Vinco Ventures, Inc. (BBIG) on Q4 2021 Results - Earnings Call Transcript
Operator: Greetings and welcome to the Vinco Ventures Fourth Quarter 2021 Earnings Call. At this time all participants are in a listen only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Greg McNiff, Investor Relations for Vinco Ventures. Thank you, you may begin.
Greg McNiff: Good morning and welcome to Vinco Ventures fourth quarter and full year 2021 financial results conference call. I am Greg McNiff, Invesor Relations for Vinco Ventures. Also on the call today will be Lisa King, Vinco's Chief Executive Officer; and Philip Jones, Vinco's Chief Financial Officer. Today's call is being webcast live and will be archived on the Investor Relations section of Vinco's website at investors.vincoventures.com where our earnings press release is currently available. Certain matters we will be discussing today, including our growth strategies and expected growth opportunities and performance centered around the automotive platform as well as certain transactions we expect to complete to fuel our growth, are forward-looking statements. Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in our documents filed with the SEC, including our Annual Report on Form 10-K for the period ended December 31, 2021 filed on April 15, 2022. And with that, I'd like to turn the call over to Lisa.
Lisa King: Good morning. And thank you for joining us today. We're pleased to report our fourth quarter and full year 2021 results. Before I discuss some of the highlights of the quarter, I'd like to take a few moments to review the progress we've made. 2021 was a significant transition year for the organization. As we continue to move to a digital media and content technologies company. We're focused on our four pillars, to entertain, engage, endorse and enrich. We strive to entertain broad global audiences with compelling content, engage users with rich experiences on automotive social media platform, create unique opportunities to endorse and advertise brands through our marketing platform and influencer relationships and enrich the lives of our users. We believe we can continue to grow into a robust international media and entertainment company focused on content and engagement with millions of users around the world. Here are some highlights based on our four pillars. In our efforts to create unique opportunities to endorse and advertise brands through our marketing platform and influencer relationships, Vinco Ventures completed the acquisition of AdRizer, a provider of technology solutions that automate the use of artificial intelligence for digital advertising analytics and programmatic media buying, for consideration consisting of $38 million in cash paid at closing and up to 10 million shares of common stock of the company issuable on January 1, 2024, with certain leak-out restrictions. This acquisition coupled with our digital commerce company Honey Badger enabled us to promote our events, partner with celebrities - celebrities and influencers and drive millions of impressions for our brand partners. Next, I'll share more about our events and efforts to entertain and engage audiences through Lomotif. India remains a strong market for the Lomotif and will be a growth market moving forward as the fifth largest economy with the second largest population in the world. In a country that's banned TikTok. Lomotif continued the momentum of its expansion in India through a co-production content partnership with Viacom18. This partnership begins with an unscripted reality TV show for inventors and entrepreneurs in the Indian market called, The Inventor Challenge, which is inspired by Vinco’s PBS series, Everyday Edisons. The Inventor Challenge is set to premiere late summer 2022, with production for season two to begin later this year. In the Indian region, Viacom is producing, marketing and broadcasting the show. Beyond the Indian market, we plan to bring the format to other countries around the world. We anticipate the show will help to increase exposure and engagement of Vinco’s content and the Lomotif platform. Lomotif’s global talent search You’ve Been Scouted, concluded with India’s Yatin Kumar being presented an album deal working with Grammy-winning producer Teddy Riley, who has worked with Michael Jackson, Lady Gaga, Pharrell and BTS. The album is in final production, and is expected to be released over the next several weeks and promoted on the Lomotif platform. We actively sought opportunities to live stream