Bay Street News

Banzai Reports Third Quarter 2024 Financial Results; Annualized Adjusted Net Loss Improvement of $12.2 Million

Bay Street

Q3 2024 Annual Recurring Revenue Increased by 31% Annualized to $4.4 Million, a 7% Sequential Increase from Q2 2024

Q3 2024 Annualized Adjusted Net Loss Improved by $12.2 Million, a $3.0 Million Sequential Increase to ($1.45) Million, Bringing the Company Closer to Profitability

Management to Host Third Quarter 2024 Results Conference Call Today, November 14, 2024 at 5:30 p.m. Eastern Time

SEATTLE, Nov. 14, 2024 (GLOBE NEWSWIRE) — Banzai International, Inc. (NASDAQ: BNZI) (“Banzai” or the “Company”), a leading marketing technology company that provides essential marketing and sales solutions, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Key Financial & Operational Highlights

Outlook

“It is hard to overstate how important the third quarter of 2024 was for Banzai,” said Joe Davy, Founder and CEO of Banzai. “We believe this marks a turning point for the Company in many ways. Banzai achieved a 31% annualized Annual Recurring Revenue growth rate and a historic record for Net Revenue Retention. We also made game-changing improvements to our balance sheet and cost structure to set us up for sustainable profitability in the future. Growth was driven by our focus on the Reach product through re-engineering and expanded sales efforts, leading to the addition of 1,785 customers through October 2024. In total, we now serve nearly 3,000 customers that have contributed to top and bottom-line sequential improvements from the second quarter.

“To better serve our customers, we have continued to invest in our software platforms and growth. We’ve launched a new product, Curate, to bring AI-powered newsletters that leverage OpenAI’s GPT-4o to automate the newsletter creation process by writing relevant, branded articles that resonate with target audiences. We added significant enhancements to our Demio platform through deeper integration with Salesforce, the industry leading AI CRM company, with key enhancements designed to maximize efficiency and insight, offering marketers a more scalable, data-rich experience. We also released a major improvement to the Demio HubSpot integration. This upgrade offers unparalleled flexibility and efficiency in managing webinar data, empowering marketers to streamline their webinar management and marketing efforts, leading to better decision-making and higher ROI.

“Alongside a $5.0 million private placement transaction and debt restructuring transactions we executed, we implemented a strategic initiative that we expect will enable us to significantly improve net income, substantially extend our cash runway and invest in growth. We are making significant progress on these goals and overall improvement in net income is expected to be approximately $12.2 million annually when fully implemented, while maintaining our growth outlook.

“Looking ahead, our ability to leverage deep analytics and insights to drive marketing decisions combined with leveraging AI to launch exciting new products and capabilities, will continue to drive growth. We will continue to manage costs efficiently while investing in our software platform, sales and marketing and product development. We look forward to additional updates on our anticipated milestones in the weeks and months to come,” concluded Davy.

Third Quarter 2024 Financial Results

Banzai believes its non-GAAP financial measure ARR is more meaningful in evaluating its performance. The Company’s management team evaluates its financial and operating results utilizing this non-GAAP measure. For the three months ended September 30, 2024, ARR increased 7% sequentially, representing a 31% annualized ARR growth rate.

Total revenue for the three months ended September 30, 2024, was $1.1 million, a sequential increase of 0.5% from the three months ended June 30, 2024, and a decrease of 2.5% compared to the prior year quarter.

Total cost of revenue for the three months ended September 30, 2024 was $0.3 million, compared to $0.3 million in the prior year quarter, a decrease of 1%. The decrease was proportional to the revenue for the corresponding period.

Gross profit for the three months ended September 30, 2024, was $0.7 million, compared to $0.8 million in the prior year quarter. Gross margin was 68.7% in the third quarter of 2024, compared to 69.2% in the third quarter of 2023.

Total operating expenses for the three months ended September 30, 2024, were $3.5 million, compared to $2.8 million in the prior year quarter.

Net loss for the three months ended September 30, 2024, was $8.5 million, compared to $0.8 million in the prior year quarter. The greater net loss is primarily due to the change in fair valuation of various financial instruments related to the debt restructuring in the third quarter of 2024, which increased by approximately $14.5 million over the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. These non-cash valuation charges do not represent present or future cash obligations of the Company, and as a result, the Company believes Adjusted Net Loss is a better representation of the financial performance of the company for the third quarter 2024.

