Vancouver, BC - August 15th, 2022 - 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 and six months ended June 30, 2022. All figures in Canadian dollars (“CAD”) unless otherwise stated for figures in U.S. dollars (“USD”, “U$”).
Summary of Quarterly and Annual Results
|Three months ended
|Six months ended
|Annual Recurring Revenue-Closing (“ARR”)1||$ 12,762,485||$ 9,420,962|
|% Increase over prior year period (CAD)||35%||30%|
|% Increase over prior year period (USD)||38%||34%|
|Net new ARR (“NNARR”)||$ 766,998||$ 405,388||$ 1,921,456||$ 781,019|
|% Increase (decrease) over prior year||89%||8%||146%||2%|
|Revenue||$ 3,131,743||$ 2,245,889||$ 5,948,573||$ 4,417,842|
|% Increase over prior year period||39%||29%||35%||27%|
|Gross Margin %||82%||81%||82%||81%|
|% Increase over prior year period||25%||85%||39%||65%|
|% Increase over prior year period||12%||191%||42%||137%|
|% Increase over prior year period||6%||134%||40%||103%|
|Basic and Diluted loss per share||(0.07)||(0.07)||(0.15)||(0.11)|
|At June 30, 2022||At December 31, 2022|
|Modified Working Capital ex. of Deferred Revenue and Debt||3,355,554||9,150,883|
|% Increase over same period last year||41%||28%|
|Bank Indebtedness (undrawn $7M facility) and Short-term Debt||-||1,000,000|
|Shareholder Equity (Deficit)||(2,607,039)||1,663,961|
“We’re pleased to report our strongest second quarter, and first half of a year (H1) in our history,” commented David MacLaren, Founder and CEO of MediaValet. “Following our strongest first quarter ever, we added an additional $0.77 million in net new annual recurring revenue (NNARR) in Q2 for a year-to-date record of $1.92 million in NNARR. We’re excited to see the initial impact of the investments that we’ve made over the past eighteen months. With our team now hitting their stride, we expect to innovate and deliver new features at an increasing velocity throughout the remainder of the year and into 2023, and to continue tapping into the excess capacity of our sales team.”
Mr. MacLaren continued, “Despite the current macro-economic environment, we’re seeing strong demand in the market for enterprise-level solutions that can quickly help organizations increase the productivity of their marketing and creative teams, while ensuring their operations and assets are safe and secure at all times. Corporate-wide productivity and operational continuity are the two major things that organizations are trying to solve today; and being able to confidently and quickly stand up a solution is an absolute imperative. While the overall economic climate remains uncertain, the underlying long-term market shift towards a digital-first future is accelerating faster today than even a year ago.
MacLaren added, “While there are many components to a successful digital strategy, they all rely on high-value media, corporate and brand assets. Managing, protecting and maximizing the ROI of these assets creates a significant challenge for organizations of all sizes – simply put, a DAM is required to address this challenge in times of growth, as well as in times of uncertainty, to help reduce costs, minimize the number of people and systems required to manage media-related workflows, and to ensure operational continuity. We stand out as a leader in this area as we do all this - and more - at a scale and across a global footprint that few, if any, can match. Combined with innovations like our video content management solution, which provides unparalleled video storage, indexing, searching, advanced AI, and sharing capabilities, this has enabled us to attain a 5-year CAGR for ARR of 44% and 100% net dollar retention of our ARR. We expect our momentum to build as our expanded team continues to accelerate our product roadmap and go-to-market initiatives.”
Dave Miller, CFO, also commented, “The strong start to our first half of FY22 despite a challenging global economic environment is a testament to our strong team, our competitive strength, our market share gaining strategy, and the investments we’ve made in new and exciting features in our core DAM technology. As we manage through this period, we will continue to invest strategically in our growth while maintaining an intense focus on operational excellence and discipline. Our net billings for the first half of $6.03 million are ahead of plan and well ahead of the $3.89 million achieved in the first half of FY21 (an increase of 55%). The strong start to FY22, along with holding our operating expenditures flat will help accelerate our push to cashflow positive. We are confident our available cash resources, including our working capital, outstanding warrants that we expect to be exercised in Q3, and our unused operating facility of $7M is sufficient to get us to this objective.”
