MediaValet Reports Record Annual and Fourth Quarter 2020 Results

Revenue and ARR reach all-time highs; up 45% and 33%, respectively

Vancouver, British Columbia--(Newsfile Corp. - March 15, 2021) - MediaValet Inc. (TSXV: MVP) (the Company), a leading provider of cloud-native enterprise digital asset management ("DAM") and creative operations software, is pleased to report its results for the year and the three months ended December 31, 2020.

Summary of Quarterly and Annual Results

"2020 was a tough year for many of our customers," commented David MacLaren, Founder and CEO of MediaValet. "We're grateful we provide a service that helped them quickly and cost effectively move to a fully remote, highly secure, fast digital environment. As a result, we're pleased to report record revenues and ARR for both Q4 and 2020 as a whole. Whilst the first few quarters fluctuated, the fourth quarter saw a strong rebound in greenfield opportunities with organizations looking to adopt cloud-native SaaS solutions as they initiated or resumed their digital transformation and business continuity strategies."

Continued Mr. MacLaren, "Over the past 12 months, digital asset management has solidified its position in the MarTech stack as it ensures the continuity of business operations while reducing costs and increasing productivity of marketing and creative teams. We're encouraged by the growth we saw in our enterprise accounts in 2020 and the resilience we experienced in our SMB and mid-market customers. As the year ended, we saw the mood of our entire customer base lift as organizations began to look past COVID and to the future. We believe 2021 will be another strong year for cloud-native, B2B SaaS applications that help organizations digitize and future proof their businesses."

Mr. MacLaren concluded, "I'm thankful we entered 2020 as a cloud-native, digital first, fully redundant and compliant business. This, despite a very challenging 2020, enabled us to execute flawlessly and support our customers relentlessly throughout the year. I want to thank the MediaValet team, our customers and our shareholders for their continued support of our mission to build the leading enterprise digital asset management platform."

Rob Chase, Executive Chair and CFO commented, "While it was a challenging environment, Fiscal 2020 was another solid year of progress on our long-term vision. We fortified our balance sheet, ending the year with $14.23 million in cash and cash equivalents, delivered strong top-line revenue growth of 45%, and significantly expanded our operational infrastructure to align with our long-term growth plan. The demand for DAM increasingly rebounded throughout the year with our net new ARR in the fourth quarter showing year-on-year growth for the first time since the pandemic began. The result was a 33% year-on-year increase in ARR to $8.64 million on Net Billings⁵ of $8.80 million, up 21% over last year; putting us at a breakeven Net Billings Run-Rate⁶, a meaningful milestone given we implemented a 30% step-increase in total Operating Costs in the same year. Attaining this Run-Rate, combined with our strong balance sheet position and the growing importance of DAM in MarTech stacks, has reaffirmed our long-term vision and given us the opportunity to execute another step-increase in our operations in 2021 to advance our mission."

Results of Operations

Key Financial Metrics:

• Grew revenue to $7.47 million in Fiscal 2020, up 45% from $5.16 million in Fiscal 2019. Fourth quarter revenue of $2.11 million increased 26% from $1.68 million in Q4 last year, and increased 11% sequentially from Q3 2020. The majority (generally 90%+) of revenue is from monthly recognition of annual SaaS subscriptions. As a result, the growth reflects increases in deferred revenue and ARR from customer acquisition, retention, and expansion through industry leading sales and marketing strategies, and continuous new feature development and platform enhancement.
• Increased gross margin to $6.19 million in Fiscal 2020, up 40% from $4.41 million in Fiscal 2019. The gross margin percentage was 83% for Fiscal 2020 compared to 85% last year. The margin decrease reflects the short-term impact of the planned step-increase in headcount, and increased customer usage and adoption due to the shift to remote working in response to COVID-19. Management believes this to be a positive indication of the mission-critical nature of its Cloud DAM. For the fourth quarter, gross margin was 85% compared to 84% in Q4 2019 and 82% in Q3 2020, with the increased Q4 margin due to a Microsoft Azure discount adjustment and a $39,723 credit from the Canadian Emergency Wage Subsidy (CEWS).
• Incurred Operating Costs of $9.13 million, a 30% increase from $7.01 million in Fiscal 2019. Q4 2020 Operating Costs were $2.17 million, a 3% increase from $2.11 million in Q4 2019, and a sequential decrease of 16% compared to Q3 2020. The increases are primarily due to a step-increase in sales and marketing ("S&M"), and research and development ("R&D") as part of the Company's growth plan. After a ramp-up period, the planned expansions are expected to impact sales growth through increased global market reach and accelerated enterprise product development. The reduction relative to Q3 2020 is due to a credit of $525,000 for CEWS, and Q3 including a $200,000 sponsorship program for a DAM-specific initiative with a customer and partner that is expected to benefit pipeline and sales growth in Fiscal 2021.
• Reported a Fiscal 2020 EBITDA loss of $2.94 million, a 13% increase from $2.60 million in Fiscal 2019. The Q4 2020 EBITDA loss was $0.38 million, a 45% decrease from $0.69 million in Q4 F2019 due to a $616,000 credit from CEWS. The increased annual loss was expected and is due to the step-increase in operating expenses, which require a ramp period before impacting sales growth, and due to the impact of COVID-19 on customer net retention and acquisition. Despite growing ARR by 33%, YTD net customer retention rates declined below the 100% level achieved last year, and new customer acquisition levels were also below the prior year due to the impact of COVID-19.
• Increased Annual Recurring Revenue ("ARR") to $8.64 million, an increase of 33% compared to $6.50 million at December 31, 2019, and 146% increase from $3.51 million at December 31, 2018. The Net New ARR ("NNARR") for Fiscal 2020 was $2.14 million, down 28% from $2.99 million in Fiscal 2019, and up 109% from Fiscal 2018. NNARR for Q4 2020 was $0.70 million, a 3% increase from $0.69 million in Q4 2019, and a 5% sequential increase, making Q4 the first quarter in 2020 with year-on-year growth. The Fiscal 2020 decrease in NNARR is due to the prior year including a $494,000 new customer win, and to the impact of COVID-19 on current sales cycles and net retention.
• Ended the Fiscal year with $14.24 million of cash on hand (December 2019: $2.43 million), modified working capital (excluding deferred revenue, lease liabilities and debt) of $16.10 million (December 2019: $2.80 million), lease liabilities of $0.99 million and long-term debt of $1.00 million (December 2019 - total debt of $4.47 million).

Technology and Product:

MediaValet officially launched its enhanced Enterprise DAM Platform (V4), along with unique modules such as Advanced Search, Multi-Library and CreativeSPACES^TM, in May 2018. Since, it has continued to enhance its DAM with incremental releases on a weekly and monthly basis. This continued commitment to product innovation and advancement has led to a number of announcements, including:

• March 1, 2021: announced continued wins in the manufacturing sector, which totaled $186,000 in new contract value signed in Q4 2020, growing the vertical to 15% of ARR. While MediaValet has not verticalized its offering or go-to-market strategy, we have proven to be able to adapt to the nuances of specific verticals like the manufacturing sector. At the same time, we recognize that the need for Enterprise DAM Platforms is industry agnostic and believe these wins are testament to the applicability of our Enterprise DAM Use-Case across all verticals.
• December 3, 2020: selected by a leading North American airport authority for a three-year subscription ("Subscription") to MediaValet's enterprise digital asset management platform; CreativeSPACES integrations with Azure Active Directory, Office 365 and Workfront; and professional services covering implementation, training and support. The total value of the agreement is $441,000, billed annually with first-year billings of $156,000 including implementation fees.
• October 20, 2020: launched CreativeSPACES Remote Edition. The first major version upgrade of SPACES that untethers creative operation teams from the office and VPN. Management believes this to be a significant enhancement for expanding the target market opportunity, particularly in today's work-from-anywhere world.
• September 15 to October 29, 2020: announced two new entertainment customers, one subscribed for $77,000 and the other for $90,000, and one new services company for a $93,000 subscription. This increased the media and advertising industry to 17% of recurring revenue. In addition, two of the customers are based in Europe, highlighting success in attracting global customers.
• August 13, 2020: ranked as #68 on the 2020 SaaS 1000 List of the Fastest Growing SaaS Companies, up from a ranking of #341 in 2019.
• August 11, 2020: selected by another major North American entertainment company for a $225,000 subscription to MediaValet DAM, connectors to Microsoft Azure Active Directory and Adobe Creative Cloud, including professional services covering implementation, training and support.
• July 22, 2020: recognized as winner of Microsoft Canada's AI & Machine Learning Impact Award for the customer excellence and solution innovation delivered by MediaValet with artificial intelligence in the DAM industry.
• March 19, 2020: announced that one of the Company's largest customers has expanded their DAM initiative in Q1 2020 to support additional libraries of high-value media assets throughout their business, increasing their annual license by more than $190,000.

