Approximate 20% SG&A Expense Reduction
Target Achieved Q3 Revenue up 6% QoQ to $5.7 Million; Quarterly
Active Units up 7% QoQ
Loop Media, Inc. ("Loop Media" or "Loop" or the "Company") (NYSE
American: LPTV), a leading multichannel digital video/TV streaming
platform that provides curated music video and branded
entertainment channels for businesses, is reporting financial and
operating results for its fiscal third quarter ended June 30,
2023.
Fiscal Q3 2023 Summary
- Revenue was $5.7 million.
- Gross profit was $1.8 million, with gross margin of 31.8%.
- Net loss was $(7.9) million or $(0.14) per share
- Adjusted EBITDA (a non-GAAP financial measure defined below)
was $(3.7) million.
- As of June 30, 2023, we had 34,898 QAUs operating on our
O&O Platform. We have a total of approximately 37,000 screens
across our Partner Platforms.
Management Commentary
"I am pleased to report that we finished our fiscal third
quarter stronger across all metrics than we initially announced in
our guidance issued in May. In addition to achieving the forecasted
approximate 20% SG&A expense reduction in the June quarter
compared to our March quarter, we exceeded our revenue and gross
profit margin forecasts. During the June quarter, we continued to
focus on cost reductions while maintaining our attention on
distribution. We also managed to secure a significant Partner
Platform partner at the end of the quarter, which led to expansion
in that business in the short-term," said Jon Niermann, CEO of Loop
Media.
"The headwinds we experienced in advertising demand that began
in our December quarter and that have continued during calendar
2023 have required us to revisit our cost structure and growth
strategy in calendar 2023. To meet the challenges associated with
this environment, we’ve continued to strengthen the foundation of
our business while looking for ways to reduce costs and increase
efficiencies. In our fiscal third quarter ending in June, we made
some headcount cuts that helped strengthen our bottom line. That
said, since our beginning, we’ve always taken pride in building a
‘lean’ organization, and we were able to absorb functions of
eliminated personnel into existing positions. We had 73 full-time
employees as of June 30, 2023. Going forward, we may need to make
further tactical employee reductions in certain areas of our
business, which may be offset by adding focused headcount in areas
where we believe we can grow revenue and distribution. We also were
deliberate with a slower pace of growth in QAUs in our O&O
Platform business for the June quarter from the prior quarter as we
looked to prioritize and incentivize the distribution of Loop
Players in key advertising markets and geographies, as well as into
more desirable out-of-home location types, like convenience stores,
restaurants, bars, and other retail establishments. Thus, our
result of a 7% QoQ increase in our third quarter. We also looked to
reduce our presence in less desirable out-of-home locations, which
offset and reduced our net distribution growth. This is part of the
natural learning and development of our business – better targeting
and focusing our time and investment on location types that we now
know are more lucrative. We believe the focus on key markets and
geographies will help deliver greater returns to us over time.
Conversely, we were aggressive with our Partner Platform growth,
resulting in a substantial increase of 50%, from 24,000 to 36,000
screens across our Partner Platform, at the end of Q3,” added
Niermann.
“While we achieved quarterly revenue growth and an increase of
screens in our Partner Platform in the June Q3 quarter compared to
the previous March quarter, we are still seeing a challenging
macroeconomic environment coupled with continued headwinds in the
advertising business. We believe that our business and distribution
platforms are well placed to take advantage of any macro-economic
market recovery and increase in advertising spend that may occur in
2023 and beyond," said Bob Gruters, Chief Revenue Officer of Loop
Media.
"We aim to have a Loop presence in and deliver our service to
the most desirable geographies and advantageous locations, thereby
delivering our content to the widest audience that advertisers are
looking to reach with their advertisements, products and services,"
Gruters continued. “Most importantly, we seek to achieve growth in
our distribution in the top 20 markets in the United States, which
we believe will deliver desired results with advertisers going
forward.”
