NEW
YORK, May 15, 2023 /PRNewswire/ -- Troika
Media Group, Inc. (Nasdaq: TRKA) ("TMG"), a consumer engagement and
customer acquisition group, today announced financial results for
the quarter ended March 31, 2023. TMG is a professional
services company that architects and builds enterprise value in
consumer brands to generate scalable, performance-driven revenue
growth. The Company delivers three solutions pillars: TMG
CREATES brands and experiences and CONNECTS consumers
through emerging technology products and ecosystems to deliver
PERFORMANCE based measurable business outcomes.
The fiscal quarter highlights include:
- Revenue of approximately $59.0
million
- Fifth Consecutive Record Revenue Quarter (based on quarter
over quarter)
- Revenue increase of 276% over the comparative prior year
period
- Gross Profit of $8.8
million
- Adjusted EBITDA of approximately $1.5
million
- Strong Revenue growth in Performance Solutions within Home
Services and Professional Services Sectors
"We have now delivered the fifth consecutive (quarter over
quarter) record revenue quarter and continue to execute on the
multi-phase optimization of our legacy balance sheet. Our quarter
ended March 31, 2023, came in line with our expectations
despite headwinds in the broader economy and uncertainty around the
strength of the consumer. The Company's expertise in resilient
sectors such as home services, impactful revenue generating
solutions and diverse revenue streams continues to help us build
upon what is an extremely efficient operating platform. We continue
to curate our business efforts to take advantage of sustainably
higher margin business opportunities to meaningfully enhance
strategic and financial results." said Sid
Toama, TMG's Chief Executive Officer. "We are excited at the
prospect of incremental customer acquisition programs that we are
rolling out for prospective new clients across both managed
services and performance solutions revenue streams, as we get into
our strongest operating periods of the year. We see a great demand
for our solutions in the home services and legal sectors." added
Toama.
"The revenue in our quarter ended March 31, 2023, is
reflective of the seasonality in the business which is driven by
our sector and revenue stream mix where we see lower customer
acquisition investments (in relative terms) by our clients in Q1
and Q4. We are well positioned to take advantage of the work that
has been done over the past year as we enter into our strongest
revenue generating quarters which are the key drivers for our
business. We have made great strides forward in addressing our
complicated legacy capital structure. More specifically, we have
negotiated forbearance with our senior secured debt provider to
allow us time to put alternative financing in place; Series E
Preferred securities and their related liabilities have largely
been extinguished; we have restructured Troika's pre-acquisition
legacy businesses to eliminate operations that were dilutive to
performance; and we are working on accretive strategic
opportunities to contribute greater revenue diversity and margin."
said Erica Naidrich, TMG'S Chief
Financial Officer.
Results for the three months ended March 31, 2023
compared to the three months ended March 31, 2022:
|
Three months ended
|
|
|
|
|
|
March 31,
|
|
|
|
2023
|
|
2022
|
|
Change ($)
|
|
Change (%)
|
|
(in
thousands)
|
Revenue
|
$
59,038
|
|
$
15,685
|
|
$
43,353
|
|
276 %
|
Gross profit
|
$
8,755
|
|
$
3,947
|
|
$
4,808
|
|
122 %
|
Net loss
|
$
(7,901)
|
|
$
(14,388)
|
|
$
6,487
|
|
45 %
|
EBITDA
|
$
(2,361)
|
|
$
(13,859)
|
|
$
11,498
|
|
83 %
|
Adjusted
EBITDA
|
$
1,471
|
|
$
(1,156)
|
|
$
2,627
|
|
(227) %
|
Financial Results for TMG
The results of operations for the three months ended
March 31, 2023, continue to
demonstrate the positive contributions to the business operations
from the acquisition of Converge Direct, LLC and its
affiliates. The strength of our revenue streams and our
customers has continued throughout this quarter and we are poised
to continue to deliver steadfast results for our customers. The
business has also been focused on finding a strategic path forward
to provide increased shareholder value and as a result has incurred
significant costs in the process. From a forecasting
perspective, our first calendar quarter can not be straight lined
to predict the full year results of the business. The business has
a cyclicality that is representative of a certain seasonality in
our sectors and behavior of our clients. We expect to see
stronger revenue and margins as the year progresses and then will
soften in the fourth quarter.
Revenues for the three months ended March
31, 2023, increased approximately $43.4 million, or 276% to $59.0 million, as compared to the same quarter in
the previous year. Gross profit for the three months ended
March 31, 2023, increased
$4.8 million, or 122%, to
$8.8 million, as compared to the same
quarter in the previous year.
