MediaValet Reports Third Quarter 2021 Results
Investing in long-term growth and delivering a 33% U.S. dollar increase in ARR
Vancouver, British Columbia--(Newsfile Corp. - November 15, 2021) - MediaValet Inc. (TSX: MVP) (the Company), a leading provider of cloud-native enterprise digital asset management ("DAM") and creative operations software, is pleased to report its results for the three and nine months ended September 30, 2021. All figures in Canadian dollars unless otherwise stated.
Summary of Quarterly and Annual Results
|Three months ended |
| || ||Nine months ended |
|2021||2020|| ||2021|| ||2020|
|Revenue||$||2,354,221||$||1,892,351|| ||$||6,772,063|| ||$||5,363,477|
|% Increase||24%|| ||38%|| ||26%|| ||54%|
|Gross Margin||1,961,363|| ||1,554,817|| ||5,544,729|| ||4,399,441|
|Gross Margin %||83%|| ||82%|| ||82%|| ||82%|
|Operating Costs1||4,078,738|| ||2,594,597|| ||11,255,311|| ||6,954,801|
|% Increase||57%||45%|| ||62%|| ||42%|
|EBITDA Loss2||(2,117,375||)||(1,039,780||)||(5,710,582||) ||(2,555,360||)|
|% (Decrease) / Increase||104%|| ||73%|| ||123%|| ||34%|
|% Increase / (Decrease)||82%|| ||66%|| ||95%|| ||31%|
|Loss per share||(0.06||)||(0.04||) ||(0.17||)||(0.11||)|
| ||At September|
| ||As at December 31, 2020|
|Annual Recurring Revenue ("ARR")3||$||10,003,096|| ||$||8,639,943|
|% Increase over same period last year||26%|| ||33%|
|Modified Working Capital ex. of Deferred |
Revenue and Debt
|Deferred Revenue||5,786,485|| ||5,735,133|
|% Increase over same period last year||16%|| ||30%|
|Total assets||13,786,919|| ||19,565,137|
|Lease liabilities||832,335|| ||989,390|
|Long-term and Convertible Debt||1,000,000|| ||1,000,000|
|Shareholder Equity (Deficiency)||4,335,845||10,031,159|
"Our focus on addressing enterprise DAM and creative operations use-cases, across all sizes of organizations, is working," commented David MacLaren, Founder and CEO of MediaValet. "Based on current market estimates by various industry analysts, we're growing faster than the DAM industry as a whole - gaining market share every quarter."
"When we started MediaValet, we focused solely on the DAM needs of enterprise organizations but over the last eighteen months, we've experienced a wave of mid-sized and SMB organizations with similar DAM use-cases as some of the largest, global enterprises that we work with. This trend was not unexpected, it's timing and intensity was. COVID, digital transformation, and the large-scale work-from-anywhere migration aside, all organizations today (not-for-profits included) are effectively "media companies". The need for organizations to produce media assets at the same rate as true media companies of yester-years, is driving the DAM industry's double digit annual growth rate and the need for more complex, scalable, and intelligent DAM solutions."
Mr. MacLaren continued, "Our approach to DAM is quite a bit different than other DAM providers - we focus on the assets themselves - throughout their entire lifecycle. Of course, how and where the final consumable assets are used is extremely important, but we feel the high value assets themselves - first and foremost - need to be protected, preserved, and highly accessible - at scale, at all times, from everywhere - by all approved individuals, teams, departments, suppliers, vendors, and systems, within the ecosystems that make up today's organizations. Beyond these foundational elements of DAM, we believe the continuity, accessibility and discoverability of assets - in the very near future - has to happen entirely without any human interaction and very little direction. This is our vision, our future."
"With the market expected to grow from U$4.30 billion today to U$10.0 billion by 20264, we set out in 2021 to position MediaValet to win a leading share of this market growth by strategically doubling our operations and R&D. The majority of this investment will benefit fiscal 2022 and beyond, enabling us to accelerate our innovative product roadmap to further differentiate MediaValet and expand our market potential. We feel we're at the forefront of the industry today, and that recent advances in technology are finally beginning to unlock our ultimate vision for DAM."