Adjusted Net Loss for the three months ended September 30, 2024, was ($1.45) million, compared to ($3.6) million in the prior year quarter. This improvement was driven by improvements to the Company’s efficiency and by write-off agreements entered into for certain liabilities, substantially reducing the Company’s current and future cash liabilities.

Adjusted EBITDA Loss for the three months ended September 30, 2024, was ($1.5) million, compared to Adjusted EBITDA Loss of ($2.0) million for the prior year quarter, representing an improvement of $0.5 million.

Nine Month 2024 Financial Results

Total revenue for the nine months ended September 30, 2024 and 2023, was $3.2 million and $3.5 million, respectively, a decrease of 7.2%. This decrease is primarily attributable to lower Reach revenue which declined by approximately $44 thousand due to the discontinuation of the legacy Reach 1.0 product, which was discontinued on December 31, 2023. In 2024, Banzai has revitalized its focus on the Reach product through re-engineering and expanded sales efforts. Demio revenue was lower by approximately $0.2 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due to lower new unit sales period-over-period, due to the company’s strategic shift to focus on mid-market customers, which the Company hopes will ultimately result in higher Average Customer Value and Net Retention Rate for the Demio product. Demio Net Revenue Retention reached an all-time historic high in the three months ended September 30, 2024.

Cost of revenue for the nine months ended September 30, 2024 and 2023 was $1.0 million and $1.1 million, respectively. This represents a decrease of approximately $84 thousand, or approximately 7.4%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This decrease is due primarily to the company’s focus on Mid-Market customers that led to an approximately 12% higher average cost per customer, driven by the increase in the streaming services costs of approximately $150 thousand that were offset by lower infrastructure costs / data licenses of approximately $117 thousand, payroll and contracted services of approximately $98 thousand, and merchant fee costs of approximately $12 thousand.

Gross profit for the nine months ended September 30, 2024 and 2023 was $2.2 million and $2.3 million, respectively. This represents a decrease of approximately $167 thousand, or approximately 7.1%, which was due to the decreases in revenue of approximately $251 thousand and decreases in cost of revenue of approximately $84 thousand described above. Gross margin for the nine months ended September 30, 2024 and 2023 was 67.5% and 67.4%, respectively.

Total operating expenses for the nine months ended September 30, 2024 and 2023, were $11.7 million and $8.9 million, respectively, an increase of 31.1%. This increase was due primarily to an overall increase in salaries and related expenses by approximately $0.3 million, marketing expenses by approximately $0.6 million, costs associated with audit, technical accounting, and legal and other professional services of approximately $1.6 million. The company has implemented a plan to reduce annualized operating expenses by up to $13.5 million by the end of the first quarter 2025.

Net loss for the nine months ended September 30, 2024 and 2023, was $23.7 million and $8.0 million, respectively. The greater net loss is primarily due to an increase in total other expenses of approximately $12.6 million, an increase in operating expenses of approximately $2.8 million, and a decrease in gross profit of approximately $0.2 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Adjusted Net Loss for the nine months ended September 30, 2024 and 2023, was ($10.0)

million and ($10.0) million, respectively.

Net cash used in operating activities for the nine months ended September 30, 2024, was $11.9 million, compared to $5.8 million for the nine months ended September 30, 2023.

Cash totaled $4.3 million as of September 30, 2024, compared to $2.1 million as of December 31, 2023, representing a historic high.

End-of-Year 2024 Target

Banzai targets December 2024 ARR to be $8.1 – $10 million, based on the Company’s March 2024 ARR, organic growth during the year as demonstrated by year-to-date 2024 customer wins and reactivations, and currently signed non-binding LOIs to acquire other marketing technology businesses.

The midpoint target, or $9.1 million, foresees a 97% increase in ARR, which would be attributable to both organic growth and the acquisitions currently under LOI. Banzai’s management anticipates tracking the Company’s progress to its targeted December 2024 ARR as part of the Company’s 2024 quarterly earnings reports.

Annual recurring revenue refers to revenue, normalized on an annual basis, that Banzai expects to receive from its customers for providing them with products or services. The December 2024 ARR information provided above is based on Banzai’s current estimates of internal growth, the completion of acquisitions, and those companies contributing ARR based on current levels, and is not a guarantee of future performance. These statements are forward-looking and actual ARR may differ materially. Refer to the “Forward-Looking Statements” section below for information on the factors that could cause Banzai’s actual ARR to differ materially from these forward-looking statements.

