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.
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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(1)
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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.
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"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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SOURCE Engagement Labs