Fiscal Third Quarter (June 30) 2023 Financial Results
In the 2023 fiscal third quarter, revenue decreased
approximately 47% to $5.7 million compared to $10.8 million in the
same period in fiscal 2022. The decrease was primarily driven by a
material slowdown in digital advertising spend due to the
macroeconomic environment.
“We have more clearly learned that there still is an education
process involved with many of our advertising partners that Loop is
an extension of Connected Television (“CTV”) and digital video
budgets as opposed to just digital out-of-home (“DOOH”). We have
worked with these partners extensively over the past several months
to encourage them to once again open up their budgets to all forms
of digital video, which will help us going forward, as it did in
previous quarters,” said Neil Watanabe, Chief Financial Officer of
Loop Media.
Gross profit in the 2023 fiscal third quarter was $1.8 million
compared to $3.8 million for the same period in fiscal 2022. Gross
margin was 31.8% in the 2023 fiscal third quarter compared to 35%
in the prior period. The decrease was primarily driven by revenue
mix as well as incremental licensing costs.
Total sales, general, and administrative ("SG&A") expenses
(excluding stock-based compensation and depreciation and
amortization) in the 2023 fiscal third quarter were $6.3 million
compared to $5.9 million for the same period in fiscal 2022 and
$7.8 million for the 2023 fiscal second quarter. The year-over-year
increase was primarily due to greater customer acquisition and
retention expenses and stock compensation expenses, partially
offset by decreased payroll costs. The quarter-over-quarter
decrease was primarily due to a reduction in marketing spend and
other operating expenses. Net loss in the 2023 fiscal third quarter
was $(7.9) million or $(0.14) per share, compared to a net loss of
$(5.7) million or $(0.11) per share for the same period in fiscal
2022.
Adjusted EBITDA in the fiscal 2023 third quarter was $(3.7)
million compared to $(1.9) million for the same period in fiscal
2022.
On June 30, 2023, cash and cash equivalents were $6.4 million
compared to $4.7 million on March 31, 2023. The increase was
primarily driven by proceeds of $8.3 million from equity offerings
under the Company’s equity at-the-market (“ATM”) sales program. As
of June 30, 2023, the Company had total debt of $10.1 million
compared to $9.1 million as of March 31, 2023.
Conference Call
The Company will conduct a conference call today, August 8,
2023, at 5:00 p.m. Eastern Daylight Time to discuss financial and
operating results for its third quarter ended June 30, 2023.
Loop's management will host the conference call, followed by a
question and answer period.
Date: August 8, 2023 Time: 5:00 p.m. Eastern Standard Time
Participant registration link: here
Below are the details for those participants who would like to
dial in and ask questions.
Conference ID: 7218531 Participant Toll-Free Dial-In Number: 1
(800) 715-9871 Participant International Dial-In Number: 1 (646)
307-1963
The conference call will also be available for replay on the
investor relations section of the Company's website at
ir.loop.tv.
About Loop Media, Inc.
Loop Media, Inc. ("Loop Media") (NYSE American: LPTV) is a
leading digital out-of-home (“DOOH”) TV and digital signage
platform optimized for businesses, providing free music video,
news, sports and entertainment channels through its Loop TV
service. Loop Media is the leading company in the U.S. licensed to
stream music videos to businesses through its proprietary Loop
Player.
Loop Media's digital video content reaches millions of viewers
in DOOH locations including bars/restaurants, office buildings,
retail businesses, college campuses, airports and on free
ad-supported TV platforms and at local gas stations on GSTV
terminals in the United States.
Loop is fueled by one of the largest and most important short
form entertainment libraries that includes music videos, movie
trailers and live performances. Loop Media's non-music channels
cover a multitude of genres and moods and include sports
highlights, news, lifestyle and travel videos, viral videos and
more. Loop Media's streaming services generate revenue from
advertising, sponsorships, integrated marketing, branded content
and from subscriptions.