Third Quarter 2024 Results Conference Call

Banzai Founder & CEO Joe Davy and Interim CFO Alvin Yip will host the conference call, followed by a question-and-answer session. The conference call will be accompanied by a presentation, which can be viewed during the webcast or accessed via the investor relations section of the Company’s website here.

To access the call, please use the following information:

Date: Thursday, November 14, 2024
Time: 5:30 p.m. Eastern Time, 2:30 p.m. Pacific Time
Toll-free dial-in number: 1-877-425-9470
International dial-in number: 1-201-389-0878
Conference ID: 13749747
   

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235.

The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1694251&tp_key=65eec38e9b and via the investor relations section of the Company’s website here.

A replay of the webcast will be available after 9:30 p.m. Eastern Time through February 14, 2025.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13749747
   

About Banzai

Banzai is a marketing technology company that provides essential marketing and sales solutions for businesses of all sizes. On a mission to help their customers achieve their mission, Banzai enables companies of all sizes to target, engage, and measure both new and existing customers more effectively. Banzai customers include Square, Hewlett Packard Enterprise, Thermo Fisher Scientific, Thinkific, Doodle and ActiveCampaign, among thousands of others. Learn more at www.banzai.io. For investors, please visit https://ir.banzai.io.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often use words such as “believe,” “may,” “will,” “estimate,” “target,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “propose,” “plan,” “project,” “forecast,” “predict,” “potential,” “seek,” “future,” “outlook,” and similar variations and expressions. Forward-looking statements are those that do not relate strictly to historical or current facts. Examples of forward-looking statements may include, among others, statements regarding Banzai International, Inc.’s (the “Company’s”): future financial, business and operating performance and goals; annualized recurring revenue and customer retention; ongoing, future or ability to maintain or improve its financial position, cash flows, and liquidity and its expected financial needs; potential financing and ability to obtain financing; acquisition strategy and proposed acquisitions and, if completed, their potential success and financial contributions; strategy and strategic goals, including being able to capitalize on opportunities; expectations relating to the Company’s industry, outlook and market trends; total addressable market and serviceable addressable market and related projections; plans, strategies and expectations for retaining existing or acquiring new customers, increasing revenue and executing growth initiatives; and product areas of focus and additional products that may be sold in the future. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements. Therefore, investors should not rely on any of these forward-looking statements. Factors that may cause actual results to differ materially include changes in the markets in which the Company operates, customer demand, the financial markets, economic, business and regulatory and other factors, such as the Company’s ability to execute on its strategy. More detailed information about risk factors can be found in the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q under the heading “Risk Factors,” and in other reports filed by the Company, including reports on Form 8-K. The Company does not undertake any duty to update forward-looking statements after the date of this press release.

Investor Relations
Chris Tyson
Executive Vice President
MZ Group – MZ North America
949-491-8235
BNZI@mzgroup.us
www.mzgroup.us

Media
Rachel Meyrowitz
Director, Demand Generation, Banzai
media@banzai.io

BANZAI INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
             
    September 30, 2024     December 31, 2023  
    (Unaudited)        
ASSETS            
Current assets:            
Cash   $ 4,263,567     $ 2,093,718  
Accounts receivable, net of allowance for credit losses of $5,694 and $5,748, respectively     37,386       105,049  
Prepaid expenses and other current assets     753,746       741,155  
Total current assets     5,054,699       2,939,922  
             
Property and equipment, net     918       4,644  
Goodwill     2,171,526       2,171,526  
Operating lease right-of-use assets     2,386       134,013  
Other assets     38,381       38,381  
Total assets     7,267,910       5,288,486  
             
LIABILITIES AND STOCKHOLDERS’ DEFICIT            
Current liabilities:            
Accounts payable     9,997,052       6,439,863  
Accrued expenses and other current liabilities     3,633,072       5,194,240  
Convertible notes (Yorkville)     —       1,766,000  
Convertible notes – related party     —       2,540,091  
Convertible notes     3,517,742       2,693,841  
Notes payable     7,083,905       6,659,787  
Notes payable – related party     —       2,505,137  
Notes payable, carried at fair value     1,393,592       —  
Deferred underwriting fees     4,000,000       4,000,000  
Deferred fee     —       500,000  
Warrant liability     79,000       641,000  
Warrant liability – related party     230,000       575,000  
Earnout liability     37,125       59,399  
Due to related party     167,118       67,118  
GEM commitment fee liability     —       2,000,000  
Deferred revenue     1,220,572       1,214,096  
Operating lease liabilities, current     2,352       234,043  
Total current liabilities     31,361,530       37,089,615  
             
