TORONTO, ONTARIO--(Marketwired - Aug. 7, 2014) - EQ Inc. (TSX:EQ) ("EQ Works"), a leader in audience targeting for mobile, social, video and display advertising, today announced its financial results for the second quarter-ended June 30, 2014. Total revenue from operations for the quarter was $1.1 million, a decrease from the $1.9 million recorded in the second quarter of 2013. The adjusted EBITDA loss for the quarter was approximately $891,000, as compared to a loss of $591,000 in the second quarter of 2013.
"This past quarter we continued to add new clients, deliver great campaign results for our existing clients and bring new and innovative solutions to the Canadian market, yet our financial performance was disappointing," said Geoffrey Rotstein, President and CEO. "With more campaigns in the quarter having smaller budgets, we prioritized certain self-serve features to streamline campaigns and in the process, lessen the performance gap between fully managed campaigns and self-serve platforms in Canada," added Rotstein. "This, together with our dedication to mobile as a key growth area for EQ, is expected to shape our progress for the coming quarters."
The Company also announced that it has retained Difference Capital as financial advisor to explore and advise on potential strategic alternatives for the Company.
Highlights for the Second Quarter ended June 30, 2014
- Launch of the most advanced mobile targeting platform in Canada
- Enhanced mobile rich media capabilities
- Introduced pre-screened video with exclusive audience segments
- Rolled out Phase 1 of the EQ Self-Serve Reporting and Insights Platform
"We are now witnessing a decisive shift in the Canadian digital media landscape with mobile now front and centre with all of our agency partners," said David Katz, EVP Corporate Development. "To support this shift, EQ's mobile platform received a boost in the quarter, with the creation of bespoke audiences and the most advanced hyper-local and points-of-interest targeting in the Canadian market," added Katz. "During the quarter, EQ made significant investments to support our mobile and video capabilities, and we have already been recognized for our advancements by major media agencies in Canada. We intend to rapidly grow our share of mobile footprint."
Non-IFRS Financial Measures
We measure the success of our strategies and performance based on Adjusted EBITDA, which is outlined and reconciled with net income (loss) in the section entitled "Reconciliation of Net Loss for the period to Adjusted EBITDA" in the MD&A. The Company defines Adjusted EBITDA as net income (loss) from operations before; (a) depreciation of property and equipment and amortization of domain properties and other intangible assets; (b) share-based payments, (c) restructuring, (d) impairment of goodwill and domain properties and other intangible assets, (e) Income tax expense and recovery, and (f) finance income and costs, 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 working capital requirements, capital expenditures and potential acquisitions. 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 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 operations and Adjusted EBITDA for the periods presented:
| Adjusted EBITDA for three and six months ended June 30, 2014 and 2013 |
|
| |
Three months ended
June 30, |
|
Six months ended
June 30, |
|
| (In thousands of Canadian dollars) |
2014 |
|
2013 |
|
2014 |
|
2013 |
|
| |
|
|
|
|
|
|
|
|
| Net loss |
(1,168 |
) |
(1,008 |
) |
(2,327 |
) |
(2,366 |
) |
| Add: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Income tax recovery |
- |
|
(65 |
) |
- |
|
(130 |
) |
| Finance (income) cost, net |
(57 |
) |
111 |
|
46 |
|
213 |
|
| Depreciation of property and equipment |
50 |
|
70 |
|
110 |
|
145 |
|
| Amortization of domain properties and other intangibles |
270 |
|
286 |
|
544 |
|
569 |
|
| Share-based payments |
14 |
|
15 |
|
25 |
|
36 |
|
| |
|
|
|
|
|
|
|
|
| Adjusted EBITDA |
(891 |
) |
(591 |
) |
(1,601 |
) |
(1,533 |
) |
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, 2014 |
December 31, 2013 |
| |
|
|
|
|
| Assets |
|
|
|
|
| |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
$ |
1,218 |
$ |
2,797 |
| Accounts receivable |
|
959 |
|
2,231 |
| Other current assets |
|
395 |
|
222 |
| |
|
|
|
|
| |
|
2,572 |
|
5,250 |
| |
|
|
|
|
| Non-current assets: |
|
|
|
|
| Investment |
|
50 |
|
50 |
| Property and equipment |
|
186 |
|
281 |
| Domain properties and other intangible assets |
|
1,087 |
|
1,610 |
| |
|
|
|
|
| |
|
1,323 |
|
1,941 |
| |
|
|
|
|
| Total assets |
$ |
3,895 |
$ |
7,191 |
| |
|
|
|
|
| |
