VANCOUVER, British Columbia, May 30, 2019 (GLOBE NEWSWIRE) -- WOW! Unlimited Media Inc. (“WOW!” or the “Company”) (TSX-V: WOW; OTCQX: WOWMF), the next generation kids and youth entertainment company, announced its results for the three months ended March 31, 2019.
The Company completed the first quarter of 2019 with revenue of $19.5 million, as compared to $15.7 million for the first quarter of 2018.
Q1 2019 HIGHLIGHTS
Studio production
In addition to multiple ongoing projects, WOW! is proud to announce the following productions in progress:
- The second season of Barbie Dreamhouse Adventures, which will consist of an additional 26 episodes
- A new series, Made by Maddie, in partnership with Silvergate Media, which will consist of 80 episodes
- A 3-episode special program of Octonauts, also with Silvergate Media
Strong production pipeline
- As of March 31, 2019, WOW!’s animation production backlog was $69.2 million; Animation Production segment revenue was $5.5 million for the three months ended March 31, 2019
Growth in Channel Frederator Network
- WOW!’s Channel Frederator Network on YouTube also attracted a total of 14.2 billion views for the three months ended March 31, 2019, representing a 25% increase over the prior quarter.
Growing affiliation with gaming and e-sports:
- WOW!’s original IP Castlevania, now under production for Season 3 on Netflix, has been hailed as ‘the best videogame adaptation of all time’
- WOW!’s Costume Quest, which was also adapted from a video game, debuted on Amazon Prime Video on March 8 and had positive reviews in the LA Times
- WOW!’s YouTube channel, The Leaderboard, is creating a home for video game fans. The Leaderboard offers insights, development history, tips & tricks, the latest in news and commentary about video games past and present
- The Leaderboard currently has over 500 published videos and a growing audience and creator base
Financial highlights & guidance
- Revenue for the quarter was $19.5 million
- Operating EBITDA was ($1.8) million
- The Company maintains its previous guidance for fiscal 2019 revenue in excess of $100 million and Operating EBITDA of $3-$4 million
OVERVIEW OF RESULTS
| For the three months ended | ||||||||
| $000's, except per share amounts | March 31, 2019 | March 31, 2018 | ||||||
| Revenue | $ | 19,496 | $ | 15,663 | ||||
| Operating EBITDA1 | (1,814 | ) | 822 | |||||
| Operating loss1 | (3,267 | ) | (292 | ) | ||||
| Operating loss per share | ||||||||
| - basic and diluted | $ | (0.11 | ) | $ | (0.01 | ) | ||
| Net loss | $ | (3,392 | ) | $ | (162 | ) | ||
| Net loss per share | ||||||||
| - basic and diluted | $ | (0.11 | ) | $ | (0.01 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| - basic and diluted | 30,185,577 | 25,178,604 | ||||||
| 1 Operating EBITDA and operating loss include amortization of investment in film and television programming. Refer to discussion under Consolidated Results for a reconciliation of Operating EBITDA and Operating loss to Net loss. | ||||||||
- Revenue for the three months ended March 31, 2019 was $19.5 million. This included $14.0 million generated by the Networks and Platforms segment, which continues to build viewership. Revenue for the Animation Production segment was $5.5 million for the three months ended March 31, 2019, bolstered by the continued production of Costume Quest, Barbie Dreamhouse Adventures, season 2, Made by Maddie, the Octonauts specials, and Octonauts, season 5.
- Operating EBITDA was a $1.8 million loss and the net loss was $3.4 million for the three months ended March 31, 2019.
“WOW! had a good start to the year during the first quarter – we announced new projects, added significantly to the production pipeline and continued to see growth for the Channel Frederator Network. The Company is pursuing its path to profitability while investing modestly on newer initiatives,” said Michael Hirsh, Chairman and CEO.
CONSOLIDATED RESULTS
| For the three months ended | ||||||||
| $000's | March 31, 2019 | March 31, 2018 | ||||||
| Revenue | $ | 19,496 | $ | 15,663 | ||||
| Amortization of investment in film and television programming | $ | 365 | $ | 947 | ||||
| Operating EBITDA | $ | (1,814 | ) | $ | 822 | |||
| Finance costs | 449 | 353 | ||||||
| Depreciation and amortization1 | 1,004 | 761 | ||||||
| Operating loss | (3,267 | ) | (292 | ) | ||||
| Items affecting comparability: | ||||||||
| Share-based compensation expense | 125 | 261 | ||||||
| Deferred income tax recovery | – | (391 | ) | |||||
| (414 | ) | (414 | ) | |||||
| Net loss | $ | (3,392 | ) | $ | (162 | ) | ||
| 1 Excludes amortization of investment in film and television programming | ||||||||
Revenue and Operating EBITDA
Revenue for the three months ended March 31, 2019, increased by $3.8 million compared to the same period in 2018. For the three months ended March 31, 2019, revenues for the Networks and Platforms segment increased by $8.5 million and revenues for the Animation Production segment decreased by $4.7 million in comparison to the same period in 2018. The growth in revenues for the Networks and Platforms segment for the three months ended March 31, 2019, was driven by increased views and revenues generated by Channel Frederator. Revenue for the Animation Production segment for the three months ended March 31, 2018, was higher in comparison to the same period in 2019 as a result of the recognition of the revenue from the licensing of international SVOD rights for Reboot: The Guardian Code during the three months ended March 31, 2018.