Other long-term liabilities     75,000       75,000  
Total liabilities     31,436,530       37,164,615  
             
Commitments and contingencies (Note 14)            
             
Stockholders’ deficit:            
Common stock, $0.0001 par value, 275,000,000 shares authorized and 3,760,174 and 2,585,297 issued and outstanding at September 30, 2024 and December 31, 2023, respectively     410       259  
Preferred stock, $0.0001 par value, 75,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2024 and December 31, 2023     —       —  
Additional paid-in capital     39,297,867       14,889,936  
Accumulated deficit     (63,466,897 )     (46,766,324 )
Total stockholders’ deficit     (24,168,620 )     (31,876,129 )
Total liabilities and stockholders’ deficit   $ 7,267,910     $ 5,288,486  
                 
BANZAI INTERNATIONAL, INC.
Unaudited Condensed Consolidated Statements of Operations
             
    For the Three Months
Ended September 30,		     For the Nine Months
Ended September 30,		  
    2024     2023     2024     2023  
Operating income:                        
Revenue   $ 1,080,607     $ 1,108,412     $ 3,228,276     $ 3,478,794  
Cost of revenue     338,023       341,151       1,049,411       1,132,671  
Gross profit     742,584       767,261       2,178,865       2,346,123  
                         
Operating expenses:                        
General and administrative expenses     2,942,008       2,838,052       11,569,951       8,937,265  
Depreciation expense     900       1,571       3,725       5,596  
Total operating expenses     2,942,908       2,839,623       11,573,676       8,942,861  
                         
Operating loss     (2,200,324 )     (2,072,362 )     (9,394,811 )     (6,596,738 )
                         
Other expenses (income):                        
GEM settlement fee expense     60,000       —       260,000       —  
Other expense (income), net     (62,927 )     14,114       (2,900 )     (70,569 )
Interest income     —       —       (10 )     (111 )
Interest expense     495,679       820,096       1,343,097       1,879,394  
Interest expense – related party     589,614       678,398       1,552,601       1,614,085  
Gain on extinguishment of liability     (22,282 )     —       (550,262 )     —  
Loss on debt issuance     —       —       171,000       —  
Loss on debt issuance of term notes     381,000       —       381,000       —  
Loss on debt issuance of convertible notes     —       —       —       —  
Loss on conversion and settlement of Alco promissory notes     4,808,882       —       4,808,882       —  
Loss on conversion and settlement of CP BF notes     —       —       —       —  
Change in fair value of warrant liability     —       —       (562,000 )     —  
Change in fair value of warrant liability – related party     —       —       (345,000 )     —  
Change in fair value of simple agreement for future equity     —       (276,436 )     —       (184,993 )
Change in fair value of simple agreement for future equity – related party     —       (3,139,564 )     —       (1,927,007 )
Change in fair value of bifurcated embedded derivative liabilities     —       198,728       —       36,500  
Change in fair value of bifurcated embedded derivative liabilities – related party     —       413,272       —       72,359  
Change in fair value of convertible notes     (77,000 )     —       501,000       —  
Change in fair value of term notes     66,813       —       66,813       —  
Change in fair value of convertible bridge notes     —       —       —       —  
Yorkville prepayment premium expense     14,000       —       94,760       —  
Total other expenses (income), net     6,253,779       (1,291,392 )     7,718,981       1,419,658  
Loss before income taxes     (8,454,103 )     (780,970 )     (17,113,792 )     (8,016,396 )
Income tax expense     1,010       1,332       6,701       17,081  
Net loss   $ (8,455,113 )   $ (782,302 )   $ (17,120,493 )   $ (8,033,477 )
                         
Net loss per share                        
Basic and diluted   $ (2.68 )   $ (0.33 )   $ (5.99 )   $ (3.36 )
                         
Weighted average common shares outstanding                        
Basic and diluted     3,150,057       2,394,122       2,857,350       2,394,067  
                                 
