MediaValet Reports First Quarter Fiscal 2018 Results
Achieves a 32% increase in Revenue, a 29% increase in Annual Recurring Revenue, and a 6% reduction in Operating Expenses
Vancouver, BC ‐ May 14, 2018 ‐ MediaValet Inc. (TSX-V:MVP) (the Company), a leading provider of cloud‐based digital asset management (“DAM”) software, is pleased to report its results for the three months ended March 31, 2018.
“Fiscal 2018 is off to a great start for MediaValet,” said David MacLaren, CEO of MediaValet. “We significantly strengthened our balance sheet with a successful financing round, grew our revenue base, resumed our go-to-market spend on sales and marketing, and delivered on some major product milestones. We believe this has given us a fantastic opportunity to capitalize on the positive developments and growth trends in the DAM market.”
“Subsequent to quarter end, we announced a number of key new features and solutions that have set us apart from the competition and reinforced our reputation as an innovator. We have already seen increasing interest from both new and existing customers as a result. The speed at which MediaValet V4 can now deliver cloud DAM is not only unparalleled by other cloud vendors, but rivals that of expensive and complex on premise solutions. Add to this the exciting new search capabilities leveraging artificial intelligence, the solving of long-standing creative workflow challenges with Creative Spaces, and an ability to innovate faster than ever before; and I believe we are poised to significantly increase our rate of new customer acquisition.”
“At the same time, to have also solved for our funding requirements and to have resumed investing in our go-to-market strategy, will enable us to monetize these exciting product launches and to accelerate our revenue growth. Our team is truly expert in the DAM space. I am looking forward to what we can accomplish with proper funding and a differentiated offering.”
Results of Operations
Key Financial Metrics:
Grew first quarter revenue to $0.62 million, up 32% from $0.47 million in Q1 2017, and up 4% sequentially from Q4 2017. Over 90% of revenue is recurring from annual Software-as-a-Service (SaaS) agreements. The increases reflect the growth in the ARR base as the Company continues to win and retain customers.
Achieved Q1 2018 Gross Margin of 80%, down from 82% last year. The high Gross Margin is consistent with the SaaS business model. The decline is due to additional data center costs during implementation of MediaValet V4.
Incurred Operating Expenses of $1.37 million for Q1 2018, reducing 9% (restated 5%) from $1.50 million last year, and increasing 6% (restated 2%) from Q4-2017. The year-on-year reduction reflects efforts to optimize spending levels and to manage expenses with funding availability. The sequential increase is due to increased sales and marketing spend following close of the equity financing in February 2018. The restated percentages are used in this document to provide the change from prior periods had IFRS 15 been applied with retroactive restatement.
Reported a Q1 2018 EBITDA loss of $0.877 million, a 22% (restated 17%) reduction from an EBITDA loss of $1.12 million in Q1 2017 and a 6% (restated 1%) sequential increase from Q4 2017. The reduction from last year reflects continued revenue growth as a result of the Company’s growing ARR base and efforts to balance operating costs with funding levels. The sequential increase is primarily due to increased sales and marketing expenses following the equity financing.
Increased ARR to $2.63 million, an increase of 29% compared to $2.03 million at March 31, 2017, and a 6% sequential increase from Q4 2017. The increase is a result of efforts to maintain and grow the customer base through continuing to invest in go-to-market strategies and developing innovative solutions to customers’ DAM challenges.
Ended the quarter with $2.53 million of cash on hand (December 31, 2017 – $0.04 million), working capital of $2.09 million (December 31, 2017 – negative $1.70 million) and debt of $3.00 million (December 31, 2017 – $6.18 million). On February 22, 2018, the Company completed an $8.6 million equity financing, which was sufficient to retire $3.18 million of debt, pay trade accounts payable, and to fund the Company’s current operating capital requirements.
Technology and Product:
In May 2018, launched MediaValet V4 including new features for advanced search, multi-library and interactive user success guides. MediaValet is focused on improving the DAM experience for customers, and in turn expects this will enable MediaValet to attract, win and retain more customers. This product launch included:
MediaValet V4 – the result of 18 months of development efforts, and leveraging Microsoft’s next generation cloud application platform, Azure Service Fabric, V4 sets new benchmarks for application speed and platform scalability. A complete backend code rewrite, V4 removes legacy system technical debt, significantly reduces support requirements, dramatically increases the performance, functionality and broad user appeal of MediaValet, and increases the velocity at which we can innovate.
