TORONTO--(BUSINESS WIRE)--VerticalScope Holdings Inc. (“VerticalScope” or the “Company”) (TSX: FORA), a technology company that has built and operates a cloud-based digital platform for online enthusiast communities, today announced financial results for the quarter ("Q4") and full year ended December 31, 2021.
“2021 was an incredibly successful year for VerticalScope as we continued to experience strong momentum in our business,” commented Rob Laidlaw, Founder and CEO of VerticalScope. “Our business is performing very well, evidenced by our 16% revenue growth and our Adjusted EBITDA growth of 9% compared to 2020 (or 18% YoY when excluding incremental public company costs, FX changes, and government subsidies). Underlying our financial performance, we were able to grow our MAUs to a new record-high of 105.8 million, including 4% organic growth. We are ahead of schedule in our deployment of our IPO capital having completed 21 acquisitions in 2021, and they are performing well for us, which will accelerate our growth in 2022 and beyond.”
Financial Highlights for the Three and Twelve Months Ended December 31, 2021. All comparatives, unless otherwise noted are versus the same period in the prior year:
– Q4 and full year revenue were $21.4M, an increase of 6%, and $65.8M, an increase of 16%, respectively
– Revenue from Digital Advertising recorded double digit growth in both the quarter and year with a Q4 contribution of $15.1M, an increase of 35%, and a full year contribution of $44M, an increase of 37%, led by an increase in digital advertising ARPU. These strong results were achieved in spite of ongoing challenges related to global supply chain disruptions and inventory shortages experienced by several customers, particularly in the automotive and powersports categories.
– E-commerce revenue contributed $6.3M in Q4 and $21.8M for the full year, a decrease of 30% and 12%, respectively. E-commerce revenue was negatively impacted in the period by supply chain disruption, and out-of-stock products, while results in the prior period were elevated due to COVID-19 induced increases in online shopping.
– Full year Adjusted EBITDA was $29M, an increase of 9%. Excluding incremental public company costs, foreign exchange and benefits from government subsidies, Adjusted EBITDA increased by $4.7M or 18%.
– As a result of incremental costs of $15.9M relating to the initial public offering, the amendment of the credit agreement, acquisitions and omnibus incentive plan compensation, total comprehensive loss for the year was $12.4M compared to $1.5M in the prior year.
– Full year cash flows from operating activities were $19.6M, an increase of $5.5M, or 39%.
– Free Cash Flow generated in the year was $23.6M, an increase of $1.8M or 8%. Excluding the full year variances with respect to incremental public company costs, FX and benefits from government subsidies noted above, Free Cash Flow generated in the year was $24.9M, an increase of $4.1M or 20%.
– At the end of the year there were 1,203 communities running on the Fora platform which represent 86% of designated forum community MAU. Fluctuations in this percentage are due to MAU growth through acquisition.
– In Q4, we completed 13 asset and business acquisitions bringing the total number of acquisitions in the year to 21 (for a total cash consideration of $82.5M, and total share consideration of $13.2M not including earnouts).
– We ended the quarter with $20.5M of unrestricted cash and cash equivalents on our balance sheet, and $45M available under our existing credit facility to fund our M&A pipeline.
Laidlaw added, “We are very pleased with the performance improvements we continue to see with sites running on our Fora community platform and the capabilities we have added to VerticalScope with acquisitions completed in Q4 including Threadloom, ProBoards, TheStreamable and HomeTalk. We experienced exceptional growth in digital advertising revenue in Q4, up 35% compared to prior year with strength in both direct and programmatic channels. This growth was achieved in spite of continued challenges from supply chain disruptions and inventory shortages. Although our E-commerce revenue was down in Q4 and full-year 2021 compared to 2020 when we saw a surge in Covid-19 related online shopping, we are optimistic about the long term growth prospects for E-commerce across our platform which will be accelerated by our Threadloom acquisition. We are also very pleased with the pace of capital deployment and the quality of the assets that we have acquired to date.