Results of Operations
Key Financial Metrics:
- Achieved a second-quarter record for net new ARR (“NNARR”) of $0.77 million, bringing our Q2 2022 Annual Recurring Revenue (“ARR”) to $12.76 million, an increase of 35% (38% in U.S. dollars) compared to $9.42 million at June 30, 2021 and a 6% increase (6% in U.S. dollars) from $12.00 million at March 31, 2022. NNARR increased 89% from $0.40 million Q2 2021 and decreased 34% sequentially from a record $1.15 million in Q1 2022. For the year-to-date (“YTD”) period, NNARR of $1.92 million is up 146% from $0.78 million last YTD. The increases reflect the Company’s operational expansion completed in 2021 and the continuing market demand for enterprise DAM solutions.
- Revenue grew to $3.13 million, up 39% from $2.24 million in Q2’21, and up 11% sequentially from Q1’ Revenue YTD grew to $5.95 million, up 35% from $4.42 million last YTD. The increases are due to the ARR and deferred revenue growth from ramping customer acquisition and net retention performance.
- Gross margins remained strong at 82% ($2.56 million) compared to 81% ($1.81 million) in Q2’21 and 83% ($2.33 million) in Q1’ YTD Gross Margins were $4.89 million, or 82% compared to $3.54 million last YTD of 81%.
- Incurred Operating Costs of $5.04 million, a 25% increase from $4.03 million in Q2’21, and a sequential increase of 2% compared to Q1’ YTD Operating costs were $10.00 million, a 39% increase from $7.18 million last YTD. The Company has not expanded its operational infrastructure in Fiscal 2022 as evidenced by the reduction in headcount to 95 from 102 at December 31, 2021. As such, the increases in reported Operating Costs reflect the normalized impact of the operational expansion completed in fiscal 2021, variable cost increases with revenue growth and inflationary adjustments to payroll. Management continues to tightly manage Operating Costs to balance its market opportunity, strategic vision, and available capital resources.
- Reported a Q2 2022 EBITDA loss of $2.48 million, a 12% increase from $2.22 million in Q2’21, and an improvement of 5% sequentially from Q1’ YTD EBITDA loss was $5.11 million an increase of 42% from $3.59 million last YTD. 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 $3.36 million (December 2021: $9.15 million), total lease liabilities and long-term debt of $0.69 million (December 2021: total lease liabilities and debt of $1.78 million). In the first half of 2022, the Company repaid $1.00 million of long-term debt and secured a $7.00 million revolving credit facility which remains 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 include: a Fortune 500 global auto-industry manufacturer with first-year Billings of $85,000; a leading manufacturer of physical security products with first-year Billings of $75,000; MediaValet’s third NBA Franchise, with first-year Billings of $103,000; a producer of a highly rated, multi-year television drama series with first-year Billings of $113,000. All of the new customer wins have contracts commencing in June 2022 and selected MediaValet for its industry-leading highly scalable enterprise DAM platform and Audio/Visual Intelligence (“AVI”) engine that has raised the bar for handling petabytes of 8K video files in the cloud.
Operations and Corporate:
- Employees exercised 44,834 options during the quarter at an average exercise price of $1.02 per share and proceeds of $45,731; Shareholders exercised 591,380 warrants (May 25, and June 21, 2022) with an exercise price of $0.90 per share and proceeds of $532,242.
- Issued new hire stock options grants (April 14, 2022) to certain employees of 133,000 options, exercisable at $2.00 per share, and to new and existing directors, officers and employees (May 19, 2022) of 811,500 options exercisable at $1.13 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.
- The Company repaid the existing secured debentures of $1,000,000 on April 1, 2022.
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$1.2694 at June 30, 2022, C$1.2656 at December 31, 2021 and C$1.2903 at June 30, 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.