BBTV Announces Q3 2021 Results

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Nov 10, 2021, 16:30 ET

Plus Solutions saw solid revenue growth of 23%, viewership retention was 94%

VANCOUVER, BC, Nov. 10, 2021 /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 Q3 2021 ended on September 30, 2021. Due to the acquisition by the Company of BroadbandTV Corp. on October 28, 2020 (the "Business Combination Transaction"), which contributed less than three months of results of BroadbandTV Corp. to the results of operations of the Company for the prior year ended December 31, 2020, the Q3 2020 results are provided on a pro forma basis. The pro forma basis includes the operations of BroadbandTV Corp, the main operating entity and BBTV Holdings for both Q3 2021 and Q3 2020. The statutory financial statements include BBTV Holdings only, which does not include the main BroadbandTV operating entity for Q3 2020, but does for Q3 2021. See "Pro Forma Basis" below for further information regarding this pro forma presentation.

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 Canadian currency and are prepared in accordance with International Financial Reporting Standards ("IFRS").

"Our higher margin Plus Solutions are an important driver in the improvement of our overall margins and are broadly tracking our ambitious internal goals," said Shahrzad Rafati, Chairperson and CEO of BBTV. "Plus Solutions revenue streams had solid growth at 23% this quarter, our views retention was strong at 94%, and we saw robust RPM growth of 5% in contrast to some reported industry trends for the quarter. We achieved solid Adjusted EBITDA margin performance. We expect these growth rates to be sustainable on an annual basis as we continue to invest in our Plus Solutions. Our recently announced deal with Spotter for up to US$125 million is just one example of how BBTV can leverage the large and growing scale of our profitable Base Solutions business to power higher margin Plus Solutions revenue. We are on a mission to power the creator economy and are just getting started."

Q3 2021 Financial Highlights:

BBTV Share, which is a non-IFRS measure defined as revenue less content creator and third-party platform fees, in Q3 2021 was $9.4 million, consistent with $9.4 million for Q3 2020, as the contribution to BBTV Share in relation to the growth in Plus Solutions revenue was offset by the decline in Base Solutions revenue.
Plus Solutions revenue was $9.2 million, up 23.2% from $7.5 million reported in the previous year quarter. Plus Solutions revenue growth was led by Content Management and Direct Advertising Sales, which were up by 30.5% and 45.8% year over year, respectively.
Adjusted Gross Margin, which is a non-IFRS measure, and is gross profit divided by BBTV Share, was 95.6% for Q3 2021, compared to 93.2% reported for Q3 2020. Adjusted Gross Margin should remain stable for the foreseeable future.
Adjusted EBITDA Margin, which is a non-IFRS measure, and is Adjusted EBITDA divided by revenue, throughout YTD 2021 improved by a full 60 basis points going from (2.4%) in Q1 2021 to (1.8%) in Q3 2021, despite our continued investment in Plus Solutions.
Our churn rate is low among creators on the BBTV platform. We continue to have strong retention rates whereby we retain 94% of our views among the creator base (LTM Sept 2021). This is similar to customer retention as views times RPMs equals revenues.
The Company ended the quarter with $25.9 million in cash as of September 30, 2021.

Q3 2021 Operational Highlights:

The Company signed a top 3 major US news network and cable channel driving new Plus Solutions growth
BBTV launched Rights Management solutions for live events following successful pilots with premium enterprise clients including Premier Boxing Champions
BBTV entered a partnership with 3BLACKDOT, a prominent talent agency for digital creators, to provide Content Management solutions for creators
BBTV strengthened its Direct Advertising Sales division with the addition of Martin Cass
BBTV's subsidiary YoBoHo entered a deal with leading global distributor, The Orchard, a subsidiary of Sony Music Entertainment
BBTV Holdings Inc. issued a Normal Course Issuer Bid
The Company made a strategic investment and formed a strategic partnership with social NFT platform Nifty's Inc. to create new revenue streams for creators

Subsequent to quarter-end, BBTV announced:

Spotter and BBTV entered into an agreement to dedicate up to US$125 million to BBTV creators to further scale creator growth and monetization opportunities for the Company's existing library of creator content. This represents a 100% gross margin Plus Solutions revenue stream for BBTV which is expected to total in the single digit millions. Management continues to pursue similar new ways to monetize its massive library of content based on its existing creator base through several high-margin Plus Solutions.

