MediaValet Reports Record Fiscal 2019 and Fourth Quarter Results

Delivers Record Year with Revenue up 77%, Net Billings up 92% and ARR up 85%

Vancouver, British Columbia--(Newsfile Corp. - April 8, 2020) - MediaValet Inc. (TSXV:  MVP) (the Company), a leading provider of enterprise digital asset management ("DAM") and creative operations software, is pleased to report its results for the year and the three months ended December 31, 2019.

Summary of Quarterly Results

    3 months ended
December 31, 2019
    Year ended December 31, 2019  
    2019(1)     2018(2)     2019(1)     2018(2)  
Revenue $ 1,677,012   $ 841,920   $ 5,160,970   $ 2,923,122  
    % Increase   99%     43%     77%     34%  
Gross Margin   1,411,264     681,862     4,407,343     2,296,231  
    Gross Margin %   84%     81%     85%     79%  
Operating Expenses1,2,3   2,105,420     1,517,997     7, 010,662     5,915,149  
    % Increase   39%     17%     19%     3%  
EBITDA Loss1,2,4   (694,156 )   (836,135 )   (2,603,319 )   (3,618,918 )
    % (Decrease) / Increase   (17%)     1%     (28%)     (8%)  
Net loss   (1,042,296 )   (949,236 )   (3,592,327 )   (4,234,120 )
    % Increase / (Decrease)   10%     (7%)     (15%)     (15%)  
Loss per share5   (0.04 )   (0.06 )   (0.20 )   (0.30 )
                As at December
31, 2019
    As at December
31, 2018
 
Annual Recurring Revenue (“ARR”)6             $ 6,501,074   $ 3,511,967  
    % Increase               85%     41%  
Modified Working Capital ex. of Deferred 
    Revenue and Debt
              2,800,748     (164,546 )
Deferred Revenue               4,407,953     2,323,742  
    % Increase               90%     57%  
Total assets               6,486,469     1,980,184  
Lease liabilities               1,182,835     -  
Long-term and Convertible Debt               3,283,199     3,150,000  
Shareholder Deficiency               (4,260,076 )   (5,174,656 )

 

"Fiscal 2019 was a breakout year for MediaValet," said David MacLaren, Founder and CEO. "We built upon our core enterprise Cloud DAM offering, adding new features and enhancements that make a meaningful difference for our customers, resulting in increased adoption and integration within customer environments. At the same time, DAM has rapidly progressed as a mission-critical part of the marketing stack, making our Cloud solutions increasingly must-haves, especially in the current environment where working remotely has become a requirement. Our sales and marketing teams have been able to reach prospective buyers more easily than ever before and do so with high quality, referenceable, customer case studies that truly set us apart from the competition."

Continued Mr. MacLaren, "The result, a record year for customer acquisition, retention and expansion. I'm proud to report that we grew our ARR by 85% to $6.5M, adding $3.0M of net new ARR - up 192% from last year - and attained Net Billings(7) of $7.2 million, up 92% from last year after a record in Q4'18 of $2.3M, up 75% from Q4'17. Highlighting the impact of our strategic focus and the growing DAM market; it took us eight years to surpass the $1 million mark in quarterly Net Billings, and just one year to surpass $2M."

Mr. MacLaren added, "In 2019, we continued to strengthen our operational and platform security. This included adding a Head of Information Security and obtaining our SOC II Type II certification, preparing us to handle the latest macro-economic and environmental climates. This has proven essential for our response to the current pandemic, as we were able to rapidly implement our remote contingency plan, across our entire organization, without interruption. We believe our proven ability to shift to providing our services remotely, and to enable our customers to do the same, will help us to continue our growth trend through these challenging times."

Rob Chase, Executive Chair and CFO commented, "It has been an exciting year for us on all fronts - from operational excellence, to product enhancement, to sales and customer growth, to growing our team, and to strengthening our balance sheet and Board. In fiscal 2019, we raised $5.1M of growth capital, significantly reduced our operational funding requirements, and ended the year with $2.8M of working capital. Additionally, after year end, we've raised a further $3.83M of capital from deposits for exercise of warrants, options and conversion rights. This has us well-positioned to fund our growth plan despite the swift economic slowdown caused by the global response to the recent pandemic. From a longer viewpoint, we expect the DAM industry to continue growing as enterprises recognize its importance for their marketing and creative teams, particularly as they move to remote working policies, and we believe that these industry tailwinds will continue to benefit MediaValet moving forward."

Results of Operations

Key Financial Metrics:

  • Grew revenue to $5.16 million in fiscal 2019, up 77% from $2.92 million in fiscal 2018. Fourth quarter revenue of $1.68 million increased 99% from $0.84 million in Q4 last year, and increased 23% sequentially. With an average of 90% of revenue from annual subscriptions, the growth reflects the corresponding changes in deferred revenue and ARR from increased levels of customer acquisition and retention. These increases are a direct result of continuous new feature development and platform enhancements, such as Advanced Search and CreativeSPACES, and of industry leading sales and marketing strategies.

