PR Newswire
VANCOUVER, BC, Aug. 14, 2023
VANCOUVER, BC, Aug. 14, 2023 /PRNewswire/ - BBTV Holdings Inc. (TSX: BBTV) (OTCQX: BBTVF) (the "Company"), a media tech company that uses technology enabled solutions to help content creators become more successful, today announced financial results for Q2 2023 for the period ended on June 30, 2023.
The Management Discussion and Analysis ("MD&A"), along with full financial statements are posted and available on SEDAR at www.sedar.com. All dollar amounts are expressed in thousands of Canadian dollars except where otherwise indicated.
"While total views increased 20% on a year over year basis, YouTube Shorts now represents 52% of the company's total views, which is still in its early stages of monetization and trending positively. " said Shahrzad Rafati, Chairperson and CEO of BBTV. "We remain pleased with the rate that we are converting the Content Management deal pipeline which continues to be robust and growing. We signed three major contracts in the first half of the year, which we expect will help us to continue growth in Plus Solutions revenue."
KB Brinkley, CFO of BBTV commented "We continue to extend our cost optimization efforts by further aligning operations towards Plus Solutions and removing costs from our shared services and Base Solutions line of business. Our cost optimization efforts have so far resulted in a 34% decline in operating expenses compared to Q2 2022 and a 28% reduction in costs when comparing the first half of 2023 to first half of 2022. The discounted payout option that we've arranged with RTL, combined with improvements in operating costs and upside from our recent business development wins provide us with an enhanced path to profitability."
Q2 2023 Financial and Operational Highlights:
BBTV ended Q2 2023 with $14.4 million in cash compared to $22.8 million in the previous year Q2 2022. Its long-term debt balance was $44.3 million as of June 30, 2023, with maturities primarily in 2026 or 2027, which is down by $9.8 million from $54.1 million in the prior year second quarter. The decrease of debt is primarily related to the IFRS accounting treatment associated with the RTL discounted payout option announced during the quarter.
Total views for the quarter reached 114.4 billion, a 20% increase compared to the previous year quarter, and a 1% increase compared to Q1 2023. The increase in views was driven by a 223% year-over-year increase in YouTube Shorts viewership to 59.8 billion views in Q2 2023, which is approximately 52% of total views. Monetization in the form of RPM (Revenue per Thousand Views) ticked up by 2% to $0.54 compared to $0.53 in Q1 2023 and declined by 43% compared to the previous year. The year-over-year decline in RPM is a direct result of the emergence of YouTube Shorts views. Over time, it is expected that the monetization of YouTube Shorts should increase to mirror those of regular-length YouTube video. Excluding Shorts, the monetization of 54.5 billion regular form content views remained steady near typical rates at $1.14. As YouTube Shorts RPMs track higher, notwithstanding typical seasonality, overall RPMs are expected to increase over time.
Total revenue of $72.8 million declined by 27% compared to $99.9 million in Q2 2022 primarily due to a higher mix of YouTube Shorts views, which are at early stages of monetization.
The Company continued efforts to optimize its cash cost base, to re-align operations for maximum performance, and to accelerate towards profitability. Combined with cost optimization completed last year, the Company has reduced cash expenses in the Base Solutions business. The Company continues to focus on operational efficiencies and alignment towards maximum performance, and the expense ratio across the business supports current strategies going forward.
Overall, BBTV's operating expenses of $10.6 million have declined by $5.6 million or 34% compared to the previous year Q2 2022, and 28% compared to the first half of 2022 due to resource reductions and operational realignment. The Company expects to continue to find ways to optimize operations in the coming months.
Plus Solutions, including popular solutions such as Content Management and Direct Advertising Sales, deliver higher margin monetization opportunities for BBTV. Overall, during Q2 2023, Plus Solutions represented approximately 15% of total revenue compared to 13% in Q2 2022, and 33% of Adjusted Gross Profit. With a large pipeline of mostly global enterprise clients, Plus Solutions should continue to grow as a percentage of total revenue and Adjusted Gross Profit.
As of Q2 2023, Content Management revenue is tracking as our strongest Plus Solution with solid visibility on pipeline conversion. During the quarter, the Company began deploying two major Content Management contracts that have the potential to become among the top five largest Content Management revenue streams.
Outlook:
BBTV's monetization is closely tied to the performance of YouTube. Consumer preference has shifted from long-form content to micro-content across all major platforms, and while YouTube introduced YouTube Shorts a number of years ago to respond to consumer preferences, BBTV's monetization on YouTube Shorts only began on February 1, 2023. This format now represents about 52% of BBTV's viewership in Q2 2023, up from 20% of viewership in Q2 2022. Once monetization of YouTube Short views matures across the Company's entire library, it could represent significant incremental revenue to BBTV. Google has stated publicly that, over time, it expects to close the monetization gap between YouTube Shorts and regular YouTube content.
