MediaValet Reports Third Quarter Fiscal 2019 Results

ARR Jumps 84% to $5.81M and Net Billings Increase 93% to $2.14M

VANCOUVER, Nov. 6, 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 nine months ended September 30, 2019.

Summary of Quarterly Results

	Three months ended September 30				Nine months ended September 30
	2019		2018		2019		2018
Revenue	$	1,368,936	$	769,739	$	3,483,958	$	2,081,202
% Increase from prior year period	78%		29%		67%		30%
Gross Margin	1,183,158		593,742		2,996,078		1,614,369
Gross Margin %	86%		77%		86%		78%
Operating Expenses^(2)	1,783,286		1,454,283		4,905,241		4,397,152
% Increase	23%		6%		12%		(1%)
EBITDA Loss^(3)	(600,128)		(860,541)		(1,909,163)		(2,782,783)
% Decrease	(30%)		(1%)		(31%)		(10%)
Net loss	(796,417)		(993,707)		(2,550,029)		(3,284,884)
% Decrease	(20%)		(14%)		(22%)		(17%)
Loss per share	(0.05)		(0.06)		(0.16)		(0.24)
			As at September 30, 2019		As at September 30, 2018		As at December 31, 2018
Annual Recurring Revenue ("ARR")^4			$	5,808,349	$	3,150,232	$	3,511,967
% Increase over prior year			84%		25%		41%
Modified Working Capital (excluding Deferred
Revenue and Debt)			3,154,091		192,514		( 164,546)
Deferred Revenue			3,764,988		1,839,061		2,323,742
% Increase over prior year			105%		17%		57%
Total assets			5,921,717		1,710,401		1,980,184
Lease Liabilities			519,306		-		-
Total Long-Term and Convertible Debt			3,277,026		3,000,000		3,150,000
Shareholder Deficiency			(3,399,803)		(4,184,544)		( 5,174,656)

"Q3 was a momentous quarter for us," commented David MacLaren, Founder and CEO of MediaValet. "In addition to being the first quarter that we've added more than $1M in net new ARR ("NNARR"), it's also the first quarter that we reach a breakeven Net Billings level. The MediaValet team has done a tremendous job of executing our strategic go-to-market plan and delivering on our innovative product roadmap. Thanks to their ongoing commitment and hard work, we continue to gain market share in the enterprise DAM market and grow our strong, robust customer base. This has led to a record breaking Q3 with ARR growing to $5.81 million, up 84% from last year and 23% sequentially; our NNARR for the quarter increasing 282% to $1.08 million over Q3 last year; and, our year-to-date NNARR climbing 247% to $2.30 million over the same period last year."

Mr. MacLaren continued, "Q3 saw our highest number of customer adds in a single quarter and our existing customer net retention rate, year-to-date, maintained near 100%. I'm extremely proud of these results, but I believe we've truly only just begun. With each new quarter, we expect our revenue and ARR to continue to increase, and our customer acquisition and retention rates to remain strong."

"Q3 Net Billings⁽⁵⁾ reached a new record at $2.14 million, up 93% from Q3 last year and up 69% sequentially," commented Rob Chase, Executive Chair and CFO. "This milestone is monumental for us as, at $2.14 million, it is the first quarter of Net Billings at a breakeven level compared to Operating Expenses plus Cost of Sales of $1.97 million in Q3. In Q3 last year, we considered reaching the million dollar mark in a quarter a major milestone; one that was years in the making.  Just one year later, we have more than doubled that accomplishment – and have done so with increasing predictability thanks to our SaaS business model and consistent investment in our R&D and sales & marketing teams."

Mr. Chase continued, "With our recurring revenue now at $5.81 million, strong customer retention rates, and a solid balance sheet, we have set the stage for an exciting year ahead."

