Engine Gaming and Media, Inc. (NASDAQ:GAME) (TSX-V:GAME) provides premium social sports and esports gaming experiences, as well as unparalleled data analytics, marketing, advertising, and intellectual property to support its owned and operated direct-to-consumer properties, while also providing these services to enable its clients and partners. The company’s subsidiaries include Stream Hatchet, the global leader in gaming video distribution analytics; Sideqik, a social influencer marketing discovery, analytics, and activation platform; WinView Games, a social predictive play-along gaming platform for viewers to play while watching live events; and Frankly Media, a digital publishing platform used to create, distribute and monetize content across all digital channels. Engine Media generates revenue through a combination of direct-to-consumer fees, streaming technology and data SaaS-based offerings, and programmatic advertising. For more information, please visit www.enginegaming.com.
Michael Kupinski, Director of Research, Noble Capital Markets, Inc.
Patrick McCann, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Q1 results. The company reported revenue of $10.3 million, which beat our estimate of $9.8 million by 5%. Revenue was better than expected despite a decrease in advertising revenue due to changes in the algorithms that drive audience traffic. Adj. EBITDA for the quarter was a loss of $2.7 million, in line with our estimate.
Favorable influencer analytics trends. Management noted that there is heightened demand for influencer marketing. Notably. influencer and gaming analytics software as a service (SaaS) revenue grew by 34.6% on a year over year basis, helping to offset a decline in advertising revenues.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
NEW YORK, NY / ACCESSWIRE / January 17, 2023 / Engine Gaming and Media, Inc. (“Engine” or the “Company”) (NASDAQ:GAME)(TSXV:GAME), a data-driven, gaming, media and influencer marketing platform company, today announced results for its fiscal first quarter 2023 ended November 30, 2022. All amounts are stated in U.S. dollars unless otherwise indicated.
Financial Highlights:
The Company announced the successful completion of its strategic process resulting in the signed merger agreement with GameSquare Esports, Inc
For the fiscal first quarter 2023 net loss improved significantly to $5.4 million, compared to $15.2 million in the fiscal fourth quarter 2022, an improvement of 65%
Significant improvement in Adjusted EBITDA of 32% to $(2.7) million in the first fiscal quarter 2023 sequentially compared to an Adjusted EBITDA of $(4.0) million in the fiscal fourth quarter 2022
The Company’s Influencer and Data Technology SaaS revenues increased 35% during the first fiscal quarter of 2023 compared to the first fiscal quarter of 2022
Management Commentary
“We are proud of the continued improvement we have made towards our near-term goal of achieving cash-flow breakeven. This quarter is highlighted by a 65% improvement in net loss of nearly $10 million and a 32% improvement in Adjusted EBITDA on a sequential basis to $(2.7) million, despite the restructuring charges related to discontinued operations said Lou Schwartz, Chief Executive Officer of Engine. “Despite some expected short-term headwinds in the advertising market, driven by Google algorithm changes, we continue to see heightened demand for our influencer and data technology SaaS services by our gaming and brand clients, which grew 35% YoY. We see this as a welcoming trend heading into our merger with GameSquare.”
Tom Rogers, Executive Chairman of the Company, commented on the recently announced merger with GameSquare, adding, “Our strengths speak to the heart of the thesis behind the GameSquare transaction. GameSquare brings content development, a publisher advertising network, and a gaming influencer network, which is complementary to our gaming content analytics technology, our programmatic advertising technology, and our influencer marketing and management technology. When the two companies’ assets are combined, these elements create an end-to-end solution for brands to reach their target audience. Moreover, the combined companies offering provides a highly scaled answer to reach younger demographics at a level sought by brands, which traditional media can no longer perform. In addition, digital advertising continues to be constrained by new privacy protection steps of the major tech players, which has inhibited efficient targeting of certain audiences particularly gaming audiences. Traditional media’s failings and digital advertising limitations create the setting for why the combined company provides a solution to both problems that is both differentiated and scalable.”
Fiscal First Quarter 2023 Financial Results
Total revenue in the fiscal first quarter of 2023 was $10.3 million, compared to revenue of $11.5 million in the fiscal fourth quarter of 2022. Overall Software-as-a-Service (SaaS) revenues were relatively flat due to the declines in legacy content management related SaaS revenues. However, gaming and influencer data and analytics SaaS revenues grew 34.6% YoY. The decrease in advertising revenues was primarily due to changes in Google discovery and algorithms which impacted audience traffic that is expected to gradually improve throughout the fiscal second quarter and fiscal third quarter of 2023.
Expenses in the fiscal first quarter were $15.8 million, an improvement of approximately $6.0 million, when compared to $21.8 million on a sequential basis.
Net Loss in the fiscal first quarter improved 64.7% to $5.4 million, compared to a net loss of $15.2 million in the fiscal fourth quarter of 2022 inclusive of the restructuring charges related to discontinued operations.
Adjusted EBITDA was $(2.7) million for the fiscal first quarter, an improvement of 32.5% when compared to $(4.0) million in the fiscal fourth quarter of 2022, and when compared to the same year-ago quarter Adjusted EBITDA improved 17.5%.
At November 30, 2022, the Company had cash of $6.9 million.
Recent Operational Highlights:
Successful completion of Strategic Process resulting in signed merger with GameSquare.
Stream Hatchet new and expanded client highlights for the quarter include XSET, Benefit Cosmetics, a16z, Immortal, Tencent and Epic.
Sideqik new and expanded client highlights for the quarter include PDP Gaming, AverMedia, Misfits Gaming and ASUS.
Frankly new and expanded client highlights for the quarter include Citadel Communications, Krol Communications, Beyond TV, Sports News Highlights, Palmetto Network, and BmovieNation.
FY Q1 2023 Earnings Conference Call
Management will host an investor conference call at 8:45 a.m. EDT (5:45 a.m. PDT) today, Tuesday, January 17, 2023, to discuss Engine Gaming and Media, Inc.’s fiscal first quarter 2023 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
Non-IFRS Measures
The Company reports earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA, which are not financial measures calculated and presented in accordance with International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures presented by other issuers. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute to net income (loss) or any other financial measures of performance or liquidity calculated and presented in accordance with IFRS. The Company defines Adjusted EBITDA as EBITDA, adjusted to exclude certain non-cash charges and other items that we do not believe are reflective of our ongoing operating results. The Company utilizes Adjusted EBITDA internally for purposes of forecasting, determining compensation, and assessing the performance of our business, therefore, we believe this measure provides useful supplemental information that may assist investors in assessing an investment in the Company.
The following unaudited table presents the reconciliation of net loss to Adjusted EBITDA for the three months ended November 30, 2022, and 2021, respectively.
About Engine Gaming and Media, Inc.
Engine Gaming and Media, Inc. (NASDAQ:GAME)(TSXV:GAME) provides unparalleled live streaming data and social analytics, influencer relationship management and monetization, and programmatic advertising to support the world’s largest video gaming companies, brand marketers, ecommerce companies, media publishers and agencies to drive new streams of revenue. The company’s subsidiaries include Stream Hatchet, the global leader in gaming video distribution analytics; Sideqik, a social influencer marketing discovery, analytics, and activation platform; and Frankly Media, a digital publishing platform used to create, distribute, and monetize content across all digital channels. Engine generates revenue through a combination of software-as-a-service subscription fees, managed services, and programmatic advertising. For more information, please visit www.enginegaming.com.
