Strong performance across Online Networks and Distribution & Production businesses drives significant growth
COS COB, CT – Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest operators of streaming advertising-supported video-on-demand (AVOD) networks, today announced its financial results for the third quarter ended September 30, 2020.
Third Quarter 2020 Financial Summary
- Gross revenue of $20.0 million, compared to $13.9 million in the second quarter of 2020, and $17.0 million in the year-ago period.
- Net loss of $13.0 million compared to a net loss of $10.0 million in the second quarter of 2020, and a net loss of $13.3 million in the year-ago period; $12.0 million net loss before preferred dividends, compared to $9.0 million net loss in the second quarter 2020, and $12.4 million net loss before preferred dividends in the year-ago period.
- Adjusted EBITDA of $4.2 million, compared to $2.7 million in the second quarter 2020, and a loss of $0.4 million in the year-ago period.
- Online Networks, which include Crackle and Popcornflix, revenue of $6.7 million compared to $5.4 million in the second quarter of 2020, and $14.4 million in the year-ago period. The year-over-year decline reflects approximately $6.2 million in advertising revenue in the year ago period from the since-shuttered Playstation Vue, and intercompany revenue share payments in the 2020 period of $1.3 million to our Distribution & Production business for the licensing of content from our sister company, Screen Media.
- Distribution & Production revenue of $13.3 million compared to $8.5 million in the second quarter of 2020, and $2.7 million in the year-ago period due to strength in content licensing and TVOD revenue.
Recent Business Highlights
- Continued to expand pipeline of Original & Exclusive content which represented 16% of average monthly streaming hours in the quarter, compared to just 2% a year ago.
- Online Networks delivered steady viewership throughout the quarter and sequential growth in ad impressions. The latest Crackle original series, Spides, premiered on September 17th, and drove over one million streams in its first two weeks.
- Distribution and Production generated strong performance driven by the #1 TVOD hit The Outpost as well as the company’s growing library of film and television content.
- Today the company agreed to a 30-day extension of a key decision deadline, to December 14, 2020, as the Crackle Plus joint venture partners assess the possibility of closer collaboration.
“Our strong third quarter results demonstrate that we are continuing our momentum, despite the pandemic, and we are poised for a terrific end to 2020,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Viewers are engaging with our differentiated and expanding Original and Exclusive content, and our Distribution and Production business generated an exceptional performance driven by one of the summer and fall’s most-watched films on VOD, The Outpost. We are now turning our focus to growing awareness of our Crackle Plus networks to scale viewership, while continuing to expand our stable of fully owned content, which will drive both future revenue opportunity and higher margins. We’ve also enhanced our balance sheet, working capital position and financial flexibility. We believe we are in an excellent position to drive greater levels of growth in 2021 as we capitalize on the robust opportunities ahead in the emerging AVOD landscape.”
Gross profit for the quarter ended September 30, 2020 was $4.5 million, or 23% of net revenue, compared to $0.6 million in the second quarter, or 4% of net revenue, and $3.2 million, or 19% of net revenue for the year-ago period. The change in the percentage of gross profit resulted in part from non-cash amortization of the film library in the company’s traditional distribution business, which is required by GAAP to be included in cost of revenue. Without this non-cash film library amortization expense, the gross profit would have been $12.5 million or 65% of total net revenue.
Operating loss for the quarter ended September 30, 2020 was $11.3 million compared to an operating loss of $13.1 million in the second quarter 2020, and $9.6 million in the year-ago period. Without this film library amortization expense and other depreciation and amortization, operating income would have been $1.3 million.
Net loss was $13.0 million, or $1.04 per share, compared to a net loss of $10.0 million, or $0.83 per share, in the second quarter 2020, and a net loss of $13.3 million, or $1.11 per share in the prior-year third quarter. Excluding preferred dividends, the net loss in the third quarter of 2020 would have been $12.0 million, or $0.96 per share, compared to net loss of $12.4 million, or $1.03 per share for the year-ago period.
Adjusted EBITDA for the quarter ended September 30, 2020 was $4.2 million, compared to $2.7 million in the second quarter 2020, and a loss of $0.4 million in the year-ago period.
As of September 30, 2020, the company had $9.2 million of cash and cash equivalents compared to $6.2 million at September 30, 2019, and outstanding debt of $34.8 million as of September 30, 2020 compared to $20.2 million as of September 30, 2019.
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.
.