Results of Operations

Key Financial Metrics:

• Grew revenue to $1.37 million in Q3 2019, up 78% from $0.77 million in Q3 2018, and up 22% sequentially from Q2 2019. For the year-to-date ("YTD") period, revenue of $3.48 million is up 67% from $2.08 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 continuous new feature development and platform enhancements, such as new Advanced Search and CreativeSPACES™ updates, and of industry leading sales and marketing strategies.
• Increased Gross Margins to $1.18 million, up 99% from $0.59 million in Q3 2018, and up 23% sequentially. YTD Gross Margin increased 86% to $2.97 million. As a percent of revenue, Gross Margin was 86% in Q3 and year-to-date, up from 78% last YTD.
• Incurred Operating Expenses of $1.78 million in Q3 2019, a 23% increase from $1.45 million in Q3 2018 and up 9% from $1.64 million in Q2 2019. YTD Operating Expenses were $4.91 million, an increase of 12% from $4.40 million last YTD. The increases 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 saw increased levels for projects required to execute enterprise-grade security initiatives, and to accelerate enterprise product features. This is in response to the Company's growing traction within the enterprise segment of the DAM market.
• Reported a Q3 2019 EBITDA loss of $0.60 million, a 30% improvement from a loss of $0.86 million in Q3 2018, and 12% improvement from Q2 2019. The YTD EBITDA loss of $1.91 million improved 31% compared to $2.78 million last YTD. The reduced loss reflects continued revenue growth as a result of the Company's growing recurring revenue base, offset by a measured increase to operating costs in balance with funding levels and organic growth objectives.
• Increased Annual Recurring Revenue ("ARR") to $5.81 million, an increase of 84% compared to $3.15 million at September 30, 2018, and a 23% sequential increase from June 30, 2019. The Net New ARR ("NNARR") for Q3 2019 were $1.08 million, a 282% increase compared to NNARR of $0.28 million in Q3 2019, and an 80% sequential increase from $0.61 million in Q2 2019. YTD, NNARR was $2.30 million, a 247% increase over $0.66 million last YTD. Since launch of MediaValet 4.0 in May 2018 and with a process of continuous enhancements to the Company's enterprise-class Cloud DAM offerings, the Company has consistently improved existing customer net retention rates to near 100%, increased its average customer size, and significantly expanded its overall rate of new customer acquisition.
• Ended the quarter with $2.56 million of cash on hand, modified working capital (excluding deferred revenue, lease liabilities and debt) of $3.15 million, lease liabilities of $0.52 million, long-term debt of $3.00 million, and convertible debt of $0.28 million at carrying value.

Technology and Product:

• MediaValet first launched its new V4 platform along with its unique Advanced Search (artificial intelligence), Multi-Library and CreativeSPACES™ modules in 2018. Since then, it has continued to enhance each of these components, doing incremental releases on a weekly and monthly basis. In Fiscal 2019, this continued commitment to product innovation and advancement has led to a number of announcements, including:
• October 29, 2019: wins a $494,000 subscription under a Master Services Agreement ("MSA") with a world leader in entertainment.
• October 3, 2019: awarded a $115,000 DAM subscription with a US federal energy and power agency, helping to generate a 125% increase in revenue from government customers over last year, and to grow the government vertical to 10% of total revenue.
• October 2, 2019: adds another higher-education ("Higher-Ed") customer, winning a $65,000 contract for DAM plus CreativeSPACES™. Higher-Ed remains a 10% market vertical and has increased 29% this year.
• September 19, 2019: wins an RFP, resulting in an $85,000 contract from a division of an aerospace manufacturing company who is implementing DAM for the first time.
• September 12, 2019: a $94,000 DAM subscription including enterprise integrations awarded by a leading healthcare provider. Organizations with a high-security requirement represent 46% of new customer wins, an increase of 337% over the prior year.

Operations and Corporate:

• September 12, 2019: $1.20 million of convertible debentures were converted for 2,287,162 units at 0.525 per unit.
• September 10, 2019: announces closing of a $3.5 million brokered private placement with Cormark Securities, Inc., issuing 6,666,666 units at $0.525 per unit. Each unit includes one common share and one share purchase warrant with an exercise price of $0.90 for a period of 3 years, subject to the Company's right to force exercise if the 10 day average share price exceeds $1.50. Broker commissions were $245,000 plus 136,111 broker warrants with an exercise price of $0.90 for a period of 3 years.
• September 10, 2019: Francis Shen of Shen Capital Corporation joins MediaValet's Board of Directors, and Shen Capital becomes an 11.74% shareholder through its participation in the brokered private placement. Mr. Shen was the former Chairman, Co-Chief Executive Officer and founder of Aastra Technologies Ltd.
• September 9, 2019: the Company's shares began trading on a consolidated basis, having completed a 15:1 share consolidation, reducing the number of shares outstanding to 24,346,836.

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 14% 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