Cautionary Statement on Forward-Looking Information
This news release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Engine to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. In respect of the forward-looking information contained herein, Engine has provided such statements and information in reliance on certain assumptions that management believed to be reasonable at the time. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements stated herein to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Accordingly, readers should not place undue reliance on forward-looking information contained in this news release.
The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date. Engine does not assume any obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, except as required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Michael Kupinski, Director of Research, Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the bottom of the report for important disclosures
Overview:Will It Be A Happy New Year? The full impact of the recent increase in interest rates likely have not been fully reflected in the economy. But, many media stocks seem to anticipate that the industry is in a downturn now. Notably, some stocks have recently performed better and the current fundamentals are not falling off of a cliff.
Digital Media: Coming Off Of Its Sugar High?While Google now plans to phase out cookies in the second half of 2024, it is likely that the plan will affect 2023 as marketers and publishers prepare for the deprecation of cookies.
Television Broadcasting: A Watershed Year For Streaming. Streaming has now eclipsed both broadcast TV and cable TV in terms of viewing based on Nielsen data. Recently, Netflix launched a new pricing plan on November 3 which offers a basic tier, with advertising, at a low price point of $6.99. What does this mean for the TV industry?
Radio Broadcasting:Digital Is Bolstering Performance. It has been a bloodbath for Radio stocks, but the fundamentals appear better than the stock performance might suggest. Radio broadcasters with significant digital businesses are anticipated to report favorable pacings in Q1.
Publishing: You Are Golden If You Have Digital. The trouble with the largest newspaper company, Gannett, has created a pall over the group as it struggles to cut expenses. But, companies with substantial digital operations have performed well. We highlight one of our current favorites Lee Enterprises (LEE).
Overview
Will It Be A Happy New Year?
2022 was one of the worse for media stock performance in recent memory, with stocks across traditional and digital media sectors down over 40% or more. Media stocks underperformed the general market, as measured by the S&P 500 Index, which was down a more moderate 19.4% on a comparable basis for the full year 2022. It is typical for media stocks to underperform in a late-stage economic cycle or in the midst of an economic downturn. But, the significant stock declines are stunning. Macro-economic issues including inflation, rising interest rates, and the prospect of a looming economic downturn, all contributed to the poor performance.
The question is “will 2023 be better?” We believe so. There has been recent signs of life. The S&P 500 increased by 7% during the fourth quarter of 2022, marking the first time the Index had increased since fourth quarter of 2021. Notably, the Noble Publishing and Noble MarTech Indices outperformed the general market in the latest quarter. But, the full impact of the recent interest rate increase likely have not been reflected in the economy. Many media stocks seem to anticipate an economic downturn, but current fundamentals do not appear to be in a freefall and may be better than expected. If the economy further deteriorates from the recent or future rate hikes, it appears now that it may adversely affect the second half of 2023. Advertising pacings appear to be holding up well so far in the first half 2023. Notably, media stocks may begin to anticipate an improving economic outlook and overlook the weak fundamental environment in the second half.
Conventional thought anticipates that increasing concerns over an economic recession may prompt mortgage rates to trend lower in 2023. Furthermore, it is possible that the Fed may lower interest rates if inflation moderates, although the Fed is not currently anticipating rate decreases in 2023. Nonetheless, this paints a favorable picture for media stocks in 2023. Traditionally, the best time to buy media stocks is in the midst of an economic downturn. In addition, these consumer cyclical stocks tend to be among the first movers in an early-stage economic cycle and tend to perform well in a moderating interest rate environment. As mentioned earlier, the stocks may currently be oversold given the prospect that the current fundamental
environment is better anticipated.
What is the risk to this favorable outlook? We believe that the resurging Chinese economy may be disruptive. Within the last month, the China’s economy has been reopened from Covid lockdowns, which may put pressure on global energy prices. Such a prospect may make our fight on inflation more stubborn to combat, potentially throwing off our favorable outlook for moderating interest rates. In our view, we are closer to the light at the end of the tunnel than we were last year. Given the prospect that these stocks tend to outperform the market in an early stage economic recovery, we believe it is time for investors to accumulate positions in the media sectors. In this quarterly, we highlight some of our favorite plays in the Digital, Media & Technology space.
Digital Media & Technology
A Year To Forget
While there were signs of life in the fourth quarter of 2022 for the Internet and Digital Media sectors, 2022 was a year most investors in these sectors would like to forget. As Figure #1 LTM Internet & Digital Technology Performance illustrates, every one of these sectors substantially underperformed the S&P 500 last year. The S&P 500 Index finished the year down 19% which was substantially better than Noble’s Digital Media Index (-41%), MarTech Index (-52%), Social Media Index (-63%), and Ad Tech Index (-63%). Rather than focus on the stocks that significantly underperformed their respective Indices (and there are many), we would rather focus on the three stocks that finished 2022 up for the year.
The shares of one of our favorites, Harte Hanks (HHS)increased by 53% in 2022. The company continued its multi-year turnaround from a highly levered and unprofitable business (in 2019), to a double digit EBITDA margin business with a debt-free balance sheet. Furthermore, we believe that many of the company’s business lines have recession resilient qualities. The other stocks that performed well are Tencent (TME), whichincreased by 21%in 2022. Shares declined earlier in the year as China’s economy slowed as it maintained its Zero Covid-19 lockdowns, but surged in the fourth quarter as it appeared that the company would enjoy an increase in demand as China begins easing Covid restrictions. Finally, the shares of Perion Networks (PERI) increased by 5% in 2022 as Perion consistently beat expectation and raised its guidance throughout 2022. In the first week of 2023, the company once again pre-announced better than expected results for the fourth quarter, and shares are already up 14% since the start of the new year.
As Figure #2 Q4 Internet & Digital Technology Performancehighlights, there has been signs of life in Noble’s MarTech Index which increased 6%, roughly in-line with the market. In Noble’s MarTech Index, 11 of the 22 stocks in the index posted gains, led by Yext (YEXT; +46%), Shopify (SHOP; +29%), LiveRamp (RAMP; +29%) and Adobe (ADBE; +22%). This marks significant improvement from last quarter when only 4 of the sectors’ stocks finished the quarter in positive territory. MarTech stocks have suffered from a market reset to revenue multiples that began when the Fed began raising rates. MarTech share price declines in the first, second and third quarters of 2022 were mostly driven by multiple compression as investors rotated out of high-flying tech sectors where companies had chased growth at all costs (at the expense of profitability). Only 7 of the MarTech companies in the Index posted positive EBITDA in the latest quarter. Laggards during the fourth quarter were Noble’s Digital Media Index (-5%), Social Media Index (-7%) and Ad Tech Index (-20%).
Coming Off Of A Sugar High?
One of the largest issues affecting the Digital Media industry in 2023 will be the phase out of the use of third-party cookies. Cookies were used to track a user visits on internet sites and that data was used to model behavior. The industry has moved away from the use of cookies as governments and consumers have raised concerns over privacy issues and as consumers wanted more control over how their data is used. Governments have taken a more active role in protecting consumer privacy. California, Colorado, Connecticut, Utah, and Virginia have passed privacy laws. It is likely that there will be a federal privacy law at some point.
