BBTV Announces Q1 2022 Financial Results and Raises Guidance on Plus Solutions Revenue Growth Rate

Rhea-AI Summary

BBTV Holdings Inc. reported Q1 2022 financial results with a 69% growth in Plus Solutions revenue, which constituted 13% of total revenue, contributing 30-40% to gross profit. Total revenue decreased by 7% to $98.8 million, primarily due to a 13% decline in Base Solutions. The net loss widened to $12.5 million, a 39% increase year-over-year. However, adjusted gross margin remained stable at 95.6% and the company anticipates Plus Solutions to continue growing at over 40% annually.

Positive

• Plus Solutions revenue growth of 69%, exceeding previous guidance of 23%.
• Adjusted Gross Margin stable at 95.6%.
• Plus Solutions expected to exceed 40% growth annually.

Negative

• Total revenue decreased by 7% year-over-year.
• Net loss increased to $12.5 million, up 39%.
• Base Solutions revenue declined by 13%.

Plus Solutions Revenue Grew by 69%; Represents in Q1 a Record 13% of Total Revenue and 30-40% of Total Gross Profit

VANCOUVER, BC, May 16, 2022 /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 Q1 2022 ended on March 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 Canadian currency and are prepared in accordance with International Financial Reporting Standards ("IFRS").

Plus Solutions revenue growth is expected to exceed 40% on an annual basis for 2022, or almost double previous annual growth rate guidance of 23% provided by the Company.

"Q1 2022 results show continued strong growth in higher margin Plus Solutions," said Shahrzad Rafati, Chairperson and CEO of BBTV. "Plus Solutions Revenue grew by 69%, led by strong uptake of Content Management solutions by major media brands during the quarter. Our investments in Plus Solutions are beginning to show up in our performance, where revenue from all our major Plus Solutions categories including Content Management, Direct Advertising Sales, and Mobile Gaming Apps, have all grown by over 40% in the quarter. "

Q1 2022 Financial Highlights:

• Plus Solutions revenue in Q1 2022 grew by 69% in comparison to the same quarter last year and in Q1 2022 represents a record 13% of total revenue and 30-40% of total gross profit
• Plus Solutions revenue growth is expected to exceed 40% on an annual basis for 2022, or almost double previous annual growth rate guidance of 23% provided by the Company.
• Revenue from all of the Company's major Plus Solution categories including Content Management, Direct Advertising Sales, and Mobile Gaming Apps, have all grown by over 40% in Q1 2022 in comparison to the same quarter last year.
• 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 Q1 2022 was $9.2 million, a 5% decrease in comparison to $9.6 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 Q1 2022 was $9.6 million, a 4% decrease compared to $10.0 million reported for Q1 2021.
• Adjusted Gross Margin², which is a non-GAAP ratio and defined as Adjusted Gross Profit¹ divided by BBTV Share, was 95.6% for Q1 2022, comparable to 96.0% reported for Q1 2021. Adjusted Gross Margin² should remain stable and above 90% for the foreseeable future.
• Gross Margin Excluding PPA Amortization², which is a non-GAAP ratio and defined as Adjusted Gross Profit¹ divided by revenue, was 9.3% in Q1 2022 up from 9.0% in Q1 2021 due to the higher revenue mix of Plus Solutions. Plus Solutions should continue to help contribute to further margin expansion in future quarters.

___________________________________________

1  Non-GAAP Financial Measure. See "Non-GAAP Financial Measures and Non-GAAP Ratios Reconciliation Tables" section below and the reconciliation to the most directly comparable IFRS measure included in this press release.

 

	Three Months Ended
	Q1 2022(1)	Q1 2021(1)	$ Change	% Change
Base Solutions revenue	$86,024	$98,895	($12,871)	(13%)
Plus Solutions revenue	$12,812	$7,600	$5,212	69%
Total revenue	$98,836	$106,495	($7,659)	(7%)
Gross profit	$1,691	$3,779	($2,088)	(55%)
Gross margin	2%	4%
Adjusted Gross Profit	$9,176	$9,620	($444)	(5%)
Gross Margin Excluding PPA Amortization	9%	9%
Net loss	($12,539)	($9,051)	($3,488)	39%
Adjusted EBITDA	($3,716)	($2,506)	($1,210)	48%
Cash flow from (used in) operating activities	($8,004)	($3,966)	($4,038)	102%

(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 increase in cash outflows from operating activities over Q1 2021 was primarily due to the changes in the timing of receipts or payments of working capital items.

	Three Months Ended
	Q1 2022(1)	Q4 2021(1)	$ Change	% Change
Base Solutions revenue	$86,024	$127,316	($41,292)	(32%)
Plus Solutions revenue	$12,812	$11,473	$1,339	12%
Total revenue	$98,836	$138,789	($39,953)	(29%)
Gross profit	$1,691	$2,926	($1,235)	(42%)
Gross margin	2%	2%
Adjusted Gross Profit	$9,176	$10,354	($1,178)	(11%)
Gross Margin Excluding PPA Amortization	9%	7%
Net loss	($12,539)	($9,025)	($3,514)	39%
Adjusted EBITDA	($3,716)	($770)	($2,946)	383%
Cash flow from (used in) operating activities	($8,004)	$7,631	($15,635)	(205%)

(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".

