Chicken Soup for the Soul Entertainment Reports Q2 2022 Results

Rhea-AI Summary

Chicken Soup for the Soul Entertainment, Inc. (CSSE) reported 70% year-over-year revenue growth for Q2 2022, reaching $37.6 million. The company closed the acquisition of Redbox Entertainment Inc., expanding its entertainment platform and boosting its film and television library to over 51,000 titles. Adjusted EBITDA grew 77% to $5.6 million, though net loss increased to $20.8 million. As of June 30, 2022, cash stood at $23.5 million with debt at $87 million. Management to host a webcast on August 11, 2022.

Positive

• 70% revenue growth year-over-year, reaching $37.6 million.
• 77% increase in Adjusted EBITDA to $5.6 million.
• Successful acquisition of Redbox, enhancing content library to over 51,000 titles.
• Expansion of advertising efforts and viewership growth.

Negative

• Net loss increased to $20.8 million from $14.1 million in the previous quarter.
• Operating loss rose to $16.8 million, up from $10.8 million in Q1 2022.
• Gross profit margin decreased to 16% of net revenue compared to 23% in Q1 2022.
• Cash reserves declined to $23.5 million from $44.3 million since the beginning of the year.

Strong year-over-year revenue growth of 70%

Expanded scale driven by continued successful implementation of well-timed strategy

Closed acquisition of Redbox Entertainment Inc., creating the most complete entertainment platform for value-conscious consumers

Management to host a live webcast on August 11, 2022, at 4:30pm ET

COS COB, Conn.--(BUSINESS WIRE)-- Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest operators of advertising-supported video-on-demand (AVOD) streaming services, today announced its financial results for the second quarter ended June 30, 2022.

“We delivered outstanding results in our last quarter ahead of the transformational acquisition of Redbox, with 70% revenue growth and 77% Adjusted EBITDA growth on a year-over-year basis,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Our growth reflects terrific execution by our ad sales team, supported by strong viewership growth, increased time spent on our new tech platform, and our growing pipeline of original and exclusive programming across our services.”

“Now we move forward with Redbox, which gives us immediate scale, growing our film and television library to over 51,000 titles, establishing a broad complement of AVOD, TVOD and FAST channel services reaching millions of viewers across dozens of platforms, and adding Redbox’s 36,000 kiosks nationwide, supported by a customer loyalty program with over 40 million members. These collective assets create an entertainment company for value-conscious consumers that will generate over $500 million in revenue and $100-$150 million in Adjusted EBITDA on an annualized basis exiting this year, with multiple opportunities to accelerate our growth in 2023 and beyond.”

Second Quarter 2022 Financial Summary

• Net revenue of $37.6 million, compared to $29.2 million in the first quarter of 2022, and $22.1 million in the year-ago period, an increase of 70% year-over-year
• Net loss of $20.8 million compared with a net loss of $14.1 million in the first quarter of 2022, and a net loss of $11.1 million in the year-ago period; $18.4 million net loss before dividends, compared with $11.8 million net loss in the first quarter 2022, and $8.8 million net loss in the year-ago period
• Adjusted EBITDA of $5.6 million, compared with $3.7 million in the first quarter of 2022, and $3.2 million in the year-ago period; an increase of 77% year-over-year

Recent Business Highlights

• Closed acquisition of Redbox and began integrating key assets into Chicken Soup for the Soul Entertainment operations
• Announced leadership appointments, including Galen Smith, former CEO of Redbox, as executive vice chairman of Chicken Soup for the Soul Entertainment and Redbox, and Jonathan Katz, former CEO of Scripps Networks, as president of Chicken Soup for the Soul Entertainment
• Sold out ad inventory again in the second quarter, grew connected TV ad inventory, and expanded ad sales effort which now includes 12 ad rep partners in addition to the company’s in-house sales operation
• Rapidly grew viewership through additional touchpoint rollouts, now on track to reach 110 by year-end (excluding Redbox)

Gross profit for the quarter ended June 30, 2022, was $6.0 million, or 16% of net revenue, compared with $6.6 million in the first quarter of 2022, or 23% of net revenue, and compared with $6.7 million, or 30% of net revenue for the year-ago period.

Operating loss for the quarter ended June 30, 2022, was $16.8 million, compared with an operating loss of $10.8 million in the first quarter of 2022, and $7.8 million in the year-ago period.

