VANCOUVER, BC, Nov. 14, 2023 /CNW/ - BBTV Holdings Inc. (TSX: BBTV) (OTCQX: BBTVF) (the "Company"), a media tech company that uses technology enabled solutions to help content creators become more successful, today announced financial results for Q3 2023 for the period ended on September 30, 2023.
The Management Discussion and Analysis ("MD&A"), along with full financial statements are posted and available on SEDAR at www.sedarplus.ca. All dollar amounts are expressed in thousands of Canadian dollars except where otherwise indicated.
Q3 2023 Financial and Operational Highlights:
Total views for the quarter reached 103.6 billion, an 8% increase compared to the previous year quarter. The increase in views was driven by a 115% year-over-year increase in YouTube Shorts viewership to 53.0 billion views in Q3 2023, which is approximately 51% of total views and stable compared to Q2 2023. Monetization in the form of RPMs (Revenue per Thousand Views) were flat at $0.54 compared to $0.54 in Q2 2023 and declined by 38% compared to the previous year. The year-over-year decline in RPMs is a direct result of the emergence of YouTube Shorts viewership. Over time, based on industry stakeholder feedback, it is expected that the monetization of YouTube Shorts should improve to more closely reflect those of regular-length YouTube videos. Excluding YouTube Shorts, the monetization of 50.7 billion regular-length content views remained steady near typical rates at $1.10 in Q3 2023, a 7% decline compared to $1.18 in Q3 2022. To the extent YouTube Shorts RPMs track higher, notwithstanding typical seasonality, overall RPMs also are expected to increase over time.
Overall, total revenue of $66.2 million declined by 30% compared to $95.1 million in Q3 2022 primarily due to a higher mix of YouTube Shorts views, which are at early stages of monetization, and our decision to not renew certain contracts that didn't have near-term profitability, as we continue to focus on profitable growth.
Overall, BBTV's Q3 2023 operating expenses of $8.6 million have declined by $5.4 million or 38% compared to Q3 2022, and 19% compared to Q2 2023 due to cost optimization and operational realignment. The Company continues to look for opportunities to optimize operations in the coming months.
Plus Solutions, including popular solutions such as Content Management and Direct Advertising Sales, deliver higher margin monetization opportunities for BBTV. Overall, during Q3 2023, Plus Solutions represented approximately 13% of total revenue and 35-40% of Adjusted Gross Profit compared to 11% and 30-35%, respectively, in Q3 2022. With a large pipeline of mostly global enterprise clients, Plus Solutions is expected to continue to grow as a percentage of total revenue and Adjusted Gross Profit, even as Shorts monetization increases.
Outlook:
Subsequent to quarter-end, on October 17, 2023, the Company announced its plan to undertake a go-private transaction by way of a statutory Plan of Arrangement, subject to securityholder approval. The plan provides that the Company will acquire the Subordinate Voting Shares held by public shareholders at a price of $0.375 per share. Certain members of management and long-term shareholders will retain their shares in the Company. As well, unsecured convertible debentures of the company due June 15, 2026 and listed on the Toronto Stock Exchange will be acquired at a price of $100 per $1,000 principal amount of debentures, with interest waived. Completion of the plan is dependent on closing of a proposed debt financing as described in the Company's announcement on October 17, 2023. The meeting of securityholders to consider the transaction will be held on November 30, 2023. Further details of the Plan of Arrangement are contained within the October 17, 2023 press release and filed on SEDAR, and in Management's Information Circular dated October 30, 2023 filed on SEDAR.
The Company's ability to continue as a going concern is dependent upon its ability to meet its cash flow forecasts and secure additional financing.
