MediaValet Reports Second Quarter Fiscal 2019 Results

Momentum Continues to Accelerate: Revenue up 61%, ARR up 65%

VANCOUVER, Aug. 21, 2019 /CNW/ - MediaValet Inc. (TSX-V:MVP) (the Company), a leading provider of cloud‐based digital asset management ("DAM") and creative operations software, is pleased to report its results for the three and six months ended June 30, 2019.

Summary of Quarterly Results

	3 months ended June 30, 2019	3 months ended June 30, 2018	6 months ended June 30, 2019	6 months ended June 30, 2018^(1)
Revenue	$  1,118,946	$  696,420	$  2,115,022	$  1,311,463
% Increase from prior year period	61%	31%	61%	31%
Gross Margin	962,258	529,154	1,812,920	1,020,627
Gross Margin %	86%	76%	86%	78%
Operating Expenses^(2)	1,642,319	1,575,062	3,121,955	2,942,869
% Increase	4%	1%	6%	(4%)
EBITDA Loss^(3)	(680,061)	(1,045,908)	(1,309,035)	(1,922,242)
% Decrease	(35%)	(6%)	(32%)	(14%)
Net loss	(927,947)	(1,176,631)	(1,753,612)	(2,291,177)
% Decrease	(21%)	(17%)	(23%)	(15%)
Loss per share	(0.00)	(0.01)	(0.01)	(0.02)
			As at June 30, 2019	As at December 31, 2018
Annual Recurring Revenue ("ARR")^4			$  4,729,274	$  3,511,967
% Increase over prior year			65%	41%
Modified Working Capital (excluding Deferred
Revenue and Debt)			178,604	( 164,546)
Deferred Revenue			2,997,400	2,323,742
% Increase over prior year			100%	57%
Total assets			2,448,866	1,980,184
Lease Liabilities			585,097	-
Total Long-Term and Convertible Debt			4,203,144	3,150,000
Shareholder Deficiency			(6,680,826)	( 5,174,656)

"Our momentum continues to increase as we refine our go to market strategy and expand our product offering," commented David MacLaren, Founder and CEO of MediaValet. "In Q2, our customer acquisition rate continued to accelerate, our average deal size continued to increase, and our customer retention remained strong. Our ARR is now at $4.73 million, up 65% over last year and up 15% sequentially, and we don't see this trend slowing anytime soon.  Our net additions to ARR for the quarter were $601,000, second only to our record level in Q1'19, and up 155% over Q2 last year. Year to date we've added $1.22 million to ARR, an increase of 221% over the first half last year."

Mr. MacLaren continued, "This is a paradigm shift for the business that shows a clear path to cash positive operations through the annual renewal of our customer base and continued new customer acquisition levels we're now achieving.  The momentum shift is a direct result of our new V4 platform and our strategic feature releases since May 2018. These product enhancements have enabled us to further differentiate MediaValet and firmly establish us as a leader in the global enterprise DAM space."

Continued MacLaren, "I'm happy to report that Q2 was our fourth consecutive million plus billings quarter. Net Billings⁵ were $1.26 million, up 83% over Q2'18 and more than double year to date. This is another trend that we see persisting in the coming quarters."

Mr. Rob Chase, Executive Chair and Chief Financial Officer added, "In addition to yet another strong quarter of growth, we are pleased to announce a $3.5 million financing round at a premium to the market. I am happy to report that we have already received commitments for a majority of the financing. This is a significant milestone for us on many fronts. While we have been delivering exciting growth over the past four quarters, we believe our valuation has been hampered by our capitalization, high number of shares outstanding and debt position. Our intended financing and 15:1 consolidation announced today puts all of these concerns to rest. Based on our current trajectory following our fourth consecutive quarter of sales growth and reduced Adjusted EBITDA loss, this financing provides ample growth capital to sustain us to cash positive."