entertainment events on our Lomotif to engage users and deploy our blended media, cross-platform distribution strategy. We've engaged users on the Lomotif through live streaming of popular entertainment events and coverage of those events through influencer initiatives under the Lomotif brand, which have been shared broadly on other social media platforms. An example is the recent initiative with Insomniac, a top producer of music festivals and events, during the Okeechobee Music and Arts Festival on March 3re to 6, 2022. Over the three-day festival, the live stream registered 7.2 million active users on Lomotif according to Google Analytics and generated 16 million visitors on Lomotif media sites. We believe the beta test validated our strategy as we generated hundreds of millions of ad impressions with five-plus minutes spent viewing the sites on average, through our newly acquired ad platform, AdRizer. Lomotif for the first time broke into the top 50 downloaded social apps in the U.S. market in the Apple Store alone during the festival, boosting our effort to expand in the U.S. market. Of the 7.2 million who streamed the concert, 86% of the traffic came from YouTube through AdRizer platform promoting the festival. Another example of our effort to drive views and engagement for the Lomotif platform and content under the Lomotif brand was the Electric Daisy Carnival or EDC in Las Vegas in October 2021, the largest electronic dance music festival in North America. At EDC Las Vegas, we arranged surprise appearances and performances of Lil Nas X and Kid LAROI as Lomotif guests. The streaming of these performances not only drove engagement on the Lomotif platform, but also resulted in hundreds of millions of views of the Lomotif brand across additional platforms including TikTok, Instagram, YouTube and Snapchat, which we believe elevated the Lomotif brand during the concert. Another implementation of our blended media cross-platform distribution strategy was our exclusive distribution arrangement with Insomniac to live stream Shaquille O'Neal’s Big Game Weekend Party, Shaq's Fun House, on LomoTV in February 2022, which generated millions of views across social media platforms around the world, furthering the reach of the Lomotif brand. We also increased user engagement for the Lomotif platform and brand over the last year with celebrity events like Hailey Bieber’s #LomoStyle contest which generated 19 million views across platforms. We believe that by growing our content offering and worldwide user engagement, coupled with our AdRizer digital advertising analytics capabilities, we'll be able to use the Lomotif platform to generate additional revenue. Lastly, I’ll provide some operational updates. The company’s subsidiary, Cryptyde, filed its preliminary Form 10 registration statement with the SEC in connection with the planned spin-off of Cryptyde, which currently owns CW Machines, through a joint venture and Ferguson Containers. Cryptyde’s joint venture CW Machines has launched its crypto mining equipment reselling business and has welcomed its initial customers in Q1 2022. Cryptyde’s Freescape Metaverse characters have been developed and are expected to be launched in Q2 and Q3 2022. Also, in January 2022, we hired ZASH's employees to work with the Vinco team on new and ongoing media and entertainment initiatives, including projects involving Lomotif and PoZASH a content development company we invested in through loans and are in the process of investing in further in the form of equity investments future projects. In addition, we're in negotiations with ZASH to acquire ZASH'S interest in ZVV. We'll provide further updates as soon as practicable. In summary, I'm encouraged by our execution in fourth quarter. As of the end of 2020, we had a market cap of approximately $20 million and total stockholders’ equity of approximately $14 million, and through equity growth and our acquisition of an 80% equity interest in Lomotif through ZVV Media Partners, our joint venture with ZASH Global Media and Entertainment, our market cap has increased as of the end of last week to over $507 million and our total stockholders’ equity has increased to $134 million. We believe our four pillar strategy to entertain, engage, endorse and enrich will continue to focus the company on the large and growing media and entertainment industry and will position us well for long term growth. And with that, I'll turn the call over to Phil to discuss our financial results in more detail. Phil?
