SRAX Reports Continued Revenue Growth in Q2 2021 and Increases Full-Year Guidance

Rhea-AI Summary

SRAX, a financial technology firm, reported Q2 2021 unaudited financial results on August 16, 2021. Revenue reached $7.7M, marking a 557% year-over-year increase and surpassing expectations of $7M. Full-year revenue guidance was raised to $30M - $32M. Sequire bookings totaled $11.4M, indicating 10 consecutive quarters of growth. Operating expenses rose to $7.3M from $4.0M year-over-year, while EBITDA improved to $1.4M. The company currently holds approximately $29M in marketable securities and serves 225 public companies.

Positive

• Q2 revenue increased by 557% year-over-year to $7.7M.
• Full-year revenue guidance raised from $25M - $27M to $30M - $32M.
• Sequire bookings for Q2 reached $11.4M, demonstrating consistent growth.
• EBITDA improved to $1.4M, up $3M from Q1 2020.

Negative

• Operating expenses rose to $7.3M, significantly higher than the previous $4.0M.
• Gross margin decreased to 81% from 97% year-over-year.

SRAX, Inc. (NASDAQ: SRAX), a financial technology company that unlocks data and insights for publicly traded companies through Sequire, its SaaS platform, is providing unaudited financial results for Q2 of 2021 today, August 16th, 2021.

Second Quarter 2021 and Recent Operational Highlights and Guidance

• Revenue for Q2 of $7.7M up 557% year-over-year, 41% sequentially quarter-over-quarter, exceeding previous guidance of $7M.
• Full-year revenue guidance increased from $25M - $27M to $30M - $32M
• Sequire bookings of $11.4M for Q2
• 10 consecutive quarters of Sequire SaaS growth
• Currently holding approximately $29M worth of marketable securities
• 225 public companies/partners have subscribed to Sequire, up 25 since our Q1 release
• Sequire revenue to be recognized from existing contracts in 2021: $23.6M as of this release.
• Third Quarter revenue guidance of $8.3M

SRAX less BIGtoken, Three months ended June 30, 2021

• Total Revenue was $7.1M, an increase of 803% as compared to the same period last year and an increase of 49% sequentially quarter-over-quarter.
• Gross Margin was 83% as compared to 97% in the same period last year.
• Operating Expenses were $5M as compared to $2.8M in the same period last year.
• EBITDA of $1.4M for an increase of $3M vs. ($1.6M) in Q1 2020, and a sequential quarter-over-quarter increase of $850k or 150% vs. Q1 2021

Three months ended June 30, 2021

• Total Revenue was $7.7M, an increase of 557% as compared to the same period last year and an increase of 41% sequentially quarter-over-quarter .
• Gross Margin was 81% as compared to 65% in the same period last year.
• Operating Expenses were $7.3M as compared to $4.0M in the same period last year.
• EBITDA increase of $2.2M, ($440K) vs ($2.6M) in Q2 2020  and an sequential quarter-over-quarter increase of $400k vs.($822K) Q1 2021

Video Call:

SRAX's Founder and CEO Christopher Miglino, and CFO Michael Malone will provide an operational and financial summary of Q2 2021 on a video call, with a live question and answer session, on Monday, August 16th, at 4:30 pm ET / 1:30 pm PT.

To register for the live webcast and view the presentation, please sign up here: https://srax-earnings-q2.mysequire.com

To access the conference by phone:

Dial in US +1 3462487799 | Meeting ID: 93255970733 | Passcode: 163778

The webcast will be available on srax.com following the scheduled conference call.

Non-GAAP Measures:

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: EBITDA. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release.

SRAX less BIGtoken EBITDA is defined as earnings before interest, taxes, depreciation and amortization, changes in the fair-value of derivative and warrant liabilities and certain additional one-time charges and excluding the results from our BIGtoken operations.

About SRAX:

SRAX (NASDAQ: SRAX) is a financial technology company that unlocks data and insights for publicly traded companies. Through its premier investor intelligence and communications platform, Sequire, companies can track their investors’ behaviors and trends and use those insights to engage current and potential investors across marketing channels. For more information on SRAX, visit srax.com.

