MediaValet Reports First Quarter Fiscal 2020 Results

Delivers Record Q1 Revenue, up 73%, Grows ARR 67%, Increases Cash to $4.7M

Vancouver, British Columbia--(Newsfile Corp. - May 14, 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 three months ended March 31, 2020.

Summary of Quarterly Results


Three months ended March 31


2020

2019
Revenue $1,724,700
$996,076
% Increase
73%

62%
Gross Margin
1,425,169

850,662
Gross Margin %
83%

85%
Operating Expenses1
2,175,662

1,479,636
% Increase
47%

8%
EBITDA Loss2
(750,493)
(628,974)
% Increase / (Decrease)
19%

(28%)
Net loss
(939,748)
(825,665)
% Increase / (Decrease)
14%

(26%)
Loss per share3
(0.04)
(0.05)


At March
31, 2020


At December 31, 2019
Annual Recurring Revenue ("ARR")4$6,891,249
$6,501,074
% Increase over prior year period
67%

85%
Modified Working Capital ex. of Deferred
     
Revenue and Debt

5,538,571

2,800,748
Deferred Revenue
4,394,709

4,407,953
% Increase over prior year period
54%

90%
Total assets
8,927,848

6,486,469
Lease liabilities
1,136,481

1,182,835
Long-term and Convertible Debt
3,000,000

3,283,199
Shareholder Deficiency
(1,232,437)
(4,260,076)

 

"In the midst of the pandemic, facing faltering economies and shuttered industries around the world, we're thankful to be delivering critical infrastructure that organizations need to work remotely," said David MacLaren, Founder and CEO. "Today, we announce another quarter of strong revenue growth, illustrating the increasing role DAM is playing not only in day-to-day operations but also in business continuity plans. COVID-19 has forever changed the way we work. Remote working is now part of our lives, it has to be planned for, both as a necessity and as a way of life going forward. Overnight, SaaS and Cloud have taken center stage; VPNs and other legacy infrastructure can no longer be relied on to support the needs of tomorrow's business operations - let alone today's."

Continued MacLaren, "Coming into 2020, we ramped up our investment in product, sales and marketing, and customer success to fuel our next stage of growth. This investment found us well prepared when COVID-19 was declared a pandemic and organizations moved en masse to remote work environments. This is evident in our customer usage rates which are up over 100% from March last year and up 30% since January."

Mr. MacLaren added, "As distributed workforces become a major component of our new normal and organizations rely more heavily on Cloud-based systems, Cloud DAM will become increasingly important in day-to-day operations and business continuity plans across most industries and geographies. Together with a leading market position and a well differentiated enterprise product offering, we believe MediaValet is in a strong position for the foreseeable future."

Rob Chase, Executive Chair and CFO commented, "We are grateful to have the funding to implement our strategic plan, and to have earned the support of a great investor base. We exited our first quarter with $4.70 million in cash following exercise of $3.83 million of warrants, options and debt conversions in the quarter. Including the warrants exercised after quarter end, our pro-forma March 31 cash balances are $8.01 million. Fiscal 2019 showed the growth potential and the leverage we are capable of unlocking. While still showing solid growth in Q1 2020, the current economic climate resulted in a lower level of net new ARR generated in the quarter. This is a direct result of COVID-19, as some of our Q1 prospects delayed their purchase decisions to allow them time to adapt to their new normal. We are confident that these organizations will complete their purchases in the coming quarters and that we will see a release of pent-up demand as they settle in. In the meantime, we will use this time to invest in a measured expansion through this cycle, and believe this will position us to emerge stronger, retain our high growth and increase our operational leverage and market position for the future. We now have ample capital to fund this expansion, to weather the storms from the current economic downturn, and to grow MediaValet's leadership position in the DAM industry."