Rob Chase, Executive Chair and CFO, commented, "We are encouraged by the trust our customers have placed in us. With a 47% five-year CAGR, we have now reached an ARR level of $10.00 million - a major milestone for Software-as-a-Service ("SaaS") businesses where scale becomes an integral factor to long-term growth and success. It is at this point where our proven technical advantage, referenceable customer base and operational foundation have reached a scale and maturity that can unlock our market potential. With this in mind, we have been putting our growth capital to work by investing in our operational foundation; increasing our operating losses today in order to build a bigger opportunity for the future. As a result, we have increased YTD Operating Costs by 62% to $11.26 million. The majority of this increase is for building our top-tier team of people, most of whom we expect to be fully ramped and contributing to growth in 2022. At the same time, we have continued to deliver higher ARR growth rates than the overall DAM market, with ARR increasing 33% in U.S. dollars (26% in Canadian dollars). We are encouraged by what we can deliver as our growing team ramps to deliver new product innovation, greater market reach, and higher rates of existing customer retention and expansion."
Results of Operations
Key Financial Metrics:
- Grew revenue to $2.35 million in Q3 2021, up 24% from $1.89 million in Q3 2020, and up 5% sequentially from Q2 2021. For the year to date ("YTD") period, revenue of $6.77 million is up 26% from $5.36 million last YTD. The majority (generally 90%+) of revenue is from monthly recognition of annual SaaS subscriptions. As a result, the growth reflects increases in deferred revenue and ARR from customer acquisition, retention, and expansion through industry leading sales and marketing strategies, and continuous new feature development and platform enhancement.
- Increased Gross Margin to $1.96 million in Q3 2021, up 26% from $1.55 million in Q3 2020, and up 8% sequentially. The YTD Gross Margin increased 26% to $5.54 million from $4.40 last YTD. The Gross Margin percentage was to 83% for Q3 2021 compared to 82% in Q3 2020 and 81% in Q2 2021.
- Incurred Operating Costs of $4.08 million in Q3 2021, a 57% increase from $2.59 million in Q3 2020, and an increase of 1% from Q2 2021. YTD Operating Costs were $11.26 million, an increase of 62% from $6.95 million last YTD. The increases are primarily due to an implementation of the Company's long-term growth plan, including a step-increase in research and development ("R&D") and sales and marketing ("S&M"), and a one-time increase in general and admin ("G&A") for TSX listing fees. Headcount was increased to 91 by the end of Q3 2021 compared to 81 at Q2 2021, 59 at Q4 2020 and 56 at Q3 2020. After a ramp-up period, these planned expansions are expected to impact sales growth through increased global market reach and accelerated enterprise product development.
- Reported a Q3 2021 EBITDA loss of $2.12 million, up 104% from $1.04 million in Q3 2020, and down 5% sequentially. The YTD EBITDA loss of $5.71 million increased 123% compared to $2.56 million last YTD. The increased annual loss was expected and is primarily due to the planned step-increase in Operating Costs in line with the Company's long-term growth strategy. Management believes this growth investment is aligned with the Company's available capital resources.
- Increased Annual Recurring Revenue ("ARR") to $10.00 million, an increase of 26% (33% in U.S. dollars) compared to $7.94 million at September 30, 2020, and 16% (21% in U.S. dollars) from $8.64 million at December 31, 2020. The increases are a direct result of the Company's growth investments which have increased its sales team and market reach, accelerated its product roadmap and strengthened its customer success programs. In addition to the impact of the weakened U.S. dollar and the ramp period required for its growth investments, the increases in ARR were impacted by prospects continuing to take a cautious stance to new projects as a result of COVID-related uncertainty. Despite these headwinds, ARR from new customers YTD increased 25% (35% in U.S. dollars). In addition, net churn improved in Q3'21, reducing 44% (48% in U.S. dollars) from Q3'20, and reducing 24% (22% in U.S. dollars) from Q2'21.
- Ended the third quarter with $9.37 million of cash on hand (December 2020: $14.24 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $10.30 million (December 2020: $16.10 million), lease liabilities of $0.83 million and long-term debt of $1.00 million (December 2020: total lease liabilities and debt of $1.99 million).
Technology and Product:
MediaValet has a continuous development process to enhance its DAM and creative operations platform with incremental releases on a weekly basis. These releases include new features, fixes and product upgrades aimed at expanding its enterprise DAM and creative operations use-cases and target addressable market, and at increasing its market differentiation with innovative solutions. This continued commitment to product innovation and advancement has led to an increase in new customer win-rates, customer retention and expansion, and average contract value. The Company has announced a number of customer wins to provide examples of the impact of its development process, which recently included the following:
- November 10, 2021: added FFW as a digital agency reseller and implementation partner. FFW is an award-winning digital experience agency with over 500 global clients, such as Pfizer, Panasonic and General Electric. Leveraging MediaValet's Application Programming Interface ("API"), FFW will integrate digital asset management into their customers' digital experience platforms to enable them to achieve digital scale.