Operating EBITDA for the 3 months ended March 31, 2019, decreased by $2.6 million compared to the same period in 2018. The higher operating EBITDA for the 3 months ended March 31, 2018 was driven by gross margin on the revenue from Reboot: The Guardian Code, as noted above. In addition, for the three months ended March 31, 2019, the Company incurred higher legal and accounting costs compared to the previous quarter which was offset by a decrease in operating costs as a result of adopting IFRS 16, the new lease accounting standard, during the current quarter.
NON-IFRS FINANCIAL MEASURES
In addition to results reported in accordance with IFRS, the Company reports using certain non-IFRS financial measures as supplemental indicators of the Company’s financial and operating performance. These non-IFRS financial measures include operating profit or loss, operating profit or loss per share and operating EBITDA. The Company believes these supplemental financial measures reflect the Company's on-going business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.
The Company defines operating profit or loss as net profit or loss excluding the impact of specified items affecting comparability, including, where applicable, share of gain or loss of equity accounted investees, other non-operational income and expenses, deferred taxes and other gains or losses. The use of the term "non-operational income and expenses" is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal management reports. Operating profit or loss per share is calculated using diluted weighted average shares outstanding and does not represent actual profit or loss per share attributable to shareholders. The Company believes that the disclosure of operating profit or loss and operating profit or loss per share allows investors to evaluate the operational and financial performance of the Company's ongoing business using the same evaluation measures that management uses, and is therefore a useful indicator of the Company's performance or expected performance of recurring operations.
The Company defines operating EBITDA as profit or loss net of amortization of investment in film and television programming, but before interest, taxes, depreciation and amortization, adjusted for certain items affecting comparability as specified in the calculation of operating profit or loss. Operating EBITDA is presented on a basis consistent with the Company's internal management reports. The Company discloses operating EBITDA to capture the profitability of its business before the impact of items not considered in management's evaluation of operating performance. Unless otherwise stated, the Company includes the amortization of investment in film and television programming in the calculation of operating EBITDA.
The Company defines backlog as the undiscounted value of signed agreements for production services and intellectual property (“IP”) in relation to licensing and distribution agreements for work that has not yet been performed, but for which the Company expects to recognize revenue in future periods. Backlog excludes estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licences of intellectual property. The extent of eventual revenue recognized in future periods may be materially higher or lower than this amount, depending upon factors which include, but are not limited to the following: (i) contract modifications, (ii) fluctuations in foreign exchange rates for contracts not denominated in Canadian dollars, (iii) changes to production and delivery schedules, or (iv) valuation issues in connection with the collectability of fees.
Operating profit or loss, operating profit or loss per share, operating EBITDA, and backlog do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. The Company cautions readers to consider these non-IFRS financial measures in addition to, and not as an alternative for, measures calculated in accordance with IFRS.
Forward-looking Statements
This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes.
In particular, this news release contains forward-looking statements relating to, among other things: (i) general economic conditions; (ii) future revenues to be received by WOW!; (iii) WOW!’s future business prospects and opportunities; (iv) WOW!’s ability to complete any or all of its proposed production work; and (v) the ability of the Company to raise financing in the future.
Management of the Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Corporation believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise.
Forward-looking statements are not a guarantee of future performance and are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in the Company's annual information form for the year ended December 31, 2017, which has been filed with the Canadian Securities Administrators and is available on www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
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.
About Wow Unlimited Media Inc.
Wow Unlimited is creating a leading next generation kids and youth entertainment business by focusing on creating top end content, and by building and partnering with the most engaging platforms. The Company's key assets include: Frederator Networks Inc., which includes, Channel Frederator Network, the world's #1 digital animation network, Frederator Studios, an animation production company, as well as video-on-demand channels on digital platforms; and one of Canada's largest, multi-faceted animation production studios, Mainframe Studios, which produces computer-generated animated television series and long-form animated features.