To learn more about Loop Media products and applications, please
visit us online at Loop.tv
Follow us on social:
Instagram: @loopforbusiness
X (Twitter): @loopforbusiness
LinkedIn: https://www.linkedin.com/company/loopforbusiness/
Safe Harbor Statement and Disclaimer
This news release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, but not limited to, Loop Media's expected
performance, ability to compete in the highly competitive markets
in which it operates, statements regarding Loop Media's ability to
develop talent and attract future talent, the success of strategic
actions Loop Media is taking, and the impact of strategic
transactions. Forward-looking statements give our current
expectations, opinion, belief or forecasts of future events and
performance. A statement identified by the use of forward-looking
words including "will," "may," "expects," "projects,"
"anticipates," "plans," "believes," "estimate," "should," and
certain of the other foregoing statements may be deemed
forward-looking statements. Although Loop Media believes that the
expectations reflected in such forward-looking statements are
reasonable, these statements involve risks and uncertainties that
may cause actual future activities and results to be materially
different from those suggested or described in this news release.
Investors are cautioned that any forward-looking statements are not
guarantees of future performance and actual results or developments
may differ materially from those projected. The forward-looking
statements in this press release are made as of the date hereof.
Loop Media takes no obligation to update or correct its own
forward-looking statements, except as required by law, or those
prepared by third parties that are not paid for by Loop Media. Loop
Media's Securities and Exchange Commission filings are available at
www.sec.gov.
Non-GAAP Measures
Loop Media uses non-GAAP financial measures, including adjusted
EBITDA and quarterly active units or QAUs, as supplemental measures
of the performance of the Company's business. Use of these
financial measures has limitations, and you should not consider
them in isolation or use them as substitutes for analysis of Loop
Media's financial results under generally accepted accounting
principles in the United States of America ("U.S. GAAP"). The
tables below provide a reconciliation of adjusted EBITDA to the
most nearly comparable measure under U.S. GAAP.
The Company defines an "active unit" as (i) an ad-supported Loop
Player (or DOOH location using our ad-supported service through our
"Loop for Business" application or using a DOOH venue-owned
computer screening our content) that is online, playing content,
and has checked into the Loop analytics system at least once in the
90-day period or (ii) a DOOH location customer using our paid
subscription service at any time during the 90-day period. The
Company uses "QAU" to refer to the number of such active units
during such period.
LOOP MEDIA, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
Three months ended June
30,
Nine months ended June
30,
2023
2022
2023
2022
Revenue $
5,734,976
$
10,804,083
$
25,954,038
$
18,679,956
Cost of revenue Cost of revenue - Advertising and Legacy and
other revenue
3,132,568
6,742,460
14,767,807
11,045,440
Cost of revenue - depreciation and amortization
779,165
275,823
2,091,876
933,037
Total cost of revenue
3,911,733
7,018,283
16,859,683
11,978,477
Gross profit
1,823,243
3,785,800
9,094,355
6,701,479
Gross margin %
31.8
%
35.0
%
35.0
%
35.9
%
Operating expenses Sales, general and administrative
6,284,514
5,942,793
22,011,961
14,956,990
Stock-based compensation
2,592,369
1,479,774
6,858,983
4,202,286
Depreciation and amortization
295,008
130,864
717,733
195,666
Restructuring costs
146,672
—
146,672
—
Total operating expenses
9,318,563
7,553,431
