Frankly Reports Third Quarter 2016 Financial Results

SAN FRANCISCO, Nov. 29, 2016 /CNW/ -- Frankly Inc. (TSX VENTURE: TLK) (Frankly), a leading technology and monetization platform for media companies, reported financial results for the third quarter ended September 30, 2016.

Third Quarter 2016 Financial Highlights (All amounts in U.S. dollars)

  • Revenue increased 18% to $6.2 million from the previous quarter of 2016. The sequential increase was primarily due to contractual changes to the company's advertising program requiring the company to recognize gross revenues beyond commissions. On a year-over-year basis, revenue increased $4.7 million from $1.5 million in the same year-ago period. The year-over-year increase was primarily due to the acquisition of Worldnow completed in August 2015. 
  • Adjusted EBITDA improved to $380,000 compared to an adjusted EBITDA loss of $110,000 in the second quarter of 2016 (see discussion about the presentation of adjusted EBITDA below).
  • Net loss totaled $14.3 million, compared to a net loss of $1.4 million in the second quarter of 2016. Due to the continued decline of the company's common share price during the third quarter of 2016, the company performed an interim goodwill impairment analysis as of September 30, 2016. As a result, a portion of the goodwill related to the Worldnow acquisition was impaired and the company recorded a non-cash goodwill impairment expense of $12.9 million. Excluding this impairment expense, along with one-time fees associated with the company's NASDAQ listing process, net loss for the quarter would have been $1.1 million, or lower compared to the prior quarter.
  • The company had $2.8 million in cash at September 30, 2016.

Third Quarter 2016 Operational Highlights

  • Secured four new wins in the local TV broadcasting space for its CMS and Total Digital solutions
  • Secured multi-year agreement with Heartland Media, a local broadcast media company, to deploy full suite of multimedia platform services
  • Signed multi-year agreements with Rural Media Group and SNJ Today, accelerating the company's expansion from its core local TV broadcasting market into all digital media verticals
  • Secured a $16 million loan facility from Raycom Media, a leading television broadcasting company
  • Launched Apple TV over-the-top (OTT) app with NBC and CBS station KUAM
  • Appointed Chief Operating Officer Lou Schwartz as new Chief Financial Officer

Management Commentary  
"Building on the strong progress we made in the prior quarter, Q3 represented another period of positive results, driven primarily by our topline growing by 18% sequentially to $6.2 million," said Frankly chairman and CEO, Steve Chung. "While the sequential increase was primarily due to a change in our advertising program, we see this revenue growth reflecting much of the progress we made on the commercial front, both in signing new customers and in securing renewals from some of our established customers.

"Q3 was also highlighted by several key wins outside of our core local TV broadcasting market, such as with Rural Media Group and SNJ Today. Already, we are beginning to see our platform gain traction in other digital media verticals, and we are continuing to make investments both in our sales infrastructure and our channel partnerships to accelerate this expansion.

"From a solution standpoint, we saw healthy progress in our local and national advertising business, the latter of which has seen considerable growth over the prior quarter. We have also recently launched our Frankly Data product, which will continue to drive incremental revenues for our advertising business.

"Operationally, we continued to reduce our non-essential costs and drive further growth in our bottom line. Although our net loss for the quarter was higher than in Q2, we recorded a goodwill impairment expense of $12.9 million and roughly $410,000 of expenses tied to our NASDAQ listing process. Excluding these non-recurring expenses, net loss would have improved during the quarter, which demonstrates how we have positioned the business to grow profitably.

"Overall, we are very satisfied with our results for the quarter. Along with a steadily growing topline, our cost reduction efforts are starting to bear fruit, enabling us to improve our bottom line when excluding non-recurring expenses. Going forward, we will continue to focus aggressively on the three growth catalysts that can scale our business—namely, data-driven advertising, mobile and OTT apps, and strategic channel partnerships. We believe our proposed offering and listing on NASDAQ, should they be successful, will enable us to further propel and support these expansion plans, and we are confident that we can continue to gain traction in our core markets and increase our presence in newer markets within digital media."

Conference Call  
Frankly management will hold a conference call later today (November 29, 2016) at 10:00 a.m. Eastern time (7:00 a.m. Pacific time) to discuss these results. The call may also include discussion of company developments, forward-looking information and other material information about Frankly's business and financial matters.

Frankly chairman and CEO Steve Chung, along with CFO and COO Lou Schwartz, will host the presentation, followed by a question and answer period.

U.S. dial-in: 1-888-599-4883   
International dial-in: 1-913-312-1451

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

The conference call will be broadcasted live and available for replay here. A telephonic replay of the call will be available after 1:00 p.m. Eastern time through December 13, 2016.

U.S. replay dial-in: 1-844-512-2921  
International replay dial-in: 1-412-317-6671  
Replay ID: 3314250

About Frankly  
Frankly (TSX VENTURE: TLK) builds an integrated software platform for media companies to create, distribute, analyze and monetize their content across all of their digital properties on web, mobile and TV. Its customers include NBC, ABC, CBS and FOX affiliates, as well as other leading media organizations. Collectively, Frankly reaches nearly 60 million monthly users in the United States. The company is headquartered in San Francisco with major offices in New York. To learn more, visit www.franklyinc.com.

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

Non-IFRS Measures  
The Company reports earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA, which are not financial measures calculated and presented in accordance with International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other issuers. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute to net income (loss) or any other financial measures of performance or liquidity calculated and presented in accordance with IFRS. The Company defines Adjusted EBITDA as EDITDA, adjusted to exclude certain non-cash charges and other items that we do not believe are reflective of our ongoing operating results. The Company utilizes Adjusted EBITDA internally for purposes of forecasting, determining compensation, and assessing the performance of our business, therefore, we believe this measure provides useful supplemental information that may assist investors in assessing an investment in the Company.

Below is a reconciliation of adjusted EBITDA to net loss for the three and nine month periods ended September 30, 2016 and 2015:

 



Three month period ended


Nine month period ended



September 30, 2016


September 30, 2015


September 30, 2016


September 30, 2015










Adjusted EBITDA

$

379,723

$

(2,722,523)


279,027


(7,606,263)










Business acquisition related costs


-


968,838


(3,011)


968,838

Impairment expense


12,850,000


-


12,850,000


-

Integration expenses


-


-


163,065


-

Sales tax settlement


(135,531)


-


42,616


-

Loss on disposal of assets


-


-


1,093


-

Loss on extinguishment of debt

90,573


-


90,573


-

Nasdaq uplisting fees


410,225


-


410,225


-

Stock based compensation


276,230


306,681


859,799


777,383

Foreign exchange (gain) / loss


(5,716)


(8,637)


(3,061)


(15,484)

EBITDA


(13,106,058)


(3,989,405)


(14,132,272)


(9,337,000)










Depreciation and amortization


848,246


305,704


2,447,265


343,458

Interest expense, net


310,834


76,475


752,608


76,477

Income taxes


50,324


27,465


54,114


28,265

Net loss

$

(14,315,462)

$

(4,399,049)


(17,386,259)


(9,785,200)

Notice Regarding Forward-Looking Statements  
This release includes forward-looking statements regarding Frankly and their respective businesses. Forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the parties. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Frankly undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

SOURCE Frankly Inc.

For further information: Steve Chung, Chairman and CEO, press@franklyinc.com, or Investor Relations: Matt Glover or Najim Mostamand, Liolios Group, Inc., 949-574-3860, TLK@liolios.com, http://www.franklyinc.com


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