VANCOUVER,BC, March 8,
2023 /PRNewswire/ - 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 Q4 2022 and for
the twelve month period ended on December
31, 2022.
The Management Discussion and Analysis ("MD&A"), along with
full financial statements are posted and available on SEDAR at
www.sedar.com. All dollar amounts are expressed in thousands of
Canadian dollars except where otherwise indicated.
"The fourth quarter saw an acceleration of some important
positive key operational and financial trends for the Company",
said Shahrzad Rafati, Chairperson
and CEO of BBTV. "While total revenues were down 22% year-over-year
in Q4 2022, nearly 32% of our traffic came from YouTube Shorts,
monetization of which commenced as of February 1st 2023, and as a result of
our content acquisition efforts, we expect our viewership to grow
in 2023. The fourth quarter represented our largest revenue stream
ever for Plus Solutions, which grew year-over-year in the quarter
by 22%. Our pipeline for Content Management solutions for the
quarter was the strongest ever."
KB Brinkley, CFO of BBTV commented "Our cost containment efforts
have continued to show up in BBTV's Q4 results as illustrated by
the sequential decline in operating costs of $1.0 million from Q3 to Q4, while our recent
injection of $21.5 million of
liquidity from MEP Capital positions us well to fulfill our
strategic plans while accelerating our path to profitability and
helping to create a buffer against potential macroeconomic risks
and uncertainties."
Q4 2022 Financial and Operational Highlights:
- BBTV ended Q4 2022 with $19.5
million in cash and cash equivalents and utilized
$11.7 million of its $15 million overdraft facility.
- Use of proceeds for the MEP Capital loan of $21.5 million received subsequent to year-end
include repayment and cancellation of the Company's overdraft
facility with HSBC. The Company's long-term debt balance was
$46.8 million as of December 31, 2022 with most of that balance
having a maturity in 2026.
- Management believes that the Company's current cash on hand,
the sale of trade receivables pursuant to the receivables purchase
agreement, and the proceeds from the recent capital injection
should provide sufficient liquidity to meet its working capital
requirements for the foreseeable future.
- BBTV's expenses have declined by $1.0
million from Q3 2022 to Q4 2022 primarily due to ongoing
cost optimization, including overall headcount decline of 14%
implemented in June 2022. The Company
expects to continue to find ways to optimize expenses in the coming
months.
- Google is now monetizing YouTube Shorts as of February 1, 2023, which will cascade through to
BBTV in parallel. Once it becomes monetized across BBTV's entire
library, it could represent meaningful incremental re-occurring
revenue annually across the Company's Base Solutions at current
market rates over time. Google has stated they expect to achieve
comparable RPMs as other YouTube content over time.
- Since launching its YouTube Shorts acquisition strategy to
further expand the monetization opportunity, BBTV's YouTube Shorts
viewership has grown by over 30% quarter-over-quarter, and in the
last two quarters alone, the Company increased the percentage of
views coming from YouTube Shorts from 20% to 32%.
- Revenues for Plus Solutions now exceeds $50 million on an annualized basis for the first
time. During the quarter, revenue growth was driven by Content
Management with a 19% increase compared to Q4 of last year, and by
an increase in Direct Advertising Sales of approximately 71%
compared to the previous year period.
- Gross Margin Excluding PPA Amortization improved from 7.5% to
8.8% year-over-year, and this improving trend is expected to
continue as the Company further scales its Plus Solutions revenues
which have gross margins three to four times higher than Base
Solutions. Plus Solutions now represents 13% of total revenue, and
30-40% of total Adjusted Gross Profit, up from 8% of total revenue
and 20-30% of total Adjusted Gross Profit in Q4 2021. Management
sees this continued growth as a strong indicator that the Company's
investments in Plus Solutions are paying off, and BBTV will
continue to invest in growing these revenue streams because they
consistently deliver higher gross margins than current Base
Solutions revenue.
- Adjusted EBITDA Margins in Q4'22 beat consensus despite the
temporary headwinds when it comes to Base Solutions monetization of
micro-content like YouTube Shorts and BBTV's continued OPEX
investment in accelerating the ramp-up of Plus Solutions.
