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Banzai International(BNZI) - 2024 Q2 - Quarterly Report
BNZIBanzai International(BNZI)2024-08-14 19:15

Revenue and Financial Performance - Banzai generated revenue of approximately 1.1millionand1.1 million and 1.2 million during the three months ended June 30, 2024 and 2023, and approximately 2.1millionand2.1 million and 2.4 million during the six months ended June 30, 2024 and 2023, respectively[160] - Revenue for the six months ended June 30, 2024 decreased by 222thousand(9.4222 thousand (9.4%) to 2,148 thousand compared to the same period in 2023, primarily due to lower Reach and Demio product revenues[183] - Gross profit decreased by 141thousand(8.9141 thousand (8.9%) to 1,437 thousand for the six months ended June 30, 2024, due to lower revenue and cost of revenue[185] - Net loss for the six months ended June 30, 2024 was approximately 8.7million,comparedto8.7 million, compared to 7.3 million in the same period in 2023, primarily due to increased operating expenses of 2.5millionandadecreaseingrossprofitof2.5 million and a decrease in gross profit of 0.1 million[191] - Adjusted EBITDA loss for the six months ended June 30, 2024 was 3.35million,a114.43.35 million, a 114.4% increase from 1.56 million in the same period in 2023, driven by higher general and administrative expenses[205] Operating Expenses and Costs - Total operating expenses increased by 2.5million(41.42.5 million (41.4%) to 8.6 million for the six months ended June 30, 2024, primarily due to higher salaries, marketing, and professional services costs[186] - Cost of revenue decreased by 81thousand(10.281 thousand (10.2%) to 711 thousand for the six months ended June 30, 2024, driven by lower infrastructure costs and contracted services[184] - Transaction-related expenses increased by 35.9% to 3.18millionforthesixmonthsendedJune30,2024,comparedto3.18 million for the six months ended June 30, 2024, compared to 2.34 million in the same period in 2023, primarily due to higher legal fees[207] - Stock-based compensation expense increased by 7.2% to 665thousandforthesixmonthsendedJune30,2024,comparedto665 thousand for the six months ended June 30, 2024, compared to 621 thousand in the same period in 2023[206] - The company recorded a GEM settlement fee expense of 200thousandforthesixmonthsendedJune30,2024,whichwasnotpresentinthesameperiodin2023[206]CustomerMetricsandDemioPerformance−Banzai′scustomerbaseincludedover3,600customersasofJune30,2024,withmulti−hostDemiocustomersincreasingfrom14onJanuary1,2021to115onJune30,2024[158]−Demioaccountedfor96.1200 thousand for the six months ended June 30, 2024, which was not present in the same period in 2023[206] Customer Metrics and Demio Performance - Banzai's customer base included over 3,600 customers as of June 30, 2024, with multi-host Demio customers increasing from 14 on January 1, 2021 to 115 on June 30, 2024[158] - Demio accounted for 96.1% and 94.9% of Banzai's revenue for the three months ended June 30, 2024 and 2023, and 97.4% and 94.1% for the six months ended June 30, 2024 and 2023, respectively[163] - Average Monthly Net Revenue Retention (NRR) for Demio was 95.6% and 94.8% for the three months ended June 30, 2024 and 2023, and 96.1% and 95.5% for the six months ended June 30, 2024 and 2023, respectively[165] - New Customer Average Customer Value (ACV) for Demio was 1,417 and 1,256forthethreemonthsendedJune30,2024and2023,and1,256 for the three months ended June 30, 2024 and 2023, and 1,510 and 1,351forthesixmonthsendedJune30,2024and2023,respectively[167]−CustomerAcquisitionCost(CAC)forDemiowas1,351 for the six months ended June 30, 2024 and 2023, respectively[167] - Customer Acquisition Cost (CAC) for Demio was 1,936 and 876forthethreemonthsendedJune30,2024and2023,and876 for the three months ended June 30, 2024 and 2023, and 