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Quarterly Revenue Increases 48% and Operating Expenses Decrease 43% Year over Year, Corporate Update and Impact of Covid-19
Toronto, Ontario and Mumbai, India and Los Angeles, California--(Newsfile Corp. - June 1, 2020) - QYOU Media Inc. (TSXV: QYOU) (OTCQB: QYOUF) ("QYOU Media" or the "Company"), a media company operating in India and the United States, has reported financial results for the three months ended March 31, 2020. All figures appear in Canadian dollars.
Financial Highlights for the Quarter
For the three months ended March 31, 2020, revenue was $887,898 (of which approximately 4% was from Q India operations) as compared to $601,269 for the three months ended March 31, 2019 (of which 0% was from Q India operations), an increase of $286,629 or 48%. The increase in revenue for the three-month period compared to prior year is primarily due to growth in the Company's Influencer Marketing division.
For the three months ended March 31, 2020 net loss decreased by $793,608 or 43%. The decrease for the three months reflects the increase in revenue and decrease in total expenses for the same period.
For the three months ended March 31, 2020, other operating expenses decreased by $367,920 or 23% compared to the three months ended March 31, 2019 primarily due to a decrease in sales and marketing, and general and administrative expenses offset by increased stock-based compensation.
For the nine months ended March 31, 2020, revenue was $2,437,972 as compared to $3,230,499 for the nine months ended March 31, 2019, a decrease of $792,527 or 25%. The decrease in revenue over the nine-month period compared to prior year is primarily due to loss of linear channel revenue for the discontinued Sinclair business. For the nine months ended March 31, 2020 net loss increased by $144,054 or 3% vs the corresponding period a year earlier. For the nine months ended March 31, 2020, other operating expenses decreased by $761,211 or 15% compared to the nine months ended March 31, 2019, primarily due to decrease in the majority of operating expenses.
Report on the impact of Covid-19
The Company operates two primary business segments:
Q India and US Influencer Marketing.
In India, the Company operates The Q India, a burgeoning linear TV channel as well as a comprehensive VOD offering focused on young Indians (20 to 30-year-olds) available to over 550 million via satellite TV, cable, OTT platforms and mobile carriers.
In the United States, the Company's Influencer Marketing division utilizes digital and social media stars to promote third party brands and is primarily engaged with major studios to promote their theatrical motion picture releases.
Covid-19 had its initial impact on the Company in the three months ended March 30, 2020. Our immediate priorities were in addressing the health and safety of our staff and stakeholders and in adjusting operations to the new reality.
Our Influencer Marketing division was materially negatively affected by the immediate closure of movie theaters in March 2020. Several influencer marketing contracts for scheduled theatrical motion pictures were cancelled. This resulted in a loss of revenues in FY Q3 2020 that has become more pronounced in the current FY Q4 2020 ending June 30, 2020. During this quarter, the release of motion pictures to movie theaters has been non-existent. The Company expects to recover some influencer marketing revenue via new contracts in the first two quarters of the company's fiscal year 2021 (July 1- Dec 31, 2020) as theatres are expected to reopen. The Company's Influencer Marketing division has pivoted to offer services to opportunities in the "direct to consumer premium VOD" segment of the motion picture business led by a recent campaign we successfully deployed for the highly successful Trolls World Tour motion picture and the upcoming film King of Staten Island. Notwithstanding early encouraging signs with respect to the broadening of the scope of the business, there is no assurance that the division will succeed without the return of a robust theatrical business in the United States.
In India, the long-term strategy for The Q India was threefold: i) to build the top and most popular Hindi language channel featuring India's leading digital and social stars focused on young Indians (20 to 30-year-olds); ii) to build pan-Indian distribution across all content platforms including television; and iii) with elements i) and ii) of the strategy successfully implemented, to monetize via ad sales and sponsorships which commenced in the quarter ended March 31, 2020 ( FY Q3 2020). We became officially rated by India's Broadcast Audience Research Council (BARC) early in the quarter positioning the Company to begin full ad sales monetization of our television viewership. In March, we were gratified with our first material advertising purchase order for approximately US $75,000 only to have it put on hold pending the end of the Covid lockdown in India. The Company understood it was imminently about to obtain an additional material advertising purchase order that was cancelled as a result of Covid-19.