- Since the acquisition of Outloud Media in October 2022, BBTV has continued success in
integrating the asset operationally and as a growing segment of the
business.
- BBTV's Content Management offering is proven to build and grow
engaged communities for the Company's clients. BBTV is uniquely
positioned through its solutions to make large and established
consumer brands relevant to the digital generation.
Outlook:
- BBTV's monetization is closely tied to the performance of
YouTube. Consumer preference has shifted from long-form content to
micro-content across all major platforms, and while YouTube
introduced YouTube Shorts a couple of years ago to respond to
consumer preferences, its monetization only began subsequent to the
end of Q4 2022 on February 1, 2023.
This format now represents over 32% of BBTV's viewership (up from
26% in Q3 2022 and 20% in Q2 2022). Once it becomes monetized
across the Company's entire library, it could represent significant
incremental revenue and gross profit to BBTV depending upon the
uptake in monetization rates for YouTube Shorts. Google has stated
publicly that it expects YouTube Shorts will have similar RPM rates
to long-form video content over time. This also means that the
Company expects the views to grow year over year; BBTV's YouTube
Shorts revenue opportunity should be meaningful in the long term
based on recent viewership and comparable RPMs to long form as
monetization rates on Shorts revenue matures.
- Plus Solutions continues to represent significant revenue
growth potential for the Company. Led by recent Content Management
contract success and a growing overall pipeline for the solutions,
the Company expects future growth momentum to be similar to the
Company's last few quarters. Additionally, the investment in Direct
Advertising Sales is beginning to yield meaningful results.
- Overall, the diversity of revenue streams, combined with
improved liquidity and cost optimization programs, have positioned
BBTV to weather future macro uncertainties while also accelerating
towards sustained profitability.
Q4 2022 Financial Tables:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Years
Ended
|
|
Q4
2022(1)
|
Q4
2021(1)
|
$
Change
|
%
Change
|
Q4
2022(1)
|
Q4
2021(1)
|
$
Change
|
%
Change
|
Base Solutions
revenue
|
$94,510
|
$127,316
|
($32,806)
|
(26 %)
|
$352,029
|
$438,287
|
($86,258)
|
(20 %)
|
Plus Solutions
revenue
|
$13,985
|
$11,473
|
$2,512
|
22 %
|
$50,306
|
$38,335
|
$11,971
|
31 %
|
Total
revenue
|
$108,495
|
$138,789
|
($30,294)
|
(22 %)
|
$402,335
|
$476,622
|
($74,287)
|
(16 %)
|
Gross profit (which
includes PPA Amortization)
|
$2,088
|
$2,926
|
($838)
|
(29 %)
|
$5,288
|
$10,547
|
($5,259)
|
(50 %)
|
Gross Margin (which
includes PPA Amortization)
|
2 %
|
2 %
|
|
|
1 %
|
2 %
|
|
|
Adjusted Gross
Profit
|
$ 9,569
|
$ 10,354
|
($785)
|
(8 %)
|
$ 35,184
|
$ 38,110
|
($2,926)
|
(8 %)
|
Gross Margin Excluding
PPA Amortization
|
9 %
|
7 %
|
|
|
9 %
|
8 %
|
|
|
Net loss
|
($165,718)
|
($9,025)
|
($156,693)
|
1736 %
|
($197,276)
|
($32,840)
|
($164,436)
|
501 %
|
Adjusted
EBITDA
|
($775)
|
($770)
|
($5)
|
1 %
|
($13,326)
|
($8,636)
|
($4,690)
|
54 %
|
Cash flow from (used
in) operating activities
|
$944
|
$7,631
|
($6,687)
|
(88 %)
|
($16,707)
|
$3,254
|
($19,961)
|
(613 %)
|
(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".
|
- Total revenue was down 22% year-over-year to $108 million, which was driven by Views being
down 6% and RPMs being down by 21%. Base Solutions revenue was down
by 26% while Plus Solutions revenue increased by 22%
year-over-year. The revenue decline was primarily due to some
softening in advertising spending due to the recessionary
environment along with audience behavioural patterns shifting
towards micro-content, which impacted RPMs. There is evidence that
the pullback in views has subsided in Q4 2022 as illustrated by the
fact that, while views were down by 6% year-over-year, the trend
has improved since Q2 2022 (-15% in Q2 2022 and -10% in Q3 2022),
and views were up 5% sequentially from Q3 2022 to Q4 2022.
