EMERGE: Revenue More Than Triples, Positive Adjusted EBITDA in Q1 2021

• EMERGE reported record quarterly revenue of $7.1 million, up 223% compared to $2.2 million in Q1 2020
• Positive Adjusted EBITDA⁽¹⁾ of $0.27 million, compared $0.23 million in Q1 2020
• Cash on hand was $21.4 million as at March 31, 2021, following $12.1 million equity financing

TORONTO, May 27, 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 first quarter ended March 31, 2021. 

"Q1 was another record quarter for EMERGE, and the first quarter that includes the impact of truLOCAL, our most recent acquisition which closed December 31, 2020. truLOCAL exhibited strong organic growth and profitability in Q1, exceeding management's expectations. Overall, revenue more than tripled, and we achieved another quarter of positive Adjusted EBITDA," commented Ghassan Halazon, Founder and CEO, EMERGE.

Q1 2021 Financial Highlights

• Gross Merchandise Sales ("GMS")⁽¹⁾ increased to $11.4 million for the three months ended March 31, 2021, an increase of 81% from $6.3 million in Q1 2020
• Q1 2021 revenue increased to $7.1 million, up 223% from $2.2 million in Q1 2020, driven by the acquisition of truLOCAL
• EMERGE reported positive Adjusted EBITDA⁽¹⁾ of $0.27 million for Q1 2021 compared to $0.23 million in Q1 2020
• EMERGE ended Q1 with a strong balance sheet including $21.4 million in cash. During the quarter, EMERGE raised gross proceeds of $12.1 million in equity financing

"We saw robust organic growth in premium meat subscriptions, driven by truLOCAL, and enormous early promise in our fast-growing golf products business, JustGolfStuff.ca, a Shopify-powered site, which saw explosive growth throughout the quarter. Despite the challenging climate that persisted for our experience-based offerings during the pandemic, our diversified e-commerce portfolio demonstrated its strength and agility," continued Halazon.

Q1 2021 Highlights

• In January 2021, EMERGE hired George Marouchos to the leadership team, as Vice President, M&A and Corporate Development. Mr. Marouchos was most recently a member of the senior leadership team at Dye and Durham (TSX: DND).
• In February 2021, EMERGE announced truLOCAL, the Canadian leader in premium meat subscriptions, expanded into Quebec, Canada's second largest province by population, and truLOCAL's fifth market overall.
• In March 2021, the Company raised an aggregate of $12.1 million through a private placement offering of 8,647,570 special warrants of the Company. Each Special warrant is exercisable for one common share in the capital of the Company at no additional cost.
• In March 2021, Canaccord Genuity and Raymond James both initiated research coverage on the Company. Clients of Canaccord Genuity and Raymond James can access the research reports directly at their respective brokers.

Outlook

With $21.4 million of cash on hand, EMERGE is advancing its growing acquisition pipeline. EMERGE aims to acquire D2C e-commerce businesses for approximately 5-6x EBITDA, typically with up to 50% of the purchase price in upfront cash. Potential targets currently combine for approximately $68 million EBITDA, including signed LOIs.

"We continue to ramp up our team, making key hires to support both existing and future potential acquisitions. We are carefully exploring and advancing various opportunities in our growing acquisition pipeline. Consolidating profitable D2C e-commerce brands is a tremendous opportunity, and our strong balance sheet puts us in a prime position to capitalize on it," said Halazon.

The Company's main goals are to: (i) acquire additional niche D2C 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 Thursday, May 27, 2021 at 8:30 am ET to discuss first quarter results. To access the conference call, please dial [phone] or [phone] and provide conference ID 73207889. 

Alternatively, the conference call can be accessed online at:
https://produceredition.webcasts.com/starthere.jsp?ei=1466587&tp_key=210118266b

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 months ended March 31, 2021.

		Three months ended March 31,	Three months  ended March 31,
		2021 $	2020 $
Gross Merchandise Sales^1		11,350,883	6,262,265
Total revenue		7,080,314	2,194,802
Adjusted EBITDA^1		269,540	231,417
Net (loss) income		(2,008,468)	(1,038,491)
Basic and diluted (loss) per share		(0.02)	(0.02)

 ⁽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 months ended March 31, 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]