Vinco Ventures, Inc. (NASDAQ:BBIG) Q1 2022 Earnings Conference Call May 23, 2022 4:30 PM ET
Greg McNiff - IR
Lisa King - CEO
Philip Jones - CFO
Conference Call Participants
Greetings. Welcome to the Vinco Ventures First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded.
I'll now turn the conference over to your host, Greg McNiff, Investor Relations for Vinco Ventures. You may begin.
Thank you, operator. Good afternoon and welcome to Vinco Ventures first quarter 2022 financial results conference call. I am Greg McNiff, Invesor Relations for Vinco Ventures.
Vinco released results for the first quarter of 2022 ended March 31, 2022, this afternoon after the market closed. If you did not receive a copy of our earnings press release, you may obtain it from the Investor Relations section of our website at investors.vincoventures.com.
With me on the call today will be Lisa King, Vinco's Chief Executive Officer; and Philip Jones, Vinco's Chief Financial Officer.
Certain matters we will be discussing today, including our growth strategy and expected growth opportunities and performance centered around the Lomotif 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 quarterly report on Form 10-Q for the period ended March 31, 2022 filed earlier today.
And with that, I'd like to turn the call over to Lisa.
Thank you, Greg. Good morning, and thank you for everyone for joining us. We're very pleased to report the positive momentum from our fourth quarter continued into Q1. We more than quadrupled revenue from the year ago quarter, largely due to our acquisition of AdRizer, but even without AdRizer, revenue rose 51% from the first quarter of 2021.
We're continuing our transition into a global content-driven ecosystem and will do so with our core pillars; to entertain, engage and endorse, which each help enrich the Vinco ecosystem. We aim to entertain broad global audiences with compelling content, engage users with rich experiences on our platforms and create unique opportunities to endorse and advertise brands through our marketing platform and through artist, creator and influencer relationships.
In February, we completed our acquisition of AdRizer, an advertising platform utilizing artificial intelligence and proprietary technology for analytics and programmatic real-time media buying. Vinco revenue increased 349.7% from the first quarter of 2021 to $11.5 million, reflecting the impact of the inclusion of AdRizer.
Also the plan to integrate AdRizer's technology for ad placements throughout the Lomotif path has gone very smoothly. Testing is currently in progress and our beta launch is near. We believe that AdRizer in conjunction with Honey Badger, our digital commerce company, will help us continue to grow and strengthen our engagement and impressions across our ecosystem and beyond. Lomotif, our short form video and music social media app continues to focus on user engagement in the US and internationally through distinctive partnerships, particularly in live entertainment.
During the quarter, we continued our efforts to promote and expand the user base of our Lomotif app and related digital properties as we live streamed the Shack's Funhouse event in February and the Okeechobee Music Festival in March, and just this past weekend, Lomotif live streamed events at EDC Las Vegas, where we hosted Grimes and Snoop Dogg.
Vinco also announced May 18, 2022 as the record date for the planned spin-off of Cryptyde into a separate publicly-traded company. Upon the closing of the spinoff, investors who hold BBIG stock through the distribution date of May 27, 2022 will receive one share of the new company for every 10 shares of Vinco Ventures.
This spinoff also included some of our legacy businesses as we continue our transition to a global content-driven ecosystem. Through strategic initiatives and growth, we'll continue to focus on enriching the lives of our users, viewers, our clients, our community and our shareholders through our core pillars to entertain, engage and endorse. I'm encouraged by our positive progress in the first quarter, and look forward to continuing to execute our vision for Vinco
in the coming months and beyond.
Now, I'd like to turn it over to Phil who can provide a more granular insight into our financial results. Thank you for your time, everyone. Over to you, Phil.
Thank you, Lisa. Today we filed our Form 10-Q with the SEC that provides details on our first quarter results and our financial condition as of March 31, 2022. As I highlighted in our fourth quarter and full year earnings call for 2021, just over a month ago, 2021 was a very busy transformative year for our business. Now, as we begin 2022, our financials are starting to show the earlier results of this transformation.