1,480 and 880forthesixmonthsendedJune30,2024and2023,respectively[168]−AverageMonthlyChurn−RevenueforDemiowas6.3880 for the six months ended June 30, 2024 and 2023, respectively[168] - Average Monthly Churn - Revenue for Demio was 6.3% and 6.9% for the three months ended June 30, 2024 and 2023, and 6.3% and 7.5% for the six months ended June 30, 2024 and 2023, respectively[170] - Lifetime Value (LTV) for new Demio customers was 1,875 and 1,514forthethreemonthsendedJune30,2024and2023,and1,514 for the three months ended June 30, 2024 and 2023, and 2,040 and 1,468forthesixmonthsendedJune30,2024and2023,respectively[173]−LTV/CACRatioforDemiowas1.1and1.9forthethreemonthsendedJune30,2024and2023,and1.4and1.7forthesixmonthsendedJune30,2024and2023,respectively[175]DebtandFinancing−Banzairaisedapproximately1,468 for the six months ended June 30, 2024 and 2023, respectively[173] - LTV / CAC Ratio for Demio was 1.1 and 1.9 for the three months ended June 30, 2024 and 2023, and 1.4 and 1.7 for the six months ended June 30, 2024 and 2023, respectively[175] Debt and Financing - Banzai raised approximately 2.5 million through the issuance of convertible notes under the SEPA during the six months ended June 30, 2024[209] - Net cash provided by financing activities was approximately 2.2millionforthesixmonthsendedJune30,2024,primarilyfromconvertibledebtfinancingandcommonstockissuance[215]−Banzai′stotalcapitalexpenditurecommitmentsandfinancingrequirementsatJune30,2024,includeddebtprincipalof2.2 million for the six months ended June 30, 2024, primarily from convertible debt financing and common stock issuance[215] - Banzai's total capital expenditure commitments and financing requirements at June 30, 2024, included debt principal of 14,871,000 and interest on debt of 3,233,000[217]−BanzaienteredintoaforbearanceagreementwithCPBFLendingonAugust24,2023,duetonon−compliancewithcertaincovenantsofitsLoanAgreement[223]−Banzai′sLoanAgreementwithCPBFLendingincludesaTermNotefor3,233,000[217] - Banzai entered into a forbearance agreement with CP BF Lending on August 24, 2023, due to non-compliance with certain covenants of its Loan Agreement[223] - Banzai's Loan Agreement with CP BF Lending includes a Term Note for 6,500,000 and a Convertible Note for 1,500,000,withanoptionforadditionalloansupto1,500,000, with an option for additional loans up to 7,000,000[218] - Banzai was not in compliance with the Minimum Gross Profit Margin, Minimum ARR Growth, and Fixed Charge Coverage Ratio covenants of the Loan Agreement[221] - The company paid an Amendment Fee of 23,748toextendtheforbearanceperiodfromfourtosixmonthsaftertheMergerclosing[224]−Thecompanyissuedan823,748 to extend the forbearance period from four to six months after the Merger closing[224] - The company issued an 8% Alco August Promissory Note with a principal amount of 150,000, recording a 3,711debtdiscountand3,711 debt discount and 8,357 in interest expense for six months ended June 30, 2024[225] - The company issued an 8% Alco September Promissory Note with a principal amount of up to 1,500,000,recording1,500,000, recording 8,588 in debt issuance costs, a 638,808debtdiscount,and638,808 debt discount, and 187,498 in interest expense for six months ended June 30, 2024[226] - The company issued an 8% Alco November Promissory Note with a principal amount of up to 750,000,recordinga750,000, recording a 363,905 debt discount and 217,249ininterestexpenseforsixmonthsendedJune30,2024[227]−Thecompanyissuedan8217,249 in interest expense for six months ended June 30, 2024[227] - The company issued an 8% Alco December Promissory Note with a principal amount of up to 2,000,000, recording a 1,496,252debtdiscountand1,496,252 debt discount and 549,883 in interest expense for six months ended June 30, 2024[228] - The company issued a December Yorkville Convertible Note with a principal