Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), a growing media company building advertising-supported video-on-demand (AVOD) networks and a provider of video content for all screens, today announced its financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights

• Total revenue of $17.0 million, compared to $6.6 million in the year-ago period
• Net loss of $13.3 million; with a net loss of $12.4 million before preferred dividends, compared to a net loss of $0.2 million in the year-ago period and a net income of $0.2 million before preferred dividends
• Adjusted EBITDA was a loss of $0.4 million, compared to positive adjusted EBITDA of $3.4 million in the year-ago period
• Online networks, which includes Crackle, Popcornflix and Pivotshare, generated $14.4 million in revenue compared to $1.8 million in the year-ago period

Recent Business Highlights

• Crackle Plus delivers solid results in first full quarter
• New Crackle original series, ‘Going From Broke’ drives unprecedented engagement
• Launched Landmark Studio Group in partnership with entertainment industry veteran David Ozer
• Foresight film library acquisition expands Screen Media library and enhances distribution capabilities

“Our record third quarter results show the early promise of our transformation of our company into a leading AVOD network operator,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Crackle Plus is performing as expected, and our new original series ‘Going From Broke’ provides initial evidence of our growing network reach and engagement potential. We are also reinventing our distribution and production business to support our networks under a capital-light model focused on innovative studio launches, library content acquisitions and sponsor-funded original productions. We already see significant positive business momentum in the fourth quarter, where we expect to see a combination of all our primary strategic pieces in place for the first time, setting the stage for potentially significant growth in 2020.”

Gross profit for the quarter ended September 30, 2019 was $3.2 million, or 19% of net revenue, compared to $4.0 million, or 62% of net revenue for the year-ago period. The reduction in the percentage of gross profit was a result of an increase in online networks revenue which has a lower gross profit percentage. 

Operating loss for the quarter ended September 30, 2019 was $9.6 million compared to an operating income of $0.9 million for the year-ago period. The quarterly operating loss reflects certain non-cash or one-time expenses including $4.7 million in non-cash amortization, $1.6 million of transitional expenses related to the Crackle Plus joint venture, and $1.2 million in film library amortization. If such expenses were excluded from SG&A or cost of revenue, the company would have reported a quarterly operating loss of $2.1 million. 

Net loss was $13.3 million, or $1.11 per share, compared to a net loss of $0.2 million, or $0.02 per share in the prior-year third quarter. Excluding preferred dividends, the net loss in the third quarter of 2019 would have been $12.4 million, or approximately $1.03 per share, compared to net income of $0.2 million, or $0.02 per share last year.

Adjusted EBITDA for the quarter ended September 30, 2019 was a loss of $0.4 million, compared to $3.4 million in the same period last year.

As of September 30, 2019, the company had $6.2 million of cash and cash equivalents compared to $7.2 million as of December 31, 2018, and outstanding debt of $16.0 million as of September 30, 2019 compared to $7.9 million as of December 31, 2018.

For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), see “Note Regarding Use of Non-GAAP Financial Measures” below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures.

The company presents non-GAAP measures such as Adjusted EBITDA and Pro Forma Adjusted EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the company's operating performance.

Conference Call Information

• Date, Time: Thursday, November 14, 2019, 4:30 p.m. ET.
• Toll-free: (833) 832-5128
• International: (484) 747-6583
• Conference ID: 4392318
• A live webcast is available at http://ir.cssentertainment.com/ under the “News & Events” tab

Conference Call Replay Information

• Toll-free: (855) 859-2056
• International: (404) 537-3406
• Reference ID: 4392318