Destiny Media Technologies Inc.
Q2 2024 Earnings Call Transcript

Published: 15 Apr 2024

[Rebecca Collins:]

Good afternoon, everyone. Thank you for joining us on today's webinar. Before we begin, I'd like to announce that we will be referring to today's earnings release which was sent to the newswires earlier this afternoon. I'd also like to remind you that this conference call could contain forward-looking statements about Destiny Media Technologies within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current beliefs and expectations of management and are subject to risks and uncertainties which could cause actual results to differ materially from those forward-looking statements. Such risks are fully discussed in the company's filings with the SEC and SEDAR, and the company does not assume any obligation to update information contained in this call. During the webinar, we will discuss certain non-GAAP financial measures. The non-GAAP financial measures are presented in the supplemental disclosures and should not be considered in isolation of, or as a substitute of, or superior to the financial information prepared in accordance with GAAP and should be read in conjunction with the company's financial statements filed with SEC and SEDAR. The non-GAAP financial measures used in the company's presentation may differ from the similarly titled measures presented by other companies. A reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures can be found in the earnings press release. Also, I would like to mention that following the presentation, there will be a questions-and-answers session, during which you can submit questions by selecting the Raise Hand icon at the bottom of your screen. Your questions will be pulled in the order that they are received and at which point you'll be prompted to unmute your microphone before speaking. With that, I'd like to turn the call over to your host, Fred Vandenberg, Chief Executive Officer.

[Fred Vandenberg:]

Thanks, Rebecca. Just before we start, today is Rebecca's fifth anniversary with us. She's a key member of our management group. She maintains our list and in-charge of all the release coordination that we do, as well as a lot more for this company, including running these webinars. So, it's a good opportunity for me to just give her a shoutout and potentially embarrass her a little bit. But thanks Rebecca for all you do. To start, I will talk about -- you just have me today. We'll talk about our financial results. Q2 revenue is up 9%, year-to-date revenue is up 9.9%, so it's pretty consistent quarter-to-quarter and pretty consistent over the last year, last two quarters of last year and first two quarters of this year. Independent label revenue grew by 19.5% in Q1 and 10.5% in Q2 for a total growth of 15.6%. It's roughly -- well, it's a little bit more than 50% of our revenue fairly consistently now. About half of that growth or half of that increase for independent label revenue is from the international list selection process and easier list selection processes. And I'll touch on that just a little bit later when we talk about product a little bit. Year-to-date expenditures are up 23.3%. I think what I would say is that's a little bit misleading. It includes a one-time increase, because we had a FX gain last year, foreign exchange gain last year. Depreciations forms about a third of that increase, and it's really kind of doubling up expenditures associated with capitalized software development. And we're doing less of that now in this quarter. So, we kind of double up our increase. And so, it's kind of artificially a little bit higher than you would see, or certainly the increases. But the real accurate picture is probably the bottom three bullet points on this slide. Year-to-date income is $120,000, EBITDA is $285,000, and capitalized software development costs is $280,000. So, EBITDA would be roughly flat if we weren't capitalizing software development. So, it really tells you that we're operating close to breakeven, and that's in the context of us investing heavily for growth. Sorry. I will only stay on this slide very briefly. This is revenue over the last seven years and just kind of shows you the overall trends. You can see more recent quarters are starting to grow a little bit more. I'm happy to answer any questions on that, but I don't want to spend too much time on it. As far as non-financial things that occurred during the quarter, we transitioned our largest customer over the web browser version. That completed March 31st, but it was really done throughout the quarter. That sort of culminates into a cessation of our PC-based version of Caster, our release coordination, and that has been a very long process. We transitioned all of our customers, except for our largest, six years ago. And since that time, we've invested quite a lot into building out a number of global architecture, other global features that are required for Universal's global distribution processes. It was a huge investment technically, and then moving all their users globally over to it was another significant effort. So, pretty big step for us. Product updates

[A - Rebecca Collins:]

Thank you, Fred, and thank you for the shoutout at the beginning, too. It's been a very fast and fun five years. Okay, so we can now begin the question-and-answer session. So, if you do have a question, please use the Raise Hand option at the bottom of your screen and your question will be pulled in the order that they're received. If you raise your hand, please ensure you have access to a microphone, and if you wish to retract your question, just click that Raise Hand icon again to lower your hand. Your camera will remain off, but once prompted, please unmute your microphone before speaking. So, if anyone has any questions, please raise your hand now. Not seeing any raised hands or Q&A, so maybe we have none for today.

[Fred Vandenberg:]

Okay, I didn't get any on the email this morning either. So, we'll post the webinar on our website shortly. And if anyone does any questions, they can reach out to me directly, too. So, I'll leave it there. Thanks for attending, everyone.