Mr. Sebastien Mailhot reports

D-BOX TECHNOLOGIES FIRST QUARTER HIGHLIGHTED BY STRONG GROWTH IN REVENUE AND PROFITABILITY

D-Box Technologies Inc. today released its financial results for the first quarter ended June 30, 2023. All dollar amounts are expressed in Canadian currency.

• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 108 per cent to $1.3-million year over year;
• Total revenues grew 47 per cent to $10.5-million year over year;
• System sales revenues increased 73 per cent to $7.5-million year over year;
• Rights for use, rental and maintenance revenues of $3.0-million -- best on record;
• Net income of $500,000, or 0.2 cent per share.

"We continue to execute our plan for delivering profitable growth," said Sebastien Mailhot, president and chief executive officer of D-Box. "Following the strong revenue growth achieved in fiscal 2023, we are pleased to report our second-best quarter on record in terms of revenues, adjusted EBITDA and net income. The first quarter was our strongest quarter yet for rights of use, rental and maintenance revenues. Moreover, our total revenue for the last four quarters amounted to $37.5-million, which is the highest for any four consecutive quarters in the history of D-Box.

"We are building momentum in multiple key markets. We continue to increase our footprint in theatrical, where our second quarter should benefit from the D-Box releases of Barbie, Indiana Jones and the Dial of Destiny, Mission: Impossible -- Dead Reckoning Part One, Gran Turismo, and others. We're doing strong business in simulation and training, and gaining traction in racing/gaming, where we received initial revenues from the Motion 1 gaming chair during the quarter. Importantly, we see significant potential to grow our worldwide install base and industry-leading haptic ecosystem while delivering sustained profitable growth."

First quarter overview

Revenue increased $3.4-million, or 47 per cent, to $10.5-million compared with $7.1-million for the first quarter of last year. System sales grew by nearly $3.2-million, or 73 per cent, driven by large increases in the entertainment and simulation and training markets. Simulation and training system sales increased by 153 per cent to $2.9-million driven by growth in the transportation industry. Entertainment system sales increased by 44 per cent to $4.5-million mostly due to expansion and growth in sim racing.

Rights for use, rental, and maintenance revenues reached a new quarterly record, increasing 8 per cent to $3.0-million compared with $2.8-million for the same period last year. The growth was attributable to the corporation's increasing footprint in theaters, as well as a studio box office slate comparable with the same period last year.

Gross profit excluding amortization related to cost of goods sold increased to $5.6-million from $4.3-million for the first quarter of last year. Gross margin excluding amortization decreased to 54 per cent from 60 per cent a year ago due to a higher proportion (market mix) of system sales versus rights for use, rental and maintenance revenues compared with the same period last year. Rights for use, rental and maintenance revenues generate a higher margin than system sales.

Operating expenses for the quarter were $4.7-million, or 44.5 per cent of revenues, compared with $3.8-million, or 53.7 per cent of revenues in the first quarter of last year. The increase in operating expenses was mainly attributable to a $300,00 increase in research and development expenses due to projects related to the next generation of actuator controllers and software development; a $200,000 increase in selling and marketing expenses, due primarily to a $125,000 reduction in government assistance during the period as compared with the same period last year; and a close to $300,000 foreign exchange difference, driven by the volatility of the Canadian dollar relative to the United States currency between the periods. Marketing initiatives and participation in trade shows, business development events and travel focused on the entertainment and gaming markets also contributed to the increase in selling and marketing expenses.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 107.8 per cent to $1.3-million from $600,000 in the first quarter of last year. Net income was $496,000 (basic and diluted profit of 0.2 cent per share) compared with $29,000 (basic and diluted profit of zero cents per share) for the same period last year.

On June 30, 2023, D-Box had working capital of $9.0-million, including cash and cash equivalents of $3.9-million, compared with working capital of $8.4-million and cash and cash equivalents of $3.1-million as at March 31, 2023.

Notice of investor webinar

Management of D-Box will be participating in a Radius Research investor webinar on Friday, Aug. 11, 2023, at 9 a.m. ET. During the webinar, management will discuss D-Box's financial results for the first quarter and rolling four quarters, as well as recent developments in key markets. Anyone wishing to join the webinar may register on-line (link available in the original version of this news release).

Additional information regarding the first quarter ended June 30, 2023

The financial information relating to the first quarter ended June 30, 2023, should be read in conjunction with the corporation's audited consolidated financial statements and the management's discussion and analysis dated Aug. 10, 2023. These documents are available at SEDAR.

About D-Box Technologies Inc.

D-Box creates and redefines realistic, immersive commercial and entertainment experiences by moving the body and sparking the imagination through effects: motion, vibration and texture. D-Box has collaborated with some of the best companies in the world to deliver new ways to enhance great stories. Whether it is movies, video games, music, relaxation, virtual reality applications, metaverse experience, themed entertainment or professional simulation, D-Box creates a feeling of presence that makes life resonate like never before. D-Box Technologies is headquartered in Montreal with offices in Los Angeles, United States, and Beijing, China.

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