COS COB, Conn., Aug. 13, 2020 (GLOBE NEWSWIRE) — Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE), one of the largest operators of streaming advertising-supported video-on-demand (AVOD) networks, today announced its financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Financial SummaryGross revenue of $13.9 million, compared to $12.2 million in the year-ago period.Net loss of $10.0 million compared to net loss of $5.9 million in the year-ago period; $9.0 million net loss before preferred dividends, compared to $5.1 million net loss before preferred dividends in the year-ago period.Adjusted EBITDA was $2.7 million, compared to $1.3 million in the year-ago period. Year-to-date Adjusted EBITDA increased approximately 10x over year-to-date 2019 results.Online networks, which include Crackle and Popcornflix, generated $5.4 million in net revenue compared to $10.0 million in the year-ago period. The year-over-year decline reflects the absence of approximately $4.0 million in advertising revenue in the 2020 period due to the closing of Playstation Vue, the elimination of $1.2 million of intercompany revenue share payments to our Distribution & Production business, and the weaker 2020 advertising market environment.Distribution & Production generated $8.5 million in revenue, compared to $2.2 million in the year-ago period due to strength in the performance of Screen Media’s content on Crackle Plus and TVOD revenue.Recent Business HighlightsOriginal & Exclusive content represented 17.5% of total viewing on Crackle Plus in the quarter up from 15% last quarter and 0% a year ago, reflecting the company’s strategic focus on original programming.Continued to expand pipeline of Original & Exclusive content. Crackle Plus is fully programmed into early 2021 despite industry production delays and has announced agreements including 200 hours of new original and exclusive programming.Acquired an in-process next-generation technology platform to support delivery and growth of AVOD networks from Sony for $4.6 million; acquisition will enable Chicken Soup for the Soul Entertainment to accelerate completion of platform, which will improve service and drive ongoing operating cost efficiencies beginning immediately.Increased liquidity through bond issuance that raised an aggregate principal amount of more than $22.1 million after underwriters exercised their over-allotment option.“Despite a challenging Q2 advertising market, we were able to exceed top line expectations and increase our EBITDA by 10-fold for the six months ended June 30, 2020 on a year-over-year basis. Our results are validating our differentiated business model focused on Original & Exclusive content for our AVOD networks, and acquiring and producing that content cost-effectively through our combined Distribution and Production operations,” said William J. Rouhana Jr., chairman and chief executive officer of Chicken Soup for the Soul Entertainment. “Since establishing the Crackle Plus joint venture a little over a year ago, the execution of our strategic plan is going well, and we believe we now have a solid foundation on which to implement the next stages of our growth strategy, which include accelerating the rollout of our next generation technology platform, growing viewership through increased distribution relationships, and building audience and advertising revenue. While the pandemic adversely impacted us in the quarter and continues to create uncertainties, we have adapted and now have momentum and significant tailwinds to our performance potential in the second half of 2020.”Gross profit for the quarter ended June 30, 2020 was $0.6 million, or 4% of net revenue, compared to $3.6 million, or 30% of net revenue for the year-ago period. The change in the percentage of gross profit resulted in part from $6.4 million of non-cash amortization of the film library in the company’s traditional distribution business, which is required by GAAP to be included in cost of revenue. Without this non-cash film library amortization expense, the gross profit would have been $7.0 million or 51% of total net revenue.Operating loss for the quarter ended June 30, 2020 was $13.1 million, compared to an operating loss of $3.0 million for the year-ago period. Without this film library amortization expense, the operating loss would have been $6.7 million.Net loss was $10.0 million, or $0.83 per share, compared to a net loss of $5.9 million, or $0.49 per share in the prior-year second quarter. Excluding preferred dividends, the net loss in the second quarter of 2020 would have been $9.0 million, or $0.75 per share, compared to net loss of $5.1 million, or $0.43 per share last year.Adjusted EBITDA for the quarter ended June 30, 2020 was $2.7 million, compared to $1.3 million in the same period last year.As of June 30, 2020, the company had $4.7 million of cash and cash equivalents compared to $6.4 million at December 31, 2019, and outstanding debt of $18.6 million as of June 30, 2020 compared to $20.2 million as of December 31, 2019. The company completed debt and equity financings after the end of the second quarter that increased liquidity.For a discussion of the financial measures presented herein which are not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), see “Note Regarding Use of Non-GAAP Financial Measures” below and the schedules to this press release for additional information and reconciliations of non-GAAP financial measures.The company presents non-GAAP measures such as Adjusted EBITDA and Pro Forma Adjusted EBITDA to assist in an analysis of its business. These non-GAAP measures should not be considered an alternative to GAAP measures as an indicator of the company’s operating performance.Conference Call InformationDate, Time: Thursday, August 13, 2020, 4:30 p.m. ET.Toll-free: (833) 832-5128International: (484) 747-6583Conference ID: 6999674A live webcast and replay will be available at http://ir.cssentertainment.com/ under the “News & Events” tabConference Call Replay InformationToll-free: (855) 859-2056International: (404) 537-3406Conference ID: 6999674ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENT
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates streaming video-on-demand networks (VOD). The company owns a majority stake in Crackle Plus, a company formed with Sony Pictures Television, which owns and operates a variety of ad-supported and subscription-based VOD networks including Crackle, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media subsidiary and produces original long and short-form content through Landmark Studio Group, its Chicken Soup for the Soul Originals division and APlus.com. Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul, LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name.Note Regarding Use of Non-GAAP Financial Measures
The company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). It uses a non-GAAP financial measure to evaluate its results of operations and as a supplemental indicator of operating performance. The non-GAAP financial measure that is used is Adjusted EBITDA. Adjusted EBITDA (as defined below) is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Management believes this non-GAAP financial measure enhances the understanding of the company’s historical and current financial results and enables the board of directors and management to analyze and evaluate financial and strategic planning decisions that will directly affect operating decisions and investments. The presentation of Adjusted EBITDA should not be construed as an inference that future results will be unaffected by unusual or non-recurring items or by non-cash items. This non-GAAP financial measure should be considered in addition to, rather than as a substitute for, the company’s actual operating results included in its condensed consolidated financial statements.“Adjusted EBITDA” means earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation expense, and also includes the gain on bargain purchase of subsidiary and adjustments for other identified charges such as costs incurred to form the company and to prepare for the offering of its Class A common stock to the public, prior to its IPO. Identified charges also include the cost of maintaining a board of directors prior to being a publicly traded company. As the IPO has been completed, director fees will be deducted from Adjusted EBITDA going forward. Adjusted EBITDA is not an earnings measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP; accordingly, Adjusted EBITDA may not be comparable to similar measures presented by other companies. Management believes Adjusted EBITDA to be a meaningful indicator of the company’s performance that provides useful information to investors regarding its financial condition and results of operations. The most comparable GAAP measure is operating income.A reconciliation of net loss to Adjusted EBITDA is provided in the company’s Annual Report on Form 10-Q for the three and six month periods ended June 30, 2020 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Reconciliation of Unaudited Historical Results to Adjusted EBITDA.”FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks (including those set forth in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2020) and uncertainties which could cause actual results to differ from the forward-looking statements. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Investors should realize that if our underlying assumptions for the projections contained herein prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections.INVESTOR RELATIONS
Taylor Krafchik
Ellipsis
[email protected]
646-776-0886MEDIA CONTACT
Kate Barrette
RooneyPartners LLC
[email protected]
(212) 223-0561

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