Oct 19, 2017
Executives
Tom Hearne - CFO John Levy - Chairman and CEO Benjie Levy - President and COO
Analysts
Nikhil Thadani - Mackie Research Capital
Operator
Good morning, ladies and gentlemen, and welcome to theScore Inc.' s Fourth Quarter Results Conference Call.
At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.
[Operator Instructions] This call is being recorded on Thursday, October 19, 2017. I would now like to turn the conference over to Tom Hearne, Chief Financial Officer.
Please go ahead.
Tom Hearne
Good morning, everyone. Thanks for taking the time to join us on today's call and webcast for theScore’s fiscal 2017 yearend and Q4 results.
On the call will be theScore founder and CEO, John Levy; our President and Chief Operating Officer, Benjie Levy and myself, the CFO, Tom Hearne. At this time, I would like to caution our listeners that this presentation contains forward-looking statements.
There are risks that actual results could differ materially from what is discussed and those certain material factors or assumptions are applied in making these forward-looking statements. Any forward-looking statements contained in this presentation represent the views of management and are presented for the purposes of assisting theScore’s shareholders and analysts in understanding theScore’s financial position, objectives and priorities and anticipated financial performance.
Forward-looking statements may not be appropriate for other purposes. Additional information on items of note, theScore’s reported results and factors and assumptions related to our forward-looking information are all available in our annual information form and in our MD&A for the year 2017, both of which are filed on SEDAR this morning.
And with that, let me turn the presentation over to John Levy.
John Levy
Okay, thanks Tom. And welcome everyone.
Thank you for joining us today for our review of Q4 and fiscal yearend 2017. As most of you know this quarter is traditionally are quite due to the way the mainstream sporting season is structured.
This was especially the case when compared to Q4 of 2016, which included Rio Olympics as well as the European Championships and Copa America soccer tournaments. Without such events this year we saw an impact to our US programmatic business.
Revenue for the quarter was slightly down year-over-year. For Q4, 2017, we achieved the revenue of $4.8 million versus $5 million for the same period last year.
At year end, however, we recorded total revenue of $26.3 million for fiscal 2017 versus $23.9 million last year, an increase of 10% which is the testament to the engagement within our mobile apps throughout this year. Our Q4 softness in our US programmatic business was offset slightly by year-over-year increases in Canadian advertising which was $2.1 million versus $1.9 million last year.
Canadian revenue for the fiscal year was up to $9.4 million from $6.8 million as big brand continue to flock to theScore to help reach engaging sports fan. Ultimately these results leave us on well track to achieve adjusted EBITDA profitability in fiscal 2018 as we've discussed on previous earnings calls.
The lack of major sporting events during this quarter also contributed to our app volume decrease year-over-year from 4 million average monthly users to 3.7 million at the year end of Q4. As a results, sessions were also slightly down year-over-year reaching 261 million compared to 278 million last year.
Although that still is our user's accessing our app 70 times each among each month on average during our slowest session which is the enormous engagement. Now looking forward, fiscal 2018 is already underway.
As is our game plan to continue strengthening theScore position as the true leader in digital sports media and introduce our brand and products to even more and more sports fan. This is especially bodes downs to three core initiative.
Number one, launch our new and improved score app and then continue to build upon our biggest ever update. This will ensure we lead the way in providing an app that meets the need and surpasses the evolving expectation of our sports fan.
In this regard, last month we hit the ground running with the goal of providing an experienced sports fan especially younger sports fan demand while also forging stronger connection between our app offering and the social content we produce. The reaction to this update has been very encouraging.
We've always been blessed with an extremely passionate and loyal user base and yet in the early day some users were little shaken by such a big update to their favorite app, and believe me they told us all about it. But in just a few days it was evident as they familiarize themselves into our look and the new feature offering that engagement and audience grow through moving in the right direction.
And this continues to be the case and we'll talk more about that shortly. Number two, amplify our reach.
Make theScore top of mind for the next generation of sports fan by continuing to amplify our reach to our social and off platform channel. We are already reaching more than 30 million fans across Facebook, Instagram, Twitter and our web and chatbot platforms.
Our intention is to double down on this, continue expose the brand with younger sports fan, building relationship with them that will bring them into our ecosystem. And the third initiative, extend our reach and brand into our high growth emerging platform, and ensure we stay at the very cutting edge of technology by successfully executing product program for this emerging platform that will significantly strengthen our position as a world class provider of digital sports media.