Chris Goodridge, President and COO, commented that, “Our Q4 M&A activity was incredibly strong with 13 acquisitions completed. In addition to previously announced transactions including HomeTalk, Threadloom, ProBoards and TheStreamable, we added several additional communities that will benefit from the performance improvements that Fora can offer, such as ThumperTalk.com, the leading community for ATV and dirt bike enthusiasts, and AdvRider.com, one of the largest motorcycle communities in North America. Backed by a very strong M&A pipeline we will continue to accelerate VerticalScope’s growth through accretive acquisitions.”
Earnings Announcement
Management will host a conference call and webcast to discuss the Company's fourth quarter and full year 2021 financial results at 7:30am EST on Thursday, March 10, 2022.
Live Call Registration: https://event.on24.com/wcc/r/3577207/A2CA35D8F8EC53D1FDBF9E13E6218725
Joining by telephone:
Canada: 1 833 950 0062
United States: 1 844 200 6205
All other locations: +1 929 526 1599
Participant Access code: 952574
Webcast: https://event.on24.com/wcc/r/3577207/A2CA35D8F8EC53D1FDBF9E13E6218725
If you are unable to join live, an archived recording of the webcast will be available on the investor relations section of the VerticalScope website.
About VerticalScope
Founded in 1999 and headquartered in Toronto, Ontario, VerticalScope is a technology company that has built and operates a cloud-based digital platform for online enthusiast communities in high-consumer spending categories. VerticalScope's mission is to enable people with common interests to connect, explore their passions and share knowledge about the things they love. Through targeted acquisitions and development, VerticalScope has built a portfolio of over 1,200 online communities and over 100 million monthly active users. VerticalScope is listed on the Toronto Stock Exchange (TSX: FORA).
Forward-Looking Statements
This news release contains forward-looking information within the meaning of applicable securities legislation that reflects the Company's current expectations regarding future events. When used in this news release, words such as “should”, “could”, “intended”, “expect”, “plan” or “believe” and similar expressions indicate forward-looking statements. Forward-looking information, including the Company’s plans for organic growth and financially-accretive M&A, deployment of capital, performance of the Company’s acquisitions and the growth of E-commerce, is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company's control. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurances can be given that actual results will be consistent with these forward-looking statements. Such risks and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in the supplemented PREP prospectus dated June 14, 2021, which is available on the Company’s profile on SEDAR at www.sedar.com. Actual results could differ materially from those projected herein. VerticalScope does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.
Non-IFRS Measures
This press release references certain non-IFRS measures, including Adjusted EBITDA and Free Cash Flow, as described below. This press release also makes reference to Average Revenue Per User (“ARPU”) and MAU, which are operating metrics used in our industry. These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS.
The Company uses non-IFRS measures including:
“Adjusted EBITDA” is calculated as net income (loss) excluding interest, income tax expense (recovery), and depreciation and amortization, or EBITDA, adjusted for share-based compensation, share performance related bonuses, unrealized gains or losses from changes in fair value of derivative financial instruments, severance, contingent consideration liabilities measured at fair value through profit and loss, gain or loss on sale of assets, gain or loss on sale of investments, foreign exchange loss (gain), impairment and other charges that include direct and incremental business acquisition related costs and costs directly incurred in connection with the Offering that are not deducted from the equity proceeds.
“Free Cash Flow” means Adjusted EBITDA less capital expenditures and income taxes paid during the period.
VERTICALSCOPE HOLDINGS INC.
