Mr. Rob Chase reports

MEDIAVALET REPORTS FIRST QUARTER 2023 RESULTS

MediaValet Inc. has released its results for the three months ended March 31, 2023. All figures in Canadian dollars.

"Our first quarter performance shows a solid start to the year as we continue to both win exciting new customers and attain high net retention rates," commented Rob Chase, president and chief executive officer of MediaValet. "We continue to deliver sustainable growth in the face of challenging economic times and lengthening sales cycles which speaks to the resilience of the DAM market and to our differentiated leadership position. In addition, we welcome the increased purchasing process rigor, as it gives us an opportunity to showcase the value of DAM and MediaValet, and get buy-in, at a broad executive level. It is against this backdrop that we have reached an exciting milestone of surpassing 500 customers under contract. We believe we have the momentum and foundation in place to achieve the next 500 in less than half of the time."

Dave Miller, chief financial officer, added: "We have now achieved an important inflection point where our revenue growth is significantly outpacing our operating cost increases, and is accelerating our path towards profitability. This is apparent in our improved adjusted EBITDA loss, down 22 per cent from Q1 2022 and down 10 per cent from last quarter. We continue to employ an intense focus on operational excellence and cost optimization to drive strategic initiatives with the highest impact on revenue, gross margin and adjusted operating costs, and to pave the path to cash flow positive operations."

Key financial metrics:

• Revenue grew to $3.88-million in Q1 2023, up 38 per cent from $2.81-million in Q1 2022, and up 7 per cent sequentially from Q4 2022. The increases are due strong new customer acquisition net dollar retention from existing customers, and the impact of a strong United States dollar.
• Grew ARR (annual recurring revenue) to $15.52-million, an increase of 29 per cent compared with $11.99-million at March 31, 2022, and a 5-per-cent sequential increase from Q4 2022. The increases reflect the company's growth in new customers, 100-per-cent net dollar retention from existing customers, the strengthening U.S. dollar and continuing market demand for enterprise DAM solutions despite the current macroeconomic environment. As organizations continue to implement their necessary digital strategies, an effective DAM becomes critical to reducing costs, requiring less people to manage media workflows and ensuring continuity in difficult times.
• Gross margins remained strong at 80 per cent ($3.11-million) in Q1 2023 compared with 83 per cent ($2.33-million) in Q1 2022 and 80 per cent ($2.88-million) in Q4 2022. The decrease in gross margin percentage is related to the increase in cost of sales related to higher support personnel and the timing of customer adoption in advance of revenue expansion.
• Incurred adjusted operating costs of $5.17-million in Q1 2023, a 4-per-cent increase from $4.96-million in Q1 2022, and flat compared with the $5.17-million incurred in Q4 2022. Management continues to tightly manage adjusted operating costs to balance its market opportunity, strategic vision and available capital resources. The increase over Q1 2022 reflects an increase in sales and marketing personnel, variable costs associated with higher revenue achievement, and demand generation programs expanded in support of higher sales objectives.
• Reported a Q1 2023 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $2.06-million, an improvement of 22 per cent from $2.63-million in Q1 2022, and an improvement of 10 per cent sequentially from Q4 2022. The decrease in adjusted EBITDA loss is evidence of the company's plan to hold adjusted operating costs level while growing revenue in line with the company's long-term growth strategy. Management believes this growth investment is aligned with the company's available capital resources.
• Ended Q1 2023 with modified working capital (excluding contract acquisition assets, deferred revenue, lease liabilities and debt) of $2.42-million an increase from Q4 2022 ($2.10-million). In Q1 2023, the company repaid $500,000 of bank indebtedness, collected proceeds of $3.5-million from an oversubscribed private placement and increased its revolving credit facility to $9.0-million (currently undrawn).

Technology and product

MediaValet's continued commitment to product innovation and advancement has led to an increase in new customer win rates, as well as customer retention and expansion rates. The company recently announced several examples of the impact of its continuing innovation and development:

• New customer win and expansion announcements, including: the achievement of a significant milestone of having over 500 active customers, and to highlight continued success in the education sector with seven new education customers selecting MediaValet in Q1 2023. The new customers include colleges, universities and industry-specific training organizations, offering omnichannel courses and learning modules. Most were won through a competitive bid process and included some of the largest new customers who selected MediaValet in Q1 2023. This sampling of customers' total first-year billings of $331,000 (two of which are greater than $100,000) includes annual subscriptions to MediaValet's enterprise DAM platform; audio/visual intelligence (AVI); active directory single sign-on; CI-Hub and Office 365 connectors; implementation services; and continuing training and support.
• New feature and services announcements, including: a number of new features and enhancements were launched in H2 2022, and are now beginning to have an impact on new customer win rates and existing customer expansion. The company is expecting to release additional new features and enhancements in Q2 2023 which will believe will have a revenue impact in fiscal 2023.

Operations and corporate:

• On Jan. 11, 2023, the company announced an increase in the amount available under the operating credit facility of up to $9.0-million (previously $7.0-million), as a result of its ARR increase.
• On Jan. 16, 2023, the company announced the closing of an oversubscribed $3.5-million private placement, consisting of 2,692,315 units of $1.30 per unit. Each unit consists of one common share and one share purchase warrant. The net proceeds received from the private placement will be used by the company for general working capital. The common shares issued are subject to a four-month trading hold that will expire on May 17, 2023.

John Tobia: welcome and bio

"We welcome the addition of Mr. Tobia to our board of directors," commented Andrew Shen, chair of MediaValet. "His deep understanding of public company governance, coupled with a strong technology and corporate development background, will diversify our board experience and be invaluable to MediaValet as we execute on our vision to expand our leadership position in the DAM market."

Mr. Tobia is a seasoned executive with 25-plus years of providing business and legal advice to public companies (including corporate governance, M&A (mergers and acquisitions), divestitures, financings and IPOs (initial public offerings)). Mr. Tobia served as the vice-president, legal, general counsel and corporate secretary of Aastra Technologies Ltd. for 14 years before it was acquired by Mitel Networks in 2014 and more recently as the executive vice-president of corporate development, general counsel and corporate secretary of Sangoma Technologies Corp. for five years. Mr. Tobia has also served as a corporate development consultant for Fairfax Financial Holdings Ltd. and an executive at Enghouse Systems Ltd. Mr. Tobia has an LLB from Osgoode Hall Law School, is a member of the Law Society of Ontario and practised at Blake Cassels & Graydon LLP prior to joining Aastra in 2000. In addition, Mr. Tobia holds an MASC and BASc from the University of Toronto in Engineering Science (electrical option).

MediaValet's full financial statements and related MD&A (management's discussion and analysis) are now available on SEDAR.

About MediaValet Inc.

MediaValet stands at the forefront of the cloud-native, software-as-a-service, enterprise digital asset management, video content management and creative operations industries. Built exclusively on Microsoft Azure and available across 61 Microsoft data centre regions in 140 countries around the world, MediaValet delivers unparalleled enterprise-class security, reliability, redundancy, compliance and scalability, while offering the largest global footprint of any DAM solution. In addition to providing enterprise, cloud-native DAM capabilities at a global scale, desktop-to-server-to-cloud support for creative teams, and overall cloud redundancy and management for all source, WIP and final assets, MediaValet offers industry-leading integrations into Slack, Adobe Creative Suite, Microsoft Office 365, Wrike, Drupal, WordPress and many other best-in-class third party applications.