29,735,349
19,354,942
Loss from operations
(7,495,320
)
(3,767,631
)
(20,640,994
)
(12,653,463
)
Other income (expense) Interest income
—
—
—
200
Interest expense
(962,718
)
(978,435
)
(2,889,745
)
(1,976,941
)
Loss on extinguishment of debt
—
(944,614
)
—
(944,614
)
Gain on extinguishment of debt
—
—
—
490,051
Change in fair value of derivatives
—
18,395
—
164,708
Employee retention credits
648,543
—
648,543
—
Other expense
(65,643
)
—
(68,267
)
—
Total expense
(379,818
)
(1,904,654
)
(2,309,469
)
(2,266,596
)
Loss before income taxes
(7,875,138
)
(5,672,285
)
(22,950,463
)
(14,920,059
)
Income tax (expense)/benefit
(394
)
—
(1,624
)
(1,051
)
Net loss $
(7,875,532
)
$
(5,672,285
)
$
(22,952,087
)
$
(14,921,110
)
Basic and diluted net loss per common share $
(0.14
)
$
(0.11
)
$
(0.41
)
$
(0.32
)
Weighted average number of basic and diluted common
shares outstanding
56,604,812
51,172,644
56,455,743
47,061,092
LOOP MEDIA, INC. EBITDA RECONCILIATION
(UNAUDITED)
Three months ended June
30,
Nine months ended June
30,
2023
2022
2023
2022
GAAP net loss $
(7,875,532
)
$
(5,672,285
)
$
(22,952,087
)
$
(14,921,110
)
Adjustments to reconcile to EBITDA: Interest expense
962,718
978,435
2,889,745
1,976,941
Interest income
—
—
—
(200
)
Depreciation and amortization expense*
1,074,173
406,687
2,809,608
1,128,702
Income tax expense (benefit)
394
—
1,624
1,051
EBITDA $
(5,838,247
)
$
(4,287,163
)
$
(17,251,110
)
$
(11,814,616
)
* Includes amortization of content assets and for cost of revenue
and operating expenses and ATM facility.
LOOP MEDIA, INC.
ADJUSTED EBITDA RECONCILIATION (UNAUDITED)
Three months ended June
30,
Nine months ended June
30,
2023
2022
2023
2022
GAAP net loss $
(7,875,532
)
$
(5,672,285
)
$
(22,952,087
)
$
(14,921,110
)
Adjustments to reconcile to Adjusted EBITDA: Interest expense
962,718
978,435
2,889,745
1,976,941
Interest income
—
—
—
(200
)
Depreciation and amortization expense*
1,074,173
406,687
2,809,608
1,128,702
Income tax expense (benefit)
394
-
1,624
1,051
Stock-based compensation**
2,592,369
1,479,774
6,858,983
4,202,286
Non-recurring expense
209,287
-
209,287
Gain on extinguishment of debt
—
—
—
(490,051
)
Loss on obligations
—
944,614
—
944,614
Change in fair value of derivative
—
(18,395
)
—
(164,708
)
Employee retention credits
(648,543
)
—
(648,543
)
—
Other expense
3,027
—
5,651
—
Adjusted EBITDA $
(3,682,107
)
$
(1,881,170
)
$
(10,825,732
)
$
(7,322,475
)
* Includes amortization of content assets and for cost of revenue
and operating expenses and ATM facility. ** Includes options,
Restricted Stock Units ("RSUs") and warrants.
LOOP MEDIA,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2023 September 30, 2022 ASSETS (UNAUDITED) Current
assets Cash $
6,386,288
$
14,071,914
Accounts receivable, net
5,500,412
12,590,970
Prepaid expenses and other current assets
1,413,512
1,496,566
Content assets - current
2,462,777
745,633
Total current assets
15,762,989
28,905,083
Non-current assets Deposits
64,036
63,889
Content assets - non current
579,869
678,659
Deferred offering costs
471,473
—
Property and equipment, net
2,913,159
1,633,169
Operating lease right-of-use assets
—
76,696
Intangible assets, net
506,000
590,333
Total non-current assets
4,534,537
3,042,746
Total assets $
20,297,526
$
31,947,829
LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities Accounts payable $
5,204,563
$
7,453,801
Accrued liabilities
2,721,627
5,620,873
Accrued royalties and revenue share
3,810,862
4,559,088
Payable on acquisition
—
250,125
License content liabilities - current
568,906
1,092,819
Deferred Income
—
140,764
Lease liability - current
—
75,529
Non-revolving line of credit, related party
5,493,289
—
Non-revolving line of credit
1,967,157
—
Total current liabilities
19,766,404
19,192,999
Non-current liabilities Non-revolving line of credit
409,632
