VerticalScope Holdings Inc. (“VerticalScope” or the “Company”) (TSX: FORA), a technology company that has built and operates a cloud-based digital platform for online enthusiast communities, today announced a reduction in its workforce of approximately 60 employees, representing 22% of the Company’s total employee base. This reduction aligns VerticalScope’s talent with its most important growth initiatives, reduces its expense structure and best positions the Company to navigate the current economic environment.
“Like many businesses in our space, we grew our headcount aggressively over the last few years. With the economic uncertainty that lies ahead, we must prioritize our biggest opportunities and make sure we have the proper cost structure in place to pursue them. It is difficult to say goodbye to so many talented colleagues who have made important contributions to VerticalScope. We are grateful for their commitment and are working to ensure that they are supported to transition to their next opportunity,” commented Rob Laidlaw, Founder and CEO of VerticalScope.
The reduction in workforce and certain other cost saving initiatives being implemented by the Company are expected to generate approximately $6.0 million in annualized cost savings. “These are tough changes to make, but I am confident that they provide for the most effective and focused use of our resources and strengthen our position as we move forward,” continued Laidlaw.
In addition, VerticalScope is providing select preliminary unaudited financial results for the three months ended December 31, 2022 (“Q4 2022”) and the twelve months ended December 31, 2022 (“2022”). The audited annual consolidated financial statements of the Company for the year ended December 31, 2022 (the “Financial Statements”), and related Management Discussion and Analysis (the “MD&A”) are expected to be released on March 7, 2023.
All comparatives, unless otherwise noted, are versus the same period in the prior year.
Financial and Operating Highlights:
- Q4 2022 revenue is expected to be $19.1 million, a decrease of 10.9%, and resulting in expected 2022 revenue of $80.5 million, an increase of 22.4%
- Digital advertising revenue is expected to be $14.2 million in Q4 2022, a decrease of 5.5%, and resulting in expected 2022 digital advertising revenue of $55.1 million, an increase of 25.2%
- E-commerce revenue is expected to be $4.9 million in Q4 2022, a decrease of 23.5%, and resulting in expected 2022 e-commerce revenue of $25.4 million, an increase of 16.6%
- Adjusted EBITDA is expected to be $7.2 million in Q4 2022, a decrease of 22.9%, and resulting in expected 2022 Adjusted EBITDA of $30.9 million, an increase of 6.3%
- MAUs in Q4 2022 increased 7.4% to 113.6 million inclusive of a 5.9% organic MAU decline
“Fourth quarter results came in lower than last year as a result of macroeconomic weakness through the holiday shopping period which translated to lower advertising rates as well as reduced volume from e-commerce partners. The steps we’ve taken today to reduce our cost structure will allow us to maintain a strong financial position in this weaker economic environment while we continue to execute on our long term strategy,” commented Chris Goodridge, President and COO.
The financial and operating results included in this news release are based on preliminary unaudited estimated results which have not yet been finalized or, in the case of annual results, audited, and will be updated and superseded by the Financial Statements and MD&A of the Company which are expected to be released on March 7, 2023. It is only in the context of the fulsome information and disclosures contained in the Financial Statements and MD&A that an investor can properly analyze this information. The Financial Statements and MD&A will be published under the Company’s profile on SEDAR.
About VerticalScope
Founded in 1999 and headquartered in Toronto, Ontario, VerticalScope is a technology company that has built and operates a cloud-based digital platform for online enthusiast communities in high-consumer spending categories. VerticalScope’s mission is to enable people with common interests to connect, explore their passions and share knowledge about the things they love. Through targeted acquisitions and development, VerticalScope has built a portfolio of over 1,200 online communities and over 100 million monthly active users. VerticalScope is listed on the Toronto Stock Exchange (TSX: FORA).
Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the exchange) accepts responsibility for the adequacy or accuracy of this release.
The estimated results contained herein are subject to change upon completion of the Financial Statements and the audit of such financial statements, and such changes could be material due to, among other things, the completion of the Company’s financial closing procedures, final adjustments, review by the Company’s auditors, and other developments that may arise between now and the time the financial results are finalized. Accordingly, such estimated results are forward-looking statements within the meaning of applicable securities legislation and are subject to the limitations and risks described under “Forward-Looking Statements” below.
Forward-Looking Statements
This news release contains forward-looking information within the meaning of applicable securities legislation that reflects the Company’s current expectations regarding future events. When used in this news release, words such as “should”, “could”, “intended”, “expect”, “plan” or “believe” and similar expressions indicate forward-looking statements. Forward-looking statements in this news release include, but are not limited to, the anticipated publishing date of the Company’s Financial Statements and MD&A, and statements regarding select preliminary unaudited estimated financial and operating results of the Company and balances relating to the financial position of the Company, as at and for the three months ended December 31, 2022 and the twelve months ended December 31, 2022, which will be updated and superseded by the Financial Statements and MD&A of the Company. These results and balances may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking information, including the Company’s financial outlook (including revenue, Adjusted EBITDA and MAUs), and anticipated events or results, information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, plans and objectives, is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurances can be given that actual results will be consistent with these forward-looking statements. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated March 31, 2022, which is available on the Company’s profile on SEDAR at www.sedar.com. Actual results could differ materially from those projected herein. VerticalScope does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.
Non-IFRS Measures
This news release references certain non-IFRS measures, including Adjusted EBITDA as described below. This news release also makes reference to MAU, which is an operating metric used in our industry. These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS.
The Company uses non-IFRS measures including:
“Adjusted EBITDA” is calculated as net income (loss) excluding interest, income tax expense (recovery), and depreciation and amortization, or EBITDA, adjusted for share-based compensation, share performance related bonuses, unrealized gains or losses from changes in fair value of derivative financial instruments, severance, adjustments to contingent consideration liabilities measured at fair value through profit and loss, gain or loss on sale of assets, gain or loss on sale of investments, foreign exchange loss (gain), impairment and other charges that include direct and incremental business acquisition related costs and costs directly incurred in connection with the Initial Public Offering that are not deducted from the equity proceeds.
“Monthly Active Users” (“MAU”) is defined as the number of individuals who have visited our communities within a calendar month, based on data as measured by Google Analytics. To calculate average MAU in a given period, we sum the total MAU for each month in that period, divided by the number of months in that period.
SOURCE VerticalScope Holdings Inc.
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