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Wildbrain Ltd
Symbol WILD
Shares Issued 172,509,642
Close 2021-11-09 C$ 3.97
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Wildbrain loses $21.4-million in fiscal Q1

2021-11-09 19:05 ET - News Release

Mr. Eric Ellenbogen reports

WILDBRAIN REPORTS Q1 2022 RESULTS

Wildbrain Ltd. today released its fiscal 2022 first quarter results for the three months ended Sept. 30, 2021 (Q1 2022).

  • Revenue increased 18 per cent to $112.6-million in Q1 2022, compared with $95.5-million in Q1 2021.
  • Net loss of $21.4-million in Q1 2022, compared with net loss of $3.3-million in Q1 2021, mainly due to a non-cash, foreign exchange loss of $13.0-million in the current quarter versus a foreign exchange gain of $5.1-million in Q1 2021.
  • Cash used in operating activities in Q1 2022 was $11.4-million, compared with $19.6-million provided by operating activities in Q1 2021.
  • Free cash flow (1) for Q1 2022 was negative $19.9-million, compared with negative free cash flow of $2.7-million in Q1 2021, primarily due to increased accounts receivables arising from larger deals concluded during the quarter and timing of working capital settlements.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)(1) in Q1 2022 increased 13 per cent to $19.9-million, compared with $17.5-million in Q1 2021.
  • Consumer products revenue grew 25 per cent to $48.5-million in Q1 2022, compared with $38.8-million in Q1 2021.
  • Wildbrain Spark revenue increased 73 per cent to $15.4-million in Q1 2022, compared with $8.9-million in Q1 2021.

Eric Ellenbogen, Wildbrain chief executive officer, said: "Our first quarter results reflected a return to growth at Wildbrain Spark as well as strong consumer products performance. Spark revenue was up 73 per cent in Q1 2022, driven by improving advertising rates and our focus on higher-value views. Our vast library of high-quality owned content is the cornerstone of our leading digital network on YouTube, yielding valuable data and insights. This, together with our holistic approach to content monetization, is what really differentiates us and continues to bring top IP partners to Spark. As YouTube continues to favour quality content, we expect to realize even greater benefits from our network. We're also extending our capabilities across other digital platforms, such as the recently announced exclusive direct advertising services partnership with Gamefam, one of the top game publishers on Roblox."

Mr. Ellenbogen added: "In consumer products, we expect our momentum to build in the coming quarters and years, supported by new brand activations and content releases across Strawberry Shortcake, Sonic, Teletubbies, Yo Gabba Gabba! and others. For Peanuts, our consistent output of new content on Apple TV+ is further engaging global audiences. Season 2 of Snoopy in Space debuts this week, and the first new Peanuts special, For Auld Lang Syne, premieres in December. As we switch on more and more IP, we're fully harnessing our 360-degree capabilities across production, distribution and licensing, and, in turn, realizing the long-term earnings' power of our assets."

Aaron Ames, Wildbrain chief financial officer, added: "Q1 2022 reflected the early returns from the investments we've made across our business. We continue to unlock new monetization opportunities at Spark to generate a bigger portion of revenue through nascent areas, including digital production, direct ad sales and paid media, which collectively grew 128 per cent in the current quarter, over Q1 2021. We're also realizing synergies of our vertically integrated business by aggregating our Peanuts representation across Europe and the Middle East, which contributed to higher consumer products revenue in Q1 2022. Our investments provide a solid foundation, positioning us for sustainable growth and margin expansion in fiscal 2022 and beyond."

In Q1 2022, revenue grew 18 per cent to $112.6-million, compared with $95.5-million in the prior year, reflecting growth at Spark and strong consumer products performance.

Content production and distribution revenue increased 3 per cent to $37.6-million in Q1 2022 vs. $36.3-million in Q1 2021, driven by higher production revenues from premium projects including Sonic Prime and multiple new series and family specials for Peanuts.

Q1 2022 revenue at Spark increased 73 per cent to $15.4-million vs. $8.9-million in Q1 2021, as advertising rates continued to recover and reflecting higher-value views. This was also evident in other nascent AVOD revenues increasing 128 per cent in Q1 2022 vs. Q1 2021 through the value adds the company brings to its IP partners in direct advertising sales, paid media, data insights and digital production.

Higher revenues at Spark in the current quarter reflect the company's focus on building higher-quality viewership, driven by premium content where it owns the IP or shares in consumer products. Spark continued to attract a widely engaged audience, with 8.1 billion views across 50.1 billion minutes of video watched on the company's network in Q1 2022. This compared with 10.7 billion views and 64.2 billion minutes in watch time in Q1 2021 as consumption patterns normalize from last year's peak viewership during COVID-19 lockdowns. These metrics continued to improve sequentially into Q2 2022 with views and watch time up 27 per cent and 36 per cent respectively since hitting a trough in April, 2021 (2). During this same period, advertising rates, on average, have increased 120 per cent since April, 2021 (1). Kids continued to watch longer on Spark, averaging six minutes and 10 seconds per view, up from five minutes and 59 seconds in Q1 2021.