1,494,469
Non-revolving line of credit, related party
—
2,575,753
Revolving line of credit
2,246,060
3,030,516
Total non-current liabilities
2,655,692
7,100,738
Total liabilities
22,422,096
26,293,737
Commitments and contingencies
—
—
Stockholders’ equity Common Stock, $0.0001 par value,
105,555,556 shares authorized, 59,183,668 and 56,381,209 shares
issued and outstanding as of June 30, 2023, and September 30, 2022,
respectively
5,918
5,638
Additional paid in capital
117,143,464
101,970,318
Accumulated deficit
(119,273,952
)
(96,321,864
)
Total stockholders' equity
(2,124,570
)
5,654,092
Total liabilities and stockholders' equity $
20,297,526
$
31,947,829
LOOP MEDIA, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
Nine months ended June
30,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES Net loss $
(22,952,087
)
$
(14,921,110
)
Adjustments to reconcile net loss to net cash used in operating
activities: Amortization of debt discount
1,842,003
1,532,792
Depreciation and amortization expense
717,733
195,666
Amortization of content assets
2,091,876
933,036
Amortization of right-of-use assets
76,696
118,719
Bad debt expense
—
20,000
Gain on extinguishment of debt
—
(490,051
)
Loss on early extinguishment of convertible debt
—
944,614
Change in fair value of derivative
—
(164,708
)
Warrants issued for consulting services
—
4,202,286
Stock-based compensation
6,858,983
—
Option exercise
38,410
—
Warrants issued in conjunction with debt
136,103
—
Payment in kind for interest stock issuance
—
177,000
Change in operating assets and liabilities: Accounts receivable
7,090,558
(10,049,799
)
Prepaid income tax
—
(1,842
)
Inventory
4,397
210,494
Prepaid expenses
78,632
(741,364
)
Deposit
(147
)
(29,590
)
Accounts payable
(2,605,012
)
2,558,353
Accrued liabilities
(2,899,246
)
5,269,758
Accrued royalties and revenue share
(748,226
)
2,683,245
Licensed content liability
(4,132,894
)
(1,109,750
)
Operating lease liabilities
(75,529
)
(123,453
)
Deferred income
(140,764
)
(47,252
)
NET CASH USED IN OPERATING ACTIVITIES
(14,618,514
)
(8,832,956
)
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of
property and equipment
(1,483,498
)
(956,889
)
NET CASH USED IN INVESTING ACTIVITIES
(1,483,498
)
(956,889
)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from
issuance of common stock
8,318,110
1,250,000
Proceeds from issuance of convertible debt
—
2,079,993
Proceeds from non-revolving line of credit
—
6,222,986
Proceeds from line of credit
37,974,347
—
Payments from line of credit
(36,262,546
)
—
Debt issuance costs
(538,381
)
—
Issuance costs for stock uplist
(179,380
)
—
Deferred offering costs
(646,840
)
(500,092
)
Payment of acquisition related consideration
(250,125
)
—
Repayment of convertible debt
—
(2,715,865
)
Short swing profit recovery
1,201
—
NET CASH PROVIDED BY FINANCING ACTIVITIES
8,416,386
6,337,022
Change in cash and cash equivalents
(7,685,626
)
(3,452,823
)
Cash, beginning of period
14,071,914
4,162,548
Cash, end of period $
6,386,288
$
709,725
SUPPLEMENTAL DISCLOSURES OF CASH FLOW STATEMENTS Cash
paid for interest $
945,939
$
153,009
Cash paid for income taxes $
1,624
$
1,051
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND
FINANCING ACTIVITIES Payment in kind common stock payment $
—
$
177,000
Early extinguishment of convertible debt $
—
$
944,614
Warrants issued in conjunction with debt $
136,103
$
3,036,970
Beneficial conversion feature recorded as discounted debt $
—
$
2,079,993
Unpaid deferred offering costs $
157,731
$
40,017
Unpaid additions to property and equipment $
412,256
$
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808145366/en/
Loop Media Investor Contact James Cerna, Head of Capital
Markets ir@loop.tv
Loop Media Press Contact Jon Phillips
jon@phillcomm.global
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