Vancouver, BC ‐ May 15th, 2023 ‐ MediaValet Inc. (TSX:MVP) (the Company), a leading provider of cloud-native enterprise digital asset management (“DAM”), video content management and creative operations software, is pleased to report its results for the three months ended March 31, 2023. All figures in Canadian dollars (“CAD”).
“Our first quarter performance shows a solid start to the year as we continue to both win exciting new customers and attain high net retention rates”, commented Rob Chase, President and CEO of MediaValet. “We continue to deliver sustainable growth in the face of challenging economic times and lengthening sales cycles which speaks to the resilience of the DAM market and to our differentiated leadership position. In addition, we welcome the increased purchasing process rigor, as it gives us an opportunity to showcase the value of DAM and MediaValet, and get buy-in, at a broad executive level. It is against this backdrop that we have reached an exciting milestone of surpassing 500 customers under contract. We believe we have the momentum and foundation in place to achieve the next 500 in less than half of the time.”
Q1 2023 Highlights
|Three months ended March 31|
|Q1 2023||Q1 2022||Change|
|Revenue||$ 3,880,649||$ 2,816,831||38%|
|Gross Margin %||80%||83%|
|Adjusted Operating Costs1||5,173,189||4,956,546||4%|
|Adjusted EBITDA Loss1||(2,061,095)||(2,626,122)||(22%)|
|Basic and Diluted loss per share||(0.07)||(0.08)||(12%)|
|Annual Recurring Revenue-Closing (“ARR”) 2||$ 15,519,765||$ 11,995,487||29%|
|Modified Working Capital 1||$ 2,422,394||$ 6,529,775||(63%)|
Dave Miller, CFO, added, “We have now achieved an important inflection point where our revenue growth is significantly outpacing our operating cost increases, and is accelerating our path towards profitability. This is apparent in our improved Adjusted EBITDA loss, down 22% from Q1’22 and down 10% from last quarter. We continue to employ an intense focus on operational excellence and cost optimization to drive strategic initiatives with the highest impact on Revenue, Gross Margin and Adjusted Operating Costs, and to pave the path to cashflow positive operations.”
Key Financial Metrics:
- Revenue grew to $3.88 million in Q1’23, up 38% from $2.81 million in Q1’22, and up 7% sequentially from Q4’22. The increases are due strong new customer acquisition net dollar retention from existing customers, and the impact of a strong U.S. dollar.
- Grew ARR to $15.52 million, an increase of 29% compared to $11.99 million at March 31, 2022 and a 5% sequential increase from Q4’22. The increases reflect the Company’s growth in new customers, 100% net dollar retention from existing customers, the strengthening US Dollar and continuing market demand for enterprise DAM solutions despite the current macro-economic environment. As organizations continue to implement their necessary Digital Strategies, an effective DAM becomes critical to reducing costs, requiring less people to manage media workflows and ensuring continuity in difficult times.
- Gross margins remained strong at 80% ($3.11 million) in Q1’23 compared to 83% ($2.33 million) in Q1’22 and 80% ($2.88 million) in Q4’22. The decrease in Gross Margin percentage is related to the increase in Cost of Sales related to higher support personnel and the timing of customer adoption in advance of revenue expansion.
- Incurred Adjusted Operating Costs of $5.17 million in Q1’23, a 4% increase from $4.96 million in Q1’22, and flat compared to the $5.17 million incurred in Q4’22. Management continues to tightly manage Adjusted Operating Costs to balance its market opportunity, strategic vision, and available capital resources. The increase over Q1’22 reflects an increase in Sales and Marketing personnel, variable costs associated with higher revenue achievement, and demand generation programs expanded in support of higher sales objectives.
- Reported a Q1’23 Adjusted EBITDA loss of $2.06 million, an improvement of 22% from $2.63 million in Q1’22, and an improvement of 10% sequentially from Q4’22. The decrease in Adjusted EBITDA loss is evidence of the Company’s plan to hold Adjusted Operating Costs level while growing Revenue 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 Q1’23 with Modified Working Capital (excluding contract acquisition assets, deferred revenue, lease liabilities and debt) of $2.42 million an increase from Q4’22 ($2.10 million). In Q1’23, the Company repaid $0.5 million of bank indebtedness, collected proceeds of $3.5 million from an oversubscribed private placement and increased its Revolving Credit Facility to $9.0 million (currently 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 rates. The Company recently announced several examples of the impact of its ongoing innovation and development:
- New customer win and expansion announcements, including: the achievement of a significant milestone of having over 500 active customers, and to highlight continued success in the education sector with seven new education customers selecting MediaValet in Q1’ The new customers include colleges, universities and industry-specific training organizations, offering omni-channel courses and learning modules. Most were won through a competitive bid process and included some of the largest new customers who selected MediaValet in Q1’2023. This sampling of customers’ total first-year billings of $331,000 (two of which are >$100K) includes annual subscriptions to MediaValet's enterprise DAM platform; Audio/Visual Intelligence ("AVI"); Active Directory Single Sign-On; CI-Hub and Office 365 connectors; implementation services; and ongoing training and support.
