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Press release content from Business Wire. The AP news staff was not involved in its creation.

VerticalScope Announces Third Quarter 2021 Financial Results

November 9, 2021 GMT

TORONTO--(BUSINESS WIRE)--Nov 9, 2021--

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 ended September 30, 2021.

“Our third quarter results were driven by 27% growth in our Advertising Revenue versus the prior year, despite continued challenges from supply chain disruption, and inventory shortages.” commented Rob Laidlaw, Founder and CEO of VerticalScope. “We leveraged the strength of our Fora platform to deliver continued organic year-over-year Revenue and MAU growth. We also accelerated the pace of our M&A activity with the announcement of three significant transactions, and have a strong pipeline of deals that we anticipate closing in the fourth quarter of 2021, and into the first quarter of 2022. We have high conviction that we will be able to deploy all of our net IPO proceeds of C$135M within one year of our IPO date at highly accretive EBITDA multiples.”

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Financial Highlights for the Three Months Ended September 30, 2021. All comparatives, unless otherwise noted are versus the same period in the prior year:

Revenue was $14.0M, an increase of 5%.

Advertising revenue of $10.1M grew by 27% despite ongoing challenges with supply chain disruption and inventory shortages particularly in the Automotive and Powersports categories.

E-commercerevenue of $3.9M declined by 27%. E-commerce revenue was negatively impacted this quarter 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.

Adjusted EBITDA was $5.6M. Adjusted EBITDA decreased by 2% when excluding the following variances: (i) a $248K adverse impact from the strengthening Canadian vs. U.S. dollar; (ii) $1,158K in incremental public company and Omnibus incentive plan costs; (iii) benefits from COVID-19 relief and SR&ED totaling $899K in the quarter versus $412K in the prior year.

Cash flows from operating activities were $3.0M, an increase of $0.6M, or 23%.

Free Cash Flow was $4.3M for the quarter, and $15.5M for the nine months ended September 30, 2021 an increase of $4.2M, or 37%, compared to the nine months ended September 30, 2020. Excluding the following noted variances for the nine month period year-to-date, Free Cash Flow was $17.1M, an increase of $7.0M or 69% compared to the nine months ended September 30, 2020: (i) a $807K adverse impact from the strengthening Canadian vs. U.S. dollar; (ii) $1,653K in incremental public company and Omnibus incentive plan costs; (iii) benefits from COVID-19 relief and SR&ED totaling $899K versus $1,176K in the prior year.

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– At the end of the third quarter, we had migrated 92.2% of our forum communities to Fora. Due to MAU growth through acquisition, at the end of October we have 87.7% migrated to Fora.

MAUs for the third-quarter were 93.8M, an increase of 8.5%. Communities on the Fora platform grew 12.0%.

– We ended the quarter with $69.9M of cash and cash equivalents on our balance sheet, and $75M available under our existing credit facility to fund our M&A pipeline.

Laidlaw added, “We are very proud of the work our team has put in this quarter. Development velocity on the Fora platform has accelerated, and it is reflected in the MAU growth we are experiencing including 98M MAU’s in the month of October. In terms of new projects, we are excited about our Fora Marketplace initiatives that are currently in the testing phase, and looking forward to the progress we can make in 2022 across our entire Commerce platform. We believe it’s early-innings in our Commerce playbook, and that this will become a significant part of our organic revenue growth.”

Chris Goodridge, President and COO, commented that, “We are very excited to announce today three significant acquisitions, with Hometalk, The Streamable and Threadloom. These acquisitions add five large communities to our portfolio, accelerate the execution of our commerce playbook and add world class talent to our organization. We are also seeing impressive revenue growth on our two previously announced largest transactions including Paddling.com and ProBoards, where revenues have increased double-digit percentages since our acquisition.”

Earnings Announcement
Management will host a conference call and webcast to discuss the Company’s third quarter 2021 financial results at 10:00am EDT on Wednesday, November 10, 2021.