Operations and Corporate:

• October 8 and 29, 2020: announced and closed a bought deal private placement financing via a syndicate led by Cormark Securities, Inc., raising a total of $11.50 million, including a $1.50 million over-allotment, and issuing a total of 5,750,000 common shares that will be free-trading on March 1, 2021. A cash commission of $690,000 was paid to the syndicate.
• June 29, 2020: repaid $2,000,000 of senior secured long-term debt and modified terms of remaining $1,000,000 to reduce to 6% interest (from 7%) and extend the maturity to November 7, 2023 (from November 7, 2021).
• February 25, 2020 to April 27, 2020: raised $7.14 million and issued 7,905,157 common shares upon exercise of warrants, options and debt conversions. The warrants were subject to acceleration to April 27, 2020 (previously March and September 2022), triggered upon its common shares trading at greater than $1.50 for ten consecutive days.

¹ The Company defines Operating Costs to include Sales & Marketing, Research & Development and General & Administrative expenses, which aligns with the expenses included in EBITDA. This is a non-IFRS measure and represents operating expenses less share-based compensation and depreciation.

² EBITDA is a non-IFRS measure that is used as a measure of profit and loss. Management believes EBITDA provides a meaningful measure for assessment of Company performance as it removes non-cash and non-operating expenses such as financing costs.

³ Per share figures have been adjusted to reflect the 15:1 share consolidation completed on September 9, 2019. Note that quarterly loss per share amounts may not aggregate to the annual amount disclosed in the annual financial statements due to rounding.

⁴ Annual Recurring Revenue (ARR) is a non-IFRS measure that provides an indication of future revenue and billings from customers as of the reporting date. ARR represents the sum of the annual recurring revenue from existing customer contracts or commitments as of the reporting period end date, and as such management believes ARR to be a meaningful measure for assessment of Company performance. ARR is recorded as deferred revenue when it is invoiced and is recognized in revenue evenly on a monthly basis over the contract term.

⁵ Net Billings are a non-IFRS measure representing the sum of invoiced sales in the period, including both existing customer renewal invoices and new customer invoices with standard payment terms (generally net-30). Net Billings are calculated by subtracting closing deferred revenue from opening deferred revenue and adding recognized revenue for the period. Management believes Net Billings are an important measure for understanding the business, as given that the related revenue is deferred and amortized, Net Billings provides a measure of the amount of cash generated from customers in the period.

⁶ Net Billings Run-Rate is a non-IFRS measure representing the current annualize Net Billings at the end of the period assuming sales performance remains consistent with the current year. It is calculated as the amount of new Net Billings added in the fiscal year by our sales and customer success teams over and above the opening ARR. Specifically for F2020, Net Billings of $8.80 million, less opening ARR of $6.50 million, plus closing ARR of $8.64 million, equals Net Billings Run-Rate of $10.94 million. Accordingly, Net Billings Run-Rate is the amount of Net Billings that would be invoiced in the next year if the sales and customer success teams perform at the same level they did in F2020, and therefore provides a measure of the efficiency and effectiveness of operating infrastructure investments.

MediaValet's full financial statements and related MD&A are now available on SEDAR.

About MediaValet, Inc.

MediaValet stands at the forefront of the enterprise, cloud-native, software-as-a-service digital asset management and creative operations industries. Built exclusively on Microsoft Azure and available across 61 Microsoft data center regions in 140 countries around the world, MediaValet delivers unparalleled enterprise-class security, reliability, redundancy, compliance, and scalability; while offering the largest global footprint of any DAM solution. In addition to providing enterprise cloud-native DAM capabilities at a global scale, desktop-to-server-to-cloud support for creative teams, and overall cloud redundancy and management for all source, WIP and final assets, MediaValet offers industry-leading integrations into Slack, Adobe Creative Suite, Microsoft Office 365, Workfront, Wrike, Drupal, WordPress and many other best-in-class 3rd party applications.

For further information, please contact:

Corporate OfficeDavid MacLaren, CEO | david.maclaren@mediavalet.com^[1] | (604) 688-2321Rob Chase, Executive Chairman and CFO | rob.chase@mediavalet.com^[2] | (604) 688-2321

Press RelationsBabak Pedram | babak.pedram@mediavalet.com^[3] | (416) 644-5081

"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/77336^[4]

References

1. ^{^} david.maclaren@mediavalet.com (www.newsfilecorp.com)
2. ^{^} rob.chase@mediavalet.com (www.newsfilecorp.com)
3. ^{^} babak.pedram@mediavalet.com (www.newsfilecorp.com)
4. ^{^} https://www.newsfilecorp.com/release/77336 (www.newsfilecorp.com)