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Twitter Q1 2014 Press Release - First Ever TWTR Public Quarterly Resultslonelybrand
This presentation and the accompanying press release and conference call contain “forward-looking” statements about Twitter (TWTR) that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include statements about expected financial metrics, such as revenue, non-GAAP adjusted EBITDA and EPS, as well as non-financial metrics, such as average monthly active users, mobile monthly active users and timeline views, for the second quarter of 2014, the full fiscal year and beyond. They also include statements about our possible or assumed business strategies, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition.
Running Head INTEGRATIVE LEARNING PROJECTINTEGRATEIVE LEARNI.docxwlynn1
Running Head: INTEGRATIVE LEARNING PROJECT
INTEGRATEIVE LEARNING PROJECT2
Integrative Learning Project: Netflix Valuation
Julie Mather
Liberty University
Understanding with the Client and Scope of Work
We at XYZ have established an understanding the ABC Company hereafter referred to as “the client” to include the nature purpose and objectives of the valuation agreement as is according to the USPAP. Any limitations or assumptions must be disclosed to the valuation analyst and included in the valuation report. We have established an understanding with the client and have there were no scope restrictions or limitations for analysis. In accordance with the Scope of Work Rule is USPAP, we must:
1. Identify the problem to be solved
2. Determine and perform the scope of work necessary to develop credible results
3. Disclose the scope of work in the report
The purpose of this report is to gain and understanding of Netflix, Incorporated by reviewing their financial statements as provided by management and work environment surrounding the business. Economic considerations have been made as well and the impact on Netflix, Inc. We considered all valuation approaches and selected the most applicable method to evaluate the financial position of the company. The evaluation is in the attached report.
· The History and Nature of the Business
· General Economic and Industry Outlook
· Book Value and Financial Position
· Approaches to Value
· Income Approach
· Discounted Cash Flow Method
· Cost of Capital
· Cost of Equity
· Cost of Debt
· Market Approach
· Reconciliation of Valuation Methods
· Conclusion of Value
· Appendix A – Assumptions and Limiting Conditions
· Appendix B – Valuation Representation/Certification
· Appendix C – Other Sources Consulted
· Appendix D – ExhibitsExecutive Summary
Purpose of Valuation
To assist ABC in determining the fair market value for internal and purchase planning purposes of a 100% equity interest in Netflix, Incorporated as of July 10, 2018.
Standard of Value
Fair market value
Premise of Value
Going concern
Conclusion
Based on our analysis as described in this valuation report, the estimated value as of July 10, 2018 of a 100% equity interest in Netflix, Incorporated on a marketable basis is $55.4 million.
Table of Contents
Understanding with the Client and Scope of Work2
Executive Summary3
The History and Nature of the Business5
Market Area and Customers5
Competition5
Management and Key Persons6
Stock and Stockholders6
General Economic and Industry Outlook6
Economic Indicators6
Historical Business Cycle7
Summary and Outlook7
Book Value and Financial Position8
Income Statement Analysis8
Balance Sheet Analysis9
Working Capital.9
Total Assets9
Interest-Bearing Debt.9
Total Liabilities9
Stockholder’s Equity9
Projections9
Approaches to Value10
Income Approach11
Present Value of Cash Flows11
Discounted Cash Flow Method11
Cost of Capital12
Cost of Equity13
Cost of Debt14
Market Approach15
Guideline Compani.
2. 2
All statements other than statements of historical facts included in this
presentation may constitute forward-looking information and are based on
the best estimates of Management of the current operating environment.
These forward-looking statements are related to, but not limited to,
theScore’s operations, anticipated financial performance, business
prospects and strategies. Forward looking information typically contains
statements with words such as ‘‘anticipate’’, ‘‘believe’’, ‘‘expect’’, ‘‘plan’’,
‘‘estimate’’, ‘intend’’, ‘‘will’’, ‘‘may’’, ‘‘should’’ or similar words suggesting
future outcomes. These statements reflect current assumptions and
expectations regarding future events and operating performance as of the
date of August 31, 2018.
4. • Average monthly active users of theScore on iOS devices grew by 12.5% year-over-year in Q4 F2018, including
growth of 17% in June, supported by our coverage of the 2018 FIFA World Cup.
• Total average monthly active users of theScore app grew to 3.7 million versus 3.5 million for the same period last
year, growth of 5%.