How will this affect the industry? We believe that there has been plenty of time to “work around” this issue. The implementation of the phase out of cookies has been delayed several times, originally announced by Google in 2020. Google now plans to phased out cookies in the second half of 2024, if it is not delayed again. As marketers and publishers prepare for the deprecation of cookies, digital advertising likely will be begin to affect 2023.
Digital Advertising Outlook for 2023
Last October eMarketer revised lower its 2023 U.S. digital advertising forecast by $5.5 billion, from $284.1 billion to $278.6 billion. While this sounds like a substantial drop in percentage terms, the 2023 guidance was lowered from 14% growth to 12% growth. Most of the global ad agencies expect digital to continue to grow by double digits driven with dollars migrating to such digital ad channels as retail media and connected TV. Both sectors continue to demonstrate impressive growth.
Retail Media – A retail media network is a retailer-owned advertising service that allows marketers to purchase advertising space across all digital assets owned by a retail business, using the retailer’s first-party data to connect with shoppers throughout the buying journey. eMarketer forecasts that retail media ad spending grew by 31% last year to $41 billion and will grow to $61 billion over the next two years, by which time it will equate to 20% of digital advertising. The leaders in retail media are Amazon, Walmart and Instacart.
Through a retail media network, partners (advertisers) get direct access to a retailer’s customers. The benefit to the partners/advertisers is that they get access to first party data. Retailers own and store this data and allow advertisers to access them through their retail media programs. The first party data is valuable because it is collected at the point of sale allowing brands to get better insights into purchase behavior. Traditional retailers are beginning to follow suit. Traditional retailers with the largest digital audiences (per comScore) are Walmart, Target, Home Depot, Lowes, CVS, Walgreens, Costco and Kohls.
On January 10th, Microsoft announced that it intended to create the industry’s most complete omnichannel retail media technology stack supported by its Promote IQ platform, a company Microsoft acquired in 2019. We expect companies that serve the retail media sector from an Ad Tech or Mar Tech standpoint are poised to benefit from secular trends in this sector.
Connected TV (CTV) – Last July, Nielsen announced that for the first time U.S. streaming TV viewership was larger than cable TV viewing. In July 2022, eMarketer forecast that CTV advertising would reach $18.9 billion in 2022. However, in October 2022, eMarketer raised its forecast for CTV advertising by $2.3 billion to $21.2 billion in 2022. In October, the forecaster also raised its 2023 CTV advertising forecast by $3 billion to $26.9 billion, up from $23.9 billion in the July 2022 forecast. The big increase is due primarily to Netflix and Disney+ announcing they were launching ad supported tiers to their streaming offerings. Ad Tech or Mar Tech companies that serve this market are also poised to benefit from secular viewing trends and the advertising dollars that are migrating to these platforms, discussed later in this report.
The ability to target specific audiences and measure specific outcomes tied to the ads that viewers watched, has made CTV a force to be reckoned with, particularly for those advertisers that are never quite sure which advertising mediums provide the highest returns. Historically, TV was a mass medium used by large brands that wanted massive reach. CTV has opened the door to a wider variety of advertisers that are looking to reach more targeted, even niche, audiences. According to MNTN, a connected TV performance marketing platform, many CTV advertisers are first-time TV advertisers. With new FAST (Free Ad-Supported Streaming TV) channels coming online every month, there is no shortage of supply coming to market. This is just one reason why eMarketer predicts CTV advertising to grow by $10+ billion over the next two years and reach nearly $32 billion in advertising revenue in 2024.
As we look toward 2023, our current favorites include Harte Hanks (HHS) and Direct Digital (DRCT). In terms of Harte Hanks, we believe that the company has recession resilient qualities and that the company’s balance sheet is in a sound position. Furthermore, given the recent rising interest rate environment, the company’s unfunded pension liabilities have dramatically improved. The company may have the opportunity to further mitigate its pension liabilities in 2023. Figure #3 Marketing Tech Comparables highlights, the shares of HHS are trading well below its peers. We believe that there is meaningful upside potential in the shares as it closes the valuation gap with its peers.
While the deprecation of cookies has created a pall over the sector, we believe that Direct Digital has worked with its Publishers to mitigate this issue. In addition, the company is a relatively small player in a very large marketplace. As such, we believe that the company has the ability to attractively grow in 2023. In our view, the shares appear to be oversold given the continuation of favorable advertising trends. Figure #4 Advertising Tech Comparables illustrates that the DRCT shares trade below the average valuation in its Advertising Marketing peer set. In our view, the valuation should be higher than the averages given that the company has leading industry revenue growth. Closing this valuation gap offers compelling stock appreciation potential.
Figure #1 LTM Internet & Digital Technology Performance
Source: Capital IQ
Figure #2 Q4 Internet & Digital Technology Performance
Source: Capital IQ
Marketing Technology
Figure #3 Marketing Tech Comparables
Source: Eikon, Company filings and Noble estimates
Figure #4 Advertising Tech Comparables
Source: Eikon, Company filings and Noble estimates
Traditional Media
Another Quarter Of Moderating Stock Performance
Traditional media stocks underperformed the general market in 2022, with the Radio sector the hardest hit. As Figure #5 LTM Traditional Media Performance Chart illustrates, the Noble Radio Index declined 63.8% versus 19.4% for the general market, as measured by the S&P 500, in a comparable time period. Television and Publishing stocks were down 23.2% and 25.4%, respectively, more in line with the general market returns. But, there were notable company stock performance disparities within each sector, highlighted later in this report. Larger market capitalized companies performed better, which skewed the market cap weighted Indices.
The traditional media stocks seemed to have stabilized from the rapid declines earlier in the year. Possible signs of life in the traditional media sector as well? As Figure #6 Q4 Traditional Media Performance highlights, the Publishing sector once again outperformed the general market in the quarter. The Noble Television Index declined 3.2%, but this decline moderated from the 10.1% decline in the third quarter. The Radio industry still has not yet stabilized, with the Noble Radio Index down 15.4% in the latest quarter.
Figure #5 LTM Traditional Media Performance
Source: Capital IQ
Figure #6 Q4 Traditional Media Performance
Source: Capital IQ
Television Broadcast
Will Netflix suck the air out of the room?
Netflix launched a new pricing plan on November 3 which offers a basic tier, with advertising, at a low price point of $6.99. This compares with its previous tiers of $9.99 and $19.99 for advertising free streaming. While reports indicate that the advertising platform is off to a slow start, we believe that the Netflix move could be disruptive to the Broadcast Television Network business as its lower price basic service gains traction. It is likely that there will be some cannibalization from its higher pricing tier, but we believe that the move will broaden its subscriber base. While Netflix has not considered offering live sports on its streaming platform given the cost of sports rights, we believe that the potential success of its subscription/advertising tier may provide a platform to upend that decision. There is a strong tailwind for viewership trends on streaming platforms, which now exceed that of broadcast television viewing. A decision to enter sports will be a big deal and disruptive to Network broadcasting.
Streaming viewership not only eclipsed television viewing in July 2022, but also that of cable viewing, 34.8% versus 34.4%. In addition, based on the latest Nielsen data from November 2022, streaming now accounts for 38.2% of total viewing with Broadcast at 25.7% and cable at 31.8%. Figure #7 Viewership illustrates the November viewership data. While TV viewership increased 7.8% in November, largely due to sports content, streaming usage year over year was up more than 41%.