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December 31, |
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December 31, |
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2021 |
|
2020 |
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|
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Assets |
|
|
||||||
|
|
|
||||||
Current assets: |
|
|
||||||
Cash and cash equivalents |
$20,494,313 |
|
$4,603,609 |
|
||||
Restricted cash |
|
179,743 |
|
|
— |
|
||
Trade and other receivables |
|
15,221,610 |
|
|
14,664,272 |
|
||
Lease receivable |
|
588,101 |
|
|
— |
|
||
Income taxes receivable |
|
317,040 |
|
|
536,423 |
|
||
Prepaid expenses |
|
1,103,283 |
|
|
270,763 |
|
||
Derivative instruments |
|
18,325 |
|
|
80,506 |
|
||
|
|
37,922,415 |
|
|
20,155,573 |
|
||
|
|
|
||||||
Property and equipment |
|
986,683 |
|
|
1,751,800 |
|
||
Right-of-use asset |
|
2,629,130 |
|
|
2,712,995 |
|
||
Intangible assets |
|
98,805,989 |
|
|
32,707,475 |
|
||
Investments |
|
1,000,000 |
|
|
2,449,999 |
|
||
Goodwill |
|
53,436,546 |
|
|
11,840,039 |
|
||
Deferred tax asset |
|
20,662,839 |
|
|
16,065,696 |
|
||
Lease receivable |
|
1,586,014 |
|
|
— |
|
||
|
|
|
||||||
Total assets |
$217,029,616 |
|
$87,683,577 |
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Liabilities and Shareholders' Equity (Deficiency) |
||||||||
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Current liabilities: |
|
|
||||||
Accounts payable and accrued liabilities |
$9,948,758 |
|
$4,449,234 |
|
||||
Income taxes payable |
|
1,075,699 |
|
|
— |
|
||
Deferred revenue |
|
1,028,515 |
|
|
810,457 |
|
||
Current portion of long-term debt |
|
3,150,663 |
|
|
8,323,090 |
|
||
Lease liability |
|
1,200,836 |
|
|
708,248 |
|
||
Contingent considerations |
|
7,916,259 |
|
|
— |
|
||
|
|
24,320,730 |
|
|
14,291,029 |
|
||
|
|
|
||||||
Deferred revenue |
|
13,917 |
|
|
58,477 |
|
||
Long-term debt |
|
75,972,078 |
|
|
93,142,219 |
|
||
Lease liability |
|
3,734,829 |
|
|
2,525,799 |
|
||
Deferred tax liability |
|
11,281,781 |
|
|
210,700 |
|
||
Contingent considerations |
|
5,463,741 |
|
|
— |
|
||
Total liabilities |
|
120,787,076 |
|
|
110,228,224 |
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Shareholders' equity (deficiency): |
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Share capital |
|
160,182,417 |
|
|
34,183,524 |
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Contributed surplus |
|
15,568,994 |
|
|
10,371,945 |
|
||
Accumulated other comprehensive income |
|
3,327 |
|
|
147,816 |
|
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Deficit |
|
(79,512,198 |
) |
|
(67,247,932 |
) |
||
|
|
96,242,540 |
|
|
(22,544,647 |
) |
||
Total liabilities and shareholders' deficiency |
$217,029,616 |
|
$87,683,577 |
|
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VERTICALSCOPE HOLDINGS INC.
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For the year ended December 31, |
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2021 |
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2020 |
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Revenue |
$65,761,629 |
|
$56,923,265 |
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|
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Operating expenses: |
|
|
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Wages and consulting |
|
26,918,057 |
|
|
21,465,410 |
|
||
Share-based compensation |
|
6,132,391 |
|
|
1,961,529 |
|
||
Platform and technology |
|
7,177,465 |
|
|
6,366,223 |
|
||
General and administrative |
|
10,428,293 |
|
|
3,356,465 |
|
||
Depreciation and amortization |
|
20,636,368 |
|
|
20,190,270 |
|
||
Impairment of investment |
|
250,000 |
|
|
— |
|
||
Adjustment to contingent considerations |
|
1,710,000 |
|
|
— |
|
||
|
|
73,252,574 |
|
|
53,339,897 |
|
||
|
|
|
||||||
Operating income (loss) |
|
(7,490,945 |
) |
|
3,583,368 |
|
||
|
|
|
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Other expenses: |
|
|
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Loss (gain) on sale of assets |
|
411,209 |
|
|
(358,807 |
) |
||
Interest expense |
|
6,073,298 |
|
|
5,634,257 |
|
||
Loss (gain) on investments |
|
402 |
|
|
(530,046 |
) |
||
Foreign exchange loss (gain) |
|
118,457 |
|
|
222,082 |
|
||
|
|
6,603,366 |
|
|
4,967,486 |
|
||
|
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Loss before income taxes |
|
(14,094,311 |
) |
|
(1,384,118 |
) |
||
|
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|
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Income taxes (recovery) |
|
|
||||||
Current |
|
723,939 |
|
|
340,555 |
|
||
Deferred |
|
(2,553,984 |
) |
|
(223,972 |
) |
||
|
|
(1,830,045 |
) |
|
116,583 |
|
||
|
|
|
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Net loss |
($12,264,266 |
) |
($1,500,701 |
) |
||||
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Other comprehensive loss |
|
|
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Items that may be reclassified to net loss: |
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Foreign currency differences on translation of foreign operations |
|
(144,489 |
) |
|
(5,282 |
) |
||
|
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|
||||||
Total comprehensive loss |
($12,408,755 |
) |
($1,505,983 |
) |
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Loss per share: |
|
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Basic |
($0.59 |
) |
($0.11 |
) |
||||
Diluted |
|
(0.59 |
) |
|
(0.11 |
) |
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VERTICALSCOPE HOLDINGS INC.