- Adjusted Gross Profit1, which is a non-GAAP
financial measure and defined as Gross Profit excluding
amortization associated with the purchase price allocation ("PPA")
related to the initial public offering, for Q4 2022 was
$9.6 million, a 8% decrease in
comparison to $10.4 million reported
for the same quarter last year due to the decrease in revenue
across Base Solutions.
- BBTV Share1 of revenue, which is a non-GAAP
financial measure and defined as revenue less content creator and
third-party platform fees, for Q4 2022 was $10.0 million, a 7% decrease compared to
$10.8 million reported for Q4
2021.
- Gross Margin Excluding PPA Amortization1, which is a
non-GAAP ratio and defined as Adjusted Gross Profit1
divided by revenue, was 8.8% in Q4 2022 up from 7.5% in Q4 2021 due
to the higher revenue mix of Plus Solutions. Plus Solutions should
continue to contribute to further margin expansion in future
quarters. Management expects Gross Profit to grow at a faster pace
than the Company's top-line revenue.
- Adjusted Gross Margin1, which is a non-GAAP ratio
and defined as Adjusted Gross Profit1 divided by BBTV
Share1, was 95.7% for Q4 2022, comparable to 95.9%
reported for Q4 2021. Adjusted Gross Margin1 should
remain stable and above 90% for the foreseeable future.
- The Net Loss in Q4 2022 was primarily driven by a non-cash
goodwill impairment charge of $156.7
million. For accounting purposes, the Company did an annual
impairment test as at December 31,
2022, and the $156.7 million
impairment charge was recorded primarily in relation to the
goodwill realized during the acquisition of BroadbandTV Corp by
BBTV Holdings immediately prior to its IPO in 2020.
- The current period decrease in cash outflows from operating
activities over Q4 2021 was primarily due to the changes in the
timing of receipts or payments of working capital items.
|
|
|
|
|
|
Three Months
Ended
|
|
Q4
2022(1)
|
Q3
2022(1)
|
$
Change
|
%
Change
|
Base Solutions
revenue
|
$94,510
|
$84,563
|
$9,947
|
12 %
|
Plus Solutions
revenue
|
$13,985
|
$10,513
|
$3,472
|
33 %
|
Total
revenue
|
$108,495
|
$95,076
|
$13,419
|
14 %
|
Gross profit (which
includes PPA Amortization)
|
$2,088
|
$703
|
$1,385
|
197 %
|
Gross Margin (which
includes PPA Amortization)
|
2 %
|
1 %
|
|
|
Adjusted Gross
Profit
|
$ 9,569
|
$ 8,173
|
$1,396
|
17 %
|
Gross Margin Excluding
PPA Amortization
|
9 %
|
9 %
|
|
|
Net loss
|
($165,718)
|
($4,775)
|
($160,943)
|
3371 %
|
Adjusted
EBITDA
|
($775)
|
($3,181)
|
$2,406
|
(76 %)
|
Cash flow from (used
in) operating activities
|
$944
|
($3,286)
|
$4,230
|
(129 %)
|
(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 current period decrease in cash outflows from operating
activities over Q3 2022 was primarily due to improved Adjusted
EBITDA1 performance.
Q4 2022 Key Metrics:
|
|
|
|
|
|
Three Months
Ended
|
|
Q4
2022
|
Q4
2021
|
Change
|
%
Change
|
|
|
|
|
|
Views
(billions)
|
101
|
107
|
(6)
|
(6 %)
|
RPMs (in
dollars)
|
$0.94
|
$1.19
|
($0.25)
|
(21 %)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Q4
2022
|
Q3
2022
|
Change
|
%
Change
|
|
|
|
|
|
Views
(billions)
|
101
|
96
|
5
|
5 %
|
RPMs (in
dollars)
|
$0.94
|
$0.87
|
$0.07
|
8 %
|
- While overall views continued to trend lower, being down
approximately 6% year-over-year, data shows that the COVID-related
pullback in viewership appears to have subsided and begun to
normalize, with views up 5% sequentially from Q3 2022 to Q4 2022,
which is more favourable than the sequential seasonal decline
typically seen in past years. Views retention remained strong at
98% compared to 98% for Q3 2022 and 92% in fiscal year 2022.
