theScore, Inc. Q1 F2017 Conference Call Presentation

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Presentation given by theScore's leadership team on January 12, 2017 following the release of the company's Q1 F2017 results.

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  • John: Thanks Tom. Welcome everyone. Thanks for joining us today for this review of the first quarter of Fiscal 2017.
  • During the quarter, revenue grew from $7.0 million to $8.5 million. This growth, combined with reduced expenses, has also led to our best ever quarter in terms of our bottom line with our EBITDA loss narrowing by nearly $2 million, from $2.3 million in Q1 F2016 to $0.4 million in the current period.
    Consistent with our previous disclosures, we remain well on track to achieve EBITDA profitability in fiscal 2018. Our total quarterly revenue of $8.5 million was also a new record. Underlining this revenue growth in Q1, we also secured an impressive raft of direct sales deals in the US and Canada, with brand partners including NBC, Enterprise, Chevrolet, Nissan, GM, The Keg, Kellogg’s, Bacardi and Microsoft.
    Our sales, ad operations and analytics teams also continue to work in unison to optimize our US programmatic strategy, helping us further scale this part of our business while also enhancing our advertising targeting capability.
  • When it comes to our audience, engagement in our apps is stronger than ever, with users opening us on average 98 times a month.
    Average monthly app sessions were also up to 459 million from 414 million. In other words, when sports fans install us, they make us a part of their daily lives.
    Our priority is now meeting the challenge of app user growth head-on, with average monthly active users coming in at 4.7 million versus 4.8 million a year ago. Revitalizing user growth is our #1 priority, and this is an area where we believe there continues to be tremendous opportunity for our business.
  • We remain the number one challenger to ESPN on mobile in North America with the second largest user base for sports news and data apps, which is an incredible position of strength.
    Leveraging this, we have a tremendous opportunity to invigorate growth through a combination of product and marketing initiatives. At the same time we continue to strongly monetize our existing user base and drive increased revenue.
  • For the past few months, we’ve been developing an exciting new strategic and data-driven feature roadmap for our flagship app. We’ve also made some immediate changes and improvements to our product development process. While continued development of theScore app will be our priority and main focus over the next few quarters, we also continue to explore opportunities off our app platform and in areas that we also believe have high growth potential for us, like bots and esports.
     
    I’ll now turn things over to Benjie to summarize some of our product-specific initiatives.
  • Benjie: Thanks John. Q1 saw us make significant changes to the way our product development team operates with the goal of being more responsive, nimble and efficient in the way we ship product updates. We’ve moved to a two-week development cycle for theScore app, down from six weeks, allowing us to get new versions of theScore app into the hands of users faster than ever while also improving performance and stability.
     
    This has provided us with renewed focus to spearhead the execution of an ambitious product roadmap for our flagship app. Broadening and deepening our news and event-based coverage, strengthening our community of users, and better presenting and surfacing the vast amount of amazing original content produced by our editorial and social content team. All of this is designed to positively impact both engagement and audience growth of theScore app. Combined with continued strategic marketing efforts to raise awareness of our offering in the US, we’re excited to roll out these new features during this fiscal year.
  • We also continue to dive deeper into areas that we consider to be potential high growth opportunities. While theScore remains our flagship app and primary focus, we’ve continued to make great strides in our supporting products.
     
    We’re excited by the early traction of our bot platforms, capitalizing on a large and entirely new channel to serve our content in a deeply personalized way on mobile devices, something we do better than anyone. As the first sports media bot on Messenger, we’ve gained an early foothold and significant presence on a platform that has more than a billion monthly active users and have been able to quickly roll-out new features and offerings, including college sports and cricket, as well as a smarter onboarding flow to encourage personalization, delivering what we believe is the best sports bot on the market. Bots are barely six months old, but we are very well positioned to exploit their potential, and work closely alongside our platform partners.
  • Like bots, esports as an industry is also very young. But, similarly, we’ve been able to achieve a market leading position, with the largest and most dedicated coverage in esports media.
    As the organizational structure around esports as an industry continues to evolve, so do we, branching beyond our app with initiatives like building out a dedicated video team, to adapt and try and capitalize on needs in the market.
    In addition, we’re also working on enhancing our desktop web presence, which remains a big opportunity for our esports audience, and tapping into the larger and more casual gaming audience with content that not only entertains, but also aims to make viewers better gamers themselves.
  • On top of this, we continue to test our fantasy sports game Squad Up in a live environment.
    Only a few months in, we’re pleased with the initial reaction from our user base as we look to offer a totally new and entirely more accessible type of daily fantasy game.
    Our team has already done a great job of building a game that’s fun and easy to play and we’re now focused on further iterating on that gameplay and strategizing how to take it to scale. I’ll now turn things over to Tom for our financials.
  • Tom: Thanks Benjie.
  • Tom: Q1 FY2017 revenue, compared to Q1 FY2016 revenue, grew from $7.0 million to $8.5 million, an increase of 22%.  The entire increase is related to increases in advertising revenues.
    Our app user base continues to be more engaged. Engagement grew to 459 million users sessions per month in Q1 FY2017 compared to 414 million user sessions per month last year. Sales growth was led by this increased engagement as well as the execution of our Canadian and US direct sales teams. In Q1 FY2017, Canadian ad revenue grew from $1.7 million to $2.5 million year over year, while US revenue grew from $5.3 million to $6.0 million year over year.
  • Tom: In Q1 FY2017, expenses declined to $9.5 million from $10.1 million. The decline is mainly driven by our reduced marketing expenses related to fantasy, offset by our growth in personnel in our new product initiatives. This expense level should be an approximate base of expenses for the remainder of the fiscal year.
     
