Q3 year over year mobile platform revenue growth of 22%, and positive Adjusted EBITDA1 of
(All figures in US dollars, unless otherwise indicated)
Q3 2021 Financial Highlights
- Revenue from mobile platforms (Apple,
Google and Amazon) was$3.4 million (80.1% of total revenue), compared to$3.5 million in Q2 2021 (78.3%), and an increase from$2.7 million in Q3 2020 (63.8%) - Revenue of
$4.2 million , compared to$4.4 million in Q2 2021, and$4.3 million in Q3 2020; overall revenue was impacted by an industry wide decline in Facebook Canvas platform game activity - Gross profit margin decreased to 64.6%, from 65.3% in Q2 2021, and improved from 61.8% in Q3 2020, driven by the ongoing execution of operating cost reductions
- Operating expenses of
$3.5 million , compared to$3.1 million in Q2 2021, and$2.7 million in Q3 2020; the increase in operating expenses is due to increased user acquisition spend, and professional fees associated with the proposed business combination with 2810735Ontario Inc. d/b/a Federated Foundry ("Federated") - EBITDA1 of
$(0.1) million (-1.9% of revenue), compared to$0.4 million (9.4%) in Q2 2021, and$0.9 million (20.8%) in Q3 2020 - Adjusted EBITDA1 of
$0.4 million (9.9% of revenue), compared to$0.6 million (13.3%) in Q2 2021, and$0.8 million (18.7%) in Q3 2020 - Net loss of
$1.1 million (($0.01 ) per basic and diluted share), compared to a net income of$1.1 million ($0.01 per basic and diluted share) in Q2 2021, and a net loss of$0.5 million (($0.01 ) per basic and diluted share) in Q3 2020 - Cash used in operating activities in Q3 2021, net of working capital changes, was
$0.1 million , compared to cash generated from operating activities of$0.5 million in Q2 2021, and$1.0 million in Q3 2020 - Cash at
September 30, 2021 was$11.6 million , compared to$18.1 million at the end of 2020, and debt outstanding on the bank credit facility was$5.4 million , compared to$6.0 million at the end of 2020; the decrease in cash is due to payments relating to the Company's 2021 M&A activities, including professional fees associated with the proposed business combination with Federated
1 Please refer to "Non-GAAP Measures" section of this press release |
Q2 2021 and Subsequent Highlights
- On
August 16, 2021 , the Company entered into a letter of intent ("LOI") with Federated, an acquirer and operator of digital technology companies, for a proposed business combination, pursuant to which the Company and Federated will combine to form a leading, publicly-listed technology and media enterprise through a reverse takeover of the Company by Federated and its shareholders - On
October 18, 2021 , the Company entered into a definitive agreement in relation to its proposed business combination with Federated, and announced that it had voting support agreements in place with shareholders holding in the aggregate approximately 50.5% of the issued and outstanding PopReach Shares - On
November 12, 2021 , the Company soft launched the significant rebuild of Smurfs Magic Match, with the game to be updated and improved in the coming months - Also on
November 12, 2021 , the Company announced a closed beta for PAYDAY Crime War which is on track to go live inDecember 2021 ; the Company is pleased that it has more than doubled the expected number of sign-ups for the closed beta, representing an important milestone for the game expected to launch globally in 2022
Management Commentary
"The 22% year over year growth we generated in mobile platform revenue during the third quarter did not entirely offset the decline in revenue from Facebook Canvas games, but as we head into 2022 with our primary mobile growth initiatives well underway, these Facebook games that are in maintenance mode will become less significant," said
Added
Selected Quarterly Information
Below is selected quarterly information from the Company's consolidated financial statements for each of the quarterly periods indicated. The Company's functional and presentation currency is US Dollars. Except where indicated, the following financial data is reported in accordance with IFRS.