- While RPMs were down 21% year-over-year in Q4 2022, when
excluding the monetization gap of YouTube Shorts views, RPMs were
only down 7% year-over-year. This highlights that despite the
recessionary environment, RPMs have remained relatively stable,
particularly given that BBTV's performance is closely tied to
YouTube's, which continues to be the most resilient platform for
monetization in the creator economy.
Conference Call Details:
Wednesday, March 8, 2023 at 2:15pm Pacific Time / 5:15pm Eastern Time
Participant Information:
Access Code: 441927
United States: 1 844 200 6205
United States (Local): 1 646 904
5544
Canada dial-in number (Toll Free):
1 833 950 0062
Canada dial-in number (Local): 1
226 828 7575
All other locations: +1 929 526 1599
Press *1 to ask a question, *2 to withdraw your question, or *0 for
operator assistance.
Please connect at least 15 minutes prior to the conference
call.
To coincide with the call, an Investor Highlights presentation
will be available at:
https://investors.bbtv.com/events-and-presentations/default.aspx
Links to SEDAR filings, conference call recordings and press
releases are available on the investor website at:
https://investors.bbtv.com/
Telephonic Replay:
Access Code: 129668
US (Local): 1 929 458 6194
US Toll Free: 1 866 813 9403
Canada: 1 226 828 7578
UK (Local): 0204 525 0658
All other locations: +44 204 525 0658
March 8, 2023 20:15 ET - March 22,
2023 23:59 ET
Income Statement:
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
2022
$
|
2021
$
|
%
change
|
|
2022
$
|
2021
$
|
%
change
|
|
|
|
|
|
|
|
|
Revenue
|
$108,495
|
$138,789
|
(22 %)
|
|
$402,335
|
$476,622
|
(16 %)
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
|
|
|
|
Content creator and
other fees
|
$98,514
|
$128,108
|
(23 %)
|
|
$365,615
|
$437,261
|
(16 %)
|
Amortization
|
$7,893
|
$7,755
|
2 %
|
|
$31,432
|
$28,814
|
9 %
|
Total cost of
revenue
|
$106,407
|
$135,863
|
(22 %)
|
|
$397,047
|
$466,075
|
(15 %)
|
|
|
|
|
|
|
|
|
Gross
profit
|
$2,088
|
$2,926
|
(29 %)
|
|
$5,288
|
$10,547
|
(50 %)
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Sales and
marketing
|
$6,052
|
$6,449
|
(6 %)
|
|
$29,101
|
$27,487
|
6 %
|
General and
administration
|
$3,904
|
$4,101
|
(5 %)
|
|
$16,774
|
$16,498
|
2 %
|
Research and
development
|
$1,207
|
$1,046
|
15 %
|
|
$5,237
|
$4,614
|
14 %
|
Share-based
compensation
|
$824
|
$256
|
222 %
|
|
$3,532
|
$1,183
|
199 %
|
Amortization and
depreciation
|
$954
|
$1,156
|
(17 %)
|
|
$3,870
|
$6,043
|
(36 %)
|
Total operating
expenses
|
$12,941
|
$13,008
|
(1 %)
|
|
$58,514
|
$55,825
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
($10,853)
|
($10,082)
|
8 %
|
|
($53,226)
