NEW YORK, Nov. 14, 2022 — Troika Media Group, Inc. (Nasdaq: TRKA) (“TMG”), a consumer engagement and customer acquisition solutions group, today announced financial results for its fiscal quarter ended September 30, 2022. 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
The fiscal first quarter highlights include:
- Record Revenue of approximately $120 million
- Revenue increase of 1,335% quarter over quarter
- Record Adjusted EBITDA of approximately $10.1 million
- Operating Income of $6.3 million
- First reported positive Net Income since going public in April 2021
- Strong revenue growth in Performance Solutions within Home Services and Professional Services Sectors
- Successful restructuring of operations and cost optimizations following the Converge acquisition.
“Our quarter ended September 30, 2022 was a great start to our new fiscal year. We built on the strong record revenues of fiscal year 2022, despite the complex consumer environment and undergoing an end-to-end restructuring following the Converge acquisition in March 2022,” commented Sid Toama, CEO of TMG. “We saw continued strong performance in the Home Services and Professional Services sectors that drove growth in our Performance Solutions division. The great financial results in the quarter reflected the strength and resilience of our performance-based business model, diverse sector mix, and the excellent execution across the newly organized business. During uncertain periods, advertisers critically assess marketing investments. This leverages our business model which focuses on measurable customer acquisition results and minimizing the risk for marketers looking to acquire customers, at scale. I am also excited that we are now in market with our integrated consulting capabilities across creative, technology and customer acquisition solutions. Our positioning has never been better now that we have delivered a unified business strategy to build on Converge’s scalable business and operational model. Looking ahead, we expect the trends of the past couple of quarters to continue in the December quarter, our fiscal Q2. We also continue to expect stability in our insurance vertical beginning in January as loss ratios reset and insurance carriers benefit from rate increases to support the growth seen in our other core sectors,” concluded Toama.
The Company has also announced the appointment of two additional independent directors to add depth and experience to the board. “The appointment of Jeffrey Stein and Grant Lyon to the Board of Directors adds a wealth of commercial, operational, and restructuring experience that deepens the board’s ability to provide strategic and operational support to our management team. Both have extensive public board experience and their addition compliments the restructuring measures the company has undertaken to deliver sustainable growth and profitability as we refine our strategy to focus on the strengths acquired through the acquisition of Converge,” stated Randall Miles, Chairman of Troika’s board of directors.
Results for the three months ended September 30, 2022 and 2021:
| Three months ended | ||||||||
| September 30, | Change | |||||||
| 2022 | 2021 | $ | % | |||||
| (Unaudited) (In thousands) | ||||||||
| Revenues | $ 119,810 | $ 8,349 | $ 111,461 | 1,335 % | ||||
| Net income (loss) | $ 1,274 | $ (2,139) | $ 3,413 | 160 % | ||||
| EBITDA | $ 6,504 | $ (1,924) | $ 8,428 | 438 % | ||||
| Adjusted EBITDA | $ 10,060 | $ (945) | $ 11,005 | 1,165 % | ||||
Financial Results for TMG
The results of operations for the three months ended September 30, 2022, have been fundamentally powered by the Converge acquisition, which resulted in diversifying the company’s revenue streams and created efficiencies recognized by integrating the acquired businesses.
Revenues for the three months ended September 30, 2022, totaled approximately $119.8 million an increase of approximately $111.5 million as compared with the prior period. The increase in revenue was primarily due to the contribution of the Converge business; which accounted for approximately $110.9 million and is representative of 93% of the Company’s total revenue for the three months ended September 30, 2022. This incremental revenue to the business is comprised of performance solutions revenue of approximately $63.4 million, or 57%, and managed services revenue of approximately $47.5 million, or 43%.
These revenues were driven by organic growth from existing clients, and substantial growth, most notably, in performance solutions. The growth in performance solutions was led by our Internal-Brand product line, which is revenue generated from the fees we charge to our customers when we engage with consumers under our internally owned and operated brand names. This increase was primarily powered by its home improvement and professional services sectors.
“The acquisition of Converge continues to provide transformational changes for the Company. The revenue contributed by these revenue streams total approximately $201.5 million since its acquisition in March 2022, a period of 182 days. Further, we are pleased by the continued growth in revenue that is derived from our owned and operated internal brands, which justifies our continued investment in this enterprise strategy,” said Erica Naidrich, CFO of TMG.
TMG reported positive Net Income for the first time since going public in April 2021. Net income for the three months ended September 30, 2022 increased approximately $3.4 million to approximately $1.3 million, as compared with the prior year quarter. This increase was the result of increased revenues of 1,335%, and was partially offset by an increase in cost of sales, and selling, general, and administrative (SG&A) costs. SG&A costs increased approximately $2.5 million or 37% as compared to the prior year quarter.
“The limited increase in SG&A costs of only 37%, as compared to the 1,335% increase in revenue, is reflective of managements continued focus on transformational and restructuring initiatives. Operational efficiency was a cornerstone to the Converge model and we are working hard to replicate that at TMG. Our continued focus is on business matters that will contribute to the transformational restructuring of the business to ensure that our company is well positioned to drive ongoing growth and value for our shareholders,” added Naidrich.
TMG’s Adjusted EBITDA for the three months ended September 30, 2022 was approximately $10.1 million, which was primarily driven by the increase in revenues due to the Converge acquisition. This increase combined with the off-setting of several one-time costs incurred as a result of the ongoing restructuring and transformational efforts by management.
The first quarter contained several non-recurring and non-cash costs including restructuring and other related charges totaling approximately $0.9 million, loss on fair value of warrant derivative liabilities related to the Series E Preferred Stock of approximately $0.9 million, foreign currency exchange losses of $0.9 million, $0.5 million in non-cash stock compensation expense (which are reflected in SG&A expenses), and loss contingencies on equity issuance of $0.3 million.
About Troika Media Group
TMG is a consumer engagement and customer acquisition consulting and solutions group based in New York and Los Angeles. We deliver resilient brand equity, amplifying brands through emerging technology to deliver performance driven business growth. Troika’s expertise is in Consumer Products and Services, Entertainment and Media, Sports and Sports Betting, Financial and Professional, Education and eSports and Gaming sectors. For more information, visit www.thetmgrp.com.