Marketwire
EQ Inc. Reports Second Quarter 2013 Results
TORONTO, ONTARIO--(Marketwired - Aug. 7, 2013) - EQ Inc. (TSX:EQ) ("EQ Works"), a leader in targeted mobile, social, video and display advertising, today announced its financial results for the second quarter ended June 30, 2013. Total revenue from continuing operations for the quarter was $1.9 million, an increase from the $1.6 million recorded in the previous quarter, and adjusted EBITDA loss for the quarter was approximately $591,000 as compared to a loss of $942,000 in the previous quarter.
Highlights for the second quarter ended June 30, 2013
- At June 30, the Company had cash on hand of $4 million and no debt
- The Company's overall revenue increased 17% from the previous quarter
- The Company relaunched under its new brand EQ Works and gained significant momentum for its real-time advertising solutions
- Five new agency/clients were added during the quarter.
"During the second quarter, we began seeing results," said Geoffrey Rotstein, President and CEO. "We are now seeing more demand for our product and a greater share of our clients' advertising budgets as we continue to demonstrate the effectiveness of our real-time advertising solution," added Rotstein. "The largest growth area has been right here in Canada, where brands and agencies have been very receptive to our unique advantages and the results we deliver. We expect to see continued growth through the remainder of 2013."
Non-IFRS Financial Measures
This press release includes a discussion of "Adjusted EBITDA," which is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net loss from operations before; (a) depreciation of property and equipment and amortization of domain properties and other intangibles; (b) share-based payments, (c) restructuring and acquisition costs, (d) impairments of goodwill and intangible assets and other items, net. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information related to the Company's ability to provide operating cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.
The non-IFRS financial measure is used in addition to and in conjunction with results presented in accordance with the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
The table below reconciles net loss from continuing operations and Adjusted EBITDA for the periods presented:
| Adjusted EBITDA for three and six months ended 2013 and 2012 |
|
| |
Three months ended
June 30, |
|
Six months ended
June 30, |
|
| (In thousands of Canadian dollars) |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss from operations |
$ |
(962 |
) |
$ |
(1,041 |
) |
$ |
(2,283 |
) |
$ |
(2,214 |
) |
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation of property and equipment |
|
70 |
|
|
66 |
|
|
145 |
|
|
151 |
|
| Amortization of domain properties and other intangibles |
|
286 |
|
|
278 |
|
|
569 |
|
|
554 |
|
| Share-based payments |
|
15 |
|
|
(2 |
) |
|
36 |
|
|
(15 |
) |
| Adjusted EBITDA |
$ |
(591 |
) |
$ |
(699 |
) |
$ |
(1,533 |
) |
$ |
(1,524 |
) |
About EQ Works
EQ Works (www.eqworks.com) provides a smarter way to target customers. The Company uses its real-time technology and advanced analytics to detect the actionable data that boosts performance for all web, mobile, social and video initiatives. EQ Works balances the many components that comprise the complex advertising ecosystem and establishes equilibrium for reaching the right audience at the right time through any web or mobile device.
Forward-Looking Statements
This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. EQ Inc. is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.
| EQ Inc. |
| Unaudited Condensed Consolidated Interim Statements of Financial Position |
| (In thousands of Canadian dollars) |
| June 30, 2013 and December 31, 2012 |
| |
| | June 30,
2013 | December 31,
2012 |
| | | | | |
| Assets | | | | |
| | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | $ | 4,004 | $ | 5,419 |
| Accounts receivable | | 1,540 | | 2,425 |
| Other current assets | | 264 | | 303 |
| Income taxes recoverable | | 42 | | 40 |
| | | 5,850 | | 8,187 |
| | | | | |
| Non-current assets: | | | | |
| Investment | | 50 | | 50 |
| Property and equipment | | 387 | | 460 |
| Domain properties and other intangible assets | | 2,515 | | 2,889 |
| Goodwill | | 377 | | 357 |
| | | 3,329 | | 3,756 |
| | | | | |
| Total assets | $ | 9,179 | $ | 11,943 |
| | | | | |
| | | | | |
| Liabilities and Shareholders' Equity | | | | |
| | | | | |
| Current liabilities: | | | | |
| Accounts payable and accrued liabilities | $ | 2,120 | $ | 2,703 |
| Deferred lease inducement | | 34 | | 41 |
| Finance leases | | 156 | | 155 |
| Deferred revenue | | 537 | | 549 |
| | | 2,847 | | 3,448 |
| | | | | |
| Non-current liabilities: | | | | |
| Finance leases | | 110 | | 186 |
| Deferred lease inducement | | - | | 14 |
| Deferred tax liabilities | | 107 | | 244 |
| | | 217 | | 444 |
| | | | | |
| Shareholders' Equity | | 6,115 | | 8,051 |
| | | | | |
| Total liabilities and Shareholders' equity | $ | 9,179 | $ | 11,943 |
| |
| EQ Inc. |
| Unaudited Condensed Consolidated Interim Statements of Comprehensive Income (Loss) |