Net loss was $20.8 million, or $1.39 per share, compared with a net loss of $14.1 million, or $0.92 per share, in the first quarter of 2022, and a net loss of $11.1 million, or $0.79 per share in the prior-year period. Excluding preferred dividends, the net loss in the second quarter of 2022 would have been $18.4 million, or $1.23 per share, compared with a net loss of $8.8 million, or $0.63 per share last year.

Adjusted EBITDA for the quarter ended June 30, 2022, was $5.6 million, compared with $3.7 million in the first quarter of 2022, and $3.2 million in the same period last year.

As of June 30, 2022, the company had $23.5 million of cash and cash equivalents compared with $44.3 million as of December 31, 2021, and outstanding debt of $87.0 million as of June 30, 2022, compared with $56.7 million as of December 31, 2021.

For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), see “Note Regarding Use of Non-GAAP Financial Measures" below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures.

The company presents non-GAAP measures such as Adjusted EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the company's operating performance.

Conference Call Information

• Date, Time: Thursday, August 11, 2022, 4:30 p.m. ET.
• A webcast of the event will also be available in the “Event Calendar” section under the “News & Events” tab of the Chicken Soup for the Soul Entertainment investor relations website at http://ir.cssentertainment.com.
• To access a dial-in number, the company encourages participants to register in advance by visiting the following pre-registration link here.
• Please note the format has changed, and a dial-in option is no longer available without pre-registering at the provided link.

Conference Call Replay Information

• A webcast replay will be made available at http://ir.cssentertainment.com/ under the “News & Events” tab following the completion of the call.

About Chicken Soup for the Soul Entertainment

Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates video-on-demand (VOD) streaming services. The company owns Crackle Plus, which owns and operates a variety of ad-supported VOD streaming services including Crackle, Chicken Soup for the Soul, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media and 1091 Pictures subsidiaries and produces original video content through the Chicken Soup for the Soul Television Group. Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul, LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name.

Note Regarding Use of Non-GAAP Financial Measures

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). We use a non-GAAP financial measure to evaluate our results of operations and as a supplemental indicator of our operating performance. The non-GAAP financial measure that we use is Adjusted EBITDA. Adjusted EBITDA (as defined below) is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Due to the significance of non-cash and non-recurring expenses recognized during the three and six months ended June 30, 2022 and 2021, and the likelihood of material non-cash, non-recurring, and acquisition related expenses to occur in future periods, we believe that this non-GAAP financial measure enhances the understanding of our historical and current financial results as well as provides investors with measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. Further, we believe that Adjusted EBITDA enables our board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry.

The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual, infrequent or non-recurring items or by non-cash items. This non-GAAP financial measure should be considered in addition to, rather than as a substitute for, our actual operating results included in our condensed consolidated financial statements.

We define Adjusted EBITDA as consolidated operating income (loss) adjusted to exclude interest, taxes, depreciation, amortization (including tangible and intangible assets), film library amortization and related costs (film library amortization, film library revenue shares and participation costs, theatrical release costs) as well as amortization for certain program rights, acquisition-related costs, consulting fees related to acquisitions, dividend payments, non-cash share-based compensation expense, and adjustments for other unusual and infrequent in nature identified charges, including transition related expenses. Adjusted EBITDA is not an earnings measure recognized by U.S. GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other companies. We believe Adjusted EBITDA to be a meaningful indicator of our performance that management uses and believes provides useful information to investors regarding our financial condition and results of operations. The most comparable GAAP measure is operating income (loss).

A reconciliation of net loss to Adjusted EBITDA will be provided in the company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022 to be filed on August 12, 2022, under the section thereof entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”