Safe Harbor Statement:

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate," "plan," "will," "intend," "believe" or "expect" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation, statements made with respect to expectations of our ability to increase our revenues, satisfy our obligations as they become due, report profitable operations and other risks and uncertainties as set forth in our Annual Report on Form 10-K for the year ended December 31, 2019, and our subsequent Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of SRAX and are difficult to predict. SRAX undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

SRAX SEGMENT OPERATING RESULTS
		2Q 2021									1H 2021
SEGMENT		(Dollars, except GM%)			YoY $ Growth			YoY % Growth			(Dollars, except GM%)			YoY $ Growth			YoY % Growth
Sequire		7,160,000			6,370,000			806	%		11,420,000			10,470,000			1102	%
BIGtoken		850,000			470,000			124	%		1,700,000			1,130,000			198	%
Other / Elim		(330,000	)		(330,000	)		n/a			(660,000	)		(660,000	)		n/a
Revenue		7,680,000			6,510,000			872	%		12,460,000			10,940,000			720	%
Sequire		5,940,000			5,170,000			671	%		8,820,000			7,810,000			773	%
BIGToken		620,000			410,000			195	%		1,200,000			890,000			287	%
Other / Elim		(330,000	)		(330,000	)		n/a			(660,000	)		(660,000	)		n/a
Gross margin		6,230,000			5,250,000			709	%		9,360,000			8,040,000			609	%
Gross margin percentage		81	%		81	%					75	%		73	%
Sequire		1,400,000			2,970,000			n/a			1,962,000			4,943,000			n/a
BIGToken		(1,840,000	)		(990,000	)		n/a			(3,224,000	)		(668,000	)		n/a
Other / Elim		-			-			n/a			-			-			n/a
Adjusted EBITDA		(440,000	)		1,980,000			n/a			(1,262,000	)		4,275,000			n/a

CONSOLIDATED STATEMENT OF OPERATIONS
			For the Six Months Ended June 30,
			2021				2020
Revenues		$	13,119,000			$	1,516,000
Cost of revenues			3,103,000				508,000
Gross profit			10,016,000				1,008,000
			76.35
Employee related costs			5,143,000				4,249,000
Marketing and selling expenses			3,030,000				690,000
Platform Costs			218,000				258,000
Depreciation and amortization			756,000				630,000
General and administrative			3,364,000				2,304,000
			12,511,000				8,131,000
Loss from operations			(2,495,000	)			(7,123,000	)
Other income (expense)
Interest income			23,000
Financing Costs			(15,430,000	)			(2,038,000	)
Gain (loss) from marketable securities			(68,000	)			516,000
Other income			14,000
Change in fair value of derivative liabilities			-				321,000
Total other income (loss)			(15,461,000	)			(1,201,000	)
Loss before provision for income taxes			(17,956,000	)			(8,324,000	)
Provision for income taxes			-				-
Net income (loss)			(17,956,000	)			(8,324,000	)
Net (income) loss attributable to noncontrolling interest			1,126,000				-
Net income attributable to SRAX, Inc.		$	(16,830,000	)		$	(8,324,000	)
Net income / ( loss) per share, basic and diluted		$	(0.78	)		$	(0.59	)
Weighted average shares outstanding - basic and diluted			21,533,141				14,038,940

CONSOLIDATED BALANCE SHEET
			As of June 30,				As of December 31,
			2021				2020
Assets
Cash and cash equivalents		$	10,060,000			$	451,000
Accounts receivable			2,172,000				2,608,000
Prepaid expenses			1,125,000				367,000
Securities held for sale			24,130,000				8,447,000
Current assets			37,487,000				11,873,000
Notes receivable			917,000				893,000
Property and equipment			161,000				118,000
Intangible assets			2,046,000				2,409,000
Right of use assets			314,000				366,000
Other assets			36,000				3,000
Goodwill			23,351,000				23,351,000
Total Assets		$	64,312,000			$	39,013,000
Liabilities and stockholders' equity
Accounts payable and accrued liabilities		$	3,328,000			$	3,561,000
Other current liabilities			1,408,000				3,869,000
Deferred revenue			13,186,000				4,842,000
Payroll protection loan - current portion			1,126,000				747,000
OID notes payable - current portion			2,701,000				6,016,000
Current liabilities			21,749,000				19,035,000
Right to use liability - long term			182,000				243,000
Payroll protection loan - long term							379,000
Deferred Tax Liability			131,000				131,000
Total liabilities			22,062,000				19,788,000
Preferred stock							-
Class A common			24,000				16,000
Additional paid-in capital			98,014,000				69,551,000
Accumulated deficit			(67,172,000	)			(50,342,000	)
Total SRAX shareholders' equity			30,866,000				19,225,000
Non-controlling interest			11,384,000				-
Total stockholders' equity			42,250,000				19,225,000
Total liabilities and stockholders' equity		$	64,312,000			$	39,013,000
			-				-
Working Capital			15,738,000				(7,162,000	)

