BBTV Announces Q3 2022 Financial Results

VANCOUVER, BC, Nov. 14, 2022 /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 2022 and nine month financial results for the period ended on September 30, 2022.

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.

"TikTok's micro-content format has been a competitive disruptor in the video content space for several quarters," said Shahrzad Rafati, Chairperson and CEO of BBTV. "YouTube Shorts is emerging as a formidable alternative to TikTok and represents approximately 26% of our total views after we signed up 1.1 billion YouTube Short views in Q3 alone, representing a sequential quarterly growth rate in YouTube Shorts views of 33%. Once these are monetized, we anticipate a significant improvement in RPMs and views. Notwithstanding, we have mitigated the impact of declining overall views by concentrating on growing higher margin Plus Solutions revenue streams with our largest Plus Solution, Content Management, having grown by 24% this quarter and by a combined 40% for the twelve months ended September 30, 2022. Subsequent to quarter-end, we announced the acquisition of Outloud Media, which is a key offering in Multi-Platform Partnerships for BBTV creators. The Outloud Media asset acquisition helps us distribute and monetize creator content across multiple social media platforms like Meta, and has among the highest gross margins across both Base and Plus Solutions revenue streams."

Q3 2022 Financial and Operational Highlights:

• The Company ended the quarter with $20.8 million of cash and $10.6 million drawn on its overdraft facility, both of which are comparable to the previous quarter.  Effective September 30, 2022, BBTV reduced part of its long-term debts by 40% through debt forgiveness to position the Company for a potential new debt financing to further strengthen the balance sheet and fuel growth.
• BBTV's cash burn rate has reduced significantly from Q2 2022 due to its cost optimization program, under which overall headcount was reduced by approximately 14%.  As a result, Q3 2022 operating costs declined sequentially by $2.2 million from Q2 2022. The Company expects its cost optimization program will result in further reductions in operating costs in the coming months.
• While overall views continued to trend lower, being down approximately 10% year-over-year, data shows that the COVID-related pullback in viewership appears to have subsided and begun to normalize as we exit Q3 2022 with views up 1% sequentially from Q2 2022 to Q3 2022, which is more favourable than the sequential seasonal decline typically seen in past years. Views retention remained exceptionally strong at 98% for Q3 2022 and 93% LTM September 2022.
• Over the past few quarters, YouTube Shorts viewership consistently represented 20% of BBTV's total views.  Since activating its Content Acquisition team to pursue YouTube Shorts content in Q3 2022, the Company has signed creators generating 1.1 billion monthly views, increasing YouTube Shorts to 26% of total views in just one quarter, or a 33% sequential increase.  As a result, it's been a catalyst for views growth and it also increases YouTube Shorts future revenue potential.  Google recently publicly stated that shorts monetization and revenue sharing with creators would begin early next year.
• While RPMs were down 12% year-over-year in Q3 2022, when excluding YouTube Shorts views, RPMs were only down 2% year-over-year.  This highlights that despite the recessionary environment, RPMs have remained relatively stable, particularly given that BBTV's performance is closely tied to YouTube's, which continues to be the most resilient platform for monetization in the creator economy.
• Revenues from the Company's largest Plus Solution, Content Management, grew by 24% in Q3 2022 in comparison to the same quarter last year, and now represents 22% of the Company's Adjusted Gross Profit¹.
• While Plus Solutions revenue has grown by 40% over the last 12 months, with the recessionary environment so far in the latter half of this year, management is revising its 2022 year-over-year revenue growth rate guidance for Plus Solutions to 30%. In addition, management is confident that Plus Solutions will see more than 30% year-over-year revenue growth in 2023, driven by the strength of BBTV's Content Management division, particularly during the second half of 2023.
• Gross Margin Excluding PPA Amortization² improved by 1% year-over-year and this improving trend is expected to continue as the Company further scales its Plus Solution revenues which have gross margins 3-4X higher than Base Solutions.  Plus Solutions now represents 11% of total revenue, and 30-40% of total Adjusted Gross Profit¹.

Content Management

BBTV's Content Management offering is proven to build and grow engaged communities for the Company's clients. BBTV is uniquely positioned through its solutions to make large and established consumer brands relevant to the digital generation.

BBTV's unique combination of technology, data, and reach provides major media companies and brands Channel Management, Rights Management, and Content Development  that create low-cost fan bases that generate high brand ROI which are otherwise unreachable through traditional media.

During the quarter, the Company signed a partnership deal with Harlem Globetrotters, providing 360 solutions across a number of platforms including YouTube & Meta. BBTV also signed an agreement with Revolt TV to manage their video strategy on Facebook.

Subsequent to quarter end, the Company also signed agreements with premier Hispanic Mixed Martial Arts (MMA) Sports Franchise, Combate Global, and Wondery, Amazon's subsidiary podcast network.  The Company's pipeline of opportunities for Content Management with major publishers has never been stronger.