|
($45,278)
|
18 %
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
$535
|
$222
|
141 %
|
|
($2,165)
|
($443)
|
389 %
|
Interest
expense
|
($2,187)
|
($2,230)
|
(2 %)
|
|
($8,952)
|
($6,849)
|
31 %
|
Gain on debt
modification
|
$-
|
$-
|
NA
|
|
$11,264
|
$2,974
|
279 %
|
Goodwill
impairment
|
($156,705)
|
$-
|
NA
|
|
($156,705)
|
$-
|
NA
|
Other income
(expense)
|
$141
|
($264)
|
(153 %)
|
|
($110)
|
($174)
|
(37 %)
|
Transaction-related
costs
|
($53)
|
$-
|
NA
|
|
($651)
|
$-
|
NA
|
Total non-operating
expenses
|
($158,269)
|
($2,272)
|
6,866 %
|
|
($157,319)
|
($4,492)
|
3,402 %
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
($169,122)
|
($12,354)
|
1,269 %
|
|
($210,545)
|
($49,770)
|
323 %
|
|
|
|
|
|
|
|
|
Recovery of income
taxes
|
$3,404
|
$3,329
|
2 %
|
|
$13,269
|
$16,930
|
(22 %)
|
|
|
|
|
|
|
|
|
Loss
|
($165,718)
|
($9,025)
|
1,736 %
|
|
($197,276)
|
($32,840)
|
501 %
|
|
|
|
|
|
|
|
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
Exchange differences
on translation of foreign operations
|
($181)
|
($86)
|
110 %
|
|
($409)
|
($298)
|
37 %
|
|
|
|
|
|
|
|
|
Loss and
comprehensive loss
|
($165,899)
|
($9,111)
|
1,721 %
|
|
($197,685)
|
($33,138)
|
497 %
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share (in dollars)
|
($7.71)
|
($0.43)
|
|
|
($9.26)
|
($1.59)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding
Basic and diluted (in whole numbers)
|
21,484,220
|
20,756,413
|
|
|
21,299,900
|
20,619,973
|
|
Non-GAAP Financial Measures and non-GAAP Ratios Reconciliation
Tables
Adjusted EBITDA and Adjusted EBITDA Margin
|
Three months ended
December 31,
|
Years ended December
31,
|
|
2022
|
2021
|
2022
|
2021
|
Net
loss
|
($165,718)
|
($9,025)
|
($197,276)
|
($32,840)
|
Amortization and
depreciation(1)
|
$8,847
|
$8,911
|
$35,302
|
$34,857
|
Share-based
compensation
|
$824
|
$256
|
$3,532
|
$1,183
|
Unrealized and
realized foreign exchange
|
($535)
|
($222)
|
$2,165
|
$443
|
Interest
expense
|
$2,187
|
$2,230
|
$8,952
|
$6,849
|
Gain on debt
modification
|
$-
|
$-
|
($11,264)
|
($2,974)
|
Goodwill
impairment
|
$156,705
|
$-
|
$156,705
|
$-
|
Other expense
(income)
|
($141)
|
$264
|
$110
|
$174
|
Receivable factoring
banking fees
|
$407
|
$145
|
$1,066
|
$602
|
Transaction-related
costs
|
$53
|
$-
|
$651
|
$-
|
Recovery of income
taxes
|
($3,404)
|
($3,329)
|
($13,269)
|
($16,930)
|
Adjusted
EBITDA
|
($775)
|
($770)
|
($13,326)
|
($8,636)
|
Total
revenues
|
$108,495
|
$138,789
|
$402,335
|
$476,622
|
Adjusted EBITDA
Margin
|
(0.7 %)
|
(0.6 %)
|
(3.3 %)
|
(1.8 %)
|
|
|
|
|
|
(1)
Includes depreciation and amortization reported in cost of
revenue and operating expenses for all periods.