Q3 2023 FINANCIAL TABLES:
Three Months Ended |
||||
Q3 2023(1) |
Q3 2022(1) |
$ Change |
% Change |
|
Base Solutions revenue |
$57,317 |
$84,563 |
($27,246) |
(32 %) |
Plus Solutions revenue |
$8,922 |
$10,513 |
($1,591) |
(15 %) |
Total revenue |
$66,239 |
$95,076 |
($28,837) |
(30 %) |
Gross profit (loss) (which includes PPA Amortization) |
($2,005) |
$703 |
($2,708) |
(385 %) |
Gross margin (which includes PPA Amortization) |
(3 %) |
1 % |
||
Adjusted Gross Profit |
$ 5,499 |
$8,173 |
($2,674) |
(33 %) |
Gross Margin Excluding PPA Amortization |
8 % |
9 % |
||
Net loss |
($59,901) |
($4,775) |
($55,126) |
1,154 % |
Adjusted EBITDA |
($1,702) |
($3,181) |
$1,479 |
(46 %) |
Cash flow used in operating activities |
($9,213) |
($3,286) |
($5,927) |
180 % |
(1) |
These figures are derived from the Company's IFRS financial statements. Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and Gross Margin Excluding PPA Amortization is a non-GAAP ratio. These terms are defined under "Key Metric Definitions" below. A reconciliation of non-GAAP financial measures and non-GAAP ratios are set out below under "Non-GAAP Financial Measures and Non-GAAP Ratios Reconciliation Tables". |
The Net Loss in Q3 2023 was primarily driven by a non-cash intangible asset impairment charge of $48.2 million in relation to the intangible assets realized during the acquisition of BroadbandTV Corp by BBTV Holdings immediately prior to its IPO in 2020. The impairment charge was recorded due to the changes in the macroeconomic environment, namely lower projected cash flows from cash generating units due to a subdued economic outlook and YouTube Shorts monetization taking a longer period of time to be comparable to traditional long-form content. This impairment charge also aligns the Company's net book value with the Subordinated Voting Share price of $0.375 as proposed for the go-private transaction.
Three Months Ended |
||||
Q3 2023(1) |
Q2 2023(1) |
$ Change |
% Change |
|
Base Solutions revenue |
$57,317 |
$62,094 |
($4,777) |
(8 %) |
Plus Solutions revenue |
$8,922 |
$10,703 |
($1,781) |
(17 %) |
Total revenue |
$66,239 |
$72,797 |
($6,558) |
(9 %) |
Gross loss (which includes PPA Amortization) |
($2,005) |
($1,616) |
($389) |
24 % |
Gross margin (which includes PPA Amortization) |
(3 %) |
(2 %) |
||
Adjusted Gross Profit |
$ 5,499 |
$5,816 |
($317) |
(5 %) |
Gross Margin Excluding PPA Amortization |
8 % |
8 % |
||
Net income/(loss) |
($59,901) |
$3,842 |
($63,743) |
(1,659 %) |
Adjusted EBITDA |
($1,702) |
($2,919) |
$1,217 |
(42 %) |
Cash flow used in operating activities |
($9,213) |
($3,894) |
($5,319) |
137 % |
(1) |
These figures are derived from the Company's IFRS financial statements. Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and Gross Margin Excluding PPA Amortization is a non-GAAP ratio. These terms are defined under "Key Metric Definitions" below. A reconciliation of non-GAAP financial measures and non-GAAP ratios are set out below under "Non-GAAP Financial Measures and Non-GAAP Ratios Reconciliation Tables". |
Q3 2023 KEY METRICS:
Three Months Ended |
||||
Q3 2023 |
Q3 2022 |
Change |
% Change |
|
Views (billions) |
104 |
96 |
8 |
8 % |
RPMs (in dollars) |
$0.54 |
$0.87 |
($0.33) |
(38 %) |
Three Months Ended |