Our objective here is to capitalize and grow the areas where we've already have strong foothold at chatbot, esports, social and web, while also ensuring we continue to identify opportunities with high growth potential and ensure we are already - we are early to the market. Our newly formed emerging platforms team is 100% focused on this and we look forward to sharing more on where they all be taking us in due course.
Of course at the core of all this is our new improved marketing leading score app. We are thrilled with rollout of our new app is gone so far and more importantly how it is performing in its early stage.
I'll now turn things over to Benjie who will dive more deeper into our product strategy and primarily our recent app we designed.
Benjie Levy
Thanks, John and good morning, everyone. Last month after many months of product development and live testing, we launched the biggest update ever for theScore app to our entire user base.
It went live on iOS first with the Android version following just a couple of weeks ago and the early results have been very promising. We always knew that theScore app was a great game time companion for sports fan thanks to our lightening fast alerts, detailed box scores and deep stats, where we felt we could serve sports fan better with by truly empowering their experience 24x7.
This comprehensive redesign provided deeper team and topic cover, a slick new user interface and a dynamically enhanced multimedia content offering including videos and guest. We believe this update make theScore the only sports fan any fan needs making it easier than ever for them to uncover the biggest stories, scores and stats from their favorite teams.
One of the major new features we added was our discover section. Joining the dots between the highly engaging content being produced by our team and shared across our social channels was a large consideration during the redesign process.
We have strong social presences reaching more than 30 million people a month. So it made total sense to bring this highly engaging content into our app ecosystem.
Discover now means sports fans finding our app after first being introduced to us on social channels will be able to enjoy the same content there as they do off platform plus lots more. Our favorite page is also a big addition.
This takes the personalization element of theScore to the next level delivering even deeper team coverage and third party content from curator sources including teams and leagues. This new feature provides a much rounded experience for our users.
The redesign also provided us with the perfect opportunity to review how we deliver advertising to our users. The continued sophistication of our programmatic business is being supported by our data analytics team, helping us better identify how and where to serve ad units on our platforms, while also setting ourselves up to add more high value unit including our ability to serve programmatic video.
Turning to esports. Video has also become a core element of our strategy.
While our app offering remains a great experience for hardcore fans of the competitive video game scene, it's become clear that the vast majority of gaming enthusiasts still mean heavily on desktop experiences to get the content about the teams and tournaments that they care about. To meet this demand, we've broaden our esports focus to offer original video coverage and storytelling.
And over the past quarter we've significantly optimize this area of our business to produce a number of franchises which are showing tremendous promise by generating regular six figure viewing audiences. Build for social consumption but syndicated across our web and app and owned platforms, these videos demonstrate great growth potential and we've already executed direct ads by the client that want to attach themselves to our content.
As John touched on earlier, one of our core growth pillars is investing resources into exploring platforms that show high growth potential for us. We've recently formed our own emerging platforms teams within our product development group whose task is to identify scalable opportunity to take existing content and data to new and large audiences.
As part of this undertaking, we continue to develop our chatbot offering working extremely closely with Facebook to ensure we are delivering the best-in- class product on their messenger platform. This relationship has enabled us to actively explore other potential product offering with the social network with the team also looking closely at developing technology like voice assistance and the role we could play here.
theScore success has been built on being early to market on the platform that matter so it's important we continue to look beyond our existing offerings to ensure we are meeting the demand of the next generation of sports fan. I'll now turn things over to Tom who will run through our financials in more detail.
Tom Hearne
Thanks, Benjie. 2017 revenue when compared to 2016 revenue grew from $23.9 million to $26.3 million which was an increase of 10% for the year.
Our revenue growth for the year was driven by better direct sales in Canada which was offset slightly by lower sales in the US. For Q4, 2017 revenue was $4.8 million compared to $5 million in Q4, 2016.
This year-over-year decrease was primarily due to the absence of the major sporting events that took place in Q4, 2016 including the Rio Olympics, the 2016 UEFA EURO and Copa America soccer tournaments. Without these events in Q4, 2017, we saw mass decline in US programmatic revenue which was partially offset by an increase in Canadian sales.
In Q4, 2017 expenses decline to $7.6 million from $10.1 million in the prior year. The reduction is mainly driven by external contractor and personnel cost, as well as lower marketing cost.
In Q4, 2017, personnel costs were $2.6 million compared to $4.7 million in the prior year and for fiscal 2017 personnel cost decreased to $16.9 million from $18.3 million in fiscal 2016. Marketing costs are down year-over-year due to more strategic and cost effective external discretionary spend and more investment in our social content strategy as a way to build out the company brand.