Figure #7 Viewership
Source: Nielsen Media Insights
Scripps Plans To Expand Sports
The declining cable subscriptions and cable viewership, especially on regional sports networks, led E.W. Scripps to launch a new Scripps Sports division. This division plans to seek broadcast rights from teams and leagues and bring that programming to broadcast television. The company plans to obtain rights either in local TV markets where it can partner with the the teams or on a national basis, utilizing its distribution on its Ion Network. It is important to note that ION is unique from other networks. Ion’s distribution is nearly 100% of the US television market given that it has local licenses and local towers in every market, it is fully distributed on cable and satellite, and is offered over the air. As such, we believe that Scripps offers a unique proposition to sports teams interested in building its audiences.
Will ATSC 3.0 Stream The Tide?
Furthermore, the broadcast industry appears to be more aggressively ramping its own streaming capabilities with the rollout of its new broadcast standard, ATSC 3.0. ATSC 3.0 is built on the same Internet Protocol as other streaming platforms, and, as such, broadcast programming and internet content can be accessible in the car, on mobile devices, as well as in the home. Importantly, the new standard can handle signal shifting, like if you were moving in a car, and the signal is more robust so you may be able to pick up more stations in a local market. While there are many opportunities for the new standard, services and offerings are still being developed. But, it offers promising opportunities for broadcasters to compete with streaming services in the future. We expect that the industry will make more announcements about this promising technology at future events, including the upcoming NAB Show, April 16-19 in Las Vegas, NV.
Are We In A Recession?
In our view, the current fundamentals may be better than the stocks project. Advertising seems to be holding up, post political advertising. As Figure #8 TV Q3 YoY Revenue Growth highlights, most companies in the industry reported strong Q3 revenue growth, influenced by a large influx of Political advertising. Figure #9 TV Q3 EBITDA Margins illustrates that the largest broadcasters, particularly Nexstar, has the largest EBITDA margins. Notably, the two stocks with the highest revenue growth in the quarter, Entravision and E.W. Scripps, performed the best in the fourth quarter, discussed later.
Notably, Local advertising appears to be fairing better than National advertising. Based on our estimates, core local advertising is expected to be down in the range of 5% to 8%, with core National down as much as the double digits. We believe that some large advertising categories like Auto, Retail and Home Improvement will show improving trends. The first quarter 2023 appears to be consistent with the fourth quarter. Smaller market TV likely will perform at the lower end of the range, while larger market TV will be at the higher end (greater core revenue decline). Broadcast Network is another story, which we believe is weak. Network has potential heightened competition. Figure #8 TV Q3 YoY Revenue Growth
Source: Eikon and Company filings
Figure #9 TV Q3 EBITDA Margins
Source: Eikon and Company filings
As mentioned earlier, the Noble Television Broadcast Index declined 3.2% in the latest quarter, underperforming the general market’s 7.2% advance. Importantly, the 3.2% decline in valuations was a moderation from the 10.1% decline in the third quarter. There were variances in the performance and some notable performers including two of our favorites: E.W. Scripps, which increased 5.8% and Entravision, which increase 5.3%. Both of these companies were among the strongest revenue performers in the third quarter. Among the poor performers was Gray Television, down a significant 33.7% and Sinclair Broadcasting, down 24.0%. With the TV stocks down a significant 23.2% for the year, have the stocks already assumed that the industry is in an economic downturn? We believe that the stock may be oversold based on the prospect that advertising is currently holding up in the first quarter.
Is There Room For Upside?
As Figure # 10 TV Industry Comparables highlight, most TV stocks are trading in a tight range of each other. The biggest variance in stock valuations is our current favorite Entravision, trading at 5.9 times EV to our 2023 EBITDA estimate, well below that of its industry peers which trade on average at 7.7 times. We believe that Entravision, which has migrated to become a leading Digital Media company which contributes roughly 80% of its total company revenues, should trade at a premium to its broadcast peers, rather than at a discount. Investors appear to be somewhat confused by the company’s relatively low EBITDA margins, which is a function of how revenues are accounted for in its Digital Media Division. We would also note that its financial profile is among the best in the industry, with a large cash position and modest net debt position of $86 million. As such, EVC leads our favorites in this sector.
Figure #10 TV Industry Comparables
Source: Eikon, Company filings and Nobles estimates
Radio Broadcast
Digital Is Bolstering Performance
The radio industry index was the worst performing index in the traditional media segment, declining 15.4% in the quarter and 63.8% for the year. The radio industry is feeling the pressure that recessionary concerns place on the demand for advertising. In addition to increased competition for audiences from digital music providers and shifting advertising dollars from radio to a more targeted advertising medium, digital media.
Figure #11 Radio Industry Q3 YoY Revenue Growth chart illustrates the year over year change in revenue for the third quarter. Urban One and Townsquare Media top their peers with revenue growth of 8.9% and 8.4%, respectively. A common theme with companies at the top of the list are diversified revenue streams. Salem Media and Beasley Broadcast Group are in the middle of the pack and are both taking steps to further diversify revenue. Salem has diversified into content creation and digital media and Beasley is continuing to pursue digital agency model. The median Q3 revenue growth rate was 1.5%, and the average revenue growth was -1%. The Average growth rate of -1% is skewed due to the poor performance of Medico holdings. In previous quarters Medico benefited from Covid-19 vaccine advertising campaigns and ticket sales for an annual outdoor live event that took place in Q3 of 2021. Without Covid vaccine advertising and Medico’s concert being held in Q2 2022 instead of Q3 resulted in revenue declining 33.6% on a year over year basis.
Industry adj. EBITDA margins were healthy, as Figure #12 Radio Industry Q3 EBITDA margins illustrates, Urban one, Townsquare Media and Iheart Media top the list with adj. EBITDA margins of 30.6%, 25.6% and 25.5%, respectively.
After the 2022 calendar year ended, Moody’s downgraded Cumulus Media’s Corporate Family Rating to B3 from B2. Moody’s believes Cumulus Media will face a further decline in advertising demand as the economy weakens. Moody’s could upgrade its rating if leverage decreases to 5x as a result of positive performance and could downgrade its rating if leverage ratio increases to 7x as a result of poor performance. It should be noted that Cumulus has a large cash position of $118 million and could access an additional $100 million through an asset backed loan.
However, there are several companies in the Radio industry with improving leverage profiles. Moreover, we believe that radio companies are diversifying traditional revenue streams with digital revenue. In our view, companies that achieved a greater degree of digital transformation and are better shielded from macroeconomic headwinds. Figure #13 Radio Industry Comparables highlights, Townsquare Media, Cumulus Media, and Salem Media are among the cheapest in the group. For those companies with substantial digital media businesses that are growing rapidly, like Townsquare Media and Beasley, we believe that advertising pacings in the first quarter are likely to be positive. On the low end pacings are expected to be flat to plus 3% and may even be stronger, up 8% or more in the second quarter (although this is too early to bank). In our view, advertising for these companies do not appear to be falling off of a cliff as the stocks seem to project. As such, we believe that the Radio sector appears to be in an oversold position and should have some upside prospects in 2023. Our favorites include TSQ, SALM, BBGI, and CMLS.
