EQ Inc.
TSX : EQ

EQ Inc.

March 18, 2014 17:00 ET

EQ Inc. Reports Fourth Quarter Growth and 2013 Results

Company Reports Growth in Advertising Operations

TORONTO, ONTARIO--(Marketwired - March 18, 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 fiscal year and fourth quarter-ended December 31, 2013. Total revenue from continuing operations for the quarter was $2.6 million, an increase of 40% from the $1.9 million recorded in the third quarter of 2013. The adjusted EBITDA loss for the quarter was approximately $197,000, a 64% improvement as compared to a loss of $550,000 in the the third quarter of 2013. Total revenue from continuing operations for the year was $8.0 million and the adjusted EBITDA loss for the year was $2.3 million.

Highlights for the Fourth Quarter ended December 31, 2013

  • Several new agency clients joined our Agency First™ program, establishing EQ as their preferred media buying partner
  • Active campaigns grew 120% during the quarter
  • The Company launched Hercules™, an innovative advertising solution that has been recognized by experts for its effectiveness at fighting click-fraud
  • The Company strengthened its mobile advertising capabilities and expanded its team to support increasing demand for innovative mobile targeting solutions

"The investments we made during 2013 to refocus the Company on effective audience targeting solutions were put to the test during the busiest quarter in digital advertising," said Geoffrey Rotstein, President and CEO. "We consistently beat our clients' expectations, proving our effectiveness in reaching new audiences and with quality scores that far surpassed what others in the industry were capable of delivering." added Rotstein. "It was a good quarter for EQ as we continue to innovate with products and solutions that deliver better performing ads and produce insights that help companies find new customers."

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". The Company defines Adjusted EBITDA as net income (loss) from continuing 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 continuing operations and Adjusted EBITDA for the periods presented:

Adjusted EBITDA for three and twelve months ended December 31, 2013 and 20
Three months ended Twelve months
December 31, ended December
(In thousands of Canadian dollars) 2013 2012 2013 2012
Net income (loss) (1,330 ) (773 ) (4,471 ) 1,562
Add:
Income from the discontinued operation - - - (5,129 )
Income tax recovery (40 ) (233 ) (237 ) (378 )
Finance income costs, net 85 35 223 44
Depreciation of property and equipment 64 70 273 283
Amortization of domain properties and other
intangibles assets 296 279 1,158 1,118
Share-based payments 12 4 57 60
Impairment of goodwill and domain properties
and other intangible assets 716 - 716 -
Restructuring - 86 - 86
Adjusted EBITDA (197 ) (532 ) (2,281 ) (2,354 )

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 Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
December 31, 2013 and December 31, 2012
20132012
Assets
Current assets:
Cash and cash equivalents$2,797$5,419
Accounts receivable 2,231 2,425
Other current assets 222 303
Income taxes recoverable - 40
5,250 8,187
Non-current assets:
Investment 50 50
Property and equipment 281 460
Domain properties and other intangible assets 1,610 2,889
Goodwill - 357
1,941 3,756
Total assets$7,191$11,943
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities$2,316$2,703
Deferred lease inducements 14 41
Finance leases 122 155
Deferred revenue 602 549
3,054 3,448
Non-current liabilities:
Finance leases 64 186
Deferred lease inducements - 14
Deferred tax liabilities - 244
64 444
Shareholders' Equity 4,073 8,051
Total liabilities and Shareholders' equity$7,191$11,943
EQ Inc.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three and twelve months ended December 31, 2013 and 2012
Three months ended December 31,Twelve months ended December 31,
2013201220132012
Revenue$2,592 $2,576 $8,044 $13,506
Expenses:
Publishing and advertising 1,339 1,533 4,228 7,809
Employee compensation and benefits 855 1,143 3,605 5,139
Other operating 607 436 2,549 2,972
Depreciation of property and equipment 64 70 273 283
Amortization of domain properties and other intangible assets 296 279 1,158 1,118
Impairment of goodwill and domain properties other intangible assets 716 - 716 -
Restructuring - 86 - 86
3,877 3,547 12,529 17,407
Loss from operations (1,285) (971) (4,485) (3,901)
Finance income 9 168 34 50
Finance cost (94) (203) (257) (94)
Loss before income taxes (1,370) (1,006) (4,708) (3,945)
Income taxes recovery 40 233 237 378
Loss for the period from continuing operations (1,330) (773) (4,471) (3,567)
Discontinued Operation:
Income for the period from discontinued operation, net of tax - - - 5,129
Net income (loss) (1,330) (773) (4,471) 1,562
Other comprehensive income (loss):
Foreign currency translation adjustments to equity 165 98 436 (69)
Other comprehensive income (loss) for the period 165 98 436 (69)
Comprehensive income (loss) for the period$(1,165)$(675)$(4,035)$1,493
Income (loss) per share:
Basic (0.08) (0.05) (0.28) 0.10
Diluted (0.08) (0.05) (0.28) 0.10
Loss per share from continuing operations:
Basic (0.08) (0.05) (0.28) (0.22)
Diluted (0.08) (0.05) (0.28) (0.22)
EQ Inc.
Unaudited Consolidated Statements of Cash Flows (In thousands of Canadian dollars)
Years ended December 31, 2013 and 2012
20132012
Cash flows from operating activities:
Net income (loss)$(4,471)$1,562
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation of property and equipment 273 551
Amortization of domain properties and other intangible assets 1,158 3,291
Amortization of deferred lease inducements (41) (65)
Share-based payments 57 60
Foreign exchange loss (gain) 260 (23)
Finance cost (income), net (8) 718
Current income tax recovery (2) (21)
Deferred income taxes recovery (235) (357)
Impairment of goodwill and domain properties and other
intangible assets 716 -
Gain on sale of property and equipment 1 (17)
Gain on sale of domain properties and other intangible assets - (59)
Gain on sale of discontinued operation - (7,402)
Restructuring - 307
Change in non-cash operating working capital 160 (3,292)
Cash used in operating activities (2,132) (4,747)
Income taxes received (paid) 44 (26)
Net cash used in operating activities (2,088) (4,773)
Cash flows from financing activities:
Repurchase of common shares under NCIB - (35)
Repayment of finance leases (155) (89)
Interest paid (26) (330)
Net cash used in financing activities (181) (454)
Cash flows from investing activities:
Purchase of long-term investment - (50)
Interest income received 34 53
Net proceeds from sale of available-for-sale investments - 200
Proceeds on sale of discontinued operations, net of cash disposed of - 6,293
Decrease in restricted cash and short-term investments - 201
Net Proceeds from disposal of property and equipment 2 17
Net Proceeds from disposal of domain properties - 82
Additions to property and equipment (78) (221)
Additions to domain properties and other intangible assets (51) (2)
Net cash from (used in) investing activities (93) 6,573
Foreign exchange gain (loss) on cash held in foreign currency (260) 23
Increase (decrease) in cash and cash equivalents (2,622) 1,369
Cash and cash equivalents, beginning of year 5,419 4,050
Cash and cash equivalents, end of year$2,797 $5,419

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