer adoption and stickiness ratings, resulting in high net retention levels. This is particularly important due to the economic headwinds from COVID, which impacted industry-wide retention rates in Fiscal 2020 and Fiscal 2021. Thankfully, we continue to see COVID headwinds abate further each quarter. In Q4’21, we saw our net dollar retention exceed 100%.
- We have significantly increased our market reach and capacity for product enhancement through our operational expansion, implemented throughout 2021. As mentioned, this was a productivity drain in 2021, but will start to have a meaningful impact in 2022 and beyond. I want to emphasize that this expansion is both opportunistic (the right time based on market dynamics and our KPIs) and discretional (meaning we can ratchet it up or down depending on capital availability and growth vs profitability goals).
- The DAM market enjoys systemic long-term tailwinds, stemming from humanity’s continuously growing demand for content and the need for organizations to digitize their operations to remain competitive. Industry analysts estimate that the DAM market will continue to grow at a 19.2% CAGR from U$4.7 billion in 2021 to U$13.4 billion by 20274.”
Continued Mr. MacLaren, “We believe our KPIs show that we’ve built durable, long-term growth momentum. Our job going forward is no longer about creating a brand and establishing product momentum, it’s about leveraging the brand we’ve built and the momentum we’ve created to continually expand our share of the digital asset management market. In the past 5 years, we delivered strong ARR growth with a 43% CAGR. Given the strong market tailwinds, along with our KPIs and momentum, we believe that our operational expansion in 2021 has given us the opportunity to again achieve a CAGR in the 40% range in the next five years.”
Dave Miller, CFO, also commented, “We exit 2021 in a strong financial position with access to $15.15 million in growth capital to support our operational growth plan – $9.15 million from working capital and, as announced in February 2022, access to another $7 million through a senior revolving credit facility, less early repayment of $1 million of long-term debt. Rather than maintain operations at the cash positive level we attained in Q4’20, in 2021, we put our growth capital to work – investing to expand and reach a much larger target market. Accordingly, we increased our cost of sales plus Operating Costs by 70%, to $17.68 million for Fiscal 2021; and by 109% to $5.20 million in Q4’21. As we have now largely completed the expansion of operations, our Fiscal 2022 spend will stabilize at our Q4’21 run-rate plus revenue-driven variable costs, transactional volume costs and general inflationary increases in wages and services. These increases have been factored into our long-term growth and funding plans to ensure they are balanced with our current access to capital, without the requirement for additional raises.”
Continued Mr. Miller, “I am encouraged by the growth momentum that we are already seeing as a result of this investment. In Q4’ 21, we grew our ARR by 32% in USD, delivered our second-largest quarter ever for net new ARR, generated record-breaking Billings6 of $4.12 million (up 45% from Q4’20). With the U.S. dollar stabilizing at a level in line with our current ARR exchange rate and the COVID headwinds abating, we expect our 2021 revenue and ARR growth rates to be a low water mark, and to continue growing ARR in 2022 at a minimum rate of our underlying USD growth rate.”
Results of Operations
Key Financial Metrics:
- Revenue grew to $9.34 million, up 25% from $7.47 million in Fiscal 2020. Fourth-quarter revenue of $2.57 million increased 22% from $2.11 million in Q4 2020 and increased 9% sequentially from $2.35 million in Q3 2021. The Q4 and Fiscal 2021 growth rates were impacted by the weakened U.S. Dollar and one-time COVID price concessions. Excluding these, Fiscal 2021 revenue increased at 28%, and at 26% for Q4 2021. The growth rates reflect increases from customer acquisition, retention, and expansion through industry-leading sales and marketing strategies, and continuous new feature development and platform enhancements.
- Gross margin remained strong at 82% for Fiscal 2021 compared to 83% last year. Fourth-quarter gross margin was 82% compared to 85% (83% excluding Canadian Emergency Wage Subsidy “CEWS”) in Q4 2020 and 83% in Q3 2021.
- Operating Costs were $15.99 million, a 75% increase (63% excluding CEWS credits) from $9.13 million in Fiscal 2020. Q4 2021 Operating Costs were $4.73 million, a 118% increase (72% excluding CEWS credits) from $2.17 million in Q4 2020, and a sequential increase of 16% compared to Q3 2021. The increases are primarily due to an implementation of the Company’s long-term growth plan, including a step-increase in R&D (headcount and outsourced contractor fees), sales and marketing spend, and a one-time increase in G&A expense for TSX listing fees. After a ramp-up period, these expansions are expected to impact sales growth in Fiscal 2022 and beyond through increasing global market reach and accelerating enterprise product development.
- EBITDA loss increased to $8.35 million, up 184% (127% excluding CEWS credits) from $2.94 million in Fiscal 2020. The Q4 2021 EBITDA loss was $2.64 million, a 587% increase (163% excluding CEWS credits) from $0.38 million in Q4 F2020. The increased annual loss was expected and is primarily due to the planned and discretional expansion 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.
- ARR increased to $10.84 million, up 26% (32% in U.S. dollars) compared to $8.64 million at December 31, 2020. The increase was a direct result of the Company’s growth investments which have increased its sales capacity and marketing reach, strengthened its product roadmap and expanded its customer success programs.
- Ended the year with $6.68 million of cash on hand (December 2020: $14.24 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $9.15 million (December 2020: $16.10 million), and total lease liabilities and debt of $1.78 million (December 2020: total lease liabilities and debt of $1.99 million).
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: one of the world’s largest and most popular international film festival organizations for a three-year contract commencing December 31st, 2021 with first-year Billings of $174,000 (Jan 26, 2022); a South American university ranked as the most innovative in their country with first-year Billings of $87,000 (Nov 9, 2021); and a global leader in smart home audio with first-year Billings of $90,000 (Oct 21, 2021).
- A $120,000 ARR expansion (Jan 13, 2022) from MediaValet’s largest customer - one of the world’s leading entertainment companies. This is the fourth expansion of services since winning the customer in September 2019, which has more than doubled its original ARR to $774,000 effective with its December 31, 2021 renewal cycle.
- New partner developments including: adding FFW as a digital agency reseller and implementation partner (Nov 10, 2021); and launching on the Microsoft Azure Marketplace (Nov 2, 2021).
- On January 18, 2022, the Company announced a $7 million revolving senior credit facility with the TD Bank Group, providing the Company with a flexible growth capital option. The credit facility is secured by a General Security Agreement and is expected to augment working capital and repay the Company’s existing secured debentures of $1.00 million.
- On January 13, 2022, employees exercised 25,554 options at an average exercise price of $0.80 per share for proceeds of $20,443.
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$1.2656 at December 31, 2021, C$1.3313 at December 31, 2020 and C$1.3236 at December 31, 2019.
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 Sources: Research and Markets Digital Asset Management Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027; Date: January 2022; and Verified Market Research Digital Asset Management Market Report; Cision PRNewswire press release dated January 12, 2022.
5 Per the KBCM 2021 Private SaaS Company Survey CAC Payback Ratio average is 26 months and is calculated as CAC Ratio divided by subscription gross margin. Gross new subscriptions in 2021 were U$2.24M of ARR plus U$0.47M of up-front fees, and new customer acquisition costs average 90% of reported S&M expenses.
6 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.