Three months | Three months | Three months | ||||||
In-app purchases | $ | 3,978,677 | $ | 4,177,682 | $ | 4,185,045 | ||
Advertising | 235,764 | 263,109 | 150,936 | |||||
Other | 6,453 | 295 | 248 | |||||
Total revenue | $ | 4,220,894 | $ | 4,441,086 | $ | 4,336,229 | ||
Net Income (Loss) | (1,069,782) | 1,080,290 | (518,459) | |||||
Comprehensive Income (Loss) | (1,060,310) | 1,084,270 | (485,231) | |||||
Earnings (loss) per share (basic and diluted) | (0.01) | 0.01 | (0.01) | |||||
Non-GAAP1: | ||||||||
Bookings | 4,414,894 | 4,667,189 | 4,156,652 | |||||
EBITDA | (79,102) | 419,453 | 902,669 | |||||
Adjusted EBITDA | 416,440 | 589,587 | 810,899 | |||||
1 Please refer to "Non-GAAP Measures" section of this press release |
|
| |||||||||||
Cash and cash equivalents | $ | 11,582,698 | $ | 18,097,649 | ||||||||
Current assets | 14,130,470 | 20,079,201 | ||||||||||
Total assets | 27,788,275 | 25,934,531 | ||||||||||
Current liabilities | 6,471,296 | 7,879,809 | ||||||||||
Non-current liabilities | 6,314,665 | 5,534,564 | ||||||||||
Three months | Three months | Three months | ||||||
Apple | $ | 2,168,829 | $ | 2,240,569 | $ | 1,726,046 | ||
841,434 | 961,767 | 1,571,540 | ||||||
870,704 | 864,454 | 846,861 | ||||||
Amazon | 54,135 | 53,498 | 40,598 | |||||
Other mobile | 43,575 | 57,394 | -- | |||||
Total in-app purchases | 3,978,677 | 4,177,682 | 4,185,045 |
Financial Statements and MD&A
Non-GAAP Measures
The Company prepares its financial statements in accordance with IFRS. However, the Company considers certain non-GAAP financial measures as useful additional information to assess its financial performance. These measures, which it believes are widely used by investors, securities analysts and other interested parties to evaluate its performance, do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-GAAP measures include "Bookings", "EBITDA" and "Adjusted EBITDA".
EBITDA and adjusted EBITDA
Earnings before interest, taxes, depreciation and amortization ("EBITDA") and consolidated adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") are non-IFRS measures of financial performance. The presentation of these non-IFRS financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS, and may be different from non-IFRS financial measures used by other companies. Company management defines EBITDA as follows: IFRS Net income (loss) adding back accretion and interest expenses (including amortization of deferred financing fees), income taxes, amortization, gain/loss on disposal of assets, and fair value gain/loss on financial liabilities. Adjusted EBITDA is calculated as EBITDA and excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings, such as restructuring costs and impairments where the impairment is the result of an isolated, non-recurring event. It also excludes the effects of equity-settled share-based payments, changes in deferred revenues, and other extraordinary one-time expenses.
Management believes EBITDA and Adjusted EBITDA are useful financial metrics to assess its operating performance on a cash basis before the impact of non-cash items.
The following table presents the Company's calculation of EBITDA and Adjusted EBITDA for each period:
Three months | Three months | Three months | ||||
Net loss | $ | (1,069,782) | $ | 1,080,290 | $ | (518,459) |
Add: | ||||||
Interest and accretion expenses | 213,749 | 145,734 | 207,941 | |||
Loss (gain) on disposal of assets | - | (4,212) | 6,750 | |||
Current taxes (recovery) | 24,000 | 21,936 | (13,058) | |||
Deferred tax recovery | (7,687) | (4,495) | (37,846) | |||
Amortization | 474,220 | 491,663 | 743,314 | |||
Fair value loss (gain) on financial liabilities | 286,398 | (1,311,463) | 514,027 | |||
EBITDA | (79,102) | 419,453 | 902,669 | |||
Add: | ||||||
Share-based compensation expense | 60,144 | 73,469 | 59,692 | |||
Change in deferred revenue | 194,000 | 226,103 | (179,577) | |||
Change in deferred cost of sales | (81,075) | (139,560) | - | |||
Extraordinary one-time expenses | 322,473 | 10,122 | 28,115 | |||
Adjusted EBITDA | 416,440 | 589,587 | 810,899 | |||
Adjusted EBITDA/Revenue % | 10% | 13% | 19% |
Adjusted EBITDA was
Non-operating items
Fair value loss on financial liabilities was
The full amount of the fair value gain of
Of the
Bookings
Bookings is a non-GAAP financial measure that is equal to revenue recognized plus or minus the change in deferred revenue during the period. The following table is the reconciliation from revenue to bookings for each period:
Three months | Three months | Three months | ||||||
Revenue | $ | 4,220,894 | $ | 4,441,086 | $ | 4,336,229 | ||
Add: Increase (decrease) in deferred revenue | 194,000 | 226,103 | (179,577) | |||||
Total bookings | 4,414,894 | 4,667,189 | 4,156,652 |
The decrease in bookings for the three months ended
About
Additional information about the Company is available at www.sedar.com
Forward-looking Information
Certain information in this news release constitutes forward-looking statements and forward-looking information under applicable Canadian securities legislation (collectively, "forward-looking information"). Forward-looking information include, but are not limited to, statements with respect to and the business, financials and operations of the Company. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Forward looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements and future events to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the public documents of the Company available at www.sedar.com. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Investors are cautioned undue reliance should not be placed on any such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Neither the
SOURCE
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