Outloud Media Acquisition

Subsequent to quarter end, BBTV announced the acquisition of the assets of Outloud Media, a Detroit-based creator economy business with expertise distributing and monetizing creator content across multiple social media platforms like Facebook and Snapchat. The acquisition bolsters BBTV's Multi-Platform Partnership solution, which provides content creators additional revenue across multiple social platforms.

The acquisition is mainly structured as a 5-year performance earn-out of up to US$5 million. The performance-based earn-out will be calculated as a percentage of shareable revenue from Facebook and Snapchat, which is comparable to gross profit less certain additional direct operating costs.

Q3 2022 Financial Tables:

• Adjusted Gross Profit¹, which is a non-GAAP financial measure and defined as Gross Profit excluding amortization associated with the purchase price allocation ("PPA") related to the initial public offering, for Q3 2022 was $8.2 million, a 9% decrease in comparison to $8.9 million reported for the same quarter last year due to the decrease in revenue across Base Solutions.
• BBTV Share¹ of revenue, which is a non-GAAP financial measure and defined as revenue less content creator and third-party platform fees, for Q3 2022 was $8.6 million, an 8% decrease compared to $9.4 million reported for Q3 2021.
• Gross Margin Excluding PPA Amortization², which is a non-GAAP ratio and defined as Adjusted Gross Profit¹ divided by revenue, was 8.6% in Q3 2022 up from 7.9% in Q3 2021 due to the higher revenue mix of Plus Solutions. Plus Solutions should continue to contribute to further margin expansion in future quarters. Management expects Gross Profit to grow at a faster pace than the Company's top-line revenue.
• Adjusted Gross Margin², which is a non-GAAP ratio and defined as Adjusted Gross Profit¹ divided by BBTV Share¹, was 95.2% for Q3 2022, comparable to 95.6% reported for Q3 2021. Adjusted Gross Margin² should remain stable and above 90% for the foreseeable future.
• The current period decrease in cash outflows from operating activities over Q3 2021 was primarily due to the changes in the timing of receipts or payments of working capital items.

The current period decrease in cash outflows from operating activities over Q2 2022 was primarily due to improved Adjusted EBITDA performance.

Q3 2022 Key Metrics:

Revenue for the three months ended September 30, 2022 decreased by $18.2 million or 16% when compared to the same period of the prior year. This decline in revenue for the current three-month period was due to a decline in Views and RPMs, partially offset by an increase in revenue in the higher margin Plus Solutions revenue stream.

Conference Call Details:

Monday, November 14th, 2022 at 2:15pm Pacific Time / 5:15pm Eastern Time

Participant Information:

Access code: 508645
Canada dial-in number (Toll Free): 1 833 950 0062 
Canada dial-in number (Local): 1 226 828 7575 
United States: 1 844 200 6205 
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All other locations: +1 929 526 1599 
Press *1 to ask a question, *2 to withdraw your question, or *0 for operator assistance.

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:
A recording will be available until Monday, November 28 2022 
UK (Local): 0204 525 0658 
US (Local): 1 929 458 6194 
US Toll Free: 1 866 813 9403 
Canada: 1 226 828 7578 
All other locations: +44 204 525 0658 
Access Code: 632301

Income Statement:

Non-GAAP Financial Measures and non-GAAP Ratios Reconciliation Tables

Adjusted EBITDA and Adjusted EBITDA Margin

BBTV Share, Adjusted Gross Profit, and Adjusted Gross Margin

BBTV Share and Adjusted Gross Profit are non-GAAP financial measures while Adjusted Gross Margin is a non-GAAP ratio. Further details on these measures are included in the "Key Metrics Definitions" section of this press release.

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure. Further details on this measure is included in the "Key Metrics Definitions" section of this press release.

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 December 2021, BBTV had the fourth most unique monthly viewers among digital platforms with more than 600 million globally, who consumed more than 35 billion minutes of video content [1]. (www.bbtv.com)

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

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

Key Metrics Definitions

The information presented within this press release includes certain financial measures such as non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures, as well as a non-financial performance measure  (collectively, "Key Metrics") to assist investors in assessing the overall operating performance of the Company. 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. They are not standardized measures under IFRS and do not have standardized meanings prescribed by IFRS, and might not be comparable to similar financial measures disclosed by other issuers. These Key Metrics are used to provide investors with supplemental information on 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 Key Metrics in the evaluation of issuers. Our management also uses Key Metrics 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.

The numbers for the Company's Key Metrics and related information are calculated using external industry data sources and/or internal company data. These measures may be different from non-GAAP financial measures or ratios or other 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.

Non-GAAP Ratios contained in this press release are:

"Adjusted Gross Margin" means Adjusted Gross Profit divided by BBTV Share; and

"Adjusted EBITDA Margin" means Adjusted EBITDA divided by revenue.