Plus Solutions continue to represent significant revenue growth potential for the Company as well as viewership and valuable incremental revenue streams for partners. Led by recent Content Management contract successes and a growing overall pipeline for the solution. Additionally, Direct Advertising Sales should continue to grow.
Overall, the diversity of revenue streams, combined with improved liquidity and cost optimization programs, have positioned BBTV to weather future macroeconomic uncertainties while also accelerating towards sustained profitability.
Q2 2023 FINANCIAL TABLES:
Three Months Ended | ||||
Q2 2023(1) | Q2 2022(1) | $ Change | % Change | |
Base Solutions revenue | $62,094 | $86,932 | ($24,838) | (29 %) |
Plus Solutions revenue | $10,703 | $12,996 | ($2,293) | (18 %) |
Total revenue | $72,797 | $99,928 | ($27,131) | (27 %) |
Gross profit (loss) (which includes PPA Amortization) | ($1,616) | $806 | ($2,422) | (300 %) |
Gross Margin (which includes PPA Amortization) | (2 %) | 1 % | ||
Adjusted Gross Profit | $ 5,816 | $8,266 | ($2,450) | (30 %) |
Gross Margin Excluding PPA Amortization | 8 % | 8 % | ||
Net income/(loss) | $3,842 | ($14,244) | $18,086 | (127 %) |
Adjusted EBITDA | ($2,919) | ($5,654) | $2,735 | (48 %) |
Cash flow used in operating activities | ($3,894) | ($6,361) | ($2,467) | (39 %) |
(1) These figures are derived from the Company's IFRS financial statements. Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and Gross Margin Excluding PPA Amortization is a non-GAAP ratio. These terms are defined under "Key Metric Definitions" below. A reconciliation of non-GAAP financial measures and non-GAAP ratios are set out below under "Non-GAAP Financial Measures and Non-GAAP Ratios Reconciliation Tables".
Three Months Ended | ||||
Q2 2023(1) | Q1 2023(1) | $ Change | % Change | |
Base Solutions revenue | $62,094 | $60,897 | $1,197 | 2 % |
Plus Solutions revenue | $10,703 | $10,867 | ($164) | (2 %) |
Total revenue | $72,797 | $71,764 | $1,033 | 1 % |
Gross profit (loss) (which includes PPA Amortization) | ($1,616) | ($795) | ($821) | 103 % |
Gross Margin (which includes PPA Amortization) | (2 %) | (1 %) | ||
Adjusted Gross Profit | $5,816 | $6,685 | ($869) | (13 %) |
Gross Margin Excluding PPA Amortization | 8 % | 9 % | ||
Net income/(loss) | $3,842 | ($14,599) | $18,441 | (126 %) |
Adjusted EBITDA | ($2,919) | ($2,872) | ($47) | 2 % |
Cash flow used in operating activities | ($3,894) | ($10,844) | $6,950 | (64 %) |
(1) These figures are derived from the Company's IFRS financial statements. Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures and Gross Margin Excluding PPA Amortization is a non-GAAP ratio. These terms are defined under "Key Metric Definitions" below. A reconciliation of non-GAAP financial measures and non-GAAP ratios are set out below under "Non-GAAP Financial Measures and Non-GAAP Ratios Reconciliation Tables".