Outlook:

Our outlook for the remainder of 2021 and heading into 2022 follows a continued focus on the expansion of our high-margin Plus Solutions. The creator economy continues to grow across all revenue streams that BBTV participates in, from Direct Advertising Sales and Content Management to Mobile Gaming Apps and NFTs.

In view of these ongoing tailwinds, we continue to expect strong performance across our Plus Solutions and sustainability of these positive trends through the remainder of the year and into 2022. We have growing confidence that our original guidance for the Company remains intact, and we continue to expect to be Adjusted EBITDA profitable on an annual basis next year. In the coming quarters, we expect the following:

Strategic deals positioning BBTV's Direct Advertising Sales business further as a prominent player in the market. BBTV's competitive positioning in contextual ads continues to grow in appeal to brands and advertisers as mobile privacy policies limit platforms and advertisers' targeting capabilities and also the near abolishment of third-party tracking tools and cookies that collect information about audiences continue to reduce in value to advertisers.
Continued growth of BBTV's portfolio of Content Management clients, both as it relates to enterprise and individual creators, building on the momentum that we experienced during Q3.
Growth of lifetime value for users within BBTV's Mobile Gaming Apps division as the Company continues to focus on user retention strategies that will further enable growth in advertising impressions across our apps.
Initiatives and partnerships similar to Spotter, which look to leverage BBTV's extensive library of content and scale to add incremental bolt-on revenue to the business.

Conference Call Details
Wednesday, November 10th, 2021, 2:15pm Pacific Time/5:15pm Eastern Time.

Participant Information
Access Code: 955260
United States: 1 844 200 6205
United States (Local): 1 646 904 5544
Canada dial-in number (Toll Free): 1 833 950 0062
Canada dial-in number (Local): 1 226 828 7575
All other locations: +1 929 526 1599
Please connect at least 15 minutes prior to the conference call.

To coincide with the call, an Investor Highlights presentation will be available at: https://investors.bbtv.com/events-and-presentations/default.aspx

Links to SEDAR filings, conference call recordings and press releases are available on the investor website at: https://investors.bbtv.com/

Telephonic Replay:
Access Code: 414866
US (Local): 1 929 458 6194
US Toll Free: 1 866 813 9403
Canada: 1 226 828 7578
UK (Local): 0204 525 0658
All other locations: +44 204 525 0658
November 10, 2021 20:15 ET - November 17, 2021 23:59 ET

Pro Forma Income Statement

	Three Months Ended September 30,			Nine Months Ended September 30,
	2021 $	2020 $		2021 $	2020 $
	Q3 2021 Financial Statements	Pro-Forma Basis⁽¹⁾	% change	Q3 2021 Financial Statements	Pro-Forma Basis⁽¹⁾	% change

Revenue	$113,280	$120,580	(6%)	$337,833	$307,894	10%

Cost of revenue
Content creator and other fees	$104,020	$111,529	(7%)	$309,153	$282,518	9%
Amortization	$7,467	$7,547	(1%)	$21,059	$22,682	(7%)
	$111,487	$119,076	(6%)	$330,212	$305,200	8%

Gross profit (loss)	$1,793	$1,504	19%	$7,621	$2,694	183%

Expenses
Sales and marketing	$6,561	$5,203	26%	$21,038	$17,659	19%
General and administration	$3,501	$3,118	12%	$12,397	$8,592	44%
Research and development	$1,363	$1,570	(13%)	$3,568	$3,704	(4%)
Share-based compensation	$265	$176	51%	$927	$236	293%
Amortization and depreciation	$1,488	$1,258	18%	$4,887	$3,854	27%
	$13,178	$11,325	16%	$42,817	$34,045	26%


