- Q2 Revenue of
$6.2M compared to$8.6M in Q2 2022. Revenue for Q2 2022 would have been$7.1M when excluding revenue from US operations and trading that were eliminated in 2022. - Q2 Gross Margin improved to 51.3% compared to 44.1% in Q2 2022, marking the Company's 2nd consecutive quarter with Gross Margin exceeding 50%
- Q2 Adjusted EBITDA1 increased to
$0.13M compared to$0.09M in Q2 2022, marking the Company's 7th consecutive quarter of positive Adjusted EBITDA, and 13th out of the last 14 quarters - Q2 Cash Flow from Operations increased to
$0.8M compared to$0.2M in Q2 2022 - Senior Credit Facility down to
$15.85M from$25M a year ago
"Despite the macro climate, we're pleased to have delivered another quarter of positive Adjusted EBITDA and positive cash flow from operations, both exceeding last year. Q2 also marks our second consecutive quarter with gross margin exceeding 50%, reflecting the team's various gross margin enhancement initiatives. Our revenue in Q2 2023 was down vs. Q2 2022 in large part due to the unprofitable truLOCAL US operations and trading divisions eliminated in late 2022, in addition to what we view as more normalized post-pandemic revenue levels reflected in recent quarters. We expect the second half of 2023 to offer a more apples-to-apples revenue comparison. Notwithstanding, EMERGE'S overall revenue remains significantly higher than pre-pandemic levels (2019), with some of our brands showing healthy organic growth year over year," commented
Q2 2023 Financial Highlights
- Q2 GMS1 was
$20.2M compared to$22.1M in Q2 2022. GMS for Q2 2022 would have been$20.6M when excluding GMS from US operations and trading that were eliminated in 2022 - Q2 Revenue from continuing operations was
$6.2M versus$8.6M in Q2 2022. Revenue for Q2 2022 would have been$7.1M when excluding revenue from US operations and trading that were eliminated in 2022 - Q2 Gross Margin improved to 51.3% compared to 44.1% in Q2 2022
- Q2 Adjusted EBITDA1 of
$0.13M for 2023, compared to$0.09M in 2022, marking the Company's 7th consecutive quarter of positive Adjusted EBITDA, and 13th out of the last 14 quarters - Q2 Cash Flow from Operations increased to
$0.8M compared to$0.2M in Q2 2022 - Net Loss from Continuing Operations of
$1.6M for Q2 2023 compared to net loss of$0.9M in Q2 2022. The increase in net loss is primarily attributable to losses from foreign exchange and other gains (losses) of$0.5M in Q2 2023 compared to a gain on foreign exchange and other gains (losses) of$0.9M in Q2 2022 - Cash on hand at
June 30, 2023 was$2.8M
This marks EMERGE's second financial report which classifies BattlBox as discontinued operations, with prior period results also restated to reflect the reclassification where noted. The Company completed its sale of BattlBox in
Sale of WagJag
In
EMERGE originally acquired the business for
Following the Transaction, EMERGE retains 5 brands across 3 main verticals (Pets, Grocery, and Golf) in
Senior Debt Update
The Company entered into an amendment agreement to the Company's amended and restated credit agreement dated
The Company's senior credit facility is currently at
The Company remains in good standing with its existing lender, which it has worked with since
"Q2 was also a critical quarter to progress on debt paydown, in large part facilitated by the sale of BattlBox, and more recently supplemented by the sale of WagJag completed in Q3. Our senior debt facility now sits at
Top Priorities
The Company's top priorities in the near-term are to i) continue to pay down debt and reduce interest expense, ii) drive organic growth from existing portfolio, iii) extract further operational efficiencies, and iv) enhance EBITDA to cash flow conversion.