Forward-Looking Statements and Available Information

This press release includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are statements that are not historical facts. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of management and are not predictions of actual performance. Such assumptions involve a number of known and unknown risks and uncertainties, including but not limited to our core strategy, operating income and margin, seasonality, liquidity, including cash flows from operations, available funds, and access to financing sources, free cash flows, revenues, net income, profitability, stock price volatility, future regulatory changes, price changes, the ability of the Company’s content offerings to achieve market acceptance, the Company’s success in retaining or recruiting officers, key employees, or directors, the ability to protect intellectual property, the ability to complete strategic acquisitions, the ability to manage growth and integrate acquired operations, the ability to pay dividends, regulatory or operational risks, and general market conditions impacting demand for the Company’s services. For a more complete description of these and other risks and uncertainties, please refer the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 11, 2022. On May 10, 2022, the Company entered into a merger agreement to acquire Redbox Entertainment, Inc. These forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Information regarding Chicken Soup for the Soul Entertainment’s acquisition of Redbox is qualified by reference to the Company’s Current Reports on Form 8-K, filed on May 11, 2022 and amended on May 12, 2022 and June 6, 2022, and its Registration Statement on Form S-4 declared effective by the SEC on July 15, 2022, the risk factors described therein, and all exhibits filed with respect to such reports and registration statement. Chicken Soup for the Soul Entertainment will file a Current Report on Form 8-K disclosing consummation of the acquisition of Redbox and related transactions and other information on or about August 12, 2022.

Chicken Soup for the Soul Entertainment, Inc.
Condensed Consolidated Balance Sheets
		June 30,				December 31,
		2022				2021
		(unaudited)
ASSETS
Cash, cash equivalents and restricted cash		$	23,483,187			$	44,286,105
Accounts receivable, net of allowance for doubtful accounts of $817,395, and $786,830, respectively			67,522,346				60,213,807
Prepaid expenses and other current assets			2,591,236				1,904,273
Operating lease right-of-use assets			10,900,297				—
Content assets, net			114,880,908				63,645,396
Intangible assets, net			17,827,323				18,035,091
Indefinite lived intangible assets			12,163,943				12,163,943
Goodwill			45,463,240				39,986,530
Other assets, net			5,441,580				5,190,954
Total assets		$	300,274,060			$	245,426,099
LIABILITIES AND EQUITY
Accounts payable and accrued other expenses		$	49,373,363			$	34,984,226
Due to affiliated companies			3,145,536				489,959
Programming obligations			17,547,500				1,641,250
Film library acquisition obligations			38,738,033				24,673,866
Accrued participation costs			19,689,040				12,323,329
Film acquisition advances			19,121,686				6,196,909
Revolving loan			22,993,443				17,585,699
9.50% Notes due 2025, net of deferred issuance costs of $2,005,118 and $1,402,880, respectively			42,850,782				31,493,020
Contingent consideration			4,709,556				9,764,256
Put option obligation			11,400,000				11,400,000
Operating lease liabilities			12,724,357				—
Other liabilities			5,046,142				3,274,432
Total liabilities			247,339,438				153,826,946
Equity
Stockholders' Equity:
Series A cumulative redeemable perpetual preferred stock, $.0001 par value, liquidation preference of $25.00 per share, 10,000,000 shares authorized; 3,943,148 and 3,698,318 shares issued and outstanding, respectively; redemption value of $98,578,700 and $92,457,950, respectively			394				370
Class A common stock, $.0001 par value, 140,000,000 shares authorized; 9,608,332 and 8,964,330 shares issued, 7,253,794 and 8,019,828 shares outstanding, respectively			964				899
Class B common stock, $.0001 par value, 20,000,000 shares authorized; 7,654,506 shares issued and outstanding, respectively			766				766
Additional paid-in capital			250,874,126				240,609,345
Deficit			(171,372,394	)			(136,462,244	)
Accumulated other comprehensive loss			(11,314	)			571
Class A common stock held in treasury, at cost (2,354,538 and 944,502 shares, respectively)			(27,158,429	)			(13,202,407	)
Total stockholders’ equity			52,334,113				90,947,300
Noncontrolling interests			600,509				651,853
Total equity			52,934,622				91,599,153
Total liabilities and equity		$	300,274,060			$	245,426,099