 

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2  Non-GAAP Ratio. See "Non-GAAP Financial Measures and Non-GAAP Ratios Reconciliation Tables" section below and the reconciliation to the most directly comparable IFRS measure included in this press release.

The current period increase 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.

Q1 2022 Key Metrics:

	Three Months Ended
	Q1 2022	Q1 2021	Change	% Change
Views (billions)	105	115	(10)	(9%)
RPMs	$0.82	$0.86	($0.04)	(5%)

	Three Months Ended
	Q1 2022	Q4 2021	Change	% Change
Views (billions)	105	107	(2)	(2%)
RPMs	$0.82	$1.19	($0.37)	(31%)

Revenue for the three months ended March 31, 2022 decreased by ($7.7) million or (7%) when compared to the same period of the prior year. This decline in revenue for the current three-month period was due to a decline in Views and RPMs, partially offset by an increase in revenue in the higher margin Plus Solutions revenue stream. The increase in Views associated with COVID-19 consumers' consumption patterns started to subside when lockdowns ended in many parts of the world, resulting in a decline in Views when compared to the same period of the prior year. The decline in RPMs was due to a lack of monetization on YouTube Shorts content, and when removing this impact, RPMs would have grown by 16% when compared to the same quarter in the prior year.

In Q1 2022, about 20% of our views came from YouTube Shorts, which presents a significant upside for when that format becomes monetized, and we believe that this will begin soon. RPMs for monetizable content grew by 16% compared to Q1 last year. The continued growth of our Base Solutions business alongside the changing consumption landscape presents strong opportunities for RPM growth as monetization continues to mature across all key platforms. While micro content like YouTube Shorts isn't monetized today, once it becomes monetized across our entire library, it could represent incremental revenue of over $90 million annually across our Base Solutions at current market rates.  The Company expects its RPMs for monetizable content to continue to trend upward, particularly as our Plus Solutions continue to scale and as the YouTube Shorts monetization is activated.

Conference Call Details:

Tuesday May 17, 2022, 7:00 am Pacific Time / 10:00 am Eastern Time.

Participant Information:

Access Code: 414621
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
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: 329687
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
May 17, 2022 11:00 ET – May 30, 2022 23:59 ET

Income Statement:

					Three Months Ended March 31,
					2022 $	2021 $	% change
Revenue					$98,836	$106,495	(7%)
Cost of revenue
Content creator and other fees					$89,321	$96,567	(8%)
Amortization					$7,824	$6,149	27%
					$97,145	$102,716	(5%)
Gross profit (loss)					$1,691	$3,779	(55%)
Expenses
Sales and marketing					$7,741	$7,288	13%
General and administration					$4,312	$4,230	(8%)
Research and development					$1,336	$1,059	26%
Share-based compensation					$1,033	$264	291%
Amortization and depreciation					$1,019	$1,867	(45%)
					$15,441	$14,708	5%
Operating loss					($13,750)	($10,929)	26%
Foreign exchange gain (loss)					$599	$112	435%
Interest expense					($2,179)	($1,066)	104%
Other income (expense)					($339)	($44)	670%
Transaction-related costs					($485)	$-	NA
					($2,404)	($998)	141%
Loss before income taxes					($16,154)	($11,927)	35%
Recovery of income taxes					$3,615	2,876	26%
Loss					($12,539)	($9,051)	39%
Other comprehensive loss
Exchange differences on translation of operations in currencies other than Canadian dollars					($392)	($180)	118%
Loss and comprehensive loss					($12,931)	($9,231)	40%
Basic and diluted loss per share (in dollars)					($0.60)	($0.44)
Weighted average number of shares outstanding  Basic and diluted (in whole numbers)					21,016,374	20,513,788

Non-GAAP Financial Measures and non-GAAP Ratios Reconciliation Tables:

Adjusted EBITDA and Adjusted EBITDA Margin

			Three months ended March 31,
			2022	2021
Net loss			($12,539)	($9,051)
Amortization and depreciation(1)			$8,843	$8,016
Share-based compensation			$1,033	$264
Unrealized and realized foreign exchange			($599)	($112)
Interest expense			$2,179	$1,066
Other expense (income)			$339	$44
Receivable factoring banking fees			$158	$143
Transaction-related costs			$485	$-
Recovery of income taxes			($3,615)	($2,876)
Adjusted EBITDA(2)			($3,716)	($2,506)
Total revenues			$98,836	$106,495
Adjusted EBITDA Margin(2)			(3.8%)	(2.4%)

(1)  Includes depreciation and amortization reported in cost of revenue and operating expenses for all periods.

(2)  Adjusted EBITDA is a non-GAAP financial measure while Adjusted EBITDA Margin is a non-GAAP ratio. Further details on these measures are included in the "Key Metrics" section of this press release.

