EQ Inc.
TSX : EQ

EQ Inc.

November 07, 2013 17:01 ET

EQ Inc. Reports Third Quarter 2013 Results

TORONTO, ONTARIO--(Marketwired - Nov. 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 third quarter ended September 30, 2013. Total revenue from continuing operations for the quarter was $1.9 million, comparable to the $1.9 million recorded in the previous quarter, and adjusted EBITDA loss for the quarter was approximately $550,000, as compared to a loss of $591,000 in the previous quarter.

Highlights for the third quarter ended September 30, 2013

  • At September 30, the Company had cash on hand of $3.5 million and no debt
  • Significant investments were made during the quarter to support growth, including expansion of sales team and the launch of a comprehensive client services interface to improve operational efficiencies
  • Increased number of advertising agency clients by 40%
  • Launched Agency First, a program designed to extend in-house digital media buying capabilities to advertising agency partners

"During the third quarter we made significant investments in our people and our platform to better enable us to service our growing client base," said Geoffrey Rotstein, President and CEO. "Our ability to scale while improving customer experience and performance will be more evident in the fourth quarter as the investments we made begin to show results," added Rotstein. "We are now a formidable competitor in one of the most exciting spaces in advertising, and the future of programmatic media buying is only now being recognized."

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 nine months ended 2013 and 2012
Three months ended Nine months ended
September 30, September 30,
(In thousands of Canadian dollars) 2013 2012 2013 2012
Net loss from operations$(917)$(716)$(3,200)$(2,930)
Add:
Depreciation of property and equipment 64 62 209 213
Amortization of domain properties and other intangibles 293 285 862 839
Share-based payments 10 37 45 22
Adjusted EBITDA$(550)$(332)$(2,084)$(1,856)

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)
September 30, 2013 and December 31, 2012
September 30, 2013 December 31, 2012
Assets
Current assets:
Cash and cash equivalents $ 3,460 $ 5,419
Accounts receivable 1,437 2,425
Other current assets 282 303
Income taxes recoverable - 40
5,179 8,187
Non-current assets:
Investment 50 50
Property and equipment 328 460
Domain properties and other intangible assets 2,171 2,889
Goodwill 369 357
2,918 3,756
Total assets $ 8,097 $ 11,943
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 2,038 $ 2,703
Deferred lease inducement 24 41
Finance leases 140 155
Deferred revenue 536 549
2,738 3,448
Non-current liabilities:
Finance leases 87 186
Deferred lease inducement - 14
Deferred tax liabilities 45 244
132 444
Shareholders' Equity 5,227 8,051
Total liabilities and Shareholders' equity $ 8,097 $ 11,943
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three and nine months ended September 30, 2013 and 2012
Three months ended September 30, Nine months ended September 30,
2013 2012 2013 2012
Revenue $ 1,906 $ 3,508 $ 5,452 $ 10,930
Expenses:
Publishing and advertising costs 1,018 1,939 2,890 6,276
Employee compensation and benefits 856 1,237 2,750 3,996
Other operating expenses 592 701 1,941 2,536
Depreciation of property and equipment 64 62 209 213
Amortization of domain properties and other intangible assets 293 285 862 839
2,823 4,224 8,652 13,860
Loss from operations (917 ) (716 ) (3,200 ) (2,930 )
Finance income 81 220 26 54
Finance cost (6 ) (10 ) (163 ) (63 )
Loss before income taxes (842 ) (506 ) (3,337 ) (2,939 )
Income taxes recovery (expense) 67 (16 ) 197 145
Loss for the period from continuing operations (775 ) (522 ) (3,140 ) (2,794 )
Discontinued Operation:
Income for the period from discontinued operation, net of tax - - - 5,129
Income (loss) for the period (775 ) (522 ) (3,140 ) 2,335
Other comprehensive income (loss):
Foreign currency translation adjustments to equity, net of tax (124 ) (327 ) 271 (167 )
Total comprehensive income (loss) for the period (124 ) (327 ) 271 (167 )
Total comprehensive income (loss) for the period $ (899 ) $ (849 ) $ (2,869 ) $ 2,168
Income (loss) per share:
Basic (0.05 ) (0.03 ) (0.20 ) 0.15
Diluted (0.05 ) (0.03 ) (0.20 ) 0.15
Loss per share from continuing operations:
Basic (0.05 ) (0.03 ) (0.20 ) (0.18 )
Diluted (0.05 ) (0.03 ) (0.20 ) (0.18 )
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Nine months ended September 30, 2013 and 2012
2013 2012
Cash flows from operating activities:
Income (loss) for the period $ (3,140 ) $ 2,335
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment 209 481
Amortization of domain properties and other intangible assets 862 3,012
Amortization of deferred lease inducement (31 ) (56 )
Share-based payments 45 39
Foreign exchange loss 153 83
Finance cost, net 145 496
Deferred income taxes recovery (197 ) (164 )
Restructuring cost - 221
Gain on sale of Tsavo - (7,402 )
Change in non-cash operating working capital 307 (3,540 )
Cash used in operating activities (1,647 ) (4,495 )
Income taxes received (paid) 40 (57 )
Net cash used in operating activities (1,607 ) (4,552 )
Cash flows from financing activities:
Repurchase of common shares under NCIB - (29 )
Repayment of finance leases (114 ) (53 )
Interest paid (21 ) (272 )
Net cash used in financing activities (135 ) (354 )
Cash flows from investing activities:
Purchase of long-term investment - (50 )
Interest income received 26 34
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 (25 ) (153 )
Additions to property and equipment (65 ) (228 )
Net cash from (used in) investing activities (64 ) 6,297
Foreign exchange loss on cash held in foreign currency (153 ) (83 )
Increase (decrease) in cash and cash equivalents (1,959 ) 1,308
Cash and cash equivalents, beginning of period 5,419 4,050
Cash and cash equivalents, end of period $ 3,460 $ 5,358

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