BBTV Holdings Inc.

Good afternoon. Thank you for attending today's BBTV Holdings, Inc. to host fourth quarter and fiscal year conference call. My name is Hannah and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Nancy Glaser with BBTV. Please go ahead.

Welcome to BBTV's year-end and fiscal fourth quarter 2022 conference call. I'm Nancy Glaister, Chief Legal Officer for BBTV. During the course of this conference call, we may provide forward-looking information and make forward-looking statements within the meaning of applicable securities laws. These are statements regarding the company's current expectations, goals, and beliefs about future events relating to or which may impact the company, its business and results. These may include forward-looking statements regarding our position, growth, diversification, expansion, operations, plans and objectives. Forward-looking statements are statements about the future and are inherently uncertain. Any financial or other goals discussed are goals only and are not to be taken as future-oriented financial information or guarantees of future results of performance. Certain financial outlooks in particular are provided to aid in understanding management's goals and expectations regarding future financial matters and may not be achieved. Such financial outlooks may not be appropriate for other purposes. All of our forward-looking statements are necessarily based on a number of assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. These include the risk that our assumptions may not be accurate, as well as the risk factors contained in our press release and MD&A issued today, as well as in our latest annual information form filed on CDAR.com. We undertake no obligation to update these forward-looking statements, except as required by law. You could read more about these assumptions, risks, and uncertainties in our press release and MD&A issued today, as well as in our AIF dated March 29, 2022, and our prospectus dated October 22, 2020, filed with Canadian securities regulators at CDAR.com. Also, our commentary today will include adjusted financial measures and ratios, which are non-GAAP measures. Although the company believes these non-GAAP financial measures and ratios are useful in evaluating the company, These should be considered as a supplement to and not as a substitute for financial information prepared and presented in accordance with IFRS. Reconciliations between the two can be found in our earnings press releases and our MD&A, which are available on our website and on CDAR.com. Lastly, we also report on certain metrics, such as views and RPMs. A further description of these metrics, which are also non-GAAP measures, can also be found in our earnings press release and our MD&A. I now turn the call over to BBTV's Chief Executive Officer, Sharzad Rafati.

Hello, everyone, and thank you for joining me and our new CFO, KB Brinkley, on this conference call to discuss our Q4 and full year 2022 financial results. We're excited to have our new CFO join me on this call and benefit from her experience and background in the senior management team as we go forward. For the first few minutes, I will review some of the market conditions and our operations. And after that, KB will review our financial results. And then I will close with our outlook before we take analyst questions. BBTV is the largest professional creator network worldwide, from individuals to global media companies, Professional content creators rely on BBTV to generate meaningful revenue for them while they focus on their core competency, content creation. Our roster of 5,000 creators continues to grow and over 600 million viewers interact with their content monthly. Included in our monthly viewership is nearly 32% of YouTube Shorts views, for which monetization started at the beginning of February. This is an important milestone for BBTV. YouTube Shorts monetization does not show up in Q4 results. However, our creator acquisition teams work really hard during the quarter to increase YouTube Shorts viewership from 26% of total in Q3 to 32% in Q4, which means 1.6 billion YouTube Shorts views to monetize going forward. Initial monetization will be modest as we work through the process. We agree with Alphabet that monetization rates on views should be mature at similar RPMs compared to long-form video content over time. Viewership retention was an exceptional 98% for Q4 2022 and 92% for fiscal year 2022. This is similar to customer retention as views times RPMs equals revenue, which gives us a great line of sight to our future revenues. Subsequent to quarter-end, we announced a four-year term loan for approximately 21.5 million Canadians. The objective of this loan are to add to available liquidity. With this transaction completed, management and the board believes that the company's current cash on hand, combined with receivable financing, cash flows for operations, cost management, and access to additional resources will provide sufficient liquidity to meet all of our working capital requirements, as well as our financial obligations for the foreseeable future. KB will go into further details on the terms of the new loan and other balance sheet information during her review, but we are positioned to execute our growth and profitability plans with enough cushion to withstand future macroeconomic uncertainties going forward. In our filings, you will notice an IFRS accounting write-down that KB will also discuss later. This write-down has no impact on our performance, our cash flows, or our future. Plus Solutions now represents 13% of total revenue and 35 to 40% of total adjusted gross profit, up from 8% of total revenue and 20 to 30% of total adjusted gross profit in Q4 2021. Management sees this continued growth as a strong indicator that the company's investments in Plus Solutions are paying off. And BBTV will continue to invest in growing these revenue streams because they consistently deliver higher gross margin than our current base solutions revenue. This quarter, our direct advertising sales increased by 71% compared to last year. Although it's still a modest plus solutions revenue stream, we see continued momentum exiting the quarter. Content management continues to be our largest plus solutions revenue stream and grew by 22% quarter over quarter and by over 31% year over year. We added features to our offering over the past two quarters, which has resulted in a strong uptake by the market and our largest pipeline ever. Subsequent to the quarter end, we signed one of the largest content management deals yet with a major media conglomerate. And over time, it could become the largest. We have several similar opportunities that we're negotiating now. We're confident that Plus Solutions will continue to reduce the impact of market volatility on BBTV's overall performance, enhance the company's overall margins, and continue to help maintain creative retention going forward. BBTV Signs several new content management clients in Q4, including Lionsgate, Combata Global, Wondery, and subsequent to the quarter end, we also signed one of the largest clients in BBTV's 18-year history. BBTV is currently working with some of the largest blue-chip clients in the industry, including Sony Pictures, the NBA, Paramount Global, Fox, Univision, PBS, and more. During the quarter, our cost optimization and revenue diversification initiatives helped us to report a nearly identical adjusted EBITDA loss for the quarter of $0.77 million compared to last year, despite a 21.8% decline in base solutions revenue. Sequentially from Q3, expenses declined by approximately $1 million, and we expect operating expenses to fall further in coming months. Revenue diversification has been an emphasis to improve overall margins. Currently, plus solutions represent about 13% of total revenue and 35 to 40% of total gross profits. Based on our data, it appears that Q3 2022 was a trough quarter for base monetization. While overall views were slightly lower for Q4 compared to the same period last year, revenue grew by 14% sequentially compared to Q3. We believe the return of sequential revenue growth in Q4 is an encouraging development entering 2023. We're also pleased to say that following our acquisition of Outlook Media in October of last year, integration continues to progress well across the board, from the creators we brought on board to the employees and infrastructure that we welcomed into BBTV. Once integration is complete, this unit becomes the centerpiece of our multi-platform strategy to extend our creators' reach to new platforms, starting with Facebook. Based on the metrics that I outlined, we believe that this will also have a positive impact on base solutions margins. We are at early stages, but the strategy and the results appear promising. I can't wait to talk to you about our outlook in a few minutes. However, I'm very pleased to hand the call over to KB, BBTV CFO, to discuss the quarter and year-end-to-date performance in more detail.