Mr. Chase continued, "This capital also provides us the funding to consider accelerating our growth through additional R&D and sales resources should we believe it is warranted. With our exciting operational momentum, and with our balance sheet and share count consolidated, we believe we are well positioned to maximize value for our customers, employees and shareholders."

Results of Operations

Key Financial Metrics:

• Grew revenue to $1.12 million in Q2 2019, up 61% from $0.70 million in Q2 2018, and up 12% sequentially from Q1 2019. For the year-to-date ("YTD") period, revenue of $2.12 million is up 61% from $1.31 million last YTD. With over 90% of revenue from annual subscriptions, the growth reflects the increasing deferred revenue and ARR from customer acquisition and retention. These increases are a direct result of new feature development, such as Advanced Search and Creative SPACES, and implementation of industry leading sales and marketing strategies.
• Increased Gross Margins to $0.96 million, up 82% from $0.53 million in Q2 2018, and up 13% sequentially. The YTD Gross Margin increased 78% to $1.81 million. As a percent of revenue, Gross Margins were 86% for Q2 2019, up from 85% in Q1 2019 and 78% last YTD. The improved margin is due to launch of MediaValet V4 in May 2018, migration of existing customers to V4 in September 2018, increased sales volume, improved operating efficiencies, and new paid feature add-ons.
• Incurred Operating Expenses of $1.64 million in Q2 2019, a 4% increase (2018 proforma 7%) from $1.58 million in Q2 2018 and up 11% from $1.48 million in Q1 2019. YTD Operating Expenses were $3.12 million, an increase of 6% from $2.94 million in H1 2018 (2018 proforma 10%). Excluding the impact of IFRS 16, the increases from the prior periods are primarily due to increased sales and marketing expenses as the Company targets its spend in line with its current stage of development and team size. In addition, R&D costs were increased from Q1 2019 levels for projects required for enterprise grade security initiatives such as SOC II audit and single sign-on. This is in response to the Company's growing traction within the enterprise segment of the DAM market. Note that "2018 proforma" percentages are provided where applicable to provide the change from prior periods had IFRS 16 been applied with retroactive restatement.
• Reported a Q2 2019 EBITDA loss of $0.68 million, a 35% improvement (2018 proforma 30%) from a loss of $1.05 million in Q2 2018, and up 8% from Q1 2019. The YTD EBITDA loss of $1.31 million improved 32% (2018 proforma 27%) compared to $1.92 million last YTD. The reduced loss reflects continued revenue growth as a result of the Company's growing recurring revenue base and efforts to manage operating cost levels.
• Increased Annual Recurring Revenue ("ARR") to $4.73 million, an increase of 65% compared to $2.87 million at June 30, 2018, and an 15% sequential increase from March 31, 2019. The increase reflects a higher rate of new customer acquisition – which the Company has been consistently achieving since Q3 2018 – and increased customer usage and adoption statistics that have led to growth in the existing customer subscription base. The net additions to ARR in Q2 were $0.60 million, an increase of 155% over Q2 2018, and a 2% sequential decline from Q1 2019 (due to the seasonal cycle inherent in existing customer renewals). YTD, the net additions to ARR were $1.22 million, a 221% increase over the prior YTD. The increases over last year are a direct result of the May 2018 launch of V4, Advanced Search, Multi-Library and Creative SPACES.
• Ended the quarter with $0.04 million of cash on hand (December 2018 - $0.12 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $0.18 million (December 2018 – negative $0.16 million), lease liabilities of $0.56 million, long-term debt of $3.00 million, and convertible debt of $1.20 million at carrying value (December 2018 – total debt of $3.15 million).

