Engagement Labs Releases Q2 2020 Results

TORONTO, Aug. 28, 2020 /CNW/ -- August 28, 2020 - Engagement Labs Inc. (TSXV: EL) released results for its second quarter ended June 30, 2020. Condensed interim consolidated Financial Statements and Management Report are available on SEDAR's website at www.sedar.com.

(PRNewsfoto/Engagement Labs)

During second quarter, COVID-19 led to a significant reduction in marketing spend by major brands of the type who are our customers and with it a pull back in spending on services of the type we provide. This had a revenue impact on our Q2 results.

Second Quarter Financial Highlights

Total revenue decreased by 35% to $624,013 in Q2 2020 from $961,435 in Q2 2019.
Gross profit was $188,224 for Q2 2020, a decrease of 60% compared to $465,873 for Q2 2019. As a percentage of revenue, the gross margin decreased to 30% for Q2 2020 from 48% for Q2 2019.
EBITDA⁽¹⁾ loss increased by 40% or $146,508, to -$515,531 for Q2 2020 from -$369,023 for Q2 2019.
Non-GAAP Adjusted EBITDA⁽¹⁾ loss improved by 2% or $5,616, to -$312,670 for Q2 2020 from -$318,286 for Q2 2019.
Operating expenses decreased by 23% or $295,336, to $979,595 for Q2 2020 from $1,274,931 for Q2 2019.
Net loss for Q2 2020 decreased to -$735,190, down 6% or $49,332 from -$784,522 for Q2 2019.
Basic and diluted loss per share was ($0.00) for Q2 2020, compared to ($0.01) for Q2 2019.
As at June 30, 2020, the Company was holding cash of $1,151,002 compared to $844,107 as at December 31, 2019.

Six-month Period Financial Highlights

Total revenue decreased by 15% to $1,596,432 in H1 2020 from $1,872,803 in H1 2019.
Gross profit was $645,592 for H1 2020, a decrease of 25% compared to $855,836 for H1 2019. As a percentage of revenue, the gross margin decreased to 40% for H1 2020 from 46% for H1 2019.
EBITDA⁽¹⁾ loss improved by 2% or $22,120, to -$1,216,263 for H1 2020 from -$1,238,383 for H1 2019.
Non-GAAP Adjusted EBITDA⁽¹⁾ loss improved by 26% or $704,974, to -$1,964,314 for H1 2020 from -$2,669,288 for H1 2019.
Operating expenses before impairment loss on goodwill decreased by 26% or $704,974, to $1,964,314 for H1 2020 from $2,669,288 for H1 2019.
Net loss for H1 2020 decreased to -$1,629,301, down 21% or $424,357 from -$2,053,658 for H1 2019.
Basic and diluted loss per share was ($0.01) for H1 2020, compared to ($0.02) for H1 2019.

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EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. Number for comparative periods were revised to exclude SRED credit tax, variation on exchange, and bank charges in EBITDA. Adjusted EBITDA is a non-GAAP financial measure defined as EBITDA to which the Company adds stock-based compensation including the grant of stock options, restricted shares units, and restricted share awards as these expenses do not result in any use of operating cash flows by the Company, severance payments, impairment loss on goodwill, write-off of intangible assets, change in fair value of investment in shares, expenses related to acquisition or disposal of business, and loss on extinction of debt and equity components of convertible debentures, which are extraordinary and non-recurrent expenses, and Board remuneration, which is paid in shares units. EBITDA and non-GAAP adjusted EBITDA are provided as a supplementary earning measure to assist readers in determining the ability of ENGAGEMENT LABS INC. to generate cash from operations and to cover financial charges. They are also widely used for business valuation purposes. These measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

"We were off to strong start of the year, as evidenced by the TotalSocial revenue growth of 11% in Q1 '20 and a 64% reduction in our Non-GAAP Adjusted EBITDA loss," said Ed Keller, CEO. "Then COVID-19 hit and had a substantial impact on our clients and thus on Engagement Labs. As investment in marketing by Fortune 500 companies dropped by double digits and new growth initiatives gave way to hunkering down to survive, our sales momentum stalled leading to the revenue decline we saw in Q2."Thankfully, we had implemented major cost reduction initiatives that led to a 23% reduction in costs in Q2 and a 6% improvement in our net loss. As we look to the rest of the year we are encouraged by recent reports in the press about ad and marketing spending picking back up in Q4 and returning to growth in 2021, but it is impossible to determine the extent or length of financial implications of these events for the moment." Keller continued, "The Company's cash position has been helped by financial relief from the Canadian and US governments in the amount of approximately $776,000 as noted in our Financial Statement."

About Engagement Labs
Engagement Labs (TSXV: EL) is an industry-leading data and analytics firm that provides social intelligence for Fortune 500 brands and companies.

To learn more visit www.engagementlabs.com

Disclaimer in regard to Forward-looking Statements

Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward-looking statements. Except as required by law, Engagement Labs does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For media inquiries please contact:
Vanessa Lontoc / Ed Keller, CEO
Engagement Labs
vanessa.lontoc@engagementlabs.com / ed.keller@engagementlabs.com

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