EMERGE Delivers 182% Revenue Growth in Q2 2021 and Achieves Sixth Consecutive Quarter of Positive Adjusted EBITDA

• EMERGE reported quarterly revenue of $6.8 million, up 182% compared to $2.4 million in Q2 2020
• Positive Adjusted EBITDA⁽¹⁾ of $0.08 million in Q2 2021 compared to $0.4 million in Q2 2020
• Cash on hand was $18.9 million as of June 30, 2021
• Subsequent to quarter-end, EMERGE entered into a definitive agreement to acquire two e-commerce subscription brands, BattlBox and Carnivore Club, which collectively achieved US$23M Revenue and US $3.2M Adjusted EBITDA in the trailing twelve months ending May 31, 2021

TORONTO, Aug. 30, 2021 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE" or the "Company"), a diversified, rapidly growing acquirer and operator of direct-to-consumer ("D2C") e-commerce brands, today announced results for the three and six months ended June 30, 2021. 

"Q2 was another strong quarter for EMERGE despite continued pandemic-driven uncertainty. Overall, we are pleased to report that revenue grew dramatically while generating our sixth consecutive quarter of positive Adjusted EBITDA, despite increased investments in our team and operations. This morning, we also announced entering into a definitive agreement to acquire two terrific D2C ecommerce brands, BattlBox and Carnivore Club, that would be our 6^th and 7^th brands, and our largest and most profitable acquisition to date," commented Ghassan Halazon, Founder and CEO, EMERGE.

Q2 2021 Financial Highlights

• Gross Merchandise Sales ("GMS")⁽¹⁾ increased to a record $11.5 million for the three months ended June 30, 2021, an increase of 62% from $7.1 million in Q2 2020
• Q2 2021 revenue increased to $6.8 million, up 182% from $2.4 million in Q2 2020, mainly driven by the acquisition of truLOCAL
• EMERGE reported positive Adjusted EBITDA⁽¹⁾ of $0.08 million for Q2 2021 compared to $0.4 million in Q2 2020  
• EMERGE ended Q2 with a strong balance sheet including $18.9 million in cash

"Overall, our diversified ecommerce portfolio demonstrated strength and resilience in Q2. truLOCAL, our premium meat subscription business, and our largest brand by net revenue, exhibited sales volume that remained at around two-times pre-pandemic levels. Despite the Ontario lockdown in May that adversely impacted our golf vertical, JustGolfStuff, our golf equipment and apparel brand, showed strong growth for the quarter, and continues to benefit from the renewed popularity of golf sparked by the pandemic. As Ontario lifted COVID-19 restrictions, we saw early signs of resurgence of local and travel experiences, resulting in June being WagJag's strongest sales month in 2021 year-to-date. We are proud to be able to support our local merchant partners as they safely re-open their doors, while encouraging consumers to head out, support local, and live life again," continued Halazon.

Q2 2021 Business Highlights

• In April, EMERGE golf experiences brand, UnderPar.com, launched an inaugural offer in Western Canada with the Fairmont Chateau Whistler Golf Club
• EMERGE's local and travel experiences brands, WagJag.com and BeRightBack.ca, saw a number of key merchant partners re-join the platform as COVID-19 restrictions begin to ease
• EMERGE announced receipt of the final short form prospectus and deemed exercise of special warrants
• Subsequent to quarter end, EMERGE partnered with plant-based food company, Modern Meat, a portfolio company of Modern Plant Inc. ("Modern Plant Based Foods"), to offer plant-based meat alternatives to truLOCAL's loyal customers base, in addition to the premium selection of meats that truLOCAL customers have come to know and love

EMERGE Signs Definitive Agreement with BattlBox and Carnivore Club

The Company has recently signed a definitive agreement (the "Agreement") to acquire all of the respective membership interest and shares of BattlBox, LLC and its affiliates, namely Carnivore Club, LLC and Carnivore Club Subscription Box Canada Inc. (collectively "BattlBox Group") (the "Transaction") for US$10.25 million in cash, US$1.5 million in deferred consideration payable over 3 years, and contingent earnout consideration of up to US$7.2 million over a 3 year period. The Transaction is subject to customary closing conditions, including TSXV approval, receipt of certain third-party consents and the other conditions set out in the Agreement.