- November 9, 2021: announced a new higher-ed customer in South America who is ranked as the most innovative university in their country. The first-year billings of $87,000 include an auto-renewing subscription ("Subscription") to MediaValet's core digital asset management ("DAM") platform; its creative operations platform, CreativeSPACES; its Office 365, Azure Active Directory and Salesforce integrations; and professional services covering implementation, and ongoing training, support and library services.
- November 2, 2021: extended its market reach with the Microsoft Azure Marketplace, which enables customers to streamline their purchasing and governance processes. In addition, Microsoft customers are now, for the first time, able to utilize pre-purchased Azure credits to purchase 3rd party applications, like MediaValet, on the Azure Marketplace.
- November 1, 2021: launched a new go-to-market partnership with monday.com, including availability via their online Marketplace, co-marketing and selling initiatives, and an integration module to enable mutual customers to gain digital marketing efficiencies from connecting their monday.com WorkOS platform with their MediaValet DAM and creative operations platform. The integration module is available at no charge but is expected to become a for-fee module as the connector is expanded to provide full two-way communication between the platforms.
- October 21, 2021: announced a global leader in smart home audio selected MediaValet to be its DAM system of record. The first-year billing of $90,000 includes an auto-renewing subscription to MediaValet's core digital asset management platform; creative operations platform, CreativeSPACES™; AutoCAD and Okta Single Sign-on integrations; and professional services covering implementation, training and support.
Operations and Corporate:
- During Fiscal 2021, the Company increased its headcount from 59 to 91 people, expanding its direct and channel go-to-market initiatives, and bolstering its investment in R&D to accelerate its product roadmap. While the Company had attained a breakeven level of new and recurring sales by the end of Fiscal 2020, management believes it can attain a leadership position within the growing global DAM market by increasing its operational investment levels with a focus on R&D and S&M.
- Subsequent to quarter end, on October 14, 2021, employees exercised 67,778 options at an average exercise price of $0.72 per share for proceeds of $48,967.
1 The Company defines Operating Costs to include Sales & Marketing, Research & Development and General & Administrative expenses, which aligns with the expenses included in EBITDA. This is a non-IFRS measure and represents operating expenses less share-based compensation and depreciation.
2 EBITDA is a non-IFRS measure that is used as a measure of profit and loss. Management believes EBITDA provides a meaningful measure for assessment of Company performance as it removes non-cash and non-operating expenses such as financing costs.
3 Annual Recurring Revenue (ARR) is a non-IFRS measure that provides an indication of future revenue and billings from customers as of the reporting date. ARR represents the sum of the annual recurring revenue from existing customer contracts or commitments as of the reporting period end date, and as such management believes ARR to be a meaningful measure for assessment of Company performance. ARR is recorded as deferred revenue when it is invoiced and is recognized in revenue evenly on a monthly basis over the contract term at the US dollar exchange rate in effect at the time of invoicing. The average US dollar exchange rate of ARR was C$1.2717 at September 30, 2021, C$1.3313 at December 31, 2020 and C$1.3386 at September 30, 2020.
4 Source: Research & Markets Global DAM Market forecasts 2019 to 2026, dated: October 2021
MediaValet's full financial statements and related MD&A are now available on SEDAR.
About MediaValet, Inc.
MediaValet stands at the forefront of the enterprise, cloud-native, software-as-a-service digital asset management and creative operations industries. Built exclusively on Microsoft Azure and available across 61 Microsoft data center regions in 140 countries around the world, MediaValet delivers unparalleled enterprise-class security, reliability, redundancy, compliance, and scalability; while offering the largest global footprint of any DAM solution. In addition to providing enterprise cloud-native DAM capabilities at a global scale, desktop-to-server-to-cloud support for creative teams, and overall cloud redundancy and management for all source, WIP and final assets, MediaValet offers industry-leading integrations into Slack, Adobe Creative Suite, Microsoft Office 365, Workfront, Wrike, monday.com, Drupal, WordPress and many other best-in-class 3rd party applications.
For further information, please contact:
Babak Pedram | firstname.lastname@example.org| (416) 644-5081
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