Operating loss	($11,385)	($9,821)	16%	($35,196)	($31,351)	12%

Foreign exchange gain (loss)	($919)	$943	(197%)	($665)	($1,181)	(44%)
Interest expense	($2,232)	($1,019)	119%	($4,619)	($2,946)	57%
Other income (expense)	$60	($825)	(107%)	$3,064	($856)	(458%)
	($3,091)	($901)	243%	($2,220)	($4,983)	(55%)

Loss before income taxes	($14,476)	($10,722)	35%	($37,416)	($36,334)	3%

Recovery of income taxes	$3,986	$3,152	26%	$13,601	$8,809	54%

Loss	($10,490)	($7,570)	39%	($23,815)	($27,525)	(13%)

⁽¹⁾

The comparative prior period figures are presented on Pro-Forma Basis to include BBTV Corp. consolidated results as if the Business Combination Transaction had occurred on January 1, 2019.

Adjusted EBITDA and Adjusted EBITDA Margin

	Three Months Ended Sept 30,		Nine Months Ended Sept 30,
	2021⁽¹⁾	2020⁽²⁾	2021⁽¹⁾	2020⁽²⁾
Net loss	($10,490)	($764)	($23,815)	($988)
Pro-Forma Adjustment	-	($6,806)	-	($26,537)
Net loss after Pro-Forma Adjustment (if necessary)	($10,490)	($7,570)	($23,815)	($27,525)
Amortization and depreciation⁽³⁾	$8,955	$8,805	$25,946	$26,536
Share-based compensation	$265	$176	$927	$236
Unrealized and realized foreign exchange	$919	($943)	$665	$1,181
Interest expense	$2,232	$1,019	$4,619	$2,946
Other expense (income)	($60)	$825	($3,064)	$856
Receivable factoring banking fees	$174	$116	$457	$416
Recovery of income taxes	($3,986)	($3,152)	($13,601)	($8,809)
Adjusted EBITDA	($1,991)	($724)	($7,866)	($4,163)
Total revenues	$113,280	$120,580	$337,833	$307,984
Adjusted EBITDA Margin	(1.8%)	(0.6%)	(2.3%)	(1.4%)

⁽¹⁾	The current period figures are based on the results from the Company's Q3 2021 Financial Statements.
⁽²⁾	The comparative prior period figures are presented on Pro-Forma Basis to include BBTV Corp. consolidated results as if the Business Combination Transaction had occurred on January 1, 2019.
⁽³⁾	Includes depreciation and amortization reported in cost of revenue and operating expenses for all periods.

BBTV Share and Adjusted Gross Margin

	Three Months Ended Sept 30,		Nine Months Ended Sept 30,
	2021⁽¹⁾	2020⁽²⁾	2021⁽¹⁾	2020⁽²⁾
Revenue	$113,280	$-	$337,833	($194)
Pro-Forma Adjustment (if necessary)	-	$120,580	-	$308,088
Revenue, after adjustment (if necessary)	$113,280	$120,580	$337,833	$307,894

Less: content creator and third-party platform fees	($103,927)	$-	($308,772)	$-
Pro-Forma Adjustment (if necessary)	$-	($111,203)	-	($281,298)
Less: content creator and third-party platform fees, after adjustment (if necessary)	($103,927)	($111,203)	($308,772)	($281,298)

BBTV Share	$9,353	$9,377	$29,061	$26,596

Gross Profit	$1,793	$1,504	$7,621	$2,694
Add: amortization associated with intangible assets acquired as part of the Business Combination Transaction	$7,152	$7,235	$20,135	$21,788
Adjusted Gross Profit	$8,945	$8,739	$27,756	$24,482

Adjusted Gross Margin	95.6%	93.2%	95.5%	92.1%

⁽¹⁾	The current period figures are based on the results from the Company's Q3 2021 Financial Statements.
⁽²⁾	The comparative prior period figures are presented on Pro-Forma Basis to include BBTV Corp. consolidated results as if the Business Combination Transaction had occurred on January 1, 2019.