    In Q1 FY2017, personnel costs increased to $4.6 million compared to $4.4 million in FY2016. The expense increases are mix of higher number of personnel offset by reduced commission costs.
    Direct marketing costs were 1.3 million in Q1 2017 versus 2.0 million in Q1 2016. Most of the decrease was related to reductions in marketing relating to fantasy. Admin and overhead costs at $1.5 million were flat year over year.
    EBITDA loss for Q1 FY2017 was $0.4 million versus $2.3 million in FY2016. The combination of revenue increases and expenses savings allowed us to make the significant improvements to our profitability.
  • Tom: We finished the quarter with $11.7 million in the bank, and we have an additional $5.2 million that we expect to collect in early Q3 with respect to our digital media tax credits.  Cash use for the quarter was $3.9 million, versus $7.0 million last year. Our bottom line improvements directly contributed to significantly lower cash usage. It is also important to note that Q1 is usually our highest cash use quarter, with Q1 sales generally being collected in Q2. Working capital at quarter-end was $21.2 million, as we have $7.7 million of accounts receivables and $5.2 million in tax credits recoverable in our current assets.
  • theScore, Inc. Q1 F2017 Conference Call Presentation

    1. 1. January 12, 2016 Q1 F2017
    2. 2. Forward looking statements 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 November 30, 2016. 2
    3. 3. Q1 F2017 OVERVIEW 3
    4. 4. •Quarterly revenue of $8.5M, up from $7.0M in F2016. •EBITDA loss improved significantly to $0.4M in F2017 from $2.3M in F2016. 4 Q1 F2014 Q1 F2015 Q1 F2016 Q1 F2017 Fiscal Year: September 1 – August 31 Q1 F2017 Overview Up to $8.5M from $7.0 million
    5. 5. Q1 F2017 Overview 5 •Record user engagement within our mobile apps, with users opening us 98 times a month each on average. Average monthly app sessions up to 459 million from 414 million. •Number one priority is meeting the challenge of app user growth. Record monthly user engagement Averagemonthlysessions peruser
    6. 6. 6 •Attacking audience growth from a position of strength. •theScore remains the number one challenger to ESPN on mobile in North America, with the second largest user base for sports news and data apps. •Remains an opportunity to improve growth through combination of product and marketing initiatives. Q1 F2017 Overview
    7. 7. 7 •Developing a new strategic and data-driven feature roadmap for theScore app on iOS and Android. •Implemented significant improvements to our product development process. •Primary focus is on our flagship app, but continuing to build on our early foothold in other areas with high- growth potential, like bots and esports. Q1 F2017 Overview
    8. 8. 8 Product Updates • Implemented a faster product development cycle, allowing us to release updates to theScore app every two weeks versus every six weeks. • This improvement has made us more nimble and efficient in the way we ship product updates. • Provided us with renewed focus to spearhead the execution of an ambitious product roadmap for theScore: • Broadening and deepening our news and event-based coverage. • Strengthen our community of users. • Better surface and amplify our powerful and engaging content.
    9. 9. 9 Product Updates • theScore Bot for Facebook Messenger has gained a significant foothold as the first sports media chatbot on the platform. • Quickly iterating and rolling out new features and additional coverage, including college sports and cricket. • theScore is well positioned to capitalize on the continued growth of bots as a platform.
    10. 10. 10 Product Updates • theScore has established itself as a market leader in offering the most dedicated esports coverage. • Have built upon our strong app presence with a dedicated video team, as well as working on enhancing our desktop and web presence. • Now actively working on tapping into a larger and more casual gaming audience with content that educates as well as entertains.
    11. 11. 11 Product Updates • Continuing to operate Squad Up on iOS in Beta. • Focus remains on iterating on gameplay while strategizing how to scale user base.
    12. 12. Financials 12
    13. 13. • Q1 revenue growth of 22%. • Increased user engagement • Execution of Canadian and US direct sales teams Revenue – Q1 $ 7,003 F2017 F2016 $ 8,548 Fiscal Year: September 1 – August 31 22% Financials – Revenue Q1 F2017 13
    14. 14. • Expense decreases in marketing offset by growth in personnel. •Other expense line items consistent year over year. Revenue Operating Expenses EBITDA $ 9,489 $ (355) $ (2,344) $ 10,110 $ 7,003 Q1 F2017 Q1 F2016 $ 8,548 Fiscal Year: September 1 – August 31 22% Financials – Q1 F2017 14
    15. 15. • $5.2 million of tax credits recoverable. • Received Certificate of Eligibility, and expect to collect by early Q3 of 2017. • DSO’s at 82 days. • Cash use down 45% versus Q1 last year Cash Current Assets Working Capital $ 25,492 $ 21,183 $ 21,900 $ 27,080 Q1 F2017 Q4 F2016 $ 11,693 Fiscal Year: September 1 – August 31 $ 15,554 Financials – Q1 F2017 15
    16. 16. Q&A

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