  • Increased Gross Margin to $4.41 million in fiscal 2019, up 92% from $2.30 million in fiscal 2018. The Gross Margin percentage was 85% for fiscal 2019 compared to 79% last year. For the fourth quarter, gross margin was 84% compared to 81% in Q4 2018, and 86% in Q3 2019. The improved margin is due to continuous system enhancements, increased sales volume, improved operating efficiencies, and new paid feature add-ons such as Guided Artificial Intelligence (Guided AI) and CreativeSPACESTM.

  • Incurred Operating Expenses of $7.01 million, a 19% increase (2018 proforma 22%) from $5.92 million for fiscal 2018. Q4-2019 Operating Expenses were $2.11 million, a 39% increase (2018 proforma 43%) from $1.52 million in Q4 2018, and a sequential increase of 18% compared to Q3 2019. Excluding the impact of IFRS 16, the increases are primarily due to increased sales and marketing expenses as the Company targets spend in line with its current stage of development and team size. In addition, R&D costs increased for projects required to execute enterprise grade security initiatives, and to accelerate enterprise product features. This is in response to the Company's growing traction within the enterprise segment of the DAM market.

  • Reported a fiscal 2019 EBITDA loss of $2.60 million, a 28% reduction (2018 proforma 22%) from $3.62 million. The Q4 2019 EBITDA loss was $0.69 million, a 17% decrease (2018 proforma 9%) from $0.84 million in Q4 F2018. The reduced loss reflects continued revenue growth as a result of the Company's growing recurring revenue base, offset by a measured increase to operating costs in balance with funding levels and organic growth objectives.

  • Increased Annual Recurring Revenue ("ARR") to $6.50 million, an increase of 85% compared to $3.51 million at December 31, 2018. The Net New ARR ("NNARR") for fiscal 2019 was $2.99 million, up 192% from $1.02 million in fiscal 2018. Q4 2019 was $0.69 million, a 92% increase compared to NNARR of $0.36 million in Q4 2018, and a 36% sequential decline from $1.08 million in Q3 2019. Since launch of MediaValet 4.0 in May 2018 and the process of continuous enhancements to the Company's enterprise-class Cloud DAM offerings, the Company has consistently improved existing customer net retention rates (achieving over 100% in fiscal 2019), increased its average customer size, and significantly expanded its overall rate of new customer acquisition.

  • Ended the fiscal year with $2.43 million of cash on hand (December 2018 - $0.12 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $2.80 million (December 2018 - negative $0.16 million), lease liabilities of $1.18 million, long-term debt of $3.00 million, and convertible debt of $0.28 million at carrying value (December 2018 - total debt of $3.15 million).

Technology and Product:

MediaValet first launched its new V4 platform along with its unique Advanced Search (artificial intelligence), Multi-Library and CreativeSPACES modules in 2018. Since then it has continued to enhance each of these components, doing incremental releases on a weekly and monthly basis. In Fiscal 2019, this continued commitment to product innovation and advancement has led to a number of announcements, including:

  • October 29, 2019: won a $494,000 subscription under a Master Services Agreement ("MSA") with a world leader in entertainment. All of the client's many subsidiaries are now able to purchase under the MSA, having completed an extensive evaluation of MediaValet's security, scalability, customer support, operational processes and business execution.

  • September 12 to October 3, 2019: announced several large new customer DAM subscriptions including $115,000 from a US federal agency, $65,000 from a higher-education customer, $85,000 from a manufacturing company, and $94,000 from a Sports and Entertainment group. Highlights included: government customer revenue increased 125% to 10% of total revenue; Higher-education remains over 10% of total revenue and increased 29%; and revenue from customers with high-security needs were 46% of new customers, an increase of 337% over the prior year to date.

  • June 5 and July 11, 2019: announced two new large customer wins, of approximately $100,000 each, with world leading organizations for Sports and Entertainment and Global Sales and Marketing Services. Both new customers purchased DAM + CreativeSPACES.

  • April 30, 2019: reported existing customer usage and adoption performance improvements following migration of V4 in September 2018. In particular - (i) an Agency customer doubled its DAM subscription value to US$125,000 in ARR; and (ii) a Fortune 50 customer added a seventh division, increasing its subscription value 39% to US$95,000 in ARR.

  • March 21, 2019: indicated that the integration partnership with Wrike is making a difference for customers. Mutual customer, Pendo, improved user experience across both Wrike and MediaValet platforms, allowing Pendo's team to save money, improve brand consistency and maximize the impact of their digital assets.

  • February 26, 2019: a global leader in design awarded MediaValet with a US$140,000 subscription, citing CreativeSPACES as a "must-have for its distributed creative operation teams".

Operations and Corporate:

  • September 12, 2019: converted $1.20 million of convertible debentures for 2,287,162 units at $0.525 per unit. Each unit includes one common share and one share purchase warrant with an exercise price of $0.90 for a period of 3 years, subject to the Company's right to force exercise if the 10-day average share price exceeds $1.50. All rights under the convertible debentures were surrendered on conversion, including the warrants issued with the debentures. A total of $350,000 of convertible debentures remain outstanding.