Consumer products revenue grew 25 per cent to $48.5-million in Q1 2022, compared with $38.8-million in Q1 2021. Higher revenue in Q1 2022 was due to the strength of the Peanuts brand, supported by a consistent output of new content, which will continue over the coming years to drive consumer products globally. The company also benefitted from continued growth at its licensing agency, Wildbrain CPLG, arising from synergies in representing Peanuts across Europe and the Middle East, as well as expanding representation of third party partner IP and increasing new deal volumes.

Q1 2022 gross margin was 46 per cent vs. 45 per cent in Q1 2021, due to higher revenue in the quarter stemming from a slate of higher-margin premium productions, return to growth at Spark and a strong consumer products business.

Cash used in operating activities in Q1 2022 was $11.4-million, compared with $19.6-million provided by operating activities in Q1 2021. Free cash flow for Q1 2022 was negative $19.9-million, compared with negative free cash flow of $2.7-million in Q1 2021, primarily due to increased accounts receivables arising from larger deals concluded in the quarter and timing of working capital settlements. These included higher third party participations due to higher distribution and consumer products revenue, the final payment of $2.9-million in tangible benefit obligations related to the company's broadcast channels and $8.8-million in accounts receivables from production, which were received after quarter-end.

Adjusted EBITDA increased 13 per cent to $19.9-million in Q1 2022, compared with $17.5-million in Q1 2021, driven by higher gross margin, offset by investments in growth initiatives and higher distribution to non-controlling interests.

Q1 2022 net loss was $21.4-million vs. net loss of $3.3-million in Q1 2021, primarily due to a non-cash, foreign exchange loss of $13.0-million in the current quarter vs. a foreign exchange gain of $5.1-million in the prior year quarter.

  1. Free cash flow, gross margin, adjusted EBITDA and adjusted EBITDA attributable to Wildbrain are non-GAAP (generally accepted accounting principles) financial measures. Free cash flow is defined as operating cash flow less distributions to non-controlling interests, changes in interim production financing, cash interest paid on the company's long-term debt, bank indebtedness and lease liabilities, and principal repayments on the company's lease liabilities. Gross margin means revenue less direct production costs and expense of film and television programs produced (per the financial statements). Adjusted EBITDA represents income of the company before amortization, finance income (expense), taxes, reorganization and development expenses, impairments, equity-settled share-based compensation expense, and adjustments for other identified charges. Adjusted EBITDA attributable to Wildbrain means adjusted EBITDA excluding the portion of adjusted EBITDA attributable to non-controlling interests. Further details on the definitions of and reconciliation to free cash flow, gross margin, adjusted EBITDA and adjusted EBITDA attributable to Wildbrain can be found in the "non-GAAP financial measures" section of the company's Q1 2022 management discussion and analysis (MD&A).
  2. Growth in views and watch time from April, 2021, to October, 2021.

Q1 2022 conference call

The company will hold a conference call on Nov. 10, 2021, at 10 a.m. ET to discuss the results.

To listen, call 1-800-430-8332 toll-free or 1-647-792-1241 internationally and reference conference ID 9959611. Please allow 10 minutes to be connected to the conference call. Replay will be available after the call on 1-888-203-1112 toll-free or 1-647-436-0148, under passcode 9959611, until Nov. 17, 2021.

The audio and transcript will also be archived on our website approximately two days after the event.

About Wildbrain Ltd.

Wildbrain inspires imaginations to run wild, engaging kids and families everywhere with great content across all media. With approximately 13,000 half-hours of filmed entertainment in its library -- one of the world's most extensive -- Wildbrain is home to such brands as Peanuts, Teletubbies, Strawberry Shortcake, Yo Gabba Gabba!, Caillou, Inspector Gadget, Johnny Test and Degrassi. At its 75,000-square-foot state-of-the-art animation studio in Vancouver, B.C., it produces such fan-favourite series as The Snoopy Show, Snoopy in Space, Chip & Potato, Carmen Sandiego, Go, Dog. Go! and more. Its shows are enjoyed worldwide in more than 150 countries on over 500 streaming platforms and telecasters, and the company's AVOD (advertising-based video on demand) business -- Wildbrain Spark -- offers one of the largest networks of kids' channels on YouTube, garnering billions of views per month from over 245 million subscribers. Through its leading agency, Wildbrain CPLG, it also licenses consumer products and location-based entertainment in every major territory for its own properties as well as for its clients and content partners. Wildbrain's television group owns and operates four family entertainment channels that are among the most viewed in Canada. Wildbrain is headquartered in Canada with offices worldwide and trades on the Toronto Stock Exchange.

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