||||
Q3 2023 |
Q2 2023 |
Change |
% Change |
|
Views (billions) |
104 |
114 |
(10) |
(9 %) |
RPMs (in dollars) |
$0.54 |
$0.54 |
Nil |
Nil |
Income Statement:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||
2023 |
2022 |
% change |
2023 |
2022 |
% change |
|
$ |
$ |
$ |
$ |
|||
Revenue |
$66,239 |
$95,076 |
(30 %) |
$210,800 |
$293,840 |
(28 %) |
Cost of revenue |
||||||
Content creator and other fees |
$60,353 |
$86,508 |
(30 %) |
$191,570 |
$267,101 |
(28 %) |
Amortization |
$7,891 |
$7,865 |
0 % |
$23,646 |
$23,539 |
0 % |
Total cost of revenue |
$68,244 |
$94,373 |
(28 %) |
$215,216 |
$290,640 |
(26 %) |
Gross profit (loss) |
($2,005) |
$703 |
(385 %) |
($4,416) |
$3,200 |
(238 %) |
Operating expenses |
||||||
Sales and marketing |
$4,030 |
$6,762 |
(40 %) |
$13,536 |
$23,049 |
(41 %) |
General and administration |
$2,921 |
$3,993 |
(27 %) |
$11,037 |
$12,870 |
(14 %) |
Research and development |
$1,021 |
$1,290 |
(21 %) |
$3,299 |
$4,030 |
(18 %) |
Share-based compensation |
($315) |
$989 |
(132 %) |
$555 |
$2,708 |
(80 %) |
Amortization and depreciation |
$943 |
$944 |
0 % |
$2,870 |
$2,916 |
(2 %) |
Total operating expenses |
$8,600 |
$13,978 |
(38 %) |
$31,297 |
$45,573 |
(31 %) |
Operating loss |
($10,605) |
($13,275) |
(20 %) |
($35,713) |
($42,373) |
(16 %) |
Foreign exchange loss |
($1,381) |
($2,345) |
(41 %) |
($255) |
($2,700) |
(91 %) |
Interest expense |
($2,733) |
($2,383) |
15 % |
($8,352) |
($6,765) |
23 % |
Goodwill and intangible assets impairment |
($48,224) |
- |
NA |
($48,224) |
- |
NA |
Gain on debt modification |
- |
$11,264 |
NA |
$18,007 |
$11,264 |
60 % |
Other income (expense) |
$206 |
$240 |
(14 %) |
($2,208) |
($251) |
780 % |
Transaction-related costs |
- |
($59) |
NA |
($61) |
($598) |
(90 %) |
Total non-operating (expenses) income |
($52,132) |
$6,717 |
(876 %) |
($41,093) |
$950 |
(4,426 %) |
Loss before income taxes |
($62,737) |
($6,558) |
857 % |
($76,806) |
($41,423) |
85 % |
Recovery of income taxes |
$2,836 |
$1,783 |
59 % |
$6,148 |
$9,865 |
(38 %) |
Net oss |
($59,901) |
($4,775) |
1,154 % |
($70,658) |
($31,558) |
124 % |
Other comprehensive loss |
||||||
Exchange differences on translation of operations in currencies other than Canadian dollars |
$45 |
$272 |
(83 %) |
($36) |
($228) |
(84 %) |
Loss and comprehensive loss |
($59,856) |
($4,503) |
1,229 % |
($70,694) |
($31,786) |
122 % |
Basic and diluted loss per share (in dollars) |
($2.77) |
($0.22) |
($3.27) |
($1.49) |
||
Weighted average number of shares outstanding. Basic and diluted (in whole numbers) |
21,647,547 |
21,474,508 |
21,595,503 |
21,237,784 |
||
Non-GAAP Financial Measures and non-GAAP Ratios Reconciliation Tables:
Adjusted EBITDA and Adjusted EBITDA Margin
Three months ended September 30, |
Nine months ended September 30, |
|||
2023 $ |
2022 $ |
2023 $ |
2022 $ |
|
Net income (loss) |
($59,901) |
($4,775) |
($70,658) |
($31,558) |
Amortization and depreciation(1) |
$8,834 |
$8,809 |
$26,516 |
$26,455 |
Share-based compensation |
($315) |
$989 |
$555 |
$2,708 |
Unrealized and realized foreign exchange |
$1,381 |
$2,345 |
$255 |
$2,700 |
Interest expense |
$2,733 |
$2,383 |
$8,352 |
$6,765 |
Gain on debt modification |
- |
($11,264) |
($18,007) |
($11,264) |
