Loop Media (US:LPTV)2023-02-07 21:44Revenue and Growth - For the quarter ended December 31, 2022, revenue was $14,825,831, a 395% increase from $2,996,034 in the same quarter of 2021, primarily driven by more Loop Players deployed and the launch of the Partner Platform business [156]. - Quarterly Active Units (QAUs) reached 26,903, a 47% increase from 18,240 in the previous quarter, attributed to growth in ad-supported Loop Players and enhanced affiliate program efforts [139]. - Advertising revenue accounts for 94% of total revenue, which includes direct and programmatic advertising as well as sponsorships [202]. Profitability and Expenses - Cost of revenue for the quarter was $9,139,800, a 533% increase from $1,444,977 in the same quarter of 2021, driven by higher royalties and license fees due to increased business activities [159]. - Gross profit margin was $5,686,031, a 267% increase from $1,551,057 in the same quarter of 2021, with a gross profit margin percentage of approximately 38.4% compared to 51.8% in the prior year [160][161]. - Total operating expenses were $9,936,657, an increase of 68% from $5,909,680 in the same quarter of 2021, reflecting higher operational costs [155]. - Sales, General and Administrative Expenses rose to $7,958,135, up 82% from $4,360,684 in the same period last year [164]. - Payroll costs increased by 73% to $3,197,117, driven by higher headcount and commissions [164]. - Marketing costs surged 163% to $2,968,140, primarily due to increased advertising and customer acquisition efforts [164]. - Other expenses for Q4 2022 were $1,007,583, a significant increase of 1,287% from $84,879 in Q4 2021, mainly due to rising interest expenses [166]. Net Loss and Cash Flow - Net loss for the quarter was $5,259,439, a 23% increase from a net loss of $4,273,995 in the same quarter of 2021 [155]. - GAAP net loss for Q4 2022 was $5,259,439 compared to a net loss of $4,273,995 in Q4 2021 [169]. - Adjusted EBITDA for Q4 2022 was $(1,589,936), an improvement from $(2,498,571) in Q4 2021 [174]. - Cash balance as of December 31, 2022, was approximately $7,753,644, down from $14,071,914 at the beginning of the period [178]. - Net cash used in operating activities increased by 96% to $6,823,229 in Q4 2022, primarily due to the net loss and changes in operating assets and liabilities [179]. - The company incurred a net loss of $5,259,439 during the three months ended December 31, 2022, and used $6,823,229 of cash in operations, leading to an accumulated deficit of approximately $101,581,303 [195]. - The company has cash totaling $7,753,644 as of December 31, 2022, which is expected to fund operations for at least the next twelve months [197]. Financing and Debt - Future capital requirements indicate that existing cash will fund operations for at least twelve months, but additional capital may be needed as operations grow [184]. - As of December 31, 2022, the balance of the RAT Non-Revolving Loan, including accrued interest, was $2,235,441, compared to $2,301,260 as of September 30, 2022, with an interest expense of $224,105 for the three months ended December 31, 2022 [189]. - The Revolving Loan had a balance of $6,029,465 as of December 31, 2022, up from $4,587,255 as of September 30, 2022, with an interest expense of $358,171 for the three months ended December 31, 2022 [191]. - The Revolving Loan Agreement allows for an initial principal sum of up to $4,000,000, expandable to $10,000,000 through an accordion feature, with $5,973,001 borrowed as of December 31, 2022 [190]. - The company issued warrants for an aggregate of up to 209,522 shares of common stock under the RAT Non-Revolving Loan Agreement, with an exercise price of $5.25 per share [188]. - The company faces uncertainty regarding its ability to grow without additional financing, as future growth depends on selling services and generating cash from operations [196]. Strategic Outlook - The company anticipates challenges in digital ad spending continuing into 2023, despite benefiting from strong seasonal advertising related to the political election cycle in November 2022 [157]. - The Partner Platform business, launched in May 2022, is expected to contribute to revenue growth, although it carries a lower gross profit margin compared to the O&O Platform [161]. - The company plans to evaluate strategic transactions to acquire or license additional products and services, which may require additional financing [193]. Accounting and Tax - The company recognizes revenue from advertising when digital impressions are filled and advertisements are played, while sponsorship revenue is recognized ratably over the term of the sponsorship [204]. - Revenue from subscription content services is recognized straight-line over the term of the service, while hardware revenue is recognized at the point of delivery, with hardware sales being insignificant [214]. - The company recognizes deferred tax assets for deductible temporary differences and deferred tax liabilities for taxable temporary differences under ASC Topic 740 [212]. - Tax positions are recognized as a benefit only if they are "more likely than not" to be sustained in a tax examination, with no material uncertain tax positions reported for the periods presented [213]. - The adoption of ASU No. 2019-12 in Q1 2022 had no impact on the consolidated financial statements [215]. - ASU 2020-06, adopted on October 1, 2022, reduces the number of accounting models for convertible debt instruments, with no material impact as of December 31, 2022 [216].