The increases were attributable to a full quarter performance in
the current year of the Converge subsidiaries as the acquisition
closed on March 21, 2022, in the
prior year comparable period. The revenue contributed by
these new revenue streams totaled well over $300 million since its acquisition in
March 2022, a period of 375 days.
Selling, general, and administrative costs decreased during the
period by $6.0 million, or 35%, to
$11.2 million when compared to the
prior year period. The decrease in selling, general, and
administrative expenses was primarily driven by a decrease of
$7.0 million in employee
salaries and other employee-related costs (inclusive of stock-based
compensation) and a decrease in travel and entertainment costs of
approximately $0.1 million,
partially offset by an increase in facilities costs of
approximately $0.3 million, an
increase in professional fees of approximately $0.2 million, an increase in restructuring
and other related charges of approximately $0.2 million, an increase in $0.2 million related to various tax
expenses, and an increase in board of directors fees of
approximately $0.2 million.
TMG's Adjusted EBITDA for the three months ended March 31,
2023, increased by approximately $2.6
million, or 227%, to $1.5
million, as compared with the prior period. The increase of
$2.6 million is primarily due to
improved EBITDA of $11.5 million
offset by decreases in non-cash stock-based compensation expense of
$9.4 million and business acquisition
costs of $2.7 million in the prior
year comparable period, partially offset by several non-recurring
costs during the current period including $2.3 million of non-recurring Blue Torch
financing related matters, $0.7
million of restructuring charges, and $0.3 million of non-recurring Series E equity
related costs incurred during the period. These non-recurring costs
are expected to continue throughout the remainder of the year until
the Company finalizes a strategic plan.
About Troika Media Group
TMG is a consumer engagement and customer acquisition consulting
and solutions group based in New
York. We deliver resilient brand equity, amplifying brands
through emerging technology to deliver performance driven business
growth. TMG's expertise is in large consumer sectors including
Insurance, Financial Services, Home Improvement, Residential
Services, Legal, Professional Services, Media and
Entertainment. For more information, visit
www.thetmgrp.com.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not financial measures under
generally accepted accounting principles (GAAP). These metrics are
performance measurement tools used by our management team and you
should not consider them in isolation or as a substitute for other
financial statement data determined in accordance with GAAP. In
addition, because EBITDA and Adjusted EBITDA are not measures of
financial performance under GAAP and are susceptible to varying
calculations, the measures presented may differ from and may not be
comparable to similarly titled measures used by other
companies.
We define EBITDA as net income (loss) before (i)
depreciation, amortization and impairments of property and
equipment, goodwill and other intangible assets, (ii) interest
expense, and (iii) tax expense.
We define Adjusted EBITDA as EBITDA before (i) share-based
compensation expense or benefit, (ii) restructuring charges or
credits, (iii) restructuring charges or credits, (iv) gains or
losses on sales or dispositions of businesses and associated
settlements, and (v) certain other non-recurring or non-cash items.
We believe that the exclusion of share-based compensation expense
or benefit allows investors to better track the performance of our
business without regard to the settlement of an obligation that is
not expected to be made in cash. We eliminate merger and
acquisition-related costs because the Company does not consider
such costs to be indicative of the ongoing operating performance of
the Company as they result from an event that is of a non-recurring
nature, thereby enhancing comparability.
We believe Adjusted EBITDA is an appropriate measure for
evaluating the operating performance of our business and the
Company on a consolidated basis. Adjusted EBITDA and similar
measures with similar titles are common performance measures used
by investors and analysts to analyze our performance. Internally,
we use revenues and gross margin as the most important indicators
of our business performance, and evaluate management's
effectiveness with specific reference to these indicators. Adjusted
EBITDA should be used as a supplement to and not a substitute for
operating income (loss), net income (loss), cash flows from
operating activities, and other measures of performance and/or
liquidity presented in accordance with GAAP. For a reconciliation
of net (loss) income to Adjusted EBITDA, please see page 6 of this
release.
Forward-Looking Statements
This press release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include, without limitation, statements about future
growth and growth rates and other information regarding future
performance and strategies and appear throughout this press
release. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance or results and
involve risks and uncertainties, and that actual results,
developments or events may differ materially from those in the
forward-looking statements as a result of various factors,
including financial community perceptions of the Company and its
business, operations, financial condition and the industries in
which it operates, the impact of the COVID-19 pandemic and the
factors described in the Company's filings with the Securities and
Exchange Commission, including the sections titled "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report on Form
10-K in the Company's Annual Report on Form 10-K. The Company
disclaims any obligation to update any forward-looking statements
contained herein. Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's
opinions only as of the date hereof.