First and foremost, during the quarter, we included the results of AdRizer since the acquisition in early February, which propelled our revenue to $11.5 million for the quarter, an increase of $9 million, or 349.7%. In addition, initial crypto mining equipment sale at CW Machines helped further increase our revenue. CW Machines is a subsidiary of Cryptyde and will be part of the spinoff expected to close at the end of May.
We are excited for the AdRizer digital advertising sales and believe that this line of our business can be in an area of significant potential revenue growth for the company. Gross profit during the quarter was 600,000 as cost for traffic acquisition increased for the acquisition of AdRizer and also due to the increased content creation cost at Honey Badger, which increased its activities in anticipation of the AdRizer relationship. We'll work to increase gross profit from these businesses as we further integrate AdRizer with our other digital media properties.
During the first quarter, we incurred selling, general and administrative cost, or SG&A cost of $26.8 million as compared to $11.6 million in SG&A cost for the first quarter of 2021, an increase of $15.1 million. Of this increase, $10.4 million was due to higher legal, professional and transaction cost primarily associated with the company's acquisition of AdRizer. The remaining increase reflects the expanded size and scope of the company since the first quarter of 2021, including an increase of $4.4 million in advertising, marketing promotion cost as the company continues to invest in building market awareness of Lomotif and an increase of $5.2 million in compensation cost, which reflects the increase in headcount over the past year as the company has grown internally and through the acquisition of AdRizer, as well as the consolidation of the compensation cost of Lomotif since July of 2021. Offsetting these increases was a $7.6 million decrease in stock-based compensation between the two quarters.
Similar to recent quarters, we recorded a significant total net other expense, which for the first quarter was nearly $353 million as compared to a net other expense of $51.5 million in the first quarter of 2021. The significant increase in net other expense is due to the impact of the requirement that the company classifieds to warrants to purchase shares of its common stock as a liability upon issuance on its consolidated balance sheets, as these warrants are freestanding financial instruments that may require the company to transfer consideration upon exercise.
Each warrant is initially recorded at fair value on the date of issuance, using the Monte-Carlo simulation pricing model and subsequently re-measured to fair value at each subsequent balance sheet date. Losses on issuance and changes in fair value of outstanding warrants are recognized as a component of net other income or expense.
The company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrant. During the first quarter of 2022, loss on issuance of warrants was $243.7 million while the change in the fair value of the company's liability for its outstanding warrants as of March 31, 2022 resulted in an expense of $86.9 million.
The impact of our warrant-related expense was significant and accounted for 87% of our net loss of $372.9 million during the quarter. The impact of our warrant liability is something that we are focused on as we continue to transform our business.
To that end, recently, on May 12, we filed an 8-K for warrant exchange or warrant exercise agreements that we entered into that when elected by the holders will begin to materially reduce our warrant liabilities and therefore their impacts on our financial results in the coming quarters.
As of March 31, 2022, we had $130.8 million of unrestricted cash and $80 million of restricted cash, which is listed as a long-term asset to match the amended maturity date of the matching $80 million of convertible note underlying the cash restriction. Our balance sheet at March 31, 2022 also reflects the impact of the consolidation of AdRizer, especially for account receivable and account payable.
And for the deferred acquisition price associated with the up to 10 million shares issuable to the former owners of AdRizer in January of 2024. The deferred share issuance was given an estimated fair value as of the acquisition date of $23.3 million. And finally, once again, our balance sheet reflects the impact of our warrant liability, which was $429.2 million as of March 31.
So as we progressed through the year, we will continue to see the beneficial impact of the inclusion of AdRizer into our business, along with the continued investment in the promotion and improvement of the Lomotif app and all of its digital properties, along with our content creation initiatives, all of which are designed to increase our organically generated traffic and viewership that will feed into the AdRizer digital advertising monetization platform and thus completing the digital media ecosystem that Lisa described earlier. So we look forward to seeing the model progress and its impact on our financial results as we continue through 2022. Once again, I encourage everyone to review the 10-Q filed the SEC today for additional details on our first quarter results.
And with that, I'd like to turn the call back to Lisa for closing remarks. Lisa?
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 on our progress next quarter. Thank you.
This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.