• iOS growth partially offset by lower monthly active users on Android.
4
Q4 F2018 Highlights
• Revenue for Q4 F2018 grew to $5.1 million versus $4.8 million for the same period the previous year, while
revenue for the twelve months ending August 31, 2018 was $27.7 million, up from $26.3 million in F2017.
• EBITDA loss for F2018 improved to $2.4 million compared to a loss of $5.9 million in F2017 while EBITDA loss
for Q4 F2018 was $2.4 million, compared to a loss of $1.9 million for the same period the previous year.
• EBITDA loss during Q4 F2018 was due to a combination of increased facilities, administrative and other
expenses, including expenses relating to U.S. sports betting business development activities, as well as
direct sales for the quarter which, despite being up 6% year-over-year, were below expectations.
5. • Reached an average of 55 million sports fans a
month via our social channels during Q4 F2018.
• Included a new record reach of 70 million
in June.
• Instagram account has best-in-class
growth and engagement rates.
• Channels remain a powerful brand-building
tactic.
• Debuted new longer-form original video content
series theScore X.
• Led with exclusive interview with NBA star
Lance Stephenson.
• Success of this has opened up other
discussions with top level athletes and
teams keen for us to tell their stories.
5
Q4 F2018 Highlights
6. • Esports video content continued to
achieve significant growth.
• Recorded total of 33 million
video views in Q4 F2018, up
117% year-over-year.
• YouTube channel broke
through 400,000 subscribers
and viewing hours continue to
trend upwards.
• Growth has led to interest from
brands eager to leverage our
content to reach fans of
competitive gaming.
6
Q4 F2018 Highlights
7. • Continued to pursue opportunities related to the U.S.
Supreme Court’s repeal of the Professional and
Amateur Sports Protection Act (PASPA).
• Appointed former Wynn Resorts International
Interactive Gaming Chief David Wang as Senior
Advisor.
• Current market for sports betting in U.S. remains
limited due to state-by-state roll-out.
• Company believes there is exciting near-term and long-
term potential for theScore thanks to our large and
engaged audience and expertise in delivering great
mobile sports experiences.
7
U.S. Sports Betting Opportunity
9. 9
• Coverage of the 2018 FIFA World Cup in theScore app helped drive user
growth during Q4 F2018.
• Provided a new Timeline view to capture all major match
incidents; Added details on Top Performers, and deeper Team
Comparison stats.
• Features rolled over into other main soccer sections, including
EPL and UEFA Champions League, in time for new season.
• Coverage also provided across our Emerging Platforms.
• World Cup content delivered through theScore Bot for Facebook
Messenger and theScore Fantasy for Facebook’s Instant
Games.
• Content localized into French, Portuguese and Spanish to
capitalize on global appeal of soccer.
• Began to test social-related app features, with the goal of empowering
sports fans’ conversations
• Early results have been positive, with continued development
planned for Q1.
Product and Content
10. 10
• theScore’s social content reached an average of 55 million sports fans a month during Q4 F2018.
• Growth and engagement rates on Instagram continue to outperform our peers.
• Took first steps into longer-form original video content with the launch of ‘theScore X’ series.
• Debuted with interview with Lance Stephenson, driving about 80 million earned media impressions.
Product and Content
11. 11
• Continue to innovate in the ways we deliver content within our app.
• Introduced ‘Stories’ – a new, highly visual format that allows us to
present news.
• Continued to build out our gambling-focused content, with work
underway on increasing this offering from a content and data
standpoint in Q1.
Product and Content
12. 12
• Achieved 33 million total video views for esports in Q4 F2018, growth of 115% year-over-year.
• Subscribers to YouTube channel also broke through 400,000 in Q4 F2018, with viewing numbers and hours continuing to
trend upwards.
• Well positioned as industry continues to grow, with brands showing increased interest in engaging with our audience of
competitive gaming fans.
Product and Content
14. Financials
14
Q4 F2018 Q4 F2017
Revenue $5,099 $4,752
Operating Expenses $8,303 $7,584
EBITDA $(2,351) $(1,896)
• Revenue for Q4 F2018 grew to $5.1 million versus $4.8 million for the same period the previous year.
• Revenue for the twelve months ending August 31, 2018 was $27.7 million, up from $26.3 million in F2017.