Chicken Soup for the Soul Entertainment, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Net revenue		$	37,636,947			$	22,134,934			$	66,843,144			$	45,331,776
Cost of revenue			31,596,524				15,433,719				54,171,932				31,676,653
Gross profit			6,040,423				6,701,215				12,671,212				13,655,123
Operating expenses:
Selling, general and administrative			17,373,018				10,964,362				30,189,538				20,199,181
Amortization and depreciation			1,680,443				1,337,678				3,328,701				2,575,705
Management and license fees			3,763,695				2,213,493				6,684,315				4,533,177
Total operating expenses			22,817,156				14,515,533				40,202,554				27,308,063
Operating loss			(16,776,733	)			(7,814,318	)			(27,531,342	)			(13,652,940	)
Interest expense			2,022,770				1,141,044				3,333,229				2,228,988
Other non-operating income, net			(279,405	)			(144,569	)			(481,197	)			(145,139	)
Loss before income taxes and preferred dividends			(18,520,098	)			(8,810,793	)			(30,383,374	)			(15,736,789	)
Provision for income taxes			14,000				15,000				34,000				29,000
Net loss before noncontrolling interests and preferred dividends			(18,534,098	)			(8,825,793	)			(30,417,374	)			(15,765,789	)
Net loss attributable to noncontrolling interests			(142,350	)			—				(180,735	)			—
Net loss attributable to Chicken Soup for the Soul Entertainment, Inc.			(18,391,748	)			(8,825,793	)			(30,236,639	)			(15,765,789	)
Less: preferred dividends			2,391,442				2,253,385				4,673,511				4,506,770
Net loss available to common stockholders		$	(20,783,190	)		$	(11,079,178	)		$	(34,910,150	)		$	(20,272,559	)
Net loss per common share:
Basic and diluted		$	(1.39	)		$	(0.79	)		$	(2.30	)		$	(1.46	)
Weighted-average common shares outstanding:
Basic and diluted			14,950,458				14,059,211				15,152,222				13,848,655

Chicken Soup for the Soul Entertainment, Inc.
Adjusted EBITDA
(unaudited)
		Three Months Ended March 31,								Six Months Ended June 30,
		2022				2021				2022				2021
Net loss available to common stockholders		$	(20,783,190	)		$	(11,079,178	)		$	(34,910,150	)		$	(20,272,559	)
Preferred dividends			2,391,442				2,253,385				4,673,511				4,506,770
Provision for income taxes			14,000				15,000				34,000				29,000
Other taxes			178,403				103,854				258,775				188,347
Interest expense			2,022,770				1,141,044				3,333,229				2,228,988
Film library amortization and related costs			14,666,992				6,841,349				24,354,016				13,770,016
Share-based compensation expense			957,859				231,844				1,954,656				463,688
Expense for bad debt and video returns			692,295				907,837				1,274,129				1,602,049
Amortization and depreciation			2,674,893				1,721,011				4,678,966				3,342,371
Other non-operating income, net			(279,405	)			(144,569	)			(481,197	)			(145,139	)
Transitional expenses			255,615				192,054				363,400				192,054
All other nonrecurring costs			2,777,637				967,848				3,698,069				1,807,898
Adjusted EBITDA		$	5,569,311			$	3,151,479			$	9,231,404			$	7,713,483

Chicken Soup for the Soul Entertainment, Inc.
Adjusted Earnings Per Share
(unaudited)
		Three Months Ended June 30,
		2022				2021
Basic and diluted loss per share		$	(1.39	)		$	(0.79	)
Amortization related to acquired intangible assets			0.11				0.09
Adjusted basic and diluted loss per share		$	(1.28	)		$	(0.70	)
		Six Months Ended June 30,
		2022				2021
Basic and diluted loss per share		$	(2.30	)		$	(1.46	)
Amortization related to acquired intangible assets			0.21				0.18
Adjusted basic and diluted loss per share		$	(2.09	)		$	(1.28	)

 

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Investor Relations

Taylor Krafchik

Ellipsis

CSSE@ellipsisir.com

(646) 776-0886

Media Contact

Peter Binazeski

Chicken Soup for the Soul Entertainment

pbinazeski@chickensoupforthesoul.com

Source: Chicken Soup for the Soul Entertainment, Inc.

FAQ

What were Chicken Soup for the Soul Entertainment's (CSSE) Q2 2022 financial results?

In Q2 2022, CSSE reported $37.6 million in revenue, a 70% increase year-over-year, and an Adjusted EBITDA of $5.6 million, up 77% year-over-year.

How did the acquisition of Redbox impact CSSE?

The acquisition of Redbox allows CSSE to expand its content library to over 51,000 titles and reach millions of viewers through various platforms.

What is the net loss reported by CSSE for Q2 2022?

CSSE reported a net loss of $20.8 million for Q2 2022, compared to $14.1 million in the previous quarter.

When will CSSE host its next conference call?

CSSE will host a live webcast on August 11, 2022, at 4:30 p.m. ET.

How much cash did CSSE have as of June 30, 2022?

As of June 30, 2022, CSSE had $23.5 million in cash and cash equivalents.