|
BBTV Share, Adjusted Gross Profit, and Adjusted Gross
Margin
|
Three months ended
December 31,
|
Years ended December
31,
|
|
2022
|
2021
|
2022
|
2021
|
Revenue
|
$108,495
|
$138,789
|
$402,335
|
$476,622
|
Less: content creator
and third-party platform fees
|
($98,499)
|
($127,988)
|
($365,499)
|
($436,760)
|
BBTV Share
(A)
|
$9,996
|
$10,801
|
$36,836
|
$39,862
|
|
|
|
|
|
Gross
Profit
|
$2,088
|
$2,926
|
$5,288
|
$10,547
|
Add: amortization
associated with intangible assets acquired as part of the Business
Combination Transaction
|
$7,481
|
$7,428
|
$29,896
|
$27,563
|
Adjusted Gross
Profit (B)
|
$9,569
|
$10,354
|
$35,184
|
$38,110
|
|
|
|
|
|
Adjusted Gross
Margin (B/A)
|
95.7 %
|
95.9 %
|
95.5 %
|
95.6 %
|
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
December 31,
|
Years ended December
31,
|
|
2022
|
2021
|
2022
|
2021
|
Cash flow from
(used in) operating activities
|
$944
|
$7,631
|
($16,707)
|
$3,254
|
Purchase of property
and equipment
|
$-
|
($55)
|
($267)
|
($197)
|
Purchase or
development of intangible assets
|
($423)
|
($585)
|
($2,367)
|
($1,804)
|
Free Cash
Flow
|
$521
|
$6,991
|
($19,341)
|
$1,253
|
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 as a result of our content
acquisition efforts, we expect our viewership to grow in 2023; our
recent injection of $21.5 million of
liquidity from MEP Capital will allow us to fulfill our strategic
plans while accelerating our path to profitability and helping to
create a buffer against potential macroeconomic risks and
uncertainties; management believes that the Company's current cash
on hand, the sale of trade receivables pursuant to the receivables
purchase agreement, and the proceeds from the recent capital
injection should provide sufficient liquidity to meet its working
capital requirements for the foreseeable future; the Company
expects to continue to find ways to optimize expenses in the coming
months; Google is now monetizing YouTube Shorts as of February 1, 2023, which will cascade through to
BBTV in parallel; once YouTube Shorts become monetized across
BBTV's entire library, it could represent meaningful incremental
and significant re-occurring revenue and gross profit annually
across the Company's Base Solutions at current market rates over
time, depending upon the uptake in monetization rates for YouTube
Shorts; Gross Margin Excluding PPA Amortization improved
year-over-year, and this improving trend is expected to continue as
the Company further scales its Plus Solutions revenues; BBTV is
uniquely positioned through its solutions to make large and
established consumer brands relevant to the digital
generation; the Company expects views to grow year over
year; Plus Solutions continues to represent significant
revenue growth potential for the Company; BBTV will continue to
invest in growing its Plus Solutions revenue streams; led by recent
content management contract success and a growing overall pipeline
for the solutions, the Company expects future growth momentum to be
similar to the Company's last few quarters; revenue opportunity is
meaningful based on recent viewership and comparable RPMs to long
form; overall, the diversity of revenue streams, combined with
improved liquidity and cost optimization programs, have positioned
BBTV to weather future macro uncertainties while also accelerating
towards sustained profitability; Plus Solutions should continue to
contribute to further margin expansion in future quarters; and
Management expects Gross Profit to grow at a faster pace than the
Company's top-line revenue. 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 industry growth trends in views and RPMs will improve and the
Company's growth plans will not change in any material respect; its
internal financial forecasts and models, including its estimates of
costs and revenue, are accurate; the monetization of YouTube Shorts
will improve RPMs, views and revenue potential over time, with RPMs
for YouTube Shorts having similar RPM rates to long-form video
content over time; the Company will continue to acquire
significant content management clients resulting in the
Company's Plus Solutions revenue continuing to grow as expected and
to show gross margins 3-4 times higher than its Base
Solutions; RPMs and views will increase; 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's business will otherwise expand;
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 seamlessly enter into
new markets and diversify to new platforms; we will be able to
increase our sales of advertising inventory as planned; we will be
able to obtain and maintain financing on acceptable terms on a
timely basis; our assumptions regarding foreign exchange rates and
other matters are correct; 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, which is not 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 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, its Annual
Information Form dated March 29, 2022
and in our MD&A dated March 8,
2023 each filed on sedar at www.sedar.com and in the
Company's other filings with the Canadian securities regulatory
authorities at www.sedar.com. 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
Mark
Funston,
Head of Marketing and PR,
778-288-4950
mfunston@bbtv.com
Investor Relations
ir@bbtv.com Ron Shuttleworth
Partner
Oak Hill Financial Inc
(647)–500–7371
rshuttleworth@oakhillfinancial.ca
BBTV-F
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SOURCE BBTV Holdings Inc.