Live Call Registration:
https://www.incommglobalevents.com/registration/q4inc/9054/verticalscope-holdings-inc-q3-earnings-call/

Joining by telephone:
Canada: 1 833 950 0062
United States: 1 844 200 6205
All other locations: +1 929 526 1599
Participant Access code: 503080

Webcast: https://event.on24.com/wcc/r/3411367/2104781C0E930FC7DA37363E11D4F7FB

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 nearly 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. Forward-looking information, including the Company’s plans for organic growth and financially-accretive M&A, 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. 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. These 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

“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, 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 on sale of assets, gain on sale of investments, foreign exchange loss (gain), and other charges that include direct and incremental business acquisition related costs and costs directly incurred in connection with the Company’s initial public offering that are not deducted from the equity proceeds.

VERTICALSCOPE HOLDINGS INC.

Condensed Consolidated Interim Statement of Financial Position

(In U.S. dollars)

(Unaudited)

 

 

 

September 30,

December 31,

 

 

2021

2020

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

 

$69,874,661

$4,603,609

Trade and other receivables

 

7,914,000

14,664,272

Income taxes receivable

 

142,590

536,423

Prepaid expenses

 

1,233,956

270,763

Derivative instruments

 

1,935

80,506

 

 

79,167,142

20,155,573

 

 

 

 

Property and equipment

 

1,408,012

1,751,800

Right-of-use asset

 

2,676,643

2,712,995

Intangible assets

 

27,901,871

32,707,475

Investments

 

2,199,999

2,449,999

Goodwill

 

11,840,039

11,840,039

Deferred tax asset

 

19,590,402

16,065,696

 

 

 

 

Total assets

 

$144,784,108

$87,683,577

 

 

 

 

Liabilities and Shareholders' Equity (Deficiency)

 

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

 

$4,156,983

$4,449,234

Deferred revenue

 

845,529

810,457

Current portion of long-term debt

 

2,512,873

8,323,090

Lease liability

 

608,255

708,248

 

 

8,123,640

14,291,029

 

 

 

 

Deferred revenue

 

19,105

58,477

Long-term debt

 

47,153,057

93,142,219

Lease liability

 

2,621,388

2,525,799

Deferred tax liability

 

105,865

210,700

Total liabilities

 

58,023,055

110,228,224

 

 

 

 

Shareholders' equity (deficiency):

 

 

 

Share capital

 

146,970,996

34,183,524

Contributed surplus

 

12,684,437

10,371,945

Deficit

 

(72,894,380)

(67,100,116)

 

 

86,761,053

(22,544,647)

 

 

 

 

Total liabilities and shareholders' deficiency

 

$144,784,108

$87,683,577

VERTICALSCOPE HOLDINGS INC.

Condensed Consolidated Interim Statements of Comprehensive Loss and Other Comprehensive Loss

(In U.S. dollars, except per share amounts)

(Unaudited)

 

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2021

2020

2021

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$14,001,350

$13,345,481

$44,343,216

$36,741,439

 

 

 

 

 

Operating expenses:

 

 

 

 

Wages and consulting

5,515,705

4,539,356

17,228,248

14,620,558

Share-based compensation

1,665,206

1,126,943

2,697,047

1,552,906

Platform and technology

1,680,405

1,541,368

5,052,043

4,480,817

General and administrative

1,545,209

676,114

6,404,544

2,723,400

Depreciation and amortization

4,770,062

4,991,405

13,869,966

15,225,584

Impairment

250,000

250,000

 

15,426,587

12,875,186

45,501,848

38,603,265

 

 

 

 

 

Operating income (loss)

(1,425,237)

470,295

(1,158,632)

(1,861,826)

 

 

 

 

 

Other expenses:

 

 

 

 

Loss (gain) on sale of assets

11,944

361

13,800

(408,952)

Interest expense

1,071,077

1,460,278

5,581,055

5,334,305

Loss (gain) on investments

402

(530,046)

402

(530,046)

Foreign exchange loss (gain)

190,231

39,225

299,709

48,047

 

1,273,654

969,818

5,894,966

4,443,354

 

 

 

 

 

Loss before income taxes

(2,698,891)

(499,523)

(7,053,598)

(6,305,180)

 

 

 

 

 

Income taxes (recovery)

 

 

 

 

Current

112,538

67,211

431,552

344,541

Deferred

(522,707)

396,105

(1,690,886)

(1,822,803)

 

(410,169)

463,316

(1,259,334)

(1,478,262)

 

 

 

 

 

Net loss and comprehensive loss

$(2,288,722)

$(962,839)

$(5,794,264)

$(4,826,918)

 

 

 

 

 

Loss per share:

 

 

 

 

Basic

$(0.10)

$(0.07)

$(0.28)

$(0.35)

Diluted

(0.10)

(0.07)

(0.28)

(0.35)

VERTICALSCOPE HOLDINGS INC.