Investor Relations Contact:
Sid Toama
Chief Executive Officer
Troika Media Group, Inc.
investorrelations@troikamedia.com
Troika Media Group,
Inc.
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months Ended March 31,
|
|
2023
|
|
2022
|
|
|
|
|
Revenue
|
$
59,038,338
|
|
$
15,685,000
|
Cost of
revenue
|
50,283,718
|
|
11,738,000
|
Gross
profit
|
8,754,620
|
|
3,947,000
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling, general and
administrative expenses
|
11,163,317
|
|
17,183,000
|
Depreciation and
amortization
|
2,063,295
|
|
429,000
|
Total operating
expenses
|
13,226,612
|
|
17,612,000
|
Operating
loss
|
(4,471,992)
|
|
(13,665,000)
|
Other income
(expense):
|
|
|
|
Interest
expense
|
(3,440,656)
|
|
(100,000)
|
Miscellaneous income
(expense)
|
47,888
|
|
(590,000)
|
Total other
expense
|
(3,392,768)
|
|
(690,000)
|
Loss from operations
before income taxes
|
(7,864,760)
|
|
(14,355,000)
|
Income tax
expense
|
(35,970)
|
|
(33,000)
|
Net loss
|
(7,900,730)
|
|
(14,388,000)
|
Foreign currency
translation adjustment
|
—
|
|
36,000
|
Comprehensive
loss
|
$
(7,900,730)
|
|
$
(14,352,000)
|
Troika Media Group,
Inc.
Adjusted EBITDA Non-GAAP Measure
(Unaudited)
|
|
|
Three Months Ended March 31,
|
|
2023
|
|
2022
|
|
|
|
|
Net loss
|
$
(7,900,730)
|
|
$
(14,388,000)
|
Interest
expense
|
3,440,656
|
|
100,000
|
Income tax
expense
|
35,970
|
|
—
|
Depreciation and
amortization
|
2,063,295
|
|
429,000
|
EBITDA
|
$
(2,360,809)
|
|
$
(13,859,000)
|
Stock-based
compensation expense
|
547,197
|
|
9,901,000
|
Non-recurring expenses
related to financing matters (2)
|
2,282,451
|
|
—
|
Restructuring and
other related charges (1)
|
692,203
|
|
—
|
Non-recurring
financing expenses (3)
|
309,671
|
|
—
|
Related acquisition
& related professional costs
|
—
|
|
2,658,000
|
Bad debt expense - one
time
|
—
|
|
85,000
|
Legal settlement - one
time
|
—
|
|
59,000
|
Adjusted EBITDA
|
$
1,470,713
|
|
$
(1,156,000)
|
|
|
1)
|
Approximately $0.5
million of restructuring expenses incurred during the quarter were
expensed as incurred to selling, general, and administrative
expenses and did not have a restructuring reserve.
|
2)
|
Costs primarily
relate to Blue Torch financing matters. Costs are recorded in
selling, general, and administration expenses.
|
3)
|
Costs primarily
relate to the Preferred Series E equity matters. The total includes
$0.2 million of partial liquidated damages expense.
|
The following is a description of the adjustments to net loss in
arriving at adjusted EBITDA as described in this earnings
release:
- Interest Expense.
- Income Tax Expense.
- Depreciation and amortization. This adjustment eliminates
depreciation and amortization of property and equipment and
intangible assets in all periods.
- Impairment and other (gains) losses, net. This adjustment
eliminates non-cash impairment charges and the impact of gains or
losses from the disposition of assets or businesses in all
periods.
- Business acquisition costs. This adjustment eliminates costs
related to acquisitions in all periods.
- Restructuring charges. This adjustment eliminates costs related
to termination benefits provided to employees as part of the
Company's full-time workforce reductions
- Share based compensation. This adjustment eliminates the
compensation expense relating to restricted stock units and stock
options granted under the Troika Media Group Stock Plan.
- Loss Contingency on Equity Issuance related to Series E
PIPE
- Net gain on sale of subsidiary
- (Gain) loss on derivative liabilities related to the Series E
PIPE
View original content to download
multimedia:https://www.prnewswire.com/news-releases/troika-media-group-inc-reports-revenue-of-59-0-million-adjusted-ebitda-of-1-5-million-for-the-three-months-ended-march-31--2023--301825204.html
SOURCE Troika Media Group, Inc.