Figure #11 Radio Industry Q3 YoY Revenue Growth
Source: Eikon and Company filings
Figure #12 Radio Industry Q3 EBITDA Margins
Source: Eikon and Company filings
Figure #13 Radio Industry Comparables
Source: Eikon, Company filings and Nobles estimates
Publishing
Illustrated above in Figure #6 Q4 Traditional Media Performance, the Publishing stocks had a pretty good quarter, up 17.9% as measured by the Noble Publishing Index versus the general market as measured by the S&P 500 Index up 7.1%. But the largest stocks in the index, New York Times and News Corp, were the only stocks that were up in the sector. Given that the Noble Publishing Index is market cap weighted, it was the reason that the Index was up in the quarter. Importantly, one of our favorites, Lee Enterprises was down a very modest 2.3% in the quarter. Again, the relatively favorable performance of the index was primarily due to its largest constituents, News Corp. and The New York Times, which rebounded from -29.7% and -39.1%, respectively in Q2, to -3% and +3%, respectively, in Q3 and then up 16.8% and 16.3%, respectively, in Q4.
We believe that Gannett, the nation’s largest newspaper company, continues to create a pall over the publishing group as it continues to struggle to manage cash flows with its heavy debt burden. In August, the company announced a round of lay offs of 400 employees and then announced another 200 in December. We believe that the company is trying to shore up its cash flow amidst a weak fundamental environment. Not surprisingly, the GCI shares were among the worse performers in the sector in the latest quarter, down 30%. To a large extent, the stock performance in the latest quarter reflected the various company results in Q3.
As Figure #14 Publishing Industry Q3 YoY Revenue Performance chart illustrates, Q3 publishing revenue declined on average 1.1%, which excludes the strong revenue growth of the Daily Journal. The company benefited from its Journal Technologies consulting fees which bolstered revenues in its fiscal Q4 results. In addition, during the year, the company sold marketable securities for roughly $80.6 million, realizing net gains of $14.2 million. As such, we have backed out the extraordinary results of the Daily Journal from our industry averages. Notably, Gannett had the weakest revenue performance in the latest quarter, down 10%.
The notable exceptions to the overall weak industry revenue performance was The New York Times, up 7.5% in Q3 revenues, which reflected a moderation in revenue growth from the prior quarter of an increase of 11.5%. News Corp, declined 1%, which was well below the 7.3% gain in the prior quarter. Importantly, Lee Enterprises fiscal quarter revenue was down a modest 0.2%, a sequential improvement from the modest 0.7% decrease in the prior fiscal quarter. We believe that Lee’s digital strategy continues to gain traction and that the company is very close to an inflection point toward revenue growth. We continue to note that Lee’s digital subscriptions currently lead the industry. The company has exceeded all of its peers in terms of digital subscription growth in the past 11 consecutive quarters. Furthermore, over 50% of its advertising is derived from digital. Currently, roughly 30% of the company total revenues are derived from Digital, still short of the 55% at The New York Times, but closing the gap.
Not only is Lee performing well on the Digital revenue front, it has industry leading margins. As Figure #15 Publishing Industry Q3 EBITDA Margins illustrates, Lee’s Q3 EBITDA margins were industry leading at 16.7%, again, excluding the extraordinary results at the Daily Journal which benefited from marketable securities trading. We believe that Lee’s margins are notable given that it demonstrates that the company is managing its margins in spite of the investments in its Digital Media businesses. Its margins place it on pare with its Digital Media focused peers, such as the New York Times.
As Figure #16 Publishing Industry Comparables chart illustrates, the LEE shares trade at an average industry multiple of 5.7 times Enterprise Value to our 2023 adj. EBITDA estimate. Notably, the company is closing the gap with its Digital Media revenue contribution to that of New York Times. The New York Times carries a significantly higher stock valuation, currently trading at an estimated 15.8 times EV to 2023 adj. EBITDA. We believe that the valuation gap with the New York Times should close. As such, we view the LEE shares as among our favorites in the industry.
Figure #14 Publishing Industry Q3 YoY Revenue Growth
Source: Eikon and Company filings
Figure #15 Publishing Industry Q3 EBITDA Margins
Source: Eikon and Company filings
Figure #16 Publishing Industry Comparables
Source: Eikon, Company filings and Nobles estimates.
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ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE
Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis. Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.” FINRA licenses 7, 24, 63, 87
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NEW YORK, NY / ACCESSWIRE / January 13, 2023 / Engine Gaming and Media, Inc. (“Engine” or the “Company”) (NASDAQ:GAME) (TSXV:GAME),a data-driven, gaming, media and influencer marketing platform company, today announced the company will now be releasing results before market open on Tuesday, January 17, 2023 and will hold a conference call at 8:45 a.m. Eastern Time the same day.
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
A playback of the call will be available through January 24, 2023, on Engine Gaming and Media, Inc.’s Investor Relations website at ir.enginemediainc.comor via telephone replay by dialing 1-844-512-2921 or 1-412-317-6671. The Access Code is 13735206.
About Engine Gaming and Media, Inc.
Engine Gaming and Media, Inc. (NASDAQ:GAME) (TSXV:GAME) provides unparalleled live streaming data and social analytics, influencer relationship management and monetization, and programmatic advertising to support the world’s largest video gaming companies, brand marketers, ecommerce companies, media publishers and agencies to drive new streams of revenue. The company’s subsidiaries include Stream Hatchet, the global leader in gaming video distribution analytics; Sideqik, a social influencer marketing discovery, analytics, and activation platform; and Frankly Media, a digital publishing platform used to create, distribute, and monetize content across all digital channels. Engine Gaming generates revenue through a combination of software-as-a-service subscription fees, managed services, and programmatic advertising. For more information, please visit www.enginegaming.com.
Cautionary Statement on Forward-Looking Information
This news release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Engine to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. In respect of the forward-looking information contained herein, Engine has provided such statements and information in reliance on certain assumptions that management believed to be reasonable at the time. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements stated herein to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Accordingly, readers should not place undue reliance on forward-looking information contained in this news release.
The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date. Engine does not assume any obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, except as required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Company Contact: Lou Schwartz 647-725-7765
Investor Relations Contact: Shannon Devine MZ North America Main: 203-741-8811 [email protected]
*Finale of this year’s Le Mans Virtual Series to be broadcast January 14 and 15, 2023
MIAMI, Jan. 12, 2023 (GLOBE NEWSWIRE) — Motorsport Games Inc. (NASDAQ: MSGM) (“Motorsport Games” or the “Company”) today announced the 24 Hours of Le Mans Virtual, the esports finale to the ever-entertaining Le Mans Virtual Series, takes place this weekend on January 14 and 15, 2023. The all-star entry list has attracted the interest of major broadcasters from around the globe including Motor Trend On Demand in North America, CNBC Pan Latin America and Pan Europe, Eurosport Player across Europe and M-Net SuperSport in the Sub-Saharan regions of Africa. With broadcasters streaming the event digitally through OTT platforms and on demand services, this exciting and extremely popular esports discipline will be available to millions of homes across the world.
The event features motorsport and esports champions from all four corners of the world, including Formula One Champion Max Verstappen, who will be racing from Monaco, Formula 2 Champion Felipe Drugovich in Brazil and Formula 3 Champion Victor Martins in France, who will join IndyCar’s Romain Grosjean and Felix Rosenqvist, plus a host of real world and esports racing stars ready to take on the world’s greatest virtual endurance race.