Goodwill and intangible assets impairment |
$48,224 |
- |
$48,224 |
- |
Other (income) expense |
($206) |
($240) |
$2,208 |
$251 |
Receivable factoring banking fees |
$384 |
$296 |
$1,149 |
$659 |
Transaction-related costs |
- |
$59 |
$61 |
$598 |
Recovery of income taxes |
($2,836) |
($1,783) |
($6,148) |
($9,865) |
Adjusted EBITDA |
($1,702) |
($3,181) |
($7,493) |
($12,551) |
Total revenues |
$66,239 |
$95,076 |
$210,800 |
$293,840 |
Adjusted EBITDA Margin |
(2.60 %) |
(3.30 %) |
(3.60 %) |
(4.30 %) |
(1) |
Includes depreciation and amortization reported in cost of revenue and operating expenses for all periods. |
(2) |
Adjusted EBITDA is a non-GAAP financial measure while Adjusted EBITDA Margin is a non-GAAP ratio. Further details on these measures are included in the "Key Metrics Definitions" section of this press release. |
BBTV Share, Adjusted Gross Profit, and Adjusted Gross Margin
Three months ended September 30, |
Nine months ended September 30, |
|||
2023 $ |
2022 $ |
2023 $ |
2022 $ |
|
Revenue |
$66,239 |
$95,076 |
$210,800 |
$293,840 |
Less: content creator and third-party platform fees |
($60,353) |
($86,493) |
($191,570) |
($267,000) |
BBTV Share (A) |
$5,886 |
$8,583 |
$19,230 |
$26,840 |
Gross profit (loss) |
($2,005) |
$703 |
($4,416) |
$3,200 |
Add: amortization associated with intangible assets acquired as part of the Business Combination Transaction |
$7,504 |
$7,470 |
$22,416 |
$22,415 |
Adjusted Gross Profit (B) |
$5,499 |
$8,173 |
$18,000 |
$25,615 |
Adjusted Gross Margin (B/A) |
93.40 % |
95.20 % |
93.60 % |
95.40 % |
BBTV Share and Adjusted Gross Profit are non-GAAP financial measures while Adjusted Gross Margin is a non-GAAP ratio. Further details on these measures are included in the "Key Metrics Definitions" section of this press release.
Free Cash Flow
Three months ended September 30, |
Nine months ended September 30, |
|||
2023 |
2022 |
2023 |
2022 |
|
Cash flow used in operating activities |
($9,213) |
($3,286) |
($23,951) |
($17,651) |
Purchase of property and equipment |
($6) |
($21) |
($18) |
($267) |
Purchase or development of intangible assets |
($385) |
($528) |
($1,122) |
($1,944 |
Free Cash Flow |
($9,604) |
($3,835) |
($25,091) |
($19,862) |
Free Cash Flow is a non-GAAP financial measure. Further details on this measure is included in the "Key Metrics Definitions" section of this press release
About BBTV
BBTV is a global media and technology company headquartered in Vancouver, Canada. The Company's mission is to help content creators become more successful. With creators ranging from individuals to global media brands, BBTV provides comprehensive, end-to-end Solutions to increase viewership and drive revenue powered by its innovative technology, while allowing creators to focus on their core competency – content creation. In December 2022, BBTV had the fourth most unique monthly viewers among digital platforms with more than 600 million globally, who consumed more than 30 billion minutes of video content [1]. (www.bbtv.com)
[1] Calculations and classifications made by BBTV based on data from Comscore's "Top 12 Countries = December 2022 comScore Video Metrix Media Trend – Multi-Platform – Top 100 Video Properties Report"; Top 12 countries represent ~50% of world's digital population.