amount of 2,000,000,receivingnetproceedsof2,000,000, receiving net proceeds of 1,800,000 after a 200,000non−cashoriginalissuediscount[232]−ThecompanyissuedaFebruaryYorkvillePromissoryNotewithaprincipalamountof200,000 non-cash original issue discount[232] - The company issued a February Yorkville Promissory Note with a principal amount of 1,000,000, receiving net proceeds of 900,000aftera900,000 after a 100,000 non-cash original issue discount[233] - The company issued a March Yorkville Promissory Note with a principal amount of 1,500,000,receivingnetproceedsof1,500,000, receiving net proceeds of 1,250,000 after a 250,000non−cashoriginalissuediscount[234]−Thecompanymadeacashprincipalpaymentof250,000 non-cash original issue discount[234] - The company made a cash principal payment of 750,000 and issued an Advance Notice for 600,000 shares of Class A Common Stock to satisfy a 75,000paymentpremiumundertheAmendedDebtRepaymentAgreement[237]−TheYorkvilleConvertibleNoteshaveamaturitydateofJune14,2024,accrue075,000 payment premium under the Amended Debt Repayment Agreement[237] - The Yorkville Convertible Notes have a maturity date of June 14, 2024, accrue 0% interest, and can be converted into Class A common stock shares, subject to a 9.99% ownership limit[238] - 800,000 of principal under the December Yorkville Convertible Note was converted into 1,797,019 shares of Class A Common stock, and 1,000,000undertheFebruaryYorkvilleConvertibleNotewasconvertedinto1,445,524sharesofClassACommonstock[240]−TheprincipalamountoutstandingundertheYorkvilleConvertibleNoteswas1,000,000 under the February Yorkville Convertible Note was converted into 1,445,524 shares of Class A Common stock[240] - The principal amount outstanding under the Yorkville Convertible Notes was 1,950,000 as of June 30, 2024, down from 2,000,000asofDecember31,2023[240]−TheCompanyrecorded2,000,000 as of December 31, 2023[240] - The Company recorded 80,760 in interest expense related to the Yorkville Convertible Notes for the six months ended June 30, 2024[240] - The Company paid GEM 1.2millionincashandissueda1.2 million in cash and issued a 1.0 million unsecured promissory note as part of the GEM Settlement Agreement[241] - As of June 30, 2024, the Company issued 1,045,118 shares of Class A Common Stock to GEM in lieu of monthly payments, leaving a remaining balance of 600,000ontheGEMPromissoryNote[242]−TotalinterestondebtforthesixmonthsendedJune30,2024was600,000 on the GEM Promissory Note[242] - Total interest on debt for the six months ended June 30, 2024 was 3.2 million[243] - The Company's total debt carrying value as of June 30, 2024 was 16,050,000,including16,050,000, including 14,024,000 in principal and 2,026,000inaccruedinterest[244]−TheCompanyissued1,113,927sharesofClassACommonStocktoCantor,valuedat2,026,000 in accrued interest[244] - The Company issued 1,113,927 shares of Class A Common Stock to Cantor, valued at 2,450,639, to cover the Reduced Deferred Fee[247] - The Company recognized a 2.0millionliabilityfortheGEMcommitmentfeeasofJune30,2024[249]−TheCompanyissuedanaggregateof5,529,457sharesofClassACommonStocktoGEMinlieuofmonthlypaymentobligationsundertheGEMPromissoryNote[251]RisksandChallenges−Internaloperationalrisksincludemanagementissues,operationalinefficiencies,financialmismanagement,andemployee−relatedchallenges[177]−Externalrisksincludeeconomicfactors,competition,legalandregulatorychanges,technologicaldisruptions,andunforeseenevents[178]−TheBusinessCombinationresultedinadditionalpubliccompanycosts,includingincreasedaudit,legal,andadministrativeexpenses[181]−ThereissubstantialdoubtaboutBanzai′sabilitytocontinueasagoingconcernwithinoneyearfromthedatethefinancialstatementswereissued[211]−Thecompanymayfaceincreasinglitigationandclaimsasitsgrowthcontinues,withpotentialmaterialimpactsonoperations,cashflows,orfinancialposition[255