As John and Benjie have noted, this is in line with our strategy of merging our app content with our social media content to appeal to our broader audience. Headcount at August 31, 2017, was 186 full time staff, versus 195 full time staff at August 31, 2016.
As we've commented in the previous quarter’s conference call, we see an approximate 200 person contingent as the right base for operating the company and maintaining growth opportunities, which will help drive us to profitability. We continue to higher top quality development staff and we believe we have the right mix of personnel for continue growing in fiscal 2018.
Adjusted EBITDA loss for fiscal 2017 Q4 was $1.9 million versus $3.8 million in fiscal 2016. A mix of revenue growth and reduced expenses allow us to significantly improve profitability in each quarter of this year.
We finished the quarter and the year with $10.1 million in the bank. Our cash used for the previous year was $5.4 million.
Our operational cash use was down 35% compared to the previous year, and overall our cash use was down 67% compared to the prior year. And operator, with that we will now take questions.
Operator
[Operator Instructions] And your first question is from Nikhil Thadani from Mackie Research. Nikhil, please go ahead.
Nikhil Thadani
Thanks guys, good morning. Benjie, I just wanted to go back to sort of the app redesign.
Do you have any data in terms of the user engagement or monthly active users that you maybe able to share at this point post the redesign?
Benjie Levy
Not at this point, Nik. We'll put out numbers for the redesign as part of our Q1 numbers that we talk about in January.
But as you can imagine, obviously what we know one of the core drivers for the redesign that we talked about over the past year is looking to set the table for future growth in users, as well as engagement in other core metric. So that's something we are looking at very closely and in the initial early days the results of the redesign are quite promising.
Nikhil Thadani
Okay. And in terms of the cost structure then we've seen some pretty good improvement here.
And Tom as you mentioned like you expect to sort of stay at that 200 person mark going forward. That being said though is this cost structure call it about $7.5 million - $8 million on a quarterly basis, is that how we should be thinking about the cost structure going forward and does that have any impact to the extent that you can say right now on your fiscal 2018 EBITDA breakeven guidance?
Tom Hearne
The fiscal 2018 guidance is not changed. I mean we still believe strongly that and it's important to us to drive to profitability of the company.
The $8 million range give or take is about the right range of expenses. We've been there the last quarter or two.
We've a relatively consistent contingent of staff at the moment and a couple of staff here and there won't drive that dramatically. And so we think that's the right pace upon which we can continue to build the company and our revenue base and then get ourselves to profitability.
Nikhil Thadani
Great. And just one last one for me here.
So as you sort of amplify your reach, it seems like you are getting a lot of leverage on the marketing line with these different social media approaches and it seems like there is a saving of maybe $0.5 million bucks on quarterly basis going forward. How sustainable is that as you develop new products going forward?
Should we expect the marketing line to sort of stay at that level as you leverage these social channels more going forward?
Benjie Levy
So I mean we've commented in our prior quarters growth is -- we can't buy our way to growth. We believe the growth is fundamentally build on very good product that appeal to a broader audience base and so the development work that we've done, the social branding that we've done to expose ourselves to now over 30 million people a month is kind of the key is that how we will grow.
And so I think the marketing spend that you are seeing reflects kind of the efficiency and how we try to build marketing using our social reach to really drive organic growth and we see that is kind of the base of how we are going to continue to drive our growth going forward.
Nikhil Thadani
Great. Sorry and just one last one for me here.
So as you sort of look out to fiscal 2018 and beyond, from a product roadmap perspective what sort of the piece that excites you the most in terms of driving top line growth? Thanks guys.
Benjie Levy
So I think as John commented earlier the redesign process is just beginning and we have a product team that is energized and excited to drive new features from a sports data perspective, the content perspective, tapping into some social and community elements and then our entire emerging platform teams which is looking off platform exploring opportunities like voice and chatbot which we all think are going to be core contributors to growth going forward.
Operator
Thank you. At this time there are no further questions.
You may proceed with your closing comments.
John Levy
Great. Well, thank you everybody for joining us for our Q4 and Fiscal Yearend Conference Call.
We look forward to presenting our Q1 financial results along with our annual general meeting to you in January 2018. And thank you very much.
Operator
Ladies and gentlemen, this concludes today's conference call. We thank you for participation and we ask that you please disconnect your lines.