Advanced Search – designed to provide a fast and efficient experience for discovering assets, it is MediaValet’s first feature to leverage artificial intelligence. Customers are now able to search using advanced filters, including colour, file type and size, rating, number of people, status, activity, to name a few, as well as create and “pin” Saved Searches for yourself, for groups, and for global system use.
Multi-Libraries – is an essential capability for organizations needing to support multiple self-controlled user groups (eg. divisions) that require separate taxonomies and administration. Organizations such as ad agencies, hospital groups, universities, global companies and conglomerates face significant challenges maintaining master administration and governance while providing local and departmental flexibility. Multi-Libraries enables these organizations to create separate self-managed libraries for each of these user groups, while still maintaining global access and master control at the head office level.
Interactive User Success Guides – developed to increase organizational adoption of DAM through reducing impediments such as training and ease-of-use challenges. Delivered as in-app, role-based, interactive process, productivity and activity user guides that can be fully customized to support each of an organization’s unique use cases.
Announced Creative Spaces in May 2018, an innovative new solution for large creative teams that combines all the benefits of working locally with those of MediaValet’s Cloud DAMS. Developed with deep customer collaboration, this first version of Creative Spaces provides customers’ creative teams with a safe space to create while supporting linking between their assets and Adobe’s Creative Cloud. Creative Spaces delivers the speed of working locally with all the productivity and security benefits of their corporate DAM. Directly from their desktop, creatives can now access their entire corporate asset library, utilize advanced search and full screen viewing features, synchronize their local and cloud-based assets, as well as track, manage and archive work-in-progress assets – all in real time.
In Q1 2018, MediaValet continued to evolve its product integration strategy to further increase the value delivered by MediaValet within customer environments. These integrations have proven valuable in customer acquisition and retention. In May 2018, MediaValet announced integration with Workfront, a leading provider of cloud-based enterprise work management solutions, enterprise project management and workflow software.
Operations and Corporate:
Announced the DAM industry’s first supply chain consortium in May 2018, focused on leveraging Blockchain technology to transform the DAM industry and the future of enterprise content distribution. As a founding member, MediaValet will help research and create interoperability standards across service providers for the adoption of new supply chain technologies for DAM.
Launched a new reseller channel partnership with IO Integration (“IOI”) in February 2018, a global digital asset management, marketing, and creative operations technology solutions consultancy with a select portfolio of marketing and creative operations technology solutions.
In February 2018, Rob Chase expanded his role with the Company, joining the senior management team as Executive Chairman and Chief Financial Officer. Rob brings over 20 years of technology, software-as-a-service, start-up and M&A experience, including 14 years with Absolute Software as CFO and COO where he helped lead the company from $4 million to $100 million in profitable sales, and 2 years as Director with PNI Digital Media which concluded with the successful sale of the company to Staples. Rob also increased his ownership position in MediaValet to 10% as part of the February 2018 financing round.
On February 22, 2018, announced closing of an $8.6 million brokered and non-brokered private placement, issuing 143,341,864 common shares at $0.06 per share. The Company paid cash commissions of $460,709 and issued 7,678,487 broker warrants to the agents. The warrants are exercisable over 24 months at a price of $0.06 per share for the first year and $0.09 per share thereafter. The use of proceeds includes retiring $3.18 million of debt and funding the Company’s 2018 growth initiatives.
1 March 31, 2017 figures have not been restated for adoption of IFRS 9 and IFRS 15 as the changes were applied in Q1 2018 on a cumulative effect basis. The percent change for March 31, 2018 compared to restated 2017 amounts, is a 2% decline for Cost of Revenue and Operating Expenses, and a 17% decline for EBITDA Loss. See the “Adoption of New Account Standards” section below.
2 Operating Expenses include Sales & Marketing, Research & Development and General & Administrative expenses.
3 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. Refer to the Operating Results section for further information on the calculation and definition of EBITDA.
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 on 50 Microsoft data centers 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, 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:
Babak Pedram | [email protected]| (416) 644-5081
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