]−Thecompanyisnotcurrentlyinvolvedinanylegalproceedingsthatwouldhaveamaterialadverseeffectonitsbusiness,operatingresults,financialcondition,orcashflows[255]InternalControlsandRemediation−Thecompanyiscommittedtoremediatingmaterialweaknessesandimprovinginternalcontroloverfinancialreporting,asdisclosedinthe202310−K[253]−Thecompanyistakingstepstoaddressidentifiedmaterialweaknessesbutcannotguaranteetimelyremediation[253]−NosignificantchangesininternalcontroloverfinancialreportingoccurredduringthesixmonthsendedJune30,2024,otherthanstepstoremediatematerialweaknesses[254]CashFlowandLiquidity−Banzaihadaworkingcapitaldeficitofapproximately2.0 million liability for the GEM commitment fee as of June 30, 2024[249] - The Company issued an aggregate of 5,529,457 shares of Class A Common Stock to GEM in lieu of monthly payment obligations under the GEM Promissory Note[251] Risks and Challenges - Internal operational risks include management issues, operational inefficiencies, financial mismanagement, and employee-related challenges[177] - External risks include economic factors, competition, legal and regulatory changes, technological disruptions, and unforeseen events[178] - The Business Combination resulted in additional public company costs, including increased audit, legal, and administrative expenses[181] - There is substantial doubt about Banzai's ability to continue as a going concern within one year from the date the financial statements were issued[211] - The company may face increasing litigation and claims as its growth continues, with potential material impacts on operations, cash flows, or financial position[255] - The company is not currently involved in any legal proceedings that would have a material adverse effect on its business, operating results, financial condition, or cash flows[255] Internal Controls and Remediation - The company is committed to remediating material weaknesses and improving internal control over financial reporting, as disclosed in the 2023 10-K[253] - The company is taking steps to address identified material weaknesses but cannot guarantee timely remediation[253] - No significant changes in internal control over financial reporting occurred during the six months ended June 30, 2024, other than steps to remediate material weaknesses[254] Cash Flow and Liquidity - Banzai had a working capital deficit of approximately 34.0 million and an accumulated deficit of approximately 55.4millionasofJune30,2024[209]−Netcashusedinoperatingactivitieswasapproximately55.4 million as of June 30, 2024[209] - Net cash used in operating activities was approximately 3.8 million for the six months ended June 30, 2024, with a net loss of approximately 8.7million[214]−Thecompanyhadcashofapproximately8.7 million[214] - The company had cash of approximately 0.5 million as of June 30, 2024, primarily financed through sales of redeemable convertible preferred stock, convertible promissory notes, and senior secured loans[208] - The fair value of SAFEs (Simple Agreements for Future Equity) did not change during the six months ended June 30, 2024, compared to a loss of approximately 1.3millioninthesameperiodin2023[190]−Interestexpensedecreasedby20.01.3 million in the same period in 2023[190] - Interest expense decreased by 20.0% to 847 thousand for the six months ended June 30, 2024, compared to 1.06millioninthesameperiodin2023[206]−Thechangeinfairvalueofwarrantliabilitiesresultedinagainof1.06 million in the same period in 2023[206] - The change in fair value of warrant liabilities resulted in a gain of 562 thousand for the six months ended June 30, 2024, compared to no change in the same period in 2023[206] - The company's goodwill impairment assessment involves significant judgment and estimates, with qualitative factors including macroeconomic conditions, industry trends, and cost factors[195]