The storied Silverstone racing track in the UK will be the host venue for a special, live TV show covering this unique two-day event, and the studio will welcome an expert commentary team made up of FIA World Endurance Championship lead commentator Martin Haven, real world racing and esports experts Chris McCarthy and Lewis McGlade, plus highly experienced motorsport commentator Ben Constanduros. A number of “pitlane” reporters will be based around the world to capture interviews and live action including Hayley Edmonds in Paris and current WEC competitor, 2020 Le Mans Virtual driver and FIA F2 and F3 commentator Alex Brundle in the UK.
The 180 competitors – representing 41 different nationalities – piloting the 45 cars (4 drivers in each car in rotation over the 24 hours) will be located on 164 different simulators across the world, and the digital interest from a wide variety of international broadcasters fully reflects the spread of drivers and teams.
Eurosport will cover the full 2-day event live throughout its European regions on Eurosport Player, and global coverage will be on Motorsport.tv. With a large number of successful esports racers hailing from Eastern Europe, the twice-round-the-clock event will be shown live in Croatia (Max Sport), Poland (Motowizja FB and SportKlub), Slovakia (Arena) and Ukraine (Sports TV Ch2), while countries such as Malta (TVMSports+) and Turkey (BeIN) will also broadcast live coverage.
Motor Trend will cover the full race live in North America on its OTT service, while TYC in Mexico will show the first and last hour of the event within the populous country. Mnet SuperSport and Africa XP will take the broadcast live across Sub-Saharan and Pan-Africa regions, thus extending the coverage to four continents around the world. Finally, live coverage will be aired in Fiji (FBC) and Singapore (delayed) on Singtel.
In addition to the live airings above, a wide range of territories will show a special 52-minute highlights show after the event, and information about these broadcasters including CNBC, Disney/Fox in China and Sport 1 in India will be communicated in due course.
The ACO and FIA WEC’s official YouTube and social media channels will be showing all the action live from start to finish, as will the Le Mans Virtual Series official website (www.lemansvirtual.com). The broadcast begins at 12:15 GMT (13:15 CET/07:15 EST) and the famous French national flag will be dropped for the start of the biggest endurance esports event of the year at 13:00 GMT (8:00 EST / 14:00 CET).
For further information, graphics, images and results, see below. LMVS PORTAL Direct link: https://portal.motorsportgames.com/app/login – username: LMVS_2022 – password: LMVS2022
About Le Mans Virtual Series Le Mans Virtual Series is a global, elite esports series made up of five rounds which bring together endurance racing and sim racing’ top teams to compete on some of the world’s most famous racetracks. International FIA-licensed real-world drivers are teamed up with elite esports squads to take on endurance classics for a total prize fund of US$250,000, culminating in the prestigious 24 Hours of Le Mans Virtual. Le Mans Virtual Series is a joint venture between leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the world, Motorsport Games, and the Automobile Club de l’Ouest (ACO) – the creator and organizer of the world-famous 24 Hours of Le Mans and promoter of the FIA World Endurance Championship (FIA WEC).
Round 1
8 Hours of Bahrain, Bahrain
September 17, 2022
Round 2
4 Hours of Monza, Italy
October 8, 2022
Round 3
6 Hours of Spa, Belgium
November 5, 2022
Round 4
500 Miles of Sebring, USA
December 3, 2022
Round 5
24 Hours of Le Mans Virtual
January 14/15, 2023
About Motorsport Games: Motorsport Games, a Motorsport Network company, is a leading racing game developer, publisher and esports ecosystem provider of official motorsport racing series throughout the world. Combining innovative and engaging video games with exciting esports competitions and content for racing fans and gamers, Motorsport Games strives to make the joy of racing accessible to everyone. The Company is the officially licensed video game developer and publisher for iconic motorsport racing series across PC, PlayStation, Xbox, Nintendo Switch and mobile, including NASCAR, INDYCAR, 24 Hours of Le Mans and the British Touring Car Championship (“BTCC”), as well as the industry leading rFactor 2 and KartKraft simulations. rFactor 2 also serves as the official sim racing platform of Formula E, while also powering F1 Arcade through a partnership with Kindred Concepts. Motorsport Games is an award-winning esports partner of choice for 24 Hours of Le Mans, Formula E, BTCC, the FIA World Rallycross Championship and the eNASCAR Heat Pro League, among others. Motorsport Games is building a virtual racing ecosystem where each product drives excitement, every esports event is an adventure and every story inspires.Forward-Looking Statements: Certain statements in this press release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements in this press release that are not statements of historical fact may be deemed forward-looking statements. Words such as “continue,” “will,” “may,” “could,” “should,” “expect,” “expected,” “plans,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” and similar
With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
1Q23 Preliminary Revenues. RCI reported preliminary 1Q23 revenue for the Nightclubs and Bombshells. Total revenues of $69.2 million were up 13.3% year-over-year. Y-o-Y SSS were off 2.7%, but were up 8.6% compared to 1Q20, or prior to any COVID related impacts.
Nightclubs. Revenue of $55.9 million was up 20.7% y-o-y, with SSS up 1.2% y-o-y and up 10.0% from 1Q20. Nightclub sales remained high, reflecting strong contributions from acquisitions, increased VIP spend at many of the northern clubs, and reopened/reformatted clubs, all of which more than offset intermittent softness at some blue collar clubs compared to a year-ago.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Record-breaking revenue performance bolstered by TTM Same Store Sales Growth of approximately 48% year over year1
TTM revenue exceeds the $878 million revenue projection from December 2021 go-public transaction by more than $122 million or 14%
MoneyBowl™, the Company’s proprietary skill-based gamification app, is expected to be active in 27 centers by January 13, 2023, and is already operational in 16 locations
Bowlero added 40 bowling centers over the last 18 months, ending Q2 of FY23 with 326 locations
RICHMOND, Va.–(BUSINESS WIRE)– Bowlero Corp. (NYSE: BOWL) (“Bowlero” or the “Company”), the world’s largest owner and operator of bowling centers, today provided a preliminary business update covering activity through January 1, 2023, the close of its second quarter of fiscal year 2023.2
Bowling Center Trailing 13-week Revenue Growth Trend (Graphic: Business Wire)
The Company’s revenue exceeded $1.0 billion on a trailing twelve month basis, marking a major milestone in the Company’s history following record revenue generation throughout calendar year 2022. This performance was driven by strong ongoing demand for bowling, the country’s largest participatory sport, across the portfolio exemplified by Bowlero’s same store sales growth of approximately 48% year over year. In particular, the TTM revenue performance was fueled by dramatic year over year growth in events and continued strong performance from walk-in retail and leagues.
The Company’s deployment of Moneybowl™ continues to gain momentum, growing from two locations on November 16, 2022 to an expected 27 locations by January 13, 2023.
Bowling center additions remain a significant factor in driving total revenue growth. Since June 28, 2021, Bowlero has added 40 new centers and has grown its operating center count by 14%. Of the 40 centers added, two locations were new builds and 38 were acquisitions. The pipeline for new locations remains robust.
Thomas Shannon, Founder and Chief Executive Officer, stated, “The last twelve months have been transformational for Bowlero. Exceeding $1.0 billion in TTM revenue is a remarkable milestone for the Company, capping off a year of notable accomplishments. We ended December of 2022 with 326 locations, after continuing our robust unit addition plan. We launched MoneyBowl™, and it should be in pilot at 27 locations, almost ten percent of our footprint, by the end of this week. These accomplishments were almost unimaginable when we operated only six centers back in 2013, and they are a testament to our world-class team and our relentless pursuit of providing world-class experiences across our growing portfolio of nearly 330 centers and maximizing shareholder value.”