"Gross Margin Excluding PPA Amortization" means Adjusted Gross Profit divided by revenue.

Non-GAAP Financial Measures contained in this press release are:

"Adjusted EBITDA" means 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;

"BBTV Share" means revenue less content creator and third-party platform fees;

"Adjusted Gross Profit" means gross profit plus amortization associated with intangible assets acquired as part of the Business Combination Transaction;

"Free Cash Flow" means cash flows from (used in) operating activities less purchases of property and equipment and purchase or development of intangible assets;

See the financial tables above for a reconciliation of the non-GAAP ratios and non-GAAP financial measures.

Supplementary Financial Measures contained in this press release are:

"Advertising Revenue" means 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 in-app advertising on Mobile Gaming Apps.

"RPMs" or "Revenue per one thousand video Views" means the Advertising Revenues for every thousand 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.

"Gross Margin" means gross profit divided by revenue.

We monitor Advertising Revenue and RPMs to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These measures are also 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. Unless the context otherwise requires, the Company believes that readers should consider the applicable metrics to be indicative of engagement and monetization trends that are key factors that affect the Company's revenue. The Company may or may not update these metrics based on the Company's determination of applicability, circumstance, relevance or other considerations.

Views are one of BBTV's non-financial performance measures and 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.

While Views are reported using reasonable judgments and estimates of the audience and its engagement with its content for the applicable period of measurement, there are certain challenges and limitations in measuring the usage of its content across its audience. Such challenges and limitations may also affect the Company's understanding of certain details of its business. For example, the methodologies used to measure the Company's Views and RPMs (see "Supplementary Financial Measures" above) may be susceptible to algorithm, calculation or other technical or human errors, and following an acquisition or strategic transaction, certain data may be, among other things, integrated, analyzed and reported differently by the Company than it was by the target or the strategic partner. Moreover, the Company's or its data provider's business intelligence tools may experience glitches or fail on a particular data backup or upload, which could lead to certain customer activity not being properly included in the calculation of Views and RPMs. Although the Company typically attempts to address and correct any such failures and inaccuracies relatively quickly, its reported Views and RPMs are still susceptible to the same and its estimations of such metrics may be lower or higher than the actual numbers.

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 once YouTube shorts are monetized, we anticipate a significant improvement in RPMs and views; BBTV reduced part of its long-term debts by 40% through debt forgiveness to position the Company for a potential new debt financing to further strengthen the balance sheet and fuel growth; the Company expects its cost optimization program will result in further reductions in the coming months; based on current trends, forecasts, expected debt financing, and Adjusted EBITDA breakeven timelines, management is comfortable that it has adequate liquidity for the foreseeable future; the acquisition of YouTube Shorts views in Q3 2022 increases YouTube Shorts future revenue potential; the improving trend for Gross Margin Excluding PPA Amortization is expected to continue as the Company further scales its Plus Solution revenues which have gross margins 3-4X higher than Base Solutions; management is revising its 2022 year-over-year revenue growth rate guidance for Plus Solutions to 30%; management is confident that Plus Solutions will see more than 30% year-over-year revenue growth in 2023; Plus Solutions should continue to contribute to further margin expansion in future quarters; Management expects Gross Profit to grow at a faster pace than the Company's top-line revenue; and Adjusted Gross Margin² should remain stable and above 90% for the foreseeable future.  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 assumptions that reducing part of its long-term debt positions the Company for a potential new debt financing; industry growth trends in views and RPMs will improve and the Company's growth plans will not change in any material respect; its internal financial forecasts and models, including its estimates of costs and revenue, are accurate; the monetization of YouTube Shorts will improve RPMs, views and revenue potential; management's Adjusted EBITDA breakeven timelines will be realized; the Company's Plus Solutions revenue will continue to grow as expected and to show gross margins 3-4x higher than its Base Solutions;  RPMs will increase; the Company's business will otherwise expand;  the Company's cost optimization program will continue to result in further cost reductions; our creators and our strategic and other partners will perform as contractually required; we will be able to seamlessly enter into new markets and diversify  into new platforms; we will be able to obtain and maintain financing on acceptable terms on a timely basis; our assumptions regarding foreign exchange rates and other matters are correct; and that there will be no changes in general industry, market and economic conditions adverse to the Company. 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; the Company's need for additional capital, which is not assured; the Company's significant reliance on its relationship with one digital platform; and the impact of the continuing COVID-19 pandemic and of the current recessionary environment;  the risks of potential claims of infringement by the Company or its content providers of third party intellectual property and other rights; changes in laws and regulations; as well as other factors discussed in the Company's Final Long Form Prospectus dated October 22, 2020, its Annual Information Form dated March 29, 2022 and in our MD&A dated November 14, 2022 each 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.

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.