About BBTV

BBTV is a global media and technology company headquartered in Vancouver, Canada. The Company's mission is to help content creators become more successful. With creators ranging from individuals to global media brands, BBTV provides comprehensive, end-to-end Solutions to increase viewership and drive revenue powered by its innovative technology, while allowing creators to focus on their core competency – content creation. In January 2021, BBTV had the second most unique month ly viewers among digital platforms with more than 600 million globally, who consumed more than 50 billion minutes of video content, the most among media companies [1]. (www.bbtv.com)

[1] Calculations and classifications made by BBTV based on data from Comscore's "Top 12 Countries = January 2021 comScore Video Metrix Media Trend – Multi-Platform – Top 100 Video Properties Report"; Top 12 countries represent ~50% of world's digital population.

Pro Forma Basis

The pro forma information contained herein includes BroadbandTV Corp.'s financial results for comparative periods in 2020 as if the Business Combination Transaction had occurred on January 1, 2019 as well as provisional adjustments for the effects of acquisition accounting, but does not include adjustments for costs related to integration activities, cost savings or synergies that might be achieved by the combined businesses. The sources of these pro-forma results are the Q3 2021 Financial Statements and Annual Financial Statements combined with the internal, unaudited financial information of the acquired business for the same periods. These pro-forma financial measures are not specified, defined or determined under IFRS accounting rules. Pro-forma amounts to be presented are not necessarily indicative of what the Company's results would have been had BBTV Holdings completed the Business Combination Transaction on January 1, 2019, nor will the historical pro-forma amounts necessarily be indicative of future results. See also "Non-IFRS Measures and Key Metrics" below for further information regarding the Company's non-IFRS measures.

Forward Looking Statements

This press release contains "forward–looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is not information about historical facts but instead represents the Company's intentions, beliefs, plans, goals, objectives and strategies regarding future events and results, and includes certain financial outlooks. Financial outlooks, in particular, are provided to aid in understanding management's goals and expectations regarding future financial matters, and, for all the reasons set out below, may not be achieved. Such financial outlooks may not be appropriate for other purposes. Forward-looking information contained in this press release includes statements that the growth rates for Plus Solutions revenue, views retention and RPMs will continue to be sustainable; and all of our expectations set out under the heading "Outlook" in this press release above. Forward-looking information is necessarily based on a number of estimates and assumptions that the Company considered appropriate and reasonable as of the date such information is given, including but not limited to the Company's assumptions that its current growth plans will not change in any material respect; that its internal financial forecasts and models, including its estimates of costs and revenue are accurate are accurate; that its assumptions regarding continued growth, changes and trends in the Company's industry and the global economy will be met; that the Company's NFT division will be successful; that the Company's Plus Solutions revenue will continue to grow and to show greater margins than its Base Solutions; that the Company's churn will continue to remain low; that the Company will continue to contract with new content creators and to continue to receive increasing Views; that the Company will enter into an increasing number of Direct Advertising Sales Strategic Deals, Content Management agreements and initiatives and partnerships similar to Spotter; that RPMs will continue to increase; the timely receipt of required regulatory approvals and strategic partner support; the absence of new laws, regulations, rules or policies of governments, platforms and other strategic partners, that may negatively impact the business of BBTV; our ability to build our market share, enter new markets and maintain and expand geographic scope; our ability to attract and retain key personnel and to execute on our growth plans; our ability to obtain and maintain financing on acceptable terms; as well as the Company's assumptions regarding foreign exchange rates. Forward-looking information is subject to known and unknown risks, uncertainties, and other factors, many of which are beyond the Company's control, that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk that the Company's assumptions on which its forward-looking information is based may not be accurate; the effect of competition; that the Company has a history of losses and negative cash flow; that the Company's agreements with platforms, creators or others may terminate early or not be renewed either on similar terms or at all; that the Company's or its creators' NFTs may not realize significant revenue or at all; that the Company's Plus Solutions may not continue to be attractive to creators and may not realize our expectations; the regulatory environment and in particular, the fact that NFTs are a relatively recent concept and new regulations may be enacted with which the Company may not be able to comply, and government regulation of the Internet as well as privacy regulation which are both evolving and unfavourable developments could have an adverse impact on the Company's operating results; litigation risk; intellectual property risks; the Company's need for timely performance by its creators and strategic partners; the Company's significant reliance on its relationship with one digital platform; and the impact of the continuing COVID-19 pandemic; as well as the factors discussed under "Risk Factors" in the Company's Annual Information Form dated March 28, 2021 filed on sedar at www.sedar.com and in the Company's other filings with the Canadian securities regulatory authorities at www.sedar.com. The Company does not undertake any obligation to update any forward–looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Links to SEDAR filings, conference call recordings and press releases are available on the investor website at: https://investors.bbtv.com/