Bowling Center Trailing 13-week Revenue Growth Trend3
[Please see Bowling Center Trailing 13-week Revenue Growth Trend]
About Bowlero Corp.
Bowlero Corp. is the worldwide leader in bowling entertainment. With more than 325 bowling centers across North America, Bowlero Corp. serves nearly 30 million guests each year through a family of brands that includes Bowlero and AMF. Bowlero Corp. is also home to the Professional Bowlers Association, which boasts thousands of members and millions of fans across the globe. For more information on Bowlero Corp., please visit BowleroCorp.com.
Forward Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 that involve risk, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions and forecasts. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “confident,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. These forward-looking statements reflect our views with respect to future events as of the date of this press release and are based on our management’s current expectations, estimates, forecasts, projections, assumptions, beliefs and information. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. All such forward-looking statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this press release. It is not possible to predict or identify all such risks. These risks include, but are not limited to: the impact of COVID-19 pandemic and any future outbreaks of contagious diseases on our business; our ability to design and execute our business strategy; changes in consumer preferences and buying patterns; our ability to compete in our markets; the occurrence of unfavorable publicity; risks associated with long-term non-cancellable leases for our centers; our ability to retain key managers; risks associated with our substantial indebtedness and limitations on future sources of liquidity; our ability to carry out our expansion plans; our continued ability to produce content, build infrastructure and market Professional Bowlers Association (“PBA”) events; our ability to successfully defend litigation brought against us; our ability to adequately obtain, maintain, protect and enforce our intellectual property and proprietary rights and claims of intellectual property and proprietary right infringement, misappropriation or other violation by competitors and third parties; failure to hire and retain qualified employees and personnel; the cost and availability of commodities and other products we need to operate our business; cybersecurity breaches, cyber-attacks and other interruptions to our and our third-party service providers’ technological and physical infrastructures; catastrophic events, including war, terrorism and other conflicts; public health issues or natural catastrophes and accidents; changes in the regulatory atmosphere and related private sector initiatives; fluctuations in our operating results; economic conditions, including the impact of increasing interest rates, inflation and recession; and other risks, uncertainties and factors described under the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) by the Company on September 15, 2022, as well as other filings that the Company will make, or has made, with the SEC, such as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in other filings. We expressly disclaim any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
1Same-store sales are measured by comparing revenues for centers open for the entire duration of both the current and comparable measurement periods.
2Our independent registered public accounting firm has not completed its review of our results for our second quarter ended on January 1, 2023. The revenue amounts for this quarter are preliminary estimates of the results of operations that we expect to report for our second quarter ended on January 1, 2023. Our actual results may differ from these estimates due to the completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results for our second quarter are finalized.
3Revenue growth is calculated as the growth in Bowling Center Revenue compared to the comparable week during the pre-pandemic 52-week period beginning March 2019 and ending February 2020. Total Bowling Center Revenue (i) excludes media-related revenue and closed bowling centers from both current period and pre-pandemic and prior year periods and (ii) includes new bowling centers that have opened since March 2020. For weeks ending between September 26, 2021 and December 26, 2021, the percentages above are calculated by comparing each week to the comparable week in 2019. For weeks ending between January 2, 2022 and February 27, 2022, the percentages above are calculated by comparing each week to the comparable week in 2020. For weeks ending between March 6, 2022 and January 1, 2023, the percentages above are calculated by comparing each week to the comparable week in 2019. Total Bowling Center Revenue for each date is the 13-week rolling average of weekly Total Bowling Center Revenue. We use the 13-week rolling average because the revenue performance in individual weeks can be positively or negatively impacted by timing shift of holiday/sporting events, holidays moving to weekends, and extreme weather events. Data for all weeks following the close of the quarter ended on October 2, 2022 are preliminary and have not been audited or reviewed and are forward-looking statements based solely on information available to us as of the date of this announcement.
Entravision Communications Corporation is a diversified Spanish-language media company utilizing a combination of television and radio operations to reach Hispanic consumers across the United States, as well as the border markets of Mexico. Entravision owns and/or operates 53 primary television stations and is the largest affiliate group of both the top-ranked Univision television network and Univision’s TeleFutura network, with television stations in 20 of the nation’s top 50 Hispanic markets. The Company also operates one of the nation’s largest groups of primarily Spanish-language radio stations, consisting of 48 owned and operated radio stations.
Michael Kupinski, Director of Research, Noble Capital Markets, Inc.
Patrick McCann, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Founder & CEO, Walter Ulloa passes. The company announced that founding CEO and Chairman of the Board of Directors, Walter Ulloa, died on December 31, 2022, of a sudden heart attack. The board appointed CFO Chris Young as interim CEO while it begins its search for a new CEO.
Legacy of dynamic leadership. Mr. Ulloa served as chairman and CEO since cofounding the company in 1996. He led the company’s expansion as a Spanish language broadcaster and oversaw its more recent transition to a digital media company with a global presence.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
SANTA MONICA, Calif.–(BUSINESS WIRE)– Entravision (NYSE: EVC), a leading global advertising solutions, media and technology company, today announced that Walter F. Ulloa, the Company’s Chairman and Chief Executive Officer, passed away of a sudden heart attack on December 31, 2022. He was 74 years old.
Entravision’s Board of Directors issued the following statement:
“We are profoundly saddened by the sudden passing of Walter Ulloa and extend our heartfelt condolences to Walter’s wife, son and entire family. Since founding Entravision more than 25 years ago, Walter has been an exceptional leader who transformed the company from a traditional multi-linear Spanish-language company that currently owns and operates approximately 100 domestic television and radio stations, to a global digital media powerhouse with a footprint that today reaches across more than 40 countries. Well-known and respected throughout the media industry, Walter’s passion, energy, and devotion to our company will be greatly missed. We have lost a leader and a friend.
Thanks to Walter’s dynamic leadership, Entravision has assembled an experienced management team that will continue to drive the company’s long-term growth strategy as we serve our customers, our partners, and our shareholders.”
The Board also announced today that it has appointed Chris Young, Chief Financial Officer and Treasurer, as Interim Chief Executive Officer, effective immediately. Mr. Young has over two decades of experience in banking and corporate finance across the media, advertising and technology industries and has served as Treasurer and CFO of Entravision since 2008. He originally joined Entravision in August 2000 as CFO of the Company’s outdoor advertising division, of which he became President in February 2004 prior to the division’s sale in May 2008.
The Board of Directors will continue to meet to discuss matters related to the orderly transition and is currently conducting a search for a full-time replacement for the role of Chief Executive Officer.
Mr. Ulloa was a visionary in Spanish language broadcasting with nearly five decades of experience in television, radio and digital media. He co-founded Entravision in 1996, becoming the Chairman and Chief Executive Officer of the Company, roles he held until his passing. Mr. Ulloa served as director and Chairman of Entravision’s Board of Directors since February 2000. From 1976 to 1989, Mr. Ulloa worked at KMEX-TV, Los Angeles, California as Operations Manager, Production Manager, News Director, Local Sales Manager and Account Executive. This was followed by seven successful years in development, management and ownership of Entravision’s predecessor entities.