• Increase in expenses attributed to combination of increased facilities, admin, and other expenses, including those related to U.S. sports
betting business development activities.
• Finished Q4 F2018 with cash of $6.3 million. Cash use for quarter was $1.5 million versus cash use of $2.6 million in Q4 F2017.
Aug 31, 2018 May 31, 2018
Cash $6,347 $7,896
Current Assets $13,264 $16,050
Working Capital $9,554 $12,417
James: Hello and good afternoon. Many thanks for joining us on today’s call and webcast for theScore’s Fiscal 2018 Q4 and Year End results. Presenting today will be theScore Founder and Chief Executive Officer John Levy and President and Chief Operating Officer Benjie Levy.
At this time, we would like to caution our listeners that this presentation contains forward-looking statements. There are risks that actual results could differ materially from what is discussed and that certain material factors or assumptions are applied in making these forward-looking statements.
Any forward-looking statements contained in this presentation represent the views of management and are presented for the purpose of assisting theScore shareholders and analysts in understanding the theScore’s financial position, objectives and priorities and anticipated financial performance. Forward-looking statements may not be appropriate for other purposes.
Additional information on items of note, theScore’s reported results and factors and assumptions related to forward-looking information, are all available in our Annual Information Form and our MD&A for Q4 F2018, which was filed on SEDAR a few moments ago. Our CEO John will now begin the presentation.
Q4 Overview
John: Good afternoon everyone. Thanks for joining us for our review of Q4 and the end of fiscal 2018. Let’s dive straight into some of the key highlights from the past quarter.
Revenue & EBITDA
Revenue for Q4 grew to $5.1 million versus $4.8 million for the same period the previous year, which meant we finished fiscal 2018 with total revenue of $27.7 million, up from $26.3 million over fiscal 2017.
EBITDA loss for fiscal 2018 improved to $2.4 million compared to a loss of $5.9 million for the previous year. Substantially all of the EBITDA loss for fiscal 2018 can be attributed to Q4 activities and was due to a combination of increased facilities, administrative and other expenses, including expenses relating to U.S. sports betting business development activities as well as direct sales for the quarter which, despite being up 6% year-over-year, were below our own expectations.
Audience Growth
In Q4 we saw the continued growth of theScore app on iOS devices. Boosted by our coverage of the 2018 FIFA World Cup, we increased users on this platform by 12.5% - including growth of 17% in June alone.
This meant total average monthly active users of theScore app grew to 3.7 million versus 3.5 million in the same period last year - up 5%, with that iOS growth partially offset by lower monthly active users on Android. Our flagship app has continued to reinforce its position as one of the most popular in North America over the past fiscal year, and we go into Q1 with a number of exciting initiatives, including:
harnessing the conversations around sports within the app itself
further testing new ways to surface and present news content on mobile
and introducing dedicated fantasy and sports betting sections to give fans a more holistic experience when following their favorite teams and leagues.
On top of the growth of our app audience, we also continued to grow our audience elsewhere, reaching an average of 55 million sports fans a month via our social platforms, including a new single-month record of 70 million in June. These channels remain a powerful brand-building channel for us and position us as true leaders in digital sports media, with best-in-class engagement and growth rates. This success has also opened the way for new and exciting original longer-form video content initiatives to be created and served up across our platforms, such as the debut of ‘theScore X’ series with NBA star Lance Stephenson, and this has already opened-up new conversations with other top level with athletes and teams keen for theScore to tell their stories.
Our esports video content also reached new heights in Q4, with our content recording 33 million views - growth of more than 117% over last year. Our YouTube channel also smashed through the 400,000 subscriber mark, and we are now very much recognized as the leading independent media outlet for competitive gaming coverage, finding ourselves nominated for industry awards as a result. This growth and engagement around our video content has been incredible, and have begun to attract interest from brands looking to engage with fans of competitive gaming.
In Q4 we continued to pursue opportunities related to the U.S. Supreme Court’s repeal of the Professional and Amateur Sports Protection Act, which allowed individual states in the U.S. to begin exploring legalized sports betting models.
As part of this we secured the services of former Wynn Resorts International Interactive Gaming Chief David Wang. David brings a wealth of experience and joined theScore as a Senior Advisor. We’re very pleased to have him on board.
