NEW YORK, May 15, 2023 /PRNewswire/ -- Troika Media Group, Inc. (Nasdaq: TRKA) ("TMG"), a consumer engagement and customer acquisition group, today announced financial results for the quarter ended March 31, 2023. TMG is a professional services company that architects and builds enterprise value in consumer brands to generate scalable, performance-driven revenue growth. The Company delivers three solutions pillars: TMG CREATES brands and experiences and CONNECTS consumers through emerging technology products and ecosystems to deliver PERFORMANCE based measurable business outcomes.
(PRNewsfoto/Troika Media Group)
(PRNewsfoto/Troika Media Group)
The fiscal quarter highlights include:
Revenue of approximately $59.0 million
Fifth Consecutive Record Revenue Quarter (based on quarter over quarter)
Revenue increase of 276% over the comparative prior year period
Gross Profit of $8.8 million
Adjusted EBITDA of approximately $1.5 million
Strong Revenue growth in Performance Solutions within Home Services and Professional Services Sectors
"We have now delivered the fifth consecutive (quarter over quarter) record revenue quarter and continue to execute on the multi-phase optimization of our legacy balance sheet. Our quarter ended March 31, 2023, came in line with our expectations despite headwinds in the broader economy and uncertainty around the strength of the consumer. The Company's expertise in resilient sectors such as home services, impactful revenue generating solutions and diverse revenue streams continues to help us build upon what is an extremely efficient operating platform. We continue to curate our business efforts to take advantage of sustainably higher margin business opportunities to meaningfully enhance strategic and financial results." said Sid Toama, TMG's Chief Executive Officer. "We are excited at the prospect of incremental customer acquisition programs that we are rolling out for prospective new clients across both managed services and performance solutions revenue streams, as we get into our strongest operating periods of the year. We see a great demand for our solutions in the home services and legal sectors." added Toama.
"The revenue in our quarter ended March 31, 2023, is reflective of the seasonality in the business which is driven by our sector and revenue stream mix where we see lower customer acquisition investments (in relative terms) by our clients in Q1 and Q4. We are well positioned to take advantage of the work that has been done over the past year as we enter into our strongest revenue generating quarters which are the key drivers for our business. We have made great strides forward in addressing our complicated legacy capital structure. More specifically, we have negotiated forbearance with our senior secured debt provider to allow us time to put alternative financing in place; Series E Preferred securities and their related liabilities have largely been extinguished; we have restructured Troika's pre-acquisition legacy businesses to eliminate operations that were dilutive to performance; and we are working on accretive strategic opportunities to contribute greater revenue diversity and margin." said Erica Naidrich, TMG'S Chief Financial Officer.
Results for the three months ended March 31, 2023 compared to the three months ended March 31, 2022:
Three months ended
March 31,
2023
2022
Change ($)
Change (%)
(in thousands)
Revenue
$ 59,038
$ 15,685
$ 43,353
276 %
Gross profit
$ 8,755
$ 3,947
$ 4,808
122 %
Net loss
$ (7,901)
$ (14,388)
$ 6,487
45 %
EBITDA
$ (2,361)
$ (13,859)
$ 11,498
83 %
Adjusted EBITDA
$ 1,471
$ (1,156)
$ 2,627
(227) %
Financial Results for TMG
The results of operations for the three months ended March 31, 2023, continue to demonstrate the positive contributions to the business operations from the acquisition of Converge Direct, LLC and its affiliates. The strength of our revenue streams and our customers has continued throughout this quarter and we are poised to continue to deliver steadfast results for our customers. The business has also been focused on finding a strategic path forward to provide increased shareholder value and as a result has incurred significant costs in the process. From a forecasting perspective, our first calendar quarter can not be straight lined to predict the full year results of the business. The business has a cyclicality that is representative of a certain seasonality in our sectors and behavior of our clients. We expect to see stronger revenue and margins as the year progresses and then will soften in the fourth quarter.
Revenues for the three months ended March 31, 2023, increased approximately $43.4 million, or 276% to $59.0 million, as compared to the same quarter in the previous year. Gross profit for the three months ended March 31, 2023, increased $4.8 million, or 122%, to $8.8 million, as compared to the same quarter in the previous year.
The increases were attributable to a full quarter performance in the current year of the Converge subsidiaries as the acquisition closed on March 21, 2022, in the prior year comparable period. The revenue contributed by these new revenue streams totaled well over $300 million since its acquisition in March 2022, a period of 375 days.
Selling, general, and administrative costs decreased during the period by $6.0 million, or 35%, to $11.2 million when compared to the prior year period. The decrease in selling, general, and administrative expenses was primarily driven by a decrease of $7.0 million in employee salaries and other employee-related costs (inclusive of stock-based compensation) and a decrease in travel and entertainment costs of approximately $0.1 million, partially offset by an increase in facilities costs of approximately $0.3 million, an increase in professional fees of approximately $0.2 million, an increase in restructuring and other related charges of approximately $0.2 million, an increase in $0.2 million related to various tax expenses, and an increase in board of directors fees of approximately $0.2 million.
TMG's Adjusted EBITDA for the three months ended March 31, 2023, increased by approximately $2.6 million, or 227%, to $1.5 million, as compared with the prior period. The increase of $2.6 million is primarily due to improved EBITDA of $11.5 million offset by decreases in non-cash stock-based compensation expense of $9.4 million and business acquisition costs of $2.7 million in the prior year comparable period, partially offset by several non-recurring costs during the current period including $2.3 million of non-recurring Blue Torch financing related matters, $0.7 million of restructuring charges, and $0.3 million of non-recurring Series E equity related costs incurred during the period. These non-recurring costs are expected to continue throughout the remainder of the year until the Company finalizes a strategic plan.
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