CONSOLIDATED BALANCE SHEET
		Common Stock
		Shares			Amount			Additional Paid-in Capital			Non Controlling Interest				Accumulated Deficit				Stockholders' Equity
																			-
Balance, December 31, 2020		16,145,778			16,000			69,551,000			-				(50,342,000	)			19,225,000
Share based compensation								253,000											253,000
Shares issued for warrant exercise, net of offering costs		4,945,320			5,000			12,215,000											12,220,000
Shares issued for cash		53,616			-			284,000											284,000
Conversions		2,041,551			2,000			3,445,000											3,447,000
Warrants issued as inducement to exercise warrants								7,737,000											7,737,000
Warrants issued by FVPD for SRAX, Inc. debenture holders											885,000								885,000
Beneficial conversion feature FPVD series B convertible preferred stock											5,775,000								5,775,000
Series B convertible preferred stock issued by FPVD											5,775,000								5,775,000
Acquisition of noncontrolling interest											(95,000	)							(95,000	)
Net Income (Loss)											(854,000	)			(11,090,000	)			(11,944,000	)
Balance, March 31, 2021		23,186,265			23,000			93,485,000			11,486,000				(61,432,000	)			43,562,000
Share based compensation								253,000											253,000
Conversion of convertible debt to equity		350,000			-			701,000											701,000
Shares issued for warrant exercise, net of offering costs		1,310,198			1,000			3,575,000											3,576,000
Beneficial conversion feature FPVD series B convertible preferred stock											85,000								85,000
Series B convertible preferred stock issued by FPVD											85,000								85,000
Net Income (Loss)											(272,000	)			(5,740,000	)			(6,012,000	)
Balance, June 30, 2021		24,846,463			24,000			98,014,000			11,384,000				(67,172,000	)			42,250,000
		24,846,463			24,000			98,014,000			11,384,000				(67,172,000	)			42,250,000
		Common Stock
		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit				Stockholders' Equity
Balance, December 31, 2019		13,997,452		$	14,000		$	48,129,000		$	(35,637,000	)		$	12,506,000
Share based compensation		-			-			260,000			-				260,000
Relative fair value of warrants issued with notes payable		-			-			83,000			-				83,000
Shares issued for extension agreement		36,700			-			71,000			-				71,000
Net loss											(3,003,000	)			(3,003,000	)
Balance, March 31, 2020		14,034,152			14,000			48,543,000			(38,640,000	)			9,917,000
Share based compensation								246,000							246,000
Reclassification of warrants from liability to equity		-			-			4,076,000			-				4,076,000
Shares issued for debt extinguishment		100,000			-			181,000			-				181,000
Premium on debt extinguishment		-			-			46,000			-				46,000
Beneficial conversion feature		-			-			3,913,000			-				3,913,000
Relative fair value of warrants issued with notes payable								2,889,000							2,889,000
Net loss		-			-			-			(5,321,000	)			(5,321,000	)
Balance, June 30, 2020		14,134,152		$	14,000		$	59,894,000			(43,961,000	)		$	15,947,000
Checking
Per June 2020 1Q		14,134,152			14,000			59,894,000			(43,961,000	)			15,947,000
Difference