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For the year ended December 31, |
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2021 |
|
2020 |
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Cash provided by (used in): |
|
|
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|
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Operating activities: |
|
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Loss for the year |
($12,264,266 |
) |
($1,500,701 |
) |
||||
Items not involving cash: |
|
|
||||||
Depreciation and amortization |
|
20,636,368 |
|
|
20,190,270 |
|
||
Interest expense |
|
6,073,298 |
|
|
5,634,257 |
|
||
Loss (gain) on sale of assets |
|
411,209 |
|
|
(358,807 |
) |
||
Loss (gain) on sale of investments |
|
402 |
|
|
(530,046 |
) |
||
Unrealized loss (gain) in derivative instruments |
|
62,181 |
|
|
(80,957 |
) |
||
Loan forgiveness |
|
(899,289 |
) |
|
— |
|
||
Impairment of Investment |
|
250,000 |
|
|
— |
|
||
Income tax expense (recovery) |
|
(1,830,045 |
) |
|
116,583 |
|
||
Adjustment to contingent considerations |
|
1,710,000 |
|
|
— |
|
||
Share-based compensation |
|
6,132,391 |
|
|
1,961,529 |
|
||
|
|
20,282,249 |
|
|
25,432,128 |
|
||
Change in non-cash operating assets and liabilities |
|
1,564,976 |
|
|
(4,307,957 |
) |
||
Interest paid |
|
(2,005,649 |
) |
|
(6,629,541 |
) |
||
Income taxes paid |
|
(238,942 |
) |
|
(391,840 |
) |
||
|
|
19,602,634 |
|
|
14,102,790 |
|
||
|
|
|
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Financing activities: |
|
|
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Repayment of initial term loan |
|
(46,125,000 |
) |
|
(8,250,000 |
) |
||
Proceeds from issuance of revolving loan |
|
30,000,000 |
|
|
— |
|
||
Repayment of delayed draw term loan |
|
(7,714,977 |
) |
|
(2,912,578 |
) |
||
Proceeds from issuance of share capital |
|
110,308,011 |
|
|
— |
|
||
Proceeds from exercise of share options |
|
156,250 |
|
|
— |
|
||
Credit facility financing fees |
|
(1,274,501 |
) |
|
(109,178 |
) |
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Lease payments |
|
(945,076 |
) |
|
(822,191 |
) |
||
Proceeds from paycheck protection loan |
|
— |
|
|
899,289 |
|
||
|
|
84,404,707 |
|
|
(11,194,658 |
) |
||
|
|
|
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Investing activities: |
|
|
||||||
Additions to property and equipment, right-of-use and intangible assets |
|
(23,688,128 |
) |
|
(4,716,869 |
) |
||
Proceeds from sale of assets |
|
20,345 |
|
|
442,665 |
|
||
Proceeds from sale of investments |
|
— |
|
|
819,250 |
|
||
Acquisitions |
|
(64,088,074 |
) |
|
— |
|
||
|
|
(87,755,857 |
) |
|
(3,454,954 |
) |
||
|
|
|
||||||
Increase (decrease) in cash |
|
16,251,484 |
|
|
(546,822 |
) |
||
|
|
|
||||||
Cash, beginning of the period |
|
4,603,609 |
|
|
5,112,990 |
|
||
|
|
|
||||||
Restricted cash |
|
(179,743 |
) |
|
— |
|
||
Effect of movement of exchange rates on cash held |
|
(181,037 |
) |
|
37,441 |
|
||
|
|
|
||||||
Cash, end of period |
$20,494,313 |
|
$4,603,609 |
|
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