Links to SEDAR filings, conference call recordings and press releases are available on the investor website at: https://investors.bbtv.com/
Key Metrics Definitions
The information presented within this press release includes certain financial measures such as non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures, as well as a non-financial performance measure (collectively, "Key Metrics") to assist investors in assessing the overall operating performance of the Company. These measures are provided as additional information to complement IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. They are not standardized measures under IFRS and do not have standardized meanings prescribed by IFRS, and might not be comparable to similar financial measures disclosed by other issuers. These Key Metrics are used to provide investors with supplemental information on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use Key Metrics in the evaluation of issuers. Our management also uses Key Metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.
The numbers for the Company's Key Metrics and related information are calculated using external industry data sources and/or internal company data. These measures may be different from non-GAAP financial measures or ratios or other metrics used by other companies and may not be comparable to similar meanings prescribed by other companies, limiting their usefulness for comparison purposes. Moreover, some of these adjustments or measures are provided for period-over-period comparison purposes, and investors should be cautioned that the effect of the adjustments provided herein is not indicative of the actual effect on the Company's operating results.
Non-GAAP Ratios contained in this press release are:
"Adjusted Gross Margin" means Adjusted Gross Profit divided by BBTV Share; and
"Adjusted EBITDA Margin" means Adjusted EBITDA divided by revenue.
"Gross Margin Excluding PPA Amortization" means Adjusted Gross Profit divided by revenue.
Non-GAAP Financial Measures contained in this press release are:
"Adjusted EBITDA" means net earnings or loss, as applicable, before finance expenses, income tax expense (recovery), amortization and depreciation, share-based compensation, unrealized and realized gains or losses due to foreign exchange, transaction-related costs, and certain other items as set out in the reconciliation table;
"BBTV Share" means revenue less content creator and third-party platform fees;
"Adjusted Gross Profit" means gross profit plus amortization associated with intangible assets acquired as part of the Business Combination Transaction;
"Free Cash Flow" means cash flows from (used in) operating activities less purchases of property and equipment and purchase or development of intangible assets;
See the financial tables above for a reconciliation of the non-GAAP ratios and non-GAAP financial measures.
Supplementary Financial Measures
Supplementary Financial Measures contained in this press release are:
"Advertising Revenue" means the revenue generated from advertising sales from the Company's owned and licensed video on demand content across digital platforms, rights management revenue from advertising sales on video on demand content, and in-app advertising on Mobile Gaming Apps.
"RPMs" or "Revenue per one thousand video Views" means the Advertising Revenues for every thousand Views generated by the Company's owned and licensed digital content. The Company does not provide a reconciliation for RPMs as there are no directly comparable IFRS measures for the components that make up RPMs.
"Gross Margin" means gross profit divided by revenue.
We monitor Advertising Revenue and RPMs to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These measures are also used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. Unless the context otherwise requires, the Company believes that readers should consider the applicable metrics to be indicative of engagement and monetization trends that are key factors that affect the Company's revenue. The Company may or may not update these metrics based on the Company's determination of applicability, circumstance, relevance or other considerations.
Non-Financial Performance Measures
Views are one of BBTV's non-financial performance measures and are defined as the number of views, in billions, of the Company's owned and licensed digital video content on various platforms, notably YouTube, for the stated period. The presentation of Views is reliant on certain third-party industry data and therefore is not comprehensive and may exclude views of the Company's content on certain platforms or in geographies whereby such data sources are unable to or do not track such information. Trends in Views affect revenue and financial results by influencing the Company's volume of salable media inventory, RPMs, as well as its product offerings, expenses and capital expenditures.