Condensed Consolidated Interim Statement of Cash Flows

(In U.S. dollars) (Unaudited)

  

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

Loss for the year

 

$(2,288,722)

 

$(962,839)

 

$(5,794,264)

 

$(4,826,918)

Items not involving cash:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

4,770,061

 

4,991,405

 

13,869,965

 

15,225,584

Interest expense

 

1,071,077

 

1,460,278

 

5,581,055

 

5,334,305

Loss (gain) on sale of assets

 

11,944

 

361

 

13,800

 

(408,952)

Gain on sale of investments

 

 

(530,046)

 

 

(530,046)

Unrealized loss (gain) in derivative instruments

 

7,895

 

(60,938)

 

78,571

 

(29,009)

Loan forgiveness

 

(899,289)

 

 

(899,289)

 

Impairment of Investment

 

250,000

 

 

250,000

 

Income tax expense and deferred tax

 

(410,169)

 

463,316

 

(1,259,334)

 

(1,478,262)

Share-based compensation

 

1,665,206

 

1,126,943

 

2,697,047

 

1,552,906

 

 

4,178,003

 

6,488,480

 

14,537,551

 

14,839,608

Change in non-cash operating assets and liabilities

 

(1,141,950)

 

(1,397,636)

 

5,358,486

 

1,113,874

Interest paid

 

(23,835)

 

(2,366,924)

 

(1,703,462)

 

(5,539,831)

Income taxes received (paid)

 

(22,484)

 

(300,364)

 

829

 

(488,301)

 

 

2,989,734

 

2,423,556

 

18,193,404

 

9,925,350

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Repayment of initial term loan

 

(625,000)

 

(2,062,500)

 

(45,500,000)

 

(4,125,000)

Repayment of delayed draw term loan

 

 

(1,870,678)

 

(7,714,977)

 

(2,769,934)

Proceeds from issuance of share capital

 

14,282,656

 

 

110,308,011

 

Proceeds from exercise of share options

 

 

 

156,250

 

Credit facility financing fees

 

 

 

(1,274,597)

 

Lease payments

 

(225,694)

 

(209,232)

 

(679,400)

 

(616,372)

Proceeds from paycheck protection loan

 

 

 

 

899,289

 

 

13,431,962

 

(4,142,410)

 

55,295,287

 

(6,612,017)

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment, right-of use and intangible assets

 

(2,286,916)

 

(1,200,814)

 

(8,229,084)

 

(3,605,649)

Proceeds from sale of assets

 

8,680

 

6,914

 

16,876

 

433,031

Proceeds from sale of investments

 

 

819,250

 

 

819,250

 

 

(2,278,236)

 

(374,650)

 

(8,212,208)

 

(2,353,368)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash

 

14,143,460

 

(2,093,504)

 

65,276,483

 

959,965

 

 

 

 

 

 

 

 

 

Cash, beginning of the period

 

55,516,675

 

8,153,554

 

4,603,609

 

5,112,990

 

 

 

 

 

 

 

 

 

Effect of movement of exchange rates on cash held

 

214,526

 

8,712

 

(5,431)

 

(4,193)

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$69,874,661

 

$6,068,762

 

$69,874,661

 

$6,068,762

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211109006628/en/

CONTACT: Investor inquiries:Chris Goodridge, President and COO

Tel: 416-341-7174,IR@verticalscope.comMedia inquiries:Wojtek Dabrowski, Provident Communications

Tel: 647-825-5009,wojtek@providentcomms.comRelated Links

http://www.verticalscope.com

KEYWORD: NORTH AMERICA CANADA

INDUSTRY KEYWORD: SOFTWARE TECHNOLOGY NETWORKS DATA MANAGEMENT

SOURCE: VerticalScope Inc.

Copyright Business Wire 2021.

PUB: 11/09/2021 06:42 PM/DISC: 11/09/2021 06:42 PM

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