BANZAI INTERNATIONAL, INC.
Unaudited Condensed Consolidated Statements of Cash Flow
       
    For the Nine Months Ended September 30,  
    2024     2023  
Cash flows from operating activities:            
Net loss   $ (17,120,493 )   $ (8,033,477 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Depreciation expense     3,726       5,596  
Provision for credit losses on accounts receivable     54       3,879  
Non-cash share issuance for marketing expenses     —       —  
Non-cash settlement of GEM commitment fee     200,000       —  
Non-cash share issuance for Yorkville redemption premium     —       —  
Non-cash interest expense     379,354       914,944  
Non-cash interest expense – related party     261,775       345,382  
Amortization of debt discount and issuance costs     68,459       646,684  
Amortization of debt discount and issuance costs – related party     873,728       1,268,703  
Amortization of operating lease right-of-use assets     131,627       129,705  
Stock based compensation expense     665,409       830,791  
Gain on extinguishment of liability     (550,262 )     —  
Loss on debt issuance     171,000       —  
Loss on debt issuance of term notes     381,000       —  
Loss on debt issuance of convertible notes     —       —  
Change in fair value of warrant liability     (562,000 )     —  
Change in fair value of warrant liability – related party     (345,000 )     —  
Change in fair value of simple agreement for future equity     —       (184,993 )
Change in fair value of simple agreement for future equity – related party     —       (1,927,007 )
Change in fair value of bifurcated embedded derivative liabilities     —       36,500  
Change in fair value of bifurcated embedded derivative liabilities – related party     —       72,359  
Change in fair value of convertible promissory notes     501,000       —  
Change in fair value of term notes     66,813       —  
Change in fair value of convertible bridge notes     —       —  
Changes in operating assets and liabilities:            
Accounts receivable     67,609       (29,861 )
Deferred contract acquisition costs, current     —       48,191  
Prepaid expenses and other current assets     (12,591 )     120,459  
Deferred offering costs     —       (766,409 )
Accounts payable     3,557,189       1,296,098  
Deferred revenue     6,476       (39,428 )
Accrued expenses     (432,073 )     (128,027 )
Operating lease liabilities     (231,691 )     (211,204 )
Earnout liability     (22,274 )     (206,985 )
Net cash used in operating activities     (11,941,165 )     (5,808,100 )
Cash flows from financing activities:            
Payment of GEM commitment fee     (1,200,000 )     —  
Repayment of convertible notes (Yorkville)     (750,000 )     —  
Proceeds from related party advance     100,000       —  
Proceeds from term notes, net of issuance costs     1,000,000       —  
Repayment of notes payable, carried at fair value     (412,421 )     —  
Proceeds from Yorkville redemption premium     35,040       —  
Proceeds from issuance of promissory notes – related party     —       1,150,000  
Proceeds from issuance of convertible notes, net of issuance costs     2,502,000       1,485,000  
Proceeds from issuance of convertible notes, net of issuance costs – related party     —       2,533,000  
Proceeds received for exercise of Pre-Funded warrants     17       —  
Proceeds from issuance of common stock and warrants     6,257,370       13,362  
Net cash provided by financing activities     7,532,006       5,181,362  
Net decrease in cash     (4,409,159 )     (626,738 )
Cash at beginning of period     2,093,718       1,023,499  
Cash at end of period   $ (2,315,441 )   $ 396,761  
Supplemental disclosure of cash flow information:            
Cash paid for interest     306,109       313,813  
Cash paid for taxes     5,075       8,825  
Non-cash investing and financing activities            
Shares issued to Roth for advisory fee     578,833       —  
Shares issued to GEM     529,943       —  
Shares issued for marketing expenses     334,772       —  
Shares issued to MZHCI for investor relations services     94,800       —  
Shares issued to J.V.B for payment of outstanding debt     115,000       —  
Settlement of GEM commitment fee     200,000       —  
Shares issued to Yorkville for commitment fee     500,000       —  
Shares issued to Yorkville for redemption premium     115,800        
Shares issued for exercise of Pre-Funded warrants     866        
Issuance of convertible promissory note – GEM     1,000,000       —  
Conversion of convertible notes – Yorkville     2,002,000       —  
Conversion of convertible notes – related party     2,540,091       —  
Bifurcated embedded derivative liabilities at issuance     —       623,065  
Bifurcated embedded derivative liabilities at issuance—related party     —       1,062,776  
                 


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