Results of Operations

Key Financial Metrics:

  • Grew revenue to $1.72 million in Q1 2020, up 73% from $1.00 million in Q1 2019, and up 3% sequentially from Q4 2019. With an average of 90% of revenue from annual subscriptions, the growth reflects the corresponding changes in deferred revenue and increasing ARR from customer acquisition, retention, and expansion. These increases in ARR are a direct result of continuous new feature development and platform enhancements, such as Branded Portals, AI Tagging, Advanced Search, and CreativeSPACES, and of industry leading sales and marketing strategies.
  • Increased Gross Margin to $1.43 million in Q1 2020, up 68% from $0.85 million in Q1 2019, and up 1% sequentially. The Gross Margin percentage was to 83% for Q1 2020 compared to 85% in Q1 2019 and 84% Q4 2019. The reduced margin in Q1 2020 is primarily due to customers working remotely in response to COVID-19, which resulted in a significant increase in customer usage and adoption statistics. Management believes this to be a positive indication of the mission-critical nature of its Cloud DAM.
  • Incurred Operating Expenses of $2.18 million in Q1 2020, a 47% increase from $1.48 million in Q1 2019, and a 3% increase compared to Q4 2019. The increases are primarily due to a step-level expansion of sales and marketing ("S&M"), and research and development ("R&D") as part of the Company's long-term strategy. The planned expansions are expected to increase its sales potential as the expanded S&M team ramps to full capacity, and to enable the R&D team to accelerate enterprise product features to capture market share.
  • Reported a Q1 2020 EBITDA loss of $0.75 million, up 19% from $0.63 million in Q1 2019, and up 8% sequentially. The increased loss is expected due to the step-level increase in operating expenses, which require a ramp period before impacting sales growth, and due to the impact of COVID-19 on the rate of new customer acquisition. This was partially offset by continued revenue growth from the Company's growing ARR and customer base.
  • Increased Annual Recurring Revenue ("ARR") to $6.89 million, an increase of 67% compared to $4.13 million at March 31, 2019, and 6% from $6.50 million at December 31, 2019. The increases reflect strong existing customer expansion and retention, and new customer acquisition. The Net New ARR ("NNARR") for Q1 2020 was $0.39 million, down 37% from $0.62 million in Q1 2019 and 44% sequentially. The decreases in NNARR are primarily due to the global economic shutdown in response to COVID-19, which caused a number of new customer contracts to be delayed beyond the signing cut-off date for the quarter.
  • Ended the quarter with $4.70 million of cash on hand (December 2019 - $2.43 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $5.54 million (December 2019 - $2.80 million), lease liabilities of $1.18 million, long-term debt of $3.00 million, and convertible debt of $nil (December 2019 - total debt of $4.46 million).

Technology and Product:

MediaValet first launched its new V4 platform along with its unique Advanced Search, 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. This continued commitment to product innovation and advancement has led to a number of announcements, including:

  • March 19, 2020: announced that one of the Company's largest customers has expanded their DAM initiative in Q1 2020 to support additional libraries of high-value media assets throughout their business, increasing their annual license by more than $190,000.
  • February 11 and 20, 2020: highlighted that MediaValet's enterprise-class solutions and innovative approach continued to drive strong growth in high-security and manufacturing sectors in fiscal 2019. High-security sectors, such as financial, healthcare, government and legal, generated 39% of total new ARR, increasing 510% over fiscal 2018. In addition, new manufacturing customer revenue grew 123% for the year and the sector now represents 14% of the Company's ARR.
  • January 8, 2020: achieved record customer adoption and expansion levels in fiscal 2019, including expanded services and a three-year renewal term with one of its largest customers upon their first renewal date, and attaining 100%+ net retention of existing customer recurring revenue.

Operations and Corporate:

  • February 25, 2020: the Company elected to accelerate expiry of 7,133,332 warrants to April 27, 2020 (previously March and September 2022), for total potential proceeds of $6.35 million. The acceleration was triggered upon its common shares trading at greater than $1.50 for ten consecutive days. At March 31, 2020, 3,090,476 of the warrants had exercised for proceeds of $2.75 million. Total proceeds from all warrants, options and debt conversions in the quarter was $3.83 million, and a total of 4,193,453 common shares were issued.

Subsequent Events:

  • From April 1, 2020 to April 27, 2020, proceeds of $3.31 million were received from the exercise of warrants that were subject to an accelerated expiry date, 3,711,704 common shares were issued, and 331,152 warrants expired and were cancelled. The number of warrants remaining outstanding was reduced to 2,287,163 with an exercise price of $0.90.
  • On April 2, 2020, the Company issued 85,000 stock options to new hires with an exercise price of $0.88 per share. 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.

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

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 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.

4 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.

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."

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/55834

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