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
| |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable and accrued liabilities |
$ |
1,633 |
$ |
2,316 |
| Deferred lease inducement |
|
22 |
|
14 |
| Finance leases |
|
93 |
|
122 |
| Deferred revenue |
|
212 |
|
602 |
| |
|
1,960 |
|
3,054 |
| |
|
|
|
|
| Non-current liabilities: |
|
|
|
|
| Deferred lease inducement |
|
72 |
|
- |
| Finance leases |
|
16 |
|
64 |
| |
|
|
|
|
| |
|
88 |
|
64 |
| |
|
|
|
|
| Shareholders' Equity |
|
1,847 |
|
4,073 |
| |
|
|
|
|
| Total liabilities and Shareholders' equity |
$ |
3,895 |
$ |
7,191 |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| 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, 2014 and 2013 |
|
| |
|
|
|
|
| |
Three months ended
June 30, |
|
Six months ended
June 30, |
|
| |
2014 |
|
2013 |
|
2014 |
|
2013 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
$ |
1,082 |
|
$ |
1,909 |
|
$ |
3,097 |
|
$ |
3,546 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Publishing and advertising costs |
|
439 |
|
|
1,036 |
|
|
1,493 |
|
|
1,872 |
|
| |
Employee compensation and benefits |
|
785 |
|
|
858 |
|
|
1,774 |
|
|
1,894 |
|
| |
Other operating expenses |
|
763 |
|
|
621 |
|
|
1,457 |
|
|
1,349 |
|
| |
Depreciation of property and equipment |
|
50 |
|
|
70 |
|
|
110 |
|
|
145 |
|
| |
Amortization of domain properties and other intangible assets |
|
270 |
|
|
286 |
|
|
544 |
|
|
569 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2,307 |
|
|
2,871 |
|
|
5,378 |
|
|
5,829 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
(1,225 |
) |
|
(962 |
) |
|
(2,281 |
) |
|
(2,283 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Finance income |
|
59 |
|
|
6 |
|
|
10 |
|
|
21 |
|
| Finance cost |
|
(2 |
) |
|
(117 |
) |
|
(56 |
) |
|
(234 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before income taxes |
|
(1,168 |
) |
|
(1,073 |
) |
|
(2,327 |
) |
|
(2,496 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Deferred income tax recovery |
|
- |
|
|
65 |
|
|
- |
|
|
130 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss for the period |
|
(1,168 |
) |
|
(1,008 |
) |
|
(2,327 |
) |
|
(2,366 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign currency translation adjustments to equity |
|
(81 |
) |
|
213 |
|
|
76 |
|
|
394 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss) for the period, net of tax |
|
(81 |
) |
|
213 |
|
|
76 |
|
|
394 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
| for the period |
|
(1,249 |
) |
|
(795 |
) |
|
(2,251 |
) |
|
(1,972 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic and diluted |
|
(0.07 |
) |
|
(0.06 |
) |
|
(0.14 |
) |
|
(0.15 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| EQ Inc. |
|
| Unaudited Condensed Consolidated Interim Statements of Cash Flows |
|
| (In thousands of Canadian dollars) |
|
| Six months ended June 30, 2014 and 2013 |
|
| |
|
|
|
|
| |
|
|
|
|
| |
2014 |
|
2013 |
|
| |
|
|
|
|
|
|
| Cash flows from operating activities: |
|
|
|
|
|
|
| |
Loss for the period |
|
(2,327 |
) |
|
(2,366 |
) |
| |
Adjustments to reconcile net loss to net cash flows from operating activities: |
|
|
|
|
|
|
| |
|
Depreciation of property and equipment |
|
110 |
|
|
145 |
|
| |
|
Amortization of domain properties and other intangible assets |
|
544 |
|
|
569 |
|
| |
|
Amortization of deferred lease inducement |
|
(17 |
) |
|
(20 |
) |
| |
|
Share-based payment |
|
25 |
|
|
36 |
|
| |
|
Foreign exchange loss |
|
53 |
|
|
227 |
|
| |
|
Finance income, net |
|
(4 |
) |
|
(6 |
) |
| |
|
Deferred income tax recovery |
|
- |
|
|
(130 |
) |
| |
Change in non-cash operating working capital |
|
169 |
|
|
503 |
|
| |
Net cash used in operating activities |
|
(1,447 |
) |
|
(1,042 |
) |
| |
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
| |
Repayment of finance leases |
|
(77 |
) |
|
(76 |
) |
| |
Interest paid |
|
(6 |
) |
|
(15 |
) |
| |
Net cash used in financing activities |
|
(83 |
) |
|
(91 |
) |
| |
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
| |
Interest income received |
|
4 |
|
|
21 |
|
| |
Addition to property and equipment |
|
(6 |
) |
|
(50 |
) |
| |
Additions to domain properties and other intangible assets |
|
- |
|
|
(26 |
) |
| |
Net cash from (used in) investing activities |
|
(2 |
) |
|
(55 |
) |
| |
|
|
|
|
|
|
| Foreign exchange loss on cash held in foreign currency |
|
(53 |
) |
|
(227 |
) |
| |
|
|
|
|
|
|
| Decrease in cash and cash equivalents |
|
(1,585 |
) |
|
(1,415 |
) |
| |
|
|
|
|
|
|
| Cash and cash equivalents, beginning of period |
|
2,797 |
|
|
5,419 |
|
| |
|
|
|
|
|
|
| Cash and cash equivalents, for the period |
$ |
1,212 |
|
$ |
4,004 |
|