- New feature and services announcements, including: a number of new features and enhancements were launched in H2-2022, and are now beginning to have an impact on new customer win rates and existing customer expansion. We are expecting to release additional new features and enhancements in Q2 2023 which will believe will have a revenue impact in fiscal 2023.
Operations and Corporate:
- On January 11, 2023, the Company announced an increase in the amount available under the operating credit facility of up to $9.0 million (previously $7.0 million), as a result of its ARR increase.
- On January 16, 2023, the Company announced the closing of an oversubscribed $3.5 million private placement, consisting of 2,692,315 units of $1.30 per unit. Each unit consists of one common share and one share purchase warrant (a “Warrant”). The net proceeds received from the private placement will be used by the Company for general working capital. The common shares issued are subject to a four-month trading hold that will expire on May 17, 2023.
John Tobia: Welcome and Bio
“We welcome the addition of Mr. Tobia to our Board of Directors,” commented Andrew Shen, Chair of MediaValet. “His deep understanding of public company governance, coupled with a strong technology and corporate development background will diversify our board experience and be invaluable to MediaValet as we execute on our vision to expand our leadership position in the DAM market.”
Mr. Tobia is a seasoned executive with 25+ years of providing business and legal advice to public companies (including corporate governance, M&A, divestitures, financings and IPOs). Mr. Tobia served as the Vice President, Legal, General Counsel and Corporate Secretary of Aastra Technologies Limited for 14 years before it was acquired by Mitel Networks in 2014 and more recently as the Executive Vice President of Corporate Development, General Counsel and Corporate Secretary of Sangoma Technologies Corporation for 5 years. Mr. Tobia has also served as a corporate development consultant for Fairfax Financial Holdings Limited and an executive at Enghouse Systems Limited. Mr. Tobia has an LLB from Osgoode Hall Law School, is a member of the Law Society of Ontario and practiced at Blake Cassels & Graydon LLP prior to joining Aastra in 2000. In addition, Mr. Tobia holds a M.A.SC. and B.A, Sc. from the University of Toronto in Engineering Science (Electrical Option).
1 Adjusted Operating Costs, Adjusted EBITDA Loss, and Modified Working Capital are non-IFRS measures. See “Non-IFRS Measures” section of the Company’s MD&A for further discussion, the “Results of Operations” section and the “Liquidity and Capital Resources” section of the MD&A for reconciliation to the most directly comparable IFRS measure. Adjusted Operating Costs includes Sales and Marketing, Research and Development, and General and Administrative expenses, and excludes share-based compensation, depreciation, and certain non-recurring expenses. The Company considers Executive Restructuring, as defined in the Company’s MD&A, to be non-recurring in nature and not indicative of continuing operations. We use this metric as a supplemental measure to review and assess operating performance and assess our ability to generate cash flow. Management believes Adjusted EBITDA Loss provides a meaningful measure for assessment of Company performance as it removes non-cash and non-operating expenses such as financing costs, and non-recurring expenses.. Modified Working Capital is a non-IFRS measure that represents current assets less current liabilities and adjusted to exclude contract acquisition assets, deferred revenue, lease liabilities and debt. We use this metric as a supplemental measure to assess financial sustainability and sufficient liquidity to preserve the Company’s capacity to continue operating, in providing benefits to our stakeholders and in providing an adequate return on investment to our shareholders by selling our services at a price commensurate with the level of operating risk assumed by the Company.
2Annual Recurring Revenue (ARR) provides an indication of future revenue and billings from customers as of the reporting date. ARR represents the sum of the annualized recurring subscription fees 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. The average US dollar exchange rate of ARR was C$1.3275 at March 31, 2023 and C$1.2612 at March 31, 2022.
MediaValet’s full financial statements and related MD&A are now available on SEDAR at www.sedar.com.