MediaValet Reports Second Quarter 2023 Results
7 min read
Vancouver, BC ‐ August 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 and six months ended June 30, 2023. All figures in Canadian dollars (“CAD”).
“We continue to deliver strong revenue growth as the market for DAM remains robust despite various macro challenges impacting sales cycles and tech budgets," said Rob Chase, President and CEO of MediaValet ("MV"). "This is in part due to the increasing need to have an exceptional digital and content-at-scale strategy to be successful today - a status to which DAM is critical to achieving. Our performance also reflects our HotDAM! vision, which is a whole product concept focused on building an exceptional DAM, unlocking the value for customers through extraordinary service, and enabling an ecosystem of tech integrations that ensures customers can realize the full up-and-down-stream potential of DAM.”
Mr. Chase continued, “We have also delivered some exciting new features this year including In-App Notifications, Forensic Watermarking and, most recently, Face Recognition. Face is a cornerstone of our Cognitive AI Suite which we have been building over the past five years to support content at scale through enhanced meta-tagging, identification and search capabilities. The AI Suite also helps our customers leverage generative AI together with our DAM to streamline content creation. AI is an exciting area for DAM and has heightened the need for DAM. I'm excited about the impact these feature releases are having and about the roadmap of HotDAM! launches we have coming in the second half of this year and beyond.”
“In order to put us in the best position to execute in our HotDAM! vision, we have completed a strategic restructuring that aligns the organization to amplify the voice of the customer and to increase our product focus by having a single owner of each area. Please join me in congratulating Eric Simmons on promotion to Chief Revenue Officer (“CRO”), and expansion of his role to include all customer revenue - new, retention and expansion,” continued Mr. Chase. “Eric has proven to deliver top-tier performance and operational excellence as leader of our customer acquisition and partner development team. I have no doubt he will bring the same level of impact and success to our customer experience and service delivery teams. Eric is now responsible for the entire customer journey and ensuring not only that we continue to increase our win rates, but that we also deliver on HotDAM! for our existing customers.
“Eric's customer passion is matched by our CTO, Jean Lozano who I am happy to announce has expanded his role to include Product Management and to completely own our product vision. This increases product control and clarity and will improve collaboration between customer and product teams. Jean is the founder of MV's DAM technology and has a deep knowledge of the needs of customers today and in the future. I am confident that our ability to execute and the value we create for customers will accelerate through having clear ownership of revenue and product in the hands of Eric and Jean. The change will heighten our focus on existing customer requirements as we seek to be #1 in adoption and deliver on our HotDAM! vision.”
Dave Miller, CFO of MediaValet, added, “The strategic restructuring has streamlined our organization and made certain roles redundant - enabling us to do more with less. As a result, yesterday’s restructuring included the elimination of 10 positions (or 10% of our workforce) across the organization resulting in $1.80 million in annualized savings. We are confident that the increased strategic alignment and focus will enable us to improve our service and offering to benefit both our customers and our shareholders. The changes were completed in Q3 and the reduced operating costs will be reflected in our Q4 results. These changes will accelerate our path towards profitability.”
Key Financial Metrics:
- Revenue grew to $4.06 million in Q2’23, up 30% from $3.13 million in Q2’22, and up 5% sequentially from Q1’23. Revenue year-to-date (“YTD”) grew to $7.94 million, up 34% from $5.95 million last YTD. The increases are due to revenue growth from new customer acquisition as well as the relative strength of the U.S. dollar to Canadian dollar.
- Grew ARR to $16.27 million, an increase of 27% compared to $12.76 million at June 30, 2022 and a 5% sequential increase from Q1’23. The increases reflect the Company’s growth in new customers, 99.3% net dollar retention from existing customers, the strengthening U.S. dollar and continuing market demand for DAM solutions despite the current macro-economic environment.
- Gross margins remained strong at 81% ($3.27 million) in Q2’23 compared to 82% ($2.56 million) in Q2’22 and 80% ($3.11 million) in Q1’23. YTD gross margins were 80% ($6.39 million) compared to 82% ($4.89 million) last YTD. The decrease in Gross Margin percentage is related to the increase in Cost of Sales related to higher support personnel, a higher mix of professional services revenue, and the timing of customer adoption in advance of revenue expansion.
- Incurred Adjusted Operating Costs of $5.11 million in Q2’23, a 1% increase from $5.04 million in Q2’22, and a decrease of 1% compared to the $5.17 million incurred in Q1’23. YTD Adjusted Operating Costs of $10.28 million increased 3% from $10.00 million last YTD. Management continues to tightly manage Adjusted Operating Costs to balance its market opportunity, strategic vision, and available capital resources.
- Reported a Q2’23 Adjusted EBITDA loss of $1.83 million, an improvement of 26% from $2.48 million in Q2’22, and an improvement of 11% sequentially from Q1’23. YTD Adjusted EBITDA loss of $3.89 million improved 24% from $5.11 million last YTD. The decrease in Adjusted EBITDA loss is evidence of the Company’s plan to hold Adjusted Operating Costs while growing Revenue in line with the Company’s long-term growth strategy.
- Ended Q2’23 with Modified Working Capital (excluding contract acquisition assets, deferred revenue, lease liabilities and debt) of $0.34 million, a decrease of $2.09 million from Q1’23 and a decrease of $1.76 million from Q4’22 ($2.10 million). For the six months ended June 30, 2023, the Company repaid $0.4 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, with $0.9 million drawn.
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 Restructuring Costs, 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$1.3379 at June 30, 2023, C$1.3141 at December 31, 2022 and C$1.2694 at June 30, 2022.
MediaValet’s full financial statements and related MD&A are now available on SEDAR at www.sedar.com.