While Views are reported using reasonable judgments and estimates of the audience and its engagement with its content for the applicable period of measurement, there are certain challenges and limitations in measuring the usage of its content across its audience. Such challenges and limitations may also affect the Company's understanding of certain details of its business. For example, the methodologies used to measure the Company's Views and RPMs (see "Supplementary Financial Measures" above) may be susceptible to algorithm, calculation or other technical or human errors, and following an acquisition or strategic transaction, certain data may be, among other things, integrated, analyzed and reported differently by the Company than it was by the target or the strategic partner. Moreover, the Company's or its data provider's business intelligence tools may experience glitches or fail on a particular data backup or upload, which could lead to certain customer activity not being properly included in the calculation of Views and RPMs. Although the Company typically attempts to address and correct any such failures and inaccuracies relatively quickly, its reported Views and RPMs are still susceptible to the same and its estimations of such metrics may be lower or higher than the actual numbers.
Forward Looking Statements:
This press release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is not information about historical facts but instead represents the Company's intentions, beliefs, plans, goals, objectives and strategies regarding future events and results, and includes certain financial outlooks. Financial outlooks are provided to aid in understanding management's goals and expectations regarding future financial matters, and, for all the reasons set out below, may not be achieved. Such financial outlooks may not be appropriate for other purposes. Forward-looking information contained in this press release includes statements that over time, based on industry stakeholder feedback, it is expected that the monetization of YouTube Shorts should improve to more closely reflect those of regular-length YouTube videos; to the extent YouTube Shorts RPMs track higher, notwithstanding typical seasonality, overall RPMs also are expected to increase over time; the Company continues to look for opportunities to optimize operations in the coming months; with a large pipeline of mostly global enterprise clients, Plus Solutions should continue to grow as a percentage of total revenue and Adjusted Gross Profit, even as Shorts monetization increases; statements containing certain details of the Company's plan to undertake a go-private transaction by way of a statutory Plan of Arrangement, subject to securityholder approval, and complete a related financing; and the Company's ability to continue as a going concern is dependent upon its ability to meet its cash flow forecasts and secure additional financing. Forward-looking information is necessarily based on a number of estimates and assumptions that the Company considered appropriate and reasonable as of the date such information is given, including but not limited to the assumptions that growth trends in views and RPMs overall will improve over time; the Company will be able to find ways to optimize operations in the coming months; the Company will continue to acquire and maintain significant content management clients resulting in the Company's Plus Solutions revenue continuing to grow as expected; that BBTV will continue to acquire new content partners of the same nature and type and at least at the same rate or better than it has historically; the Company will continue to implement cost reductions; our content providers and our strategic and other partners will perform as contractually required; we will be able to obtain and maintain financing on acceptable terms on a timely basis; the go-private transaction and related financing will close as anticipated; and that there will be no changes in general industry, market and economic conditions adverse to the Company. Forward-looking information is subject to known and unknown risks, uncertainties, and other factors, many of which are beyond the Company's control, that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk that the Company's assumptions on which its forward-looking information is based may not be accurate; the effect of competition; that the Company has a history of losses and negative cash flow; the Company may not become profitable as anticipated by management or at all; the Company's need for additional capital on acceptable terms and to meet its cash flow forecasts, neither of which is assured; the Company's significant reliance on its relationship with YouTube; the impact of the continuing COVID-19 pandemic and of economic uncertainty; the risks of potential claims of infringement by the Company or its content providers of third party intellectual property and other rights; changes in laws and regulations; future market, consumption patterns and other trends may fail to meet or exceed historical trends or current expectations; failure of the Company to realize significant distribution on new platforms or at all; as well as other factors discussed in the Company's Final Long Form Prospectus dated October 22, 2020 and its latest Annual Information Form, MD&A and other filings with the Canadian securities regulatory authorities at www.sedarplus.ca. The Company does not undertake any obligation to update any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Contacts:
Media Relations
[email protected]
Mark Funston,
Head of Marketing and PR,
778-288-4950
[email protected]
Investor Relations
[email protected]
Ron Shuttleworth
Partner
Oak Hill Financial Inc
(647)-500-7371
[email protected]
BBTV-F
SOURCE BBTV Holdings Inc.
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