Technology and Product:

• MediaValet first launched its new V4 platform along with its unique Advanced Search (artificial intelligence), Multi-Library and Creative SPACES modules in May 2018. Since then it has continued to enhance each of these components, doing incremental releases on a weekly and monthly basis. In the first quarter of fiscal 2019, this continued commitment to innovation and advancement led to a number of announcements, including:
• June 5 and July 11, 2019: announced two new large customer wins with world leading organizations in Sports and Entertainment and Global Sales and Marketing Services. Both new customers purchased DAM + Creative SPACES to empower their marketing teams and solve their challenges with supporting mission-critical digital content needs – from creation and injestion, to management, access and distribution. At $100,000+ in recurring revenue, both are new top 10 customers for MediaValet and are examples of increasing adoption by world leading mid-enterprise size organizations.
• April 30, 2019: Existing customer usage and adoptions numbers increasing following migration of V4 in September 2018, leading to strong first quarter 2019 renewals and expansion. In particular – (i) an Agency customer expanded its DAM package to enable it to support more of its clients, resulting in a doubling of its subscription value to US$125,000 in ARR; and (ii) a Fortune 50 customer added a subscription for a seventh division, increasing its subscription value from US$68,500 to US$95,000 in ARR.

Operations and Corporate:

• Subsequent to quarter end, on July 9, 2019, a Director provided a bridge loan ("Bridge") to the Company in the amount of U$250,000. The Bridge bears interest at 18%, with a minimum interest payment of 5%, and is repayable on the earlier of the anniversary date of the Bridge and completion of the next financing.
• Subsequent to quarter end, on August 21, 2019, the Company announced it has engaged Cormark Securities for a brokered private placement of $3.5 million of units ("Units") at a post-consolidation price of $0.525 per Unit (the "Offering"). Each Unit will include one share purchase warrant at a post-consolidation price of $0.90 per share for a period of 3 years. In addition, the Company announced that subject to, and concurrently with, the Offering, it intends to: complete a 15:1 share consolidation; offer it's $1.55 million of 10% Convertible Debenture holders an option to exchange their Convertible Debentures for Units on the same terms as the Offering; and appoint Francis Shen of Shen Capital to its Board of Directors. If the Offering is fully subscribed and if all Convertible Debenture holders exchange their debentures for Units, a total of 25,013,507 post consolidation shares will be outstanding (375,202,608 pre-consolidation), and a total of 9,620,499 post consolidation deal warrants will be outstanding with a strike price of $0.90. Agency fees to Cormark are 7% of the Offering plus broker warrants equal to 3.5% of the gross proceeds of the Offering divided by $0.90 post-consolidation.

^1	Adoption of IFRS 16: Fiscal 2018 figures have not been restated for adoption of IFRS 16 as the changes were applied starting January 1, 2019 on a retrospective basis. Had Fiscal 2018 figures been restated, the percentage change from 2018 would be a 10% increase for Operating Expenses, and a 27% decline for EBITDA Loss. IFRS 16 did not impact the Net Loss. See "Adoption of New Account Standards"
^2	Operating Expenses include Sales & Marketing, Research & Development and General & Administrative.
^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.
^4	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.
^5	Net 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). Net Billings are calculated by subtracting closing deferred revenue from opening deferred revenue and adding recognized revenue for the period. Management believes Net Billings are an important measure for understanding the business, as given that the related revenue is deferred and amortized, Net 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.

About MediaValet, Inc.

MediaValet stands at the forefront of the enterprise cloud-based digital asset management and creative operations industry. Built exclusively on Microsoft Azure and available in 140 countries, 54 Microsoft data center regions, around the world, MediaValet delivers unparalleled enterprise class security, reliability, redundancy and scalability while offering the largest global footprint of any DAM solution. In addition to providing all core DAM capabilities and local desktop-to-cloud support for creative teams, MediaValet offers industry leading integrations into Slack, Adobe Creative Suite, Microsoft Office 365, Oracle Marketing Cloud (Eloqua), Drupal 8, WordPress, Hootsuite and many other best-in-class 3rd party applications.

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

SOURCE MediaValet Inc.

Corporate Office: David MacLaren, CEO | [email protected] | [phone]; Rob Chase, Executive Chairman and CFO | [email protected] | [phone]; Press Relations: Babak Pedram | [email protected] | [phone]

Related Links

www.mediavalet.com