MediaValet Reports Third Quarter Fiscal 2020 Results
Delivers Record Q3 Revenue, up 38%, and Grows ARR 37%
Vancouver, British Columbia--(Newsfile Corp. - November 17, 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 and nine months ended September 30, 2020.
Summary of Quarterly Results
|Three months ended|
|Nine months ended|
|Revenue||$ 1,892,351||$ 1,368,936||$ 5,363,477||$ 3,483,958|
|Gross Margin %||82%||86%||82%||86%|
|% Increase / (Decrease)||73%||(30%)||34%||(31%)|
|% Increase / (Decrease)||66%||(20%)||31%||(22%)|
|Loss per share3||(0.04)||(0.05)||(0.11)||(0.16)|
|At September |
|At December 31, 2019|
|Annual Recurring Revenue ("ARR")4||$ 7,936,219||$ 6,501,074|
|% Increase over prior year period||37%||85%|
|Modified Working Capital ex. of Deferred Revenue and Debt||5,288,859||2,800,748|
|% Increase over prior year period||33%||90%|
|Long-term and Convertible Debt||1,000,000||3,283,199|
"We're happy to report another strong quarter of growth in Q3'20 as we continue to support our customers and lean-in on Product, Customer Success and Sales & Marketing," commented David MacLaren, Founder and CEO of MediaValet. "The software market is changing rapidly as organizations transform to support a hybrid, work-from-anywere, digital environment; which demands a high level of accessibility, reliability, security, compliance and speed. Enterprise Cloud solutions are a critical component to ensuring organizations can meet the demands of what lies ahead."
Mr. MacLaren continued, "Our hyper focus on managing digital assets, and their data, throughout their entire lifecyle - from ideation to archival - is a major competitive advantage and is proving to position us extremely well in today's environment. We're grateful to be in a position to help our customers that are being severely affected during these challenging times, and to support the growth and expansion of new and existing customers who are faring well. As we continue to double down on growth areas of our business, we expect to be able to help more and more organizations around the world."
Added Mr. MacLaren, "Our double down efforts resulted in a number of exciting new customer announcements in Q3'20. Today, I'm proud to announce another exciting win included in Q3'20 - a five-year contract with a not-for-profit organization that will entrust MediaValet to securely archive and enable broad scientific access to over 60 years of sociobiologic research. The first annual billing under the contract of $266,000 includes our core enterprise DAM offering, Advanced Custom AI, and professional services covering implementation, training and support."
"We ended Q3'20 with working capital of $5.29 million and closed another $11.50 million equity financing in October 2020," commented Rob Chase, Executive Chair and CFO of MediaValet. "We have the growth capital to continue advancing our operations, particularly Customer Success, R&D and S&M, in order to position us to win an even greater share of the rapidly growing DAM market. Our step-level expansion in 2020 is already having impact, with our Q3'20 net new ARR increasing 78% sequentially, and with the recent release of CreativeSPACES™ Remote Edition - which we expect to further our competitive advantages and impact growth rates in the coming quarters. In addition, we've already begun to deploy our new growth capital, including a $200,000 go-to-market sponsorship in Q3'20 for a collaboration with a marquee customer and partner, and four targeted virtual tradeshows in Q4'20 to reach new prospect customers and partners. Also in Q4'20, we have kicked off a significant engineering project to take our user-experience to a best-in-class level. We expect these initiatives to help accelerate our product differentiation and sales growth in the quarters ahead."
Results of Operations
Key Financial Metrics:
- Grew revenue to $1.89 million in Q3 2020, up 38% from $1.37 million in Q3 2019, and up 8% sequentially from Q2 2020. For the year-to-date ("YTD") period, revenue of $5.36 million is up 54% from $3.48 million last YTD. The majority (generally >90%) of revenue is from monthly recognition of annual SaaS subscriptions. As a result, the growth reflects changes in deferred revenue and ARR from customer acquisition, retention, and expansion, which has increased through industry leading sales and marketing strategies, and continuous new feature development and platform enhancements.
- Increased Gross Margin to $1.55 million in Q3 2020, up 31% from $1.18 million in Q3 2019, and up 10% sequentially. The YTD Gross Margin increased 47% to $4.40 million. As a percent of revenue, YTD Gross Margins were 82%, down from 86% last YTD. The Gross Margin percentage was to 82% for Q3 2020 compared to 86% in Q3 2019 and 82% Q2 2020. The reduced margin is primarily due to the short-term impact of the step increase in headcount and customers working remotely in response to COVID-19, which has 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 $2.59 million in Q3 2020, a 45% increase from $1.78 million in Q3 2019, and up 19% sequentially. YTD Operating Expenses were $6.95 million, an increase of 42% from $4.91 million last YTD. The increases are primarily due to a step increase in sales and marketing ("S&M"), and research and development ("R&D") as part of the Company's growth plan. After a ramp-up period, the planned expansions are expected to impact sales growth through increased global market reach and accelerated enterprise product development. In addition, Q3 2020 included a one-time $200,000 fee for a sponsorship program for a DAM-specific initiative with a customer and partner that is expected to benefit pipeline and sales growth in Fiscal 2021.
- Reported a Q3 2020 EBITDA loss of $1.04 million, up 73% from $0.60 million in Q3 2019, and up 36% sequentially. The YTD EBITDA loss of $2.56 million increased 34% compared to $1.91 million last YTD. The increased loss was expected and is due to the step increase in operating expenses, which require a ramp period before impacting sales growth, and due to the impact of COVID-19 on customer net retention and acquisition. YTD net customer retention rates declined below the 100% level achieved in Fiscal 2019, and new customer acquisition levels were also below the prior year due to the impact of COVID-19.
- Increased Annual Recurring Revenue ("ARR") to $7.94 million, an increase of 37% compared to $5.81 million at September 30, 2019, and 22% from $6.50 million at December 31, 2019. The Net New ARR ("NNARR") for Q3 2020 was $0.67 million, down 38% from $1.08 million in Q3 2019 and up 78% sequentially. The decrease in NNARR from Q3 2019 is due to the prior year including a $494,000 new customer win, and due to the impact of COVID-19 on current sales cycles. The sequential increase from Q2 2020 reflects improving economic conditions as business begin to return to more normal operations, which has resulted in an incremental increase in new customer acquisition and retention rates.
- Ended the quarter with $4.12 million of cash on hand (December 2019 - $2.43 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $5.29 million (December 2019 - $2.80 million), lease liabilities of $1.04 million, and total long-term debt of $1.00 million (December 2019 - total lease and debt of $4.46 million).
Technology and Product:
- October 20, 2020: launched CreativeSPACES Remote Edition. The first major version upgrade of SPACES that untethers creative operation teams from the office and VPN. Management believes this to be a significant enhancement for expanding the target market opportunity, particularly in today's work-from-anywhere world.
- September 15 to October 29, 2020: announced two new entertainment customers, one subscribed for $77,000 and the other for $90,000, and one new services company for a $93,000 subscription. This increased the media and advertising industry to 17% of recurring revenue. In addition, two of the customers are based in Europe, highlighting success in attracting global customers.
Operations and Corporate, and Subsequent Event:
- Subsequent to quarter end, on October 8 and 29, 2020: announced and closed a bought deal private placement financing via a syndicate led by Cormark Securities, Inc., raising a total of $11.50 million, including a $1.50 million over-allotment, and issuing a total of 5,750,000 common shares that will be free-trading on March 1, 2021. A cash commission of $690,000 was paid to the syndicate.
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 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 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, Drupal 8, WordPress and many other best-in-class 3rd party applications.
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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.
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