 

BBTV Share, Adjusted Gross Profit, and Adjusted Gross Margin

			Three months ended March 31,
			2022	2021
Revenue			$98,836	$106,495
Less: content creator and third-party platform fees			($89,239)	($96,474)
BBTV Share(1) (A)			$9,597	$10,021
Gross Profit			$1,691	$3,779
Add: amortization associated with intangible assets acquired as part of the Business Combination Transaction			$7,485	$5,841
Adjusted Gross Profit(1) (B)			$9,176	$9,620
Adjusted Gross Margin(1) (B/A)			95.6%	96.0%

(1)  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" section of this press release.

 

Free Cash Flow

			Three months ended March 31,
			2022	2021
Cash flow from (used in) operating activities			($8,004)	($3,966)
Purchase of property and equipment			($185)	($61)
Purchase or development of intangible assets			($659)	($293)
Free Cash Flow(1)			($8,848)	($4,320)

(1)  Free Cash Flow is a non-GAAP financial measure. Further details on this measure is included in the "Key Metrics" 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 2021, BBTV had the fourth most unique monthly viewers among digital platforms with more than 600 million globally, who consumed more than 35 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 = January 2021 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 Metric 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 include all financial figures with a Pro-Forma Adjustment (see Pro Forma Basis) as well as the following:

"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, in particular, 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 Plus Solutions revenue growth is expected to exceed 40% on an annual basis for 2022, or almost double previous annual growth rate guidance of 23% provided by the Company; Adjusted Gross Margin should remain stable and above 90% for the foreseeable future;  Plus Solutions should continue to help contribute to further margin expansion in future quarters; In Q1 2022, about 20% of our views came from YouTube Shorts, which presents a significant upside for when that format becomes monetized, and we believe that this will begin soon; The continued growth of our Base Solutions business alongside the changing consumption landscape presents strong opportunities for RPM growth as monetization continues to mature across all key platforms; While micro content like YouTube Shorts isn't monetized today, once it becomes monetized across our entire library, it could represent incremental revenue of over $90 million annually across our Base Solutions at current market rates; and the Company expects its RPMs for monetizable content to continue to trend upward, particularly as our Plus Solutions continue to scale and as the YouTube Shorts monetization is activated. 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 Company's assumptions that its current growth plans will not change in any material respect; that its internal financial forecasts and models, including its estimates of costs and revenue are accurate are accurate; that its assumptions regarding continued growth, changes and trends in the Company's industry and the global economy will be met; that the Company's NFT and Web3 division will be successful; that the Company's Plus Solutions revenue will continue to grow and to show greater margins than its Base Solutions; that the Company's churn will continue to remain low; that the Company will continue to contract with new content creators and to continue to receive increasing Views; that the Company will enter into an increasing number of Direct Advertising Sales Strategic Deals and Content Management agreements; that RPMs will continue to increase; the timely receipt of required regulatory approvals and strategic partner support; the absence of new laws, regulations, rules or policies of governments, platforms and other strategic partners, that may negatively impact the business of BBTV; our ability to build  our market share, enter new markets and maintain and expand geographic scope; our ability to attract and retain key personnel and to execute on our growth plans; our ability to obtain and maintain financing on acceptable terms; that YouTube Shorts will be monetized soon; that our Base and Plus Solutions will continue to grow; as well as the Company's assumptions regarding foreign exchange rates. 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; that the Company's agreements with platforms, creators or others may terminate early or not be renewed either on similar terms or at all; that the Company's or its creators' NFTs may not realize significant revenue or at all; that the Company's Plus Solutions may not continue to be attractive to creators and may not realize our expectations; the regulatory environment and in particular, the fact that NFTs and WEb3 are a relatively recent concept and new regulations may be enacted with which the Company may not be able to comply, and government regulation of the Internet as well as privacy regulation which are both evolving and unfavourable developments could have an adverse impact on the Company's operating results; litigation risk; intellectual property risks; the Company's need for timely performance by its creators and strategic partners; the Company's need for additional capital; the Company's significant reliance on its relationship with one digital platform; and the impact of the continuing COVID-19 pandemic; as well as the factors discussed under "Risk Factors" in the Company's Annual Information Form dated March 29, 2022 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.

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.

FAQ

What is BBTVF's revenue growth in Q1 2022?

BBTVF reported a 69% growth in Plus Solutions revenue in Q1 2022.

What was BBTVF's total revenue for Q1 2022?

The total revenue for BBTVF in Q1 2022 was $98.8 million.

How much did BBTVF's net loss increase in Q1 2022?

BBTVF's net loss increased by 39% to $12.5 million in Q1 2022.

What percentage of BBTVF's total revenue came from Plus Solutions in Q1 2022?

Plus Solutions accounted for 13% of BBTVF's total revenue in Q1 2022.

What are the future growth prospects for BBTVF's Plus Solutions?

BBTVF expects Plus Solutions revenue to exceed 40% growth annually.