Non-IFRS Measures and Key Metrics

This press release makes reference to certain financial and other measures commonly used by financial analysts in evaluating the financial performance of companies that are not presented in accordance with IFRS. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. This press release also contains information regarding certain key metrics, such as Views and RPMs, that are considered non-IFRS measures that help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Refer to the Company's MD&A presented as at November 10, 2021 under the heading "Non-IFRS Measures and Key Metrics" for more details, as well as a discussion on the limitations of these Non-IFRS Measures and Key Metrics.

This press release includes certain financial measures, which are "Pro-Forma basis",, "Adjusted EBITDA", "Adjusted EBITDA Margin", "Adjusted Gross Profit", "Adjusted Gross Margin", "BBTV Share", and "Advertising Revenue", that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

Although the Company believes these non-IFRS financial measures are important in evaluating the Company, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. They are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. These measures may be different from non-IFRS financial measures and key metrics used by other companies and may not be comparable to similar meanings prescribed by other companies, limiting their usefulness for comparison purposes. Moreover, some of these adjustments or measures are provided for period-over-period comparison purposes, and investors should be cautioned that the effect of the adjustments provided herein is not indicative of the actual effect on the Company's operating results.

"Adjusted EBITDA" is defined as net earnings or loss, as applicable, before finance expenses, income tax expense (recovery), amortization and depreciation, share-based compensation, unrealized and realized gains or losses due to foreign exchange, transaction-related costs, and certain other items as set out in the reconciliation table above.

"Adjusted EBITDA Margin" is defined as Adjusted EBITDA divided by revenue.

"Adjusted Gross Margin" is defined as Adjusted Gross Profit divided by BBTV Share.

"Adjusted Gross Profit" is defined as gross profit plus provisional amortization associated with intangible assets acquired as part of the Business Combination Transaction.

"Advertising Revenue" is defined as the revenue generated from advertising sales from the Company's owned and licensed video on demand content across digital platforms, rights management revenue from advertising sales on video on demand content, and Mobile Gaming Apps.

"BBTV Share" is defined as revenue less content creator and third-party platform fees.

"RPMs" or revenue per one thousand Views is defined as the Advertising Revenues for every 1,000 Views generated by the Company's owned and licensed digital content. The Company does not provide a reconciliation for RPMs as there are no directly comparable IFRS measures for the components that make up RPMs.

"Views" are defined as the number of views, in billions, of the Company's owned and licensed digital video content on various platforms, notably YouTube, for the stated period. The presentation of Views is reliant on certain third-party industry data and therefore is not comprehensive and may exclude views of the Company's content on certain platforms or in geographies whereby such data sources are unable to or do not track such information. Trends in Views affect revenue and financial results by influencing the Company's volume of salable media inventory, RPMs, as well as its product offerings, expenses and capital expenditures.

See the financial tables above for a reconciliation of the non-IFRS financial measures.

Contacts:

Media Relations
Mark Funston,
Head of Marketing and PR,
778-288-4950
[email protected]

Investor Relations
[email protected]
Ron Shuttleworth
Partner
Oak Hill Financial Inc
(647)–500–7371
[email protected]

BBTV-F

SOURCE BBTV Holdings Inc.