  • September 10, 2019: announced closing of a $3.5 million brokered private placement with Cormark Securities, Inc., issuing 6,666,666 units at $0.525 per unit. Each unit includes one common share and one share purchase warrant with an exercise price of $0.90 for a period of 3 years, subject to the Company's right to force exercise if the 10 day average share price exceeds $1.50. Broker commissions were $245,000 plus 136,111 broker warrants with an exercise price of $0.90 for a period of 3 years.

  • September 10, 2019: Francis Shen of Shen Capital Corporation joins MediaValet's Board of Directors, and Shen Capital becomes an 11.74% shareholder through its participation in the brokered private placement. Mr. Shen was the former Chairman, Co-Chief Executive Officer and founder of Aastra Technologies Ltd.

  • September 9, 2019: the Company's shares began trading on a consolidated basis, having completed a 15:1 share consolidation, reducing the number of shares outstanding to 24,346,823 after completion of the brokered private placement and conversion of convertible debentures.

  • March 20, 2019: completed a $1.55 million convertible debenture financing. $1.20 million of the debentures converted to equity on September 12, 2019.

  • February 14, 2019: strengthened the Board of Directors with the addition of seasoned technology executives, Thomas Kenny (former SVP of Sales for Absolute Software and HP) and Jake Sorofman (Chief Marketing Officer of Pendo, and former Vice President and Chief of Research at Gartner). At the same time, Barry Jinks stepped down from the Board and the Company thanked him for his many years of service.

Subsequent Events:

  • On February 25, 2020, announced accelerated expiry of 7,133,332 warrants for total potential proceeds of $6.35 million. The warrants relate to financings from September 10, 2019 and March 20, 2019, and the new expiry date is April 27, 2020 (previously September 10, 2022 and March 20, 2022 respectively).

  • From January 1, 2020 to April 6, 2020, deposits of $3.83 million were received from the exercise of warrants, stock options and convertible debenture conversion rights, for a total of 4,193,452 common shares. This includes full settlement of the remaining $350,000 of convertible debentures.

  • On February 13, 2020 and April 2, 2020, the Company issued new hire stock options grants to certain employees of 38,000 and 85,000 options, at $1.53 and $0.88 per share respectively. The options have a term of five years, and a vesting term of three equal instalments on the first three annual anniversary dates from grant date.

  • On March 11, 2020, the World Health Organization categorized COVID-19 as a pandemic. The potential economic effects could have a material impact on the performance of most companies and industries. The extent of the impact of this outbreak and related containment measures on the Company's performance cannot be reliably estimated at this time.

1 Adoption of IFRS 16: Fiscal 2018 figures have not been restated for adoption of IFRS 16 as the changes were applied starting January 1, 2019 on a Modified retrospective basis. Had fiscal 2018 figures been restated, the 2019 percentage change from 2018 ("2018 proforma") would be a 22% increase (Q4'19: 43%) for Operating Expenses, and a 22% decline (Q4'19: 9%) for EBITDA Loss. IFRS 16 did not impact the Net Loss. See "Adoption of New Account Standards".

2 Adoption of IFRS 15: Fiscal 2017 figures have not been restated for adoption of IFRS 15 as the changes were applied starting January 1, 2018 on a cumulative effect basis. Had fiscal 2017 figures been restated, the 2018 percentage change would ("2017 proforma") be a 6% increase (Q4'18: 22%) for Operating Expenses, and a 4% decline (Q4'18: 8% increase) for EBITDA Loss. See "Adoption of New Account Standards".

3 Operating Expenses include Sales & Marketing, Research & Development and General & Administrative.

4 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.

5 Per share figures have been adjusted to reflect the 15:1 share consolidation completed on September 9, 2019. Note that quarterly loss per share amounts may not aggregate to the annual amount disclosed in the annual financial statements due to rounding.

6 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.

7 Net Billings are a non-IFRS measure representing the sum of invoiced sales in the period, including both existing customer renewal invoices and new customer invoices with standard payment terms (generally net-30). Net Billings are calculated by subtracting closing deferred revenue from opening deferred revenue and adding recognized revenue for the period. Management believes Net Billings are an important measure for understanding the business, as given that the related revenue is deferred and amortized, Net Billings provides a measure of the amount of cash generated from customers in the period.

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-based digital asset management industry. Built exclusively on Microsoft Azure and available in 140 countries, 54 Microsoft data center regions, around the world, MediaValet delivers unparalleled enterprise class security, reliability, redundancy and scalability while offering the largest global footprint of any DAM solution. In addition to providing all core DAM capabilities and local desktop-to-cloud support for creative teams, MediaValet offers industry leading integrations into Slack, Adobe Creative Suite, Microsoft Office 365, Oracle Marketing Cloud (Eloqua), Drupal 8, WordPress, Hootsuite and many other best-in-class 3rd party applications.

For further information, please contact:

Corporate Office
David MacLaren, CEO | david.maclaren@mediavalet.com | (604) 688-2321
Rob Chase, Executive Chairman and CFO | rob.chase@mediavalet.com | (604) 688-2321

Press Relations
Babak Pedram | babak.pedram@mediavalet.com| (416) 644-5081

"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."

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