Troika Media Group, Inc. ( Nasdaq: TRKA) (“TMG”), a consumer engagement and customer acquisition group today announced financial results for its fiscal fourth quarter and fiscal year ended June 30, 2022. TMG is a professional services company that architects and builds enterprise value in consumer facing brands to generate scalable performance driven revenue growth. The Company delivers three solutions pillars: we CREATE brands and experiences and CONNECT consumers through emerging technology products and ecosystems to deliver PERFORMANCE based measurable business outcomes.
The fiscal fourth quarter is highlighted by the following:
- Reported for the fourth quarter 2022 record revenue of $85.4 million.
- Adjusted EBITDA of $5.6 million for the fourth quarter 2022.
For the fiscal year ended June 30, 2022, the company reported revenues of $116.4 million, a 619% increase in revenue over the results for the preceding fiscal year.
We are excited to share TMG’s fourth quarter results, which are representative of the first full quarter of operations since the acquisition of Converge earlier this year. As we look forward, we are focused on ensuring that our company is well-positioned to drive ongoing growth and value for our shareholders. While this was the first full quarter of operations for the company reflecting the integration of the Converge business, we have made significant progress on TMG’s next chapter.
“The financial results demonstrate great progress since our acquisition of Converge. We have activated our new integrated operational model to deliver customer acquisition solutions that empower businesses to acquire, grow, and retain customers more efficiently and sustainably. We underwent a business transformation which has been a catalyst for growth as we have altered the course of the business following changes in management, governance, operations, and revenue strategy. The speed and magnitude of change now sets us up for a future boost to revenue, GAAP positive earnings, and ongoing growth potential. I am extremely pleased with the speed in which we have been able to deliver the reorganization in operations and the efforts of our management team during this period. Importantly, we have divested and restructured several legacy parts of the Troika business and repositioned our resources to fuel growth.” said Sid Toama, Chief Executive Officer of TMG.
“We are now able to take advantage of a disruption in digital and offline media channels and help businesses reevaluate their customer acquisition and retention investments. Our diverse performance business model will also help clients mitigate their business uncertainties as they continue to try to grow their customer base. We are continuing to help our clients in home services, professional services, insurance, and legal services to offer value offerings to consumers through our performance marketing solutions model. As an additional value proposition, we are well-positioned to help our clients measure the impact of their customer acquisition investments through our data and business intelligence solutions at a time when return on investment is paramount.”
“We have also redefined our brand strategy and integrated our data, technology, and customer acquisition functions to create a robust offering for our current and prospective clients following the acquisition of Converge. Our outlook for the now integrated Converge business remains positive, enhancing TMG’s value to clients and delivering performance outcomes through agile creative, innovative technology, and adaptive intelligence to deliver financial goals.”
“We are keenly focused on building integrated functions across the businesses to optimize operational efficiencies to drive revenue and margin, while streamlining internal corporate functions. To support this, we have relocated our Corporate headquarters to New York where we have been building our shared services teams. Additional focus points include removing from the business any legacy arrangements that are not in line with these core objectives.” said Erica Naidrich, Chief Financial Officer of TMG. “We are extremely pleased with what we have accomplished in this fourth quarter of the fiscal year, while working to mitigate the costs and remove the inefficiencies of the Company’s legacy business model, some of which will continue to burden performance until we can report a full four quarters of results integrating Converge business. We are now poised and ready directionally for where the business is going. The results reflect the early stages of the strategies and tactics we have implemented to chart a new direction for the Company.”
The results of operations for the year ended June 30, 2022, have been significantly impacted by the Converge acquisition. All financial results herein for the fiscal year ended June 30, 2022, include the results of operations of the Converge companies which are reflective of the period March 22, 2022 (the acquisition closing date), through June 30, 2022.
Revenues for the year ended June 30, 2022, increased by approximately $100.2 million as compared with the prior year period, resulting in a total of approximately $116.4 million. The increase in revenue was primarily due to the contribution of the Converge business; this accounted for approximately $90.3 million over a 101-day period since the closing date of the acquisition, and it is representative of 78% of the Company’s total revenue for fiscal year 2022.
The $100.2 million increase in revenue is attributable to Managed Services revenue of $51 million, Performance Marketing revenue of $40 million, and year over year revenue increase of $8.9 million due to an increase in demand for the Company’s branding and creative solutions.
TMG saw an increase in demand for its customer acquisition and performance solutions which led to an increase in revenue of $16 million, or 26%, for this revenue stream on a quarter over quarter basis. This increase was primarily powered by its home improvement and professional services sectors
TMG’s Adjusted EBITDA for the fourth quarter 2022 was $5.6 million, which was primarily driven by the increase in revenues due to the Converge acquisition as discussed above combined with the off-setting of several one-time costs incurred as a result of the ongoing restructuring and transformational efforts by management. We have made expeditious restructuring decisions in order to avoid distraction by business matters that will not 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.
The fourth quarter contained several non-recurring or non-cash costs including $3.9 million in non-cash stock compensation expense (which are reflected in selling, general and administrative expenses), net impairment charges totaling $7.7 million, restructuring and other related charges totaling $5.6 million, inclusive of $3.3 million of stock compensation relating to the Redeeem transaction, and loss contingencies on equity issuance of $3.6 million.
TMG entered into revised terms for our Series E Preferred Stock to minimize the impact of investor dilution and make our stock more attractive to new investors following our record financial results. The Company is intending on repurchasing all outstanding shares of the Series E Preferred Stock which we anticipate will give investors confidence as we build on the momentum that we have reported today. We are currently in a transformational stage with our primary focus on integrating the business, while creating efficiencies in order to scale for strong revenue upside to deliver sustainable profitability.
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