| (In thousands of Canadian dollars, except per share amounts) |
| Three and six months ended June 30, 2013 and 2012 |
| |
| | Three months ended
June 30, | | Six months ended
June 30, | |
| | 2013 | | 2012 | | 2013 | | 2012 | |
| | | | | | | | | | | | | |
| Revenue | $ | 1,909 | | $ | 3,890 | | $ | 3,546 | | $ | 7,422 | |
| | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | |
| | Publishing and advertising costs | | 1,036 | | | 2,357 | | | 1,872 | | | 4,337 | |
| | Employee compensation and benefits | | 858 | | | 1,301 | | | 1,894 | | | 2,759 | |
| | Other operating expenses | | 621 | | | 929 | | | 1,349 | | | 1,835 | |
| | Depreciation of property and equipment | | 70 | | | 66 | | | 145 | | | 151 | |
| | Amortization of domain properties and other intangible assets | | 286 | | | 278 | | | 569 | | | 554 | |
| | | 2,871 | | | 4,931 | | | 5,829 | | | 9,636 | |
| | | | | | | | | | | | | |
| Loss from operations | | (962 | ) | | (1,041 | ) | | (2,283 | ) | | (2,214 | ) |
| | | | | | | | | | | | | |
| Finance income | | 6 | | | 27 | | | 21 | | | 27 | |
| Finance cost | | (117 | ) | | (214 | ) | | (234 | ) | | (246 | ) |
| | | | | | | | | | | | | |
| Loss before income taxes | | (1,073 | ) | | (1,228 | ) | | (2,496 | ) | | (2,433 | ) |
| | | | | | | | | | | | | |
| | Income taxes recovery | | 65 | | | 106 | | | 130 | | | 161 | |
| | | | | | | | | | | | | |
| Loss for the period from continuing operations | | (1,008 | ) | | (1,122 | ) | | (2,366 | ) | | (2,272 | ) |
| | | | | | | | | | | | | |
| Discontinued Operation: | | | | | | | | | | | | |
| Income for the period from discontinued operation, net of tax | | - | | | 7,377 | | | - | | | 5,129 | |
| | | | | | | | | | | | | |
| Income (loss) for the period | | (1,008 | ) | | 6,255 | | | (2,366 | ) | | 2,857 | |
| | | | | | | | | | | | | |
| Other comprehensive income: | | | | | | | | | | | | |
| | Foreign currency translation adjustments to equity, net of tax | | 213 | | | 261 | | | 394 | | | 160 | |
| | Other comprehensive income for the period | | 213 | | | 261 | | | 394 | | | 160 | |
| | | | | | | | | | | | | |
| Total comprehensive income (loss) for the period | $ | (795 | ) | $ | 6,516 | | $ | (1,972 | ) | $ | 3,017 | |
| | | | | | | | | | | | | |
| Income (loss) per share: | | | | | | | | | | | | |
| | Basic | | (0.06 | ) | | 0.39 | | | (0.15 | ) | | 0.19 | |
| | Diluted | | (0.06 | ) | | 0.39 | | | (0.15 | ) | | 0.19 | |
| | | | | | | | | | | | | |
| Loss per share from continuing operations: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | Basic | | (0.06 | ) | | (0.07 | ) | | (0.15 | ) | | (0.14 | ) |
| | Diluted | | (0.06 | ) | | (0.07 | ) | | (0.15 | ) | | (0.14 | ) |
| | | | | | | | | | | | | |
| |
| EQ Inc. |
| Unaudited Condensed Consolidated Interim Statements of Cash Flows |
| (In thousands of Canadian dollars) |
| Six months ended June 30, 2013 and 2012 |
| |
| | 2013 | | 2012 | |
| | | | | | | |
| Cash flows from operating activities: | | | | | | |
| | Income (loss) for the period | $ | (2,366 | ) | $ | 2,857 | |
| | Adjustments to reconcile net loss to net cash flows from operating activities: | | | | | | |
| | | Depreciation of property and equipment | | 145 | | | 418 | |
| | | Amortization of domain properties and other intangible assets | | 569 | | | 2,727 | |
| | | Amortization of deferred lease inducement | | (20 | ) | | (45 | ) |
| | | Share-based payments | | 36 | | | (15 | ) |
| | | Foreign exchange loss (gain) | | 227 | | | (34 | ) |
| | | Finance cost, net | | 219 | | | 217 | |
| | | Deferred income taxes recovery | | (130 | ) | | (109 | ) |
| | | Restructuring cost | | - | | | 221 | |
| | | Gain on sale of Tsavo | | - | | | (7,402 | ) |
| | Change in non-cash operating working capital | | 278 | | | (2,945 | ) |
| | Cash used in operating activities | | (1,042 | ) | | (4,110 | ) |
| | Income taxes received | | - | | | 31 | |
| | Net cash used in operating activities | | (1,042 | ) | | (4,079 | ) |
| | | | | | | |
| Cash flows from financing activities: | | | | | | |
| | Repurchase of common shares under NCIB | | - | | | (10 | ) |
| | Repayment of finance leases | | (76 | ) | | (30 | ) |
| | Interest paid | | (15 | ) | | (272 | ) |
| | Net cash used in financing activities | | (91 | ) | | (312 | ) |
| | | | | | | |
| Cash flows from investing activities: | | | | | | |
| | Interest income received | | 21 | | | 17 | |
| | Net proceeds from sale of available-for-sale investments | | - | | | 200 | |
| | Decrease in restricted cash and short-term investments | | - | | | 201 | |
| | Proceeds on sale of Tsavo, net of cash disposed | | - | | | 6,293 | |
| | Additions to domain properties and other intangible assets | | (26 | ) | | - | |
| | Additions to property and equipment | | (50 | ) | | (208 | ) |
| | Net cash from (used in) investing activities | | (55 | ) | | 6,503 | |
| | | | | | | |
| Foreign exchange gain (loss) on cash held in foreign currency | | (227 | ) | | 34 | |
| | | | | | | |
| Increase (decrease) in cash and cash equivalents | | (1,415 | ) | | 2,146 | |
| | | | | | | |
| Cash and cash equivalents, beginning of period | | 5,419 | | | 4,050 | |
| | | | | | | |
| Cash and cash equivalents, end of period | $ | 4,004 | | $ | 6,196 | |