Q2 2023 KEY METRICS:
Three Months Ended | ||||
Q2 2023 | Q2 2022 | Change | % Change | |
Views (billions) | 114 | 95 | 19 | 20 % |
RPMs (in dollars) | $0.54 | $0.94 | ($0.40) | (43 %) |
Three Months Ended | ||||
Q2 2023 | Q1 2023 | Change | % Change | |
Views (billions) | 114 | 113 | 1 | 1 % |
RPMs (in dollars) | $0.54 | $0.53 | $0.01 | 2 % |
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Income Statement
Three Months Ended | Six Months Ended June 30, | ||||||
2023 $ | 2022 $ | % change | 2023 $ | 2022 $ | % change | ||
Revenue | $72,797 | $99,928 | (27 %) | $144,561 | $198,764 | (27 %) | |
Cost of revenue | |||||||
Content creator and other fees | $66,552 | $91,272 | (27 %) | $131,217 | $180,593 | (27 %) | |
Amortization | $7,861 | $7,850 | 0 % | $15,755 | $15,674 | 1 % | |
Total cost of revenue | $74,413 | $99,122 | (25 %) | $146,972 | $196,267 | (25 %) | |
Gross profit (Loss) | ($1,616) | $806 | (300 %) | ($2,411) | $2,497 | (197 %) | |
Expenses | |||||||
Sales and marketing | $4,339 | $8,545 | (49 %) | $9,506 | $16,286 | (42 %) | |
General and administration | $4,123 | $4,566 | (10 %) | $8,116 | $8,878 | (9 %) | |
Research and development | $1,086 | $1,404 | (23 %) | $2,278 | $2,740 | (17 %) | |
Share-based compensation | $156 | $686 | (77 %) | $870 | $1,719 | (49 %) | |
Amortization and depreciation | $903 | $953 | (5 %) | $1,927 | $1,972 | (2 %) | |
Total operating expenses | $10,607 | $16,154 | (34 %) | $22,697 | $31,595 | (28 %) | |
Operating loss | ($12,223) | ($15,348) | (20 %) | ($25,108) | ($29,098) | (14 %) | |
Gain on debt modification | $18,007 | - | NA | $18,007 | - | NA | |
Foreign exchange gain (loss) | $1,186 | ($954) | (224 %) | $1,126 | ($355) | (417 %) | |
Interest expense | ($2,881) | ($2,203) | 31 % | ($5,619) | ($4,382) | 28 % | |
Other expense | ($1,451) | ($152) | 855 % | ($2,414) | ($491) | 392 % | |
Transaction-related costs | ($90) | ($54) | 67 % | ($61) | ($539) | (89 %) | |
Total non-operating | $14,771 | ($3,363) | (539 %) | $11,039 | ($5,767) | (291 %) | |
Gain (Loss)before income taxes | $2,548 | ($18,711) | (114 %) | ($14,069) | ($34,865) | (60 %) | |
Provision for income taxes | $1,294 | $4,467 | (71 %) | $3,312 | $8,082 | (59 %) | |
Net Income (Loss) | $3,842 | ($14,244) | (127 %) | ($10,757) | ($26,783) | (60 %) | |
Other comprehensive loss | |||||||
Exchange differences on | ($122) | ($107) | 14 % | ($81) | ($500) | (84 %) | |
Loss and comprehensive loss | $3,720 | ($14,351) | (126 %) | ($10,838) | ($27,283) | (60 %) | |
Basic income (loss) per | $0.18 | ($0.67) | ($0.50) | ($1.27) | |||
Diluted income (loss) per | $0.16 | ($0.67) | ($0.50) | ($1.27) | |||
Weighted average | 21,647,547 | 21,221,283 | 21,569,050 | 21,117,461 | |||
Diluted (in whole numbers) | 23,643,859 | 21,221,283 | 21,569,050 | 21,117,461 | |||
Non-GAAP Financial Measures and non-GAAP Ratios Reconciliation Tables:
Adjusted EBITDA and Adjusted EBITDA Margin
Three months ended June 30, | Six months ended June 30, | |||
2023 | 2022 | 2023 | 2022 | |
Net income (loss) | $3,842 | ($14,244) | ($10,757) | ($26,783) |
Amortization and depreciation(1) | $8,764 | $8,803 | $17,682 | $17,646 |
Share-based compensation | $156 | $686 | $870 | $1,719 |
Unrealized and realized foreign exchange | ($1,186) | $954 | ($1,126) | $355 |
Interest expense | $2,881 | $2,203 | $5,619 | $4,382 |
Gain on debt modification | ($18,007) | - | ($18,007) | - |
Other expense | $1,451 | $152 | $2,414 | $491 |
Receivable factoring banking fees | $384 | $205 | $765 | $363 |
Transaction-related costs | $90 | $54 | $61 | $539 |
Recovery of income taxes | ($1,294) | ($4,467) | ($3,312) | ($8,082) |
Adjusted EBITDA(2) | ($2,919) | ($5,654) | ($5,791) | ($9,370) |
Total revenues | $72,797 | $99,928 | $144,561 | $198,764 |
Adjusted EBITDA Margin (2) | (4.0 %) | (5.7 %) | (4.0 %) | (4.7 %) |
(1) Includes depreciation and amortization reported in cost of revenue and operating expenses for all periods.
(2) Adjusted EBITDA is a non-GAAP financial measure while Adjusted EBITDA Margin is a non-GAAP ratio. Further details on these measures are included in the "Key Metrics Definitions" section of this press release.
BBTV Share, Adjusted Gross Profit, and Adjusted Gross Margin
Three months ended June 30, | Six months ended June 30, | |||
2023 | 2022 | 2023 | 2022 | |
Revenue | $72,797 | $99,928 | $144,561 | $198,764 |
Less: content creator and third-party platform fees | ($66,552) | ($91,268) | ($131,217) | ($180,507) |
BBTV Share (A) | $6,245 | $8,660 | $13,344 | $18,257 |
Gross Profit (Loss) | ($1,616) | |||