CONSOLIDATED STATEMENT OF CASH FLOWS
			For the Six Months Ended June 30,
			2021				2020
Cash Flows From Operating Activities
Net Loss		$	(17,956,000	)		$	(8,324,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest income			(24,000	)
Unrealized loss (gain) on Securities held for sale			878,000				(140,000	)
Realized loss (gain) on Securities held for sale			(810,000	)			(376,000	)
Warrants issued by FVPD for SRAX, Inc. debenture holders			885,000
Stock-based compensation			506,000				506,000
Amortization of debt issue costs			686,000				453,000
Loss on extinguishment of debt							1,103,000
Recognition of beneficial conversion feature - FPVD preferred B			5,860,000
Warrant inducement charge			7,737,000
Change in fair value of derivative liabilities							(321,000	)
Marketable securities received for accounts receivable previously written off			(409,000	)
Provision for bad debts			79,000				41,000
Depreciation expense			39,000				38,000
Amortization of intangibles			717,000				592,000
Non-cash financing expense			147,000
Change in right of use of asset			52,000
Changes in operating assets and liabilities
Accounts receivable			766,000				117,000
Prepaid expenses			(757,000	)			352,000
Marketable securities			-
Other current assets			(1,000	)			95,000
Accounts payable and accrued expenses			(233,000	)			1,527,000
Other current liabilities			(10,754,000	)			(354,000	)
Change in right of use liability			(61,000	)			(43,000	)
Net Cash Used in Operating Activities			(12,789,000	)			(4,734,000	)
Cash Flows From Investing Activities
Available for Sale Securities			2,890,000				397,000
Deferred payments to LD Micro			(2,004,000	)
Net cash received from acquisition of FPVD			955,000
Acquisition of P& E			(82,000	)			-
Development of software			(354,000	)			(575,000	)
Other assets			(33,000	)			3,000
Net Cash Used by Investing Activities			1,508,000				(175,000	)
Cash Flows From Financing Activities
Proceeds from issuance of notes payable less issuance costs							8,415,000
Proceeds from payroll protection program							1,074,000
Issuance of Preferred Stocks			4,810,000
Proceeds from issuance of shares			284,000
Proceeds from the exercise of warrants			15,796,000
Net Cash Provided by Financing Activities			20,890,000				9,489,000
Net increase (decrease) in Cash			9,609,000				4,580,000
Cash, Beginning of Period			451,000				32,000
Cash, End of Period		$	10,060,000			$	4,612,000
Supplemental disclosure of cash flow information:
Cash paid for interest		$	14,000			$	52,000
Cash paid for income taxes		$	-			$	-
Noncash investing and financing activities:
Convertible notes converted into shares		$	6,422,000			$
Fair value of marketable securities received for revenue contracts		$	18,641,000			$
Vesting of prepaid common stock award		$				$	94,000
Relative fair value of warrants issued with term loan		$				$	83,000
Shares of common stock issued for extension agreement		$				$	71,000

NON-GAAP TO GAAP RECONCILIATIONS
		Three months ended June 30,								Six months ended June 30,
		2021				2020				2021				2020
Consolidated
Operating Income		$	(1,040,000	)		$	(3,248,000	)		$	(2,495,000	)		$	(7,123,000	)
Depreciation and Amortization			347,000				321,000				727,000				630,000
Stock-based compensation expense			253,000				294,000				506,000				648,000
Adjusted EBITDA			(440,000	)			(2,633,000	)			(1,262,000	)			(5,845,000	)
SRAX
Operating Income			939,000				(2,007,000	)			1,011,000				(3,773,000	)
Depreciation and Amortization			208,000				192,000				445,000				381,000
Stock-based compensation expense			253,000				245,000				506,000				411,000
Adjusted EBITDA			1,400,000				(1,570,000	)			1,962,000				(2,981,000	)
BIGToken
Operating Income			(1,979,000	)			(1,028,000	)			(3,506,000	)			(3,042,000	)
Depreciation and Amortization			139,000				129,000				282,000				249,000
Stock-based compensation expense			-				49,000				-				237,000
Adjusted EBITDA			(1,840,000	)			(850,000	)			(3,224,000	)			(2,556,000	)

 

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FAQ

What were SRAX's Q2 2021 financial results?

SRAX reported Q2 2021 revenue of $7.7M, a 557% increase year-over-year.

How much revenue does SRAX expect for the full year of 2021?

SRAX raised its full-year revenue guidance to $30M - $32M.

What is the EBITDA for SRAX in Q2 2021?

SRAX's EBITDA for Q2 2021 was $1.4M.

How many companies are using SRAX's Sequire platform?

SRAX currently has 225 public companies subscribed to its Sequire platform.

What were SRAX's operating expenses in Q2 2021?

SRAX's operating expenses in Q2 2021 were $7.3M.