With only three U.S. states offering fulsome online sports betting the current market is limited in scope, but we see exciting near-term and long-term potential for theScore thanks to our large and engaged audience and our expertise in delivering great mobile sports experiences.
I’ll now turn things over to Benjie, who’ll take a closer look at some of our product development, content and social initiatives, as well as our financials.
Benjie: Thanks John. And good afternoon everyone.
As John touched upon, this quarter was hugely successful in terms of growing the reach of our content and the size of theScore’s audience. On our flagship app, our World Cup coverage helped drive user growth, with soccer fans eagerly consuming our real-time coverage from the tournament in Russia. We made significant upgrades to our matchup pages for this tournament. We added a new Timeline feature, which showcased all key match incidents at a glance, as well as player-specific stats like Top Performers and Key Players. These features were then rolled across to our other soccer leagues in time for the start of the new European season, making our offering one of the best for real-time soccer scores and news.
Our in-app coverage of the World Cup was also supported by our live scores, data and news offering from our Facebook Messenger bot, with our Instant Game also providing another fun way for fans to engage with the tournament. We also localized these services into French, Portuguese and Spanish to further capitalize on the global appeal of soccer.
During the quarter we also began to test a number of social-related features within our app. Following sports teams is an inherently social experience, and we believe there is a significant opportunity to enable fans to connect and engage with each other around their favourite teams, live events, and content they care about. Early results have been encouraging, and building on this foundation will be one of our focuses during Q1.
Audience and engagement across our social channels continued to lead the digital sports media industry. Our growth rate and engagement metrics comfortably beat out our peers once again, helping us achieve a cross-platform reach of more than 55 million sports fans a month on average during Q4. This is huge brand amplification and continues to serve as a means of engaging with existing fans while also uncovering new ones. This approach is not going unnotived, and earlier this month we were announced as a finalist in the category of Social Media Team of the year in the Digiday Publishing Awards, which are held in New York next month.
To build on this success, our team also successfully took the first steps into longer-form original video production under our sports vertical for the first time. We launched our new series - known as theScore X - with exclusive access for our profile of NBA star Lance Stephenson. This not only drove engagement on our own platforms, but also drove about 80 million earned media impressions as dozens of other top-tier news outlets - including ESPN and Sports Illustrated - picked-up our scoop of why he infamously blew into the ear of LeBron James. This was a hugely encouraging debut for theScore X and we’re looking forward to seeing more of these pieces over the coming months.
In our app we also introduced new content offerings, including ‘Stories’ - a new, highly-visual way of presenting news and rich-media content.
We’ve also further built on our already strong sports-betting data and content offering by incorporating even more gambling-focused articles and hiring a dedicated news editor for this topic. Another focus during Q1 will be introducing increased betting-related content and stats within our app, making them more easily accessible within box scores and allowing fans to subscribe to betting-related news and data alerts for a more complete in-game experience.
For esports, Q4 was another stellar quarter of growth. The 33 million video views we achieved between June and August was growth of 115% year-over-year, as our team continues to develop and grow video franchises that fans of competitive gaming love to consume. Our YouTube channel also hit more than 400,000 subscribers in Q4 and, with our viewing numbers and hours continuing to trend upwards, theScore is now comfortably regarded as one of the most prominent esports media platforms. In fact, last month we were named as a finalist for the Cynopsis Media Awards, where we’ll be going up against the likes of NBA TV’s The Starters and The Ellen Show among others for the prize of best category specific YouTube channel.
I’ll now take a closer look at our financials.
Q4 2018 revenue, compared to Q4 2017 revenue, was $5.1 million vs. $4.8 million. In Q4 2018, expenses were $8.5 million versus $7.6 million the prior year. As noted earlier, the increase can be attributed to a combination of increased facilities, administrative and other expenses, including expenses relating to U.S. sports betting business development activities. As a result of these increased expenses and direct sales which were below expectations, EBITDA loss for Q4 2018 was $2.4 million versus an EBITDA loss of $1.9 million in Q4 F2017.
We finished the quarter with cash of $6.3 million. Cash use for the quarter was $1.5 million versus cash use of $2.6 million in Q4 2017.
James: That concludes the formal part of our presentation. Operator, we will now take questions.
After Questions
James: Thank you everyone for joining our Q4 and Year-End conference call. We look forward to presenting to you again when we deliver our Q1 results in mid-January.