The Company is optimistic that as India's lockdown lifts, overall return to business conditions will result in revenue initiation for Q India.
As a result of the material loss of anticipated revenue this quarter from both Q India and the Influencer Marketing division, the Company has, at today's date, negative working capital and requires further capital. Management expects fiscal 2021 (July 1, 2020 - June 30, 2021) to be a substantially improved environment with Q India generating revenue and the Influencer Marketing division returning to growth in the new fiscal year beginning July 1, 2020 based on the assumption that the global business environment will improve and the "new normal" will facilitate the Company's two primary business domains.
QYOU Media's CEO, Curt Marvis, stated, "This has been an extraordinarily challenging time for people and businesses around the world. While our first priority is the health and well-being of our employees and their families, we remain hard at work from our respective homes with the goal of seeing our business strategies in India and North America thrive. It is clear we were on the right path last quarter as revenue continued to grow for our Influencer Marketing division and Q India was on the cusp of monetizing its content. That momentum was challenged this quarter operating under Covid-19 constraints but we remain optimistic that as the world begins to return to a "new normal," a great opportunity continues to exist for both Q India's ad sales business and our Influencer Marketing division."
Corporate Management and Board Composition Update
Warren Barnes, CFO, is stepping down from his position to become CEO of an emerging technology company. Mr. Barnes is being replaced by interim CFO Kevin Williams CA CPA. Mr. Williams has spent 20 years as a senior leader of both finance and commercial strategy teams across various industries. Mr. Williams led Commercial Strategy for a large Telecom operator overseeing customer facing strategy for $2B in revenue and has expertise as a business leader driving financial growth across start-ups, mid-sized businesses and large public corporations. The Company welcomes Mr. Williams and thanks Mr. Barnes for his dedicated service to the company.
Amory Schwartz, who has served as a senior executive and Board member for many years is departing the Company as both an executive and Board member to pursue new opportunities in his adopted homeland of Ireland.
QYOU Media's Chairman, G. Scott Paterson commented, "Both Amory and Warren have been strong assets to the company and we thank them for their contributions and wish them well in their new endeavors. I have worked with Kevin Williams for a number of years and have great confidence in his financial acumen and ability to effectively manage and enhance our business both at the daily operational and public company levels."
Detailed information in QYOU Media's financial statements for the quarter ended March 31, 2020, the notes to the financial statements and QYOU Media's interim management discussion and analysis and quarterly highlights have been posted to the Company's website and have been filed under QYOU Media Inc.'s profile on SEDAR at www.sedar.com.
About QYOU Media Inc.
QYOU Media is a media company operating in India and the United States that produces and distributes content created by digital and social media influencers. In India, we curate, produce and distribute premium content for cable and satellite television, OTT and mobile platforms. In the United States, we manage influencer marketing campaigns for major film studios and brands. Founded and created by industry veterans from Lionsgate, MTV, Disney and Sony, QYOU Media's millennial and Gen Z-focused content reaches more than 550 million consumers around the world. Experience our work at www.qyoumedia.com.
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This press release may contain "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws, including, without limitation, the Company's future plans and anticipated results, the strengthening of the Company's position in India, growth in the influencer marketing segments of the Company's business, and new strategic partnerships. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, although considered reasonable by management, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Additional risks and uncertainties regarding QYOU Media are described in its publicly available disclosure documents, filed by QYOU Media on SEDAR at www.sedar.com except as updated herein. The forward-looking statements contained in this news release represent QYOU Media's expectations as of the date of this news release, or as of the date they are otherwise stated to be made, and subsequent events may cause these expectations to change. Except as required by law, QYOU Media undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.
Neither the 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.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/57013