BattlBox Group generated revenue of approximately US$23 million (unaudited) and Adjusted EBITDA⁽¹⁾ of approximately US$3.3 million in the trailing twelve months ended May 31, 2021.

Outlook

The Company will be working to close the recently signed Agreement within the next 45 days, and expects the acquisition of BattlBox and Carnivore Club to be its largest and most profitable acquisition to date.

EMERGE continues to advance its growing acquisition pipeline of D2C e-commerce businesses and currently has multiple signed LOIs.

The Company's main goals remain to: (i) acquire additional niche e-commerce brands with a track record of growth and profitability; (ii) achieve organic growth for the existing portfolio of brands; and (iii) invest in the team and infrastructure to support further acquisitions and scaling.

Conference Call

Management will host a conference call on Monday, August 30, 2021 at 8:30 am ET to discuss its second quarter results and the Transaction. To access the conference call, please dial [phone] or [phone] and provide conference ID 73826130. 

Alternatively, the conference call can be accessed online at: https://produceredition.webcasts.com/starthere.jsp?ei=1489051&tp_key=e3957598d4

Selected Unaudited Financial Highlights

Please see SEDAR for complete copies of the Company's unaudited condensed consolidated interim financial statements and MD&A for the three and six-months ended June 30, 2021.

		Three months ended June 30,	Three months ended June 30,	Six months ended June 30,	Six months ended June 30,
		2021 $	2020 $	2021 $	2020 $
Gross Merchandise Sales^1		11,484,575	7,095,675	22,835,458	13,357,940
Total revenue		6,829,908	2,425,609	13,910,222	4,620,411
Adjusted EBITDA^1		80,216	408,078	349,756	639,495
Net (loss) income		(2,228,855)	498,248	(4,237,323)	(540,243)
Basic and diluted (loss) per share		(0.02)	0.01	(0.05)	(0.01)

(1)	Non-GAAP Financial Measure. Refer to section "Non-GAAP Financial Measures" below for additional information.

About EMERGE

EMERGE (TSXV: ECOM) is a disciplined, diversified, rapidly growing acquirer and operator of direct-to-consumer ("D2C") e-commerce brands. Our network of e-commerce sites provides our members with access to premium meat subscriptions, groceries, golf, family offers and nearby escapes. Our portfolio houses some of North America's most coveted online destinations including trulocal.ca, UnderPar.com, JustGolfStuff.ca, WagJag.com, and BeRightBack.ca. EMERGE was named one of the fastest growing companies in Canada by the Startup 50, and the Globe and Mail's 2020 Canada's Top Growing Companies.

To learn more visit https://www.emerge-commerce.com/

Cautionary notice

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Non-GAAP Measures

This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. Gross Merchandise Sales ("GMS"), EBITDA and Adjusted EBITDA should not be construed as alternatives to revenue or net income/loss determined in accordance with IFRS. GMS, EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.

GMS as defined by management is the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of discounts and refunds. Management believes GMS provides a useful measure for the dollar volume of e-commerce transactions made through our platforms and an indicator for our business performance.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.

A reconciliation of the adjusted measures is included in the Company's management discussion & analysis for the three and six months ended June 30, 2021 in the section "Non-GAAP Financial Measures".

Notice regarding forward-looking statements

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information.  Actual results and developments may differ materially from those contemplated by these statements.  The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable).  Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including the risk factors discussed in the Company's filing statement which are incorporated herein by reference and are available through SEDAR at www.sedar.com. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

SOURCE EMERGE Commerce Ltd.

James Bowen, CFA, EMERGE Commerce Ltd., 416-519-9442, [email protected]

Related Links

https://www.emerge-commerce.com/