Philip Jones: Thank you, Lisa. As Lisa mentioned in February of this year, we finalized the acquisition of AdRizer. This is a significant milestone for us, as AdRizer is one of the foundations of our strategy as we integrate its digital media, advertising platform and expertise into our ecosystem, which we believe will enable us to monetize Lomotif platform and our entertainment assets in a meaningful way. These benefits are expected to impact your financial performance in the first quarter of 2022 and beyond. Secondly, we continue to make progress on the steps needed in order to complete our proposed spin-off of Cryptyde, which we currently anticipate to be completed during the second quarter of 2022. We believe Cryptyde is well positioned to begin its life as a standalone company with financing in place as soon as spin-off is completed. Now turning to our 2021 results. As you review our financials, our balance sheet, statement of operations and cash flow statement, it is easy to see how busy and complex 2021 was for the company, as we began to transform Vinco into a digital media and content technologies company. To do this during 2021, we sold or discontinued certain legacy of Vinco businesses, we funded investments, and the development of media and entertainment assets with a growing list of providers and strategic partners, including ZASH Global Media. With ZASH we formed a joint venture, ZVV Media Partners - acquired an 80% stake in Lomotif which is based in Singapore with user spanning from Asia, South America to the United States. In addition, we prepared certain of our subsidiaries for spin-off and finally entered into multiple capital funding arrangements, including convertible debt instruments, and warrants that triggered complex warrant accounting requirements. As we ended 2021, our results reflect the complexities of these transactions in this transformative process. But we are very pleased with our financial position as we enter 2022. At December 31, 2021, we had $187 million of cash from which $100 million was restricted in connection with our convertible note instrument. In addition, as of December 31, we had warrants outstanding for the purchase of approximately 108 million shares of common stock, which if fully exercised for cash could raise approximately $487 million of funds for the company. Associated with these warrants is a $199 million warrant liability reported on the balance sheet as of December 31st. Similar to our previous quarter, the biggest impact to our fourth quarter and full year 2021 results is the accounting treatment of the issuance of warrants and the changes in estimated fair value of outstanding warrants at the end of December. As a reminder, is important to understand that this warrant liability is a non-cash liability that will change in value as the company's share price fluctuates and will eventually be eliminated due to either the exercise or exploration of the underlying warrants. In fact, for the fourth quarter, we realized other income of $142 million due to the impact of the activity and the fair value of the warrant liability - of our warrant liability for the quarter. After adjusting for the impact of the warrant accounting treatment, remaining results, of the operations - of our operations continue to reflect the transition of Vinco to a media and entertainment company. Revenue for the fourth quarter have decreased 1.5% on a year-over-year basis due to a decline in sales of personal protective equipment in our Edison Nation Medical division, which is a product line being phased out. This revenue decline was partially offset by growth in the packaging product segment, as well as initial revenues from company's Honey Badger, the immersive entertainment business lines. During the fourth quarter we incurred operating expenses of $35.2 million, of which $26.6 million was related to stock based compensation. Otherwise, operating expenses were only $8.6 million, which covered the compensation costs for our 46 employees and the cost of 64 employees at Lomotif. In addition, this $8.6 million included all the costs associated with our marketing event cost that’s important to Lomotif and the legal and professional fees associated with many of the transactions I mentioned earlier. So when I look at our business, I'm very happy with our relatively low core cost structure as we enter 2022. For the fourth quarter, we recognized net income of $71.7 million, compared to net income of $3.8 million in the fourth quarter of 2020. As mentioned above, the increase in the net income was primarily due to the impact of a decrease in the fair value of warrant liability which, netted against a loss on warrants issued during the fourth quarter, created a net other income of $142 million during the fourth quarter of 2021. Moving to the balance sheet, we believe we are in a strong position entering into 2022, highlighted by our cash and restricted cash balance. Our liability section of the balance sheet reflects increased working capital requirements related to the growth of the company's operations, along with the impact of the convertible note, which is listed net of unamortized debt issuance costs, and finally, the aforementioned warrant liability of a $199 million. I strongly encourage everyone to review our Form 10-K filed Friday with the SEC for further details on our results, along with information, other information important to understand the company. Finally, as we are now past the first quarter of 2022, we are quickly jumping into the preparation of our first quarter 10-Q, which will reflect the results of the first partial quarter of our newly acquired AdRizer, along with the continuing impacts of warrant activity. We expect this 10-Q to more clearly show what Vinco is creating after a transformative year in 2021. In 2022, we expect to see a digital media company with a moderate core operating cost basis, but with an expanding user base, upon which we plan to continue to build multiple potential revenue streams from advertising to content monetization. So we are eagerly looking forward to reporting on our first quarter 2022 results. With that, I'd like to turn the call back to Lisa for closing remarks. Lisa?
Lisa King: Thank you, Phil, and thank you all for joining us on the call today. We're excited about the growth opportunities ahead of us and we appreciate your interest and support. We look forward to updating you soon on our progress next quarter. Thank you.
Operator:
Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.+