Conference Call
Management will host a conference call on
Alternatively, the conference call can be accessed online at: https://app.webinar.net/Bj8ekNnknAv
Selected Financial Highlights
The tables below set out selected financial information and should be read in conjunction with the Company's consolidated financial statements and MD&A for the three and six months ended
Three months | Three months | Six months | Six months | ||
2023 $ | 2022 $ | 2023 $ | 2022 $ | ||
Gross Merchandise Sales1 | 20,162,035 | 22,059,810 | 41,135,852 | 46,306,388 | |
Total revenue | 6,165,929 | 8,632,604 | 13,190,175 | 18,340,736 | |
Adjusted EBITDA1 | 125,990 | 85,943 | 441,419 | 570,652 | |
Net (loss) income from continuing operations | (1,648,252) | (908,455) | (3,763,144) | (3,827,703) | |
Net (loss) income | (1,954,819) | (820,833) | (4,084,532) | (3,645,953) | |
Basic and diluted (loss) per share from continuing operations and total | (0.02) | (0.01) | (0.04) | (0.04) |
Results from BattlBox have been reclassified to discontinued operations. |
(1) Non-GAAP Financial Measure. Refer to section "Non-GAAP Financial Measures" below for additional information. |
The following table highlights Adjusted EBITDA and a reconciliation of the Company's reported results to its adjusted measures:
Three months | Three months | Six months | Six months | |
2023 $ | 2022 $ | 2023 $ | 2022 $ | |
Net (loss) income | (1,954,819) | (820,833) | (4,084,532) | (3,645,953) |
Add back: | ||||
Finance costs | 858,553 | 946,951 | 1,917,852 | 1,847,152 |
Income taxes | (608,141) | 95,732 | (731,003) | 12,164 |
Amortization | 1,222,941 | 1,216,707 | 2,450,188 | 2,409,592 |
EBITDA | (481,466) | 1,438,557 | (447,495) | 622,955 |
Share-based compensation | 38,359 | 93,084 | 115,564 | 226,899 |
Transaction cost | 57,542 | 143,157 | 204,057 | 327,869 |
Foreign exchange and other losses (gains) | 508,221 | (931,667) | 551,138 | (479,103) |
Fair value change in contingent consideration | (303,233) | (569,566) | (303,233) | 53,782 |
Net loss (income) from discontinued operations | 306,567 | (87,622) | 321,388 | (181,750) |
Adjusted EBITDA | 125,990 | 85,943 | 441,419 | 570,652 |
The following table highlights GMS and a reconciliation of the Company's reported results to its adjusted measures:
Three months | Three months | Six months | Six months | |
2023 $ | 2022 $ | 2023 $ | 2022 $ | |
Revenue | 6,165,929 | 8,632,604 | 13,190,175 | 18,340,736 |
Adjusted for: | ||||
Merchant costs deducted from net revenue | 14,131,053 | 13,800,796 | 28,649,255 | 28,986,884 |
Sales added to deferred revenue and value of orders fulfilled not included in revenue | 1,720,662 | 1,385,498 | 3,314,377 | 3,109,486 |
Deferred and other adjustments to revenue recognized | (1,820,285) | (1,633,543) | (3,749,239) | (3,877,155) |
Advertising revenue | (35,324) | (125,545) | (268,716) | (253,563) |
GMS | 20,162,035 | 22,059,810 | 41,135,852 | 46,306,388 |
About EMERGE
EMERGE is a diversified acquirer and operator of quality niche e-commerce brands in
To learn more visit https://www.emerge-commerce.com/
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Cautionary notice
Neither
Non-GAAP Measures
This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, 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 those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. Gross Merchandise Sales ("GMS"), EBITDA, and Adjusted EBITDA should not be construed as alternatives to revenue or net income/loss determined in accordance with IFRS. GMS, EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.
GMS as defined by management is the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of discounts and refunds. Management believes GMS provides a useful measure for the dollar volume of e-commerce transactions made through our platforms and an indicator for our business performance.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.
A reconciliation of the adjusted measures is included in the Company's management discussion & analysis for the three and six months ended
Notice regarding forward-looking statements
This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including the risk factors discussed in the Company's MD&A, Prospectus Supplement and Annual Information Form and are available through SEDAR at www.sedarplus.ca. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
On Behalf of the Board
Director, President and CEO
SOURCE
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