About Entravision
Entravision is a leading global advertising, media and ad-tech solutions company connecting brands to consumers by representing top platforms and publishers. Our dynamic portfolio includes digital, television and audio offerings. Digital, our largest revenue segment, is comprised of four business units: our digital sales representation business; Smadex, our programmatic ad purchasing platform; our branding and mobile performance solutions business; and our digital audio business. Through our digital sales representation business, we connect global media companies such as Meta, Twitter, TikTok and Spotify with advertisers in primarily emerging growth markets worldwide. Smadex is our mobile-first demand side platform, enabling advertisers to execute performance campaigns using machine learning. We also offer a branding and mobile performance solutions business, which provides managed services to advertisers looking to connect with global consumers, primarily on mobile devices, and our digital audio business provides digital audio advertising solutions for advertisers in the Americas. In addition to digital, Entravision has 49 television stations and is the largest affiliate group of the Univision and UniMás television networks. Entravision also manages 45 primarily Spanish-language radio stations that feature nationally recognized, Emmy award-winning talent. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn and Facebook.
Forward-Looking Statements
This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company’s filings with the Securities and Exchange Commission.
With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
4Q22 Operating Results. RCI recorded revenue of $71.4 million for 4Q22, up 29.9% y-o-y. Adjusted EBITDA in the quarter was $24.2 million, up 37.8% y-o-y and net income rose 361.4% to $10.6 million. EPS was $1.15 and adjusted EPS was $1.45, down 8.2% y-o-y due to a much higher tax rate this year. We had forecast revenue of $68.5 million, adjusted EBITDA of $21 million, and EPS of $1.27.
Segments. Acquisitions drove Nightclubs top line up 40.4% to $56.6 million in the quarter, SSS were up 3.2%. Non-GAAP operating margin was 41.6%, driven by a 53.6% increase in high margin service revenue. Bombshells revenues of $14 million were down slightly from $14.4 million a year ago, SSS were off 13.3%. Operating margin was 18%, ex one time start up costs for the San Antonio location.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
The E.W. Scripps Company (NASDAQ: SSP) is a diversified media company focused on creating a better-informed world. As one of the nation’s largest local TV broadcasters, Scripps serves communities with quality, objective local journalism and operates a portfolio of 61 stations in 41 markets. The Scripps Networks reach nearly every American through the national news outlets Court TV and Newsy and popular entertainment brands ION, Bounce, Defy TV, Grit, ION Mystery, Laff and TrueReal. Scripps is the nation’s largest holder of broadcast spectrum. Scripps runs an award-winning investigative reporting newsroom in Washington, D.C., and is the longtime steward of the Scripps National Spelling Bee. Founded in 1878, Scripps has held for decades to the motto, “Give light and the people will find their own way.”
Michael Kupinski, Director of Research, Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Launches new sports division. Management believes that sports broadcasting is the most valuable asset in the linear TV market and will be implementing a two prong approach for its national and local strategy. The company believes it can provide a unique value proposition for both a local/regional and a national strategy.
Serves a growing viewership gap. Due to cable cord cutting, the Regional Sports Networks have seen a significant decline in viewership. In many cities, 40% to 50% of the households are not watching cable or satellite. The company’s local strategy will focus on markets where it currently operates two or more stations, furthering its reach in those markets. Management highlighted Phoenix and Detroit as two markets it would be interested in for local sports rights.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Acquisitions. Yesterday, RCI Hospitality announced an agreement to acquire five gentlemen’s clubs, two Baby Dolls, one in Dallas and one in Forth Worth, and three Chicas Locas, one each in Arlington, Dallas, and Houston. The proposed acquisition is the second largest in RCI’s history and one of the largest in the nightclub industry.
Details. RCI is paying $66.5 million for the clubs and associated real estate. The $66.5 million breaks out to $25 million in cash, $25.5 million of 10-year 7% seller notes, and 200,000 restricted shares of stock based on a per share price of $80. The clubs are expected to contribute approximately $11 million of EBITDA in year one, growing to $14-$16 million annually once remodeling and expansion projects are complete.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
SANTA MONICA, Calif.–(BUSINESS WIRE)– Smadex, an Entravision company (NYSE: EVC), is delighted to welcome Phil Gontier as Chief Revenue Officer. Phil joins Smadex following six years of leading Liftoff to become one of the largest global programmatic ad platforms for Apps, Games and Brands. Blackstone took a majority stake in Liftoff in 2021.
Previously, Phil was Head of Mobile for Twitter EMEA, leading a team focused on servicing the needs of top global brands and apps. He joined Twitter through the TapCommerce acquisition and was instrumental in accelerating the growth of Twitter’s mobile ad business in EMEA by more than 2,000% within a two-year period.
“We are thrilled to have Phil Gontier join the Smadex and Entravision family. Having Phil on board is a validation of our growth potential. He brings a wealth of global commercial go-to-market experience as well as trusted relationships across the App, Gaming and AdTech ecosystem,” said Jordi de los Pinos, Founder and CEO of Smadex. “With his proven track record of successfully growing global businesses, I am excited to work with Phil and take Smadex to the next level.”
As Chief Revenue Officer, Phil will focus on accelerating Smadex’s Global Growth. He will lead and spearhead an established team in the US, Europe and Asia, in addition to attracting additional talent.
“On a personal and professional level, it’s always about the people, relationships and impact,” said Phil Gontier. “I spoke with trusted connections, including customers of Smadex, and felt strongly about the opportunity to make a tangible impact by helping to spearhead and accelerate the growth of Smadex. Smadex’s parent company, Entravision, has strong financials and is committed to investing in growth. This gives me tremendous confidence in our ability to execute, while tapping into synergies that will bring value to customers across Entravision’s digital and traditional media footprint.”
About Smadex
Smadex is a Programmatic Growth Platform that powers performance, direct response and brand advertising campaigns across in-app, mobile web, audio and CTV. With transparency and contextual targeting at its core, customers can rely on Smadex as a trusted partner to run privacy-centric advertising campaigns with optimized creative strategies to deliver performance. Smadex scales campaigns with advanced machine learning algorithms that are customizable – fed by a multitude of contextual signals and first-party data to find audiences that resonate and convert for your app, game, brand or offer. We are focused on helping customers unlock performance and scale in a privacy compliant manner to build long term sustainable value. Smadex is a business unit of Entravision.
About Entravision
Entravision is a leading global advertising, media and ad-tech solutions company connecting brands to consumers by representing top platforms and publishers. Our dynamic portfolio includes digital, television and audio offerings. Digital, our largest revenue segment, is comprised of four business units: our digital sales representation business; Smadex, our programmatic ad purchasing platform; our branding and mobile performance solutions business; and our digital audio business. Through our digital sales representation business, we connect global media companies such as Meta, Twitter, TikTok and Spotify with advertisers in primarily emerging growth markets worldwide. Smadex is our mobile-first demand side platform, enabling advertisers to execute performance campaigns using machine learning. We also offer a branding and mobile performance solutions business, which provides managed services to advertisers looking to connect with global consumers, primarily on mobile devices, and our digital audio business provides digital audio advertising solutions for advertisers in the Americas. In addition to digital, Entravision has 49 television stations and is the largest affiliate group of the Univision and UniMás television networks. Entravision also manages 45 primarily Spanish-language radio stations that feature nationally recognized, Emmy award-winning talent. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn and Facebook.
Forward-Looking Statements
This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company’s filings with the Securities and Exchange Commission.
