Bright Mountain Media Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001628280-24-037170
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-125527
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 157 previous paragraphs and 145 current paragraphs.
85 unchanged; 51 reworded; 9 added; 17 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Consumer insights revenue decreased by $1.2 million or 16%, for the three months ended September 30, 2024, compared to the same period in 2023. Approximately $6.8 million, or 48%, of the Company’s revenue for the three months ended September 30, 2024 was generated from our consumer insights customers compared to $8.0 million, or 52%, for the same period in 2023. This decrease was primarily related to the slowdown of Altria product testing, resulting in a negative revenue impact.
Current report
Cost of revenue decreased $2.1 million or 18% for the three months ended September 30, 2024, compared to the same period for 2023. This reduction is due to the factors discussed below:
Current report
Professional fees increased by $1.4 million, or 224%, for the three months ended September 30, 2024, compared to the same period in 2023. This increase is mainly driven by an increase in legal fees related to the Ladenburg litigation as discussed in Note 17 above.
Current report
Impairment of Goodwill and Intangibles
Current report
During the three months ended September 30, 2023, the Company performed an assessment of its goodwill and intangible assets. The assessment indicated that the carrying value was in excess of its implied fair value, resulting in an impairment charge of $13.7 million and $2.5 million for goodwill and intangibles, respectively. There was no impairment recorded for the same period of 2024.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Our revenue increased by $10.2 million, or 35%, for the nine months ended September 30, 2024 compared to the same period in 2023. For the nine months ended September 30, 2024, revenue includes $27.3 million, which represents the impact of the Big Village Acquisition, which was completed in April 2023. This compares to $19.8 million for the same period in 2023. Changes in revenue generated by each such division are set forth below:
Current report
Impairment of Goodwill and Intangibles
Current report
During the nine months ended September 30, 2023, the Company performed an assessment of its goodwill and intangible assets. The assessment indicated that the carrying value was in excess of its implied fair value, resulting in an impairment charge of $13.7 million and $2.5 million for goodwill and intangibles, respectively. There was no impairment recorded for the same period of 2024.
Removed paragraphs (17)
Previous report
Our revenue showed an overall increase of $387,000, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023.
Previous report
Revenue in our digital publishing division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic. This reduction was offset by an increase in our advertising technology division which was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue.
Previous report
Consumer insights revenue decreased by $219,000, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023. Approximately $6.7 million, or 51%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our consumer insights customers compared to $6.9 million, or 55%, for the same period in 2023.
Previous report
Cost of revenue increased $1.2 million, or 14%, for the three months ended June 30, 2024, compared to the same period for 2023.
Previous report
The Company incurred severance cost of approximately $114,000 associated with a headcount reduction during the three months ended June 30, 2023.
Previous report
Legal Fees
Previous report
Legal fees decreased by $99,000, or 16%, for the three months ended June 30, 2024, compared to the same period in 2023. Approximately $359,000 of legal fees for the three months ended June 30, 2023, represented costs associated with the Big Village Acquisition.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Our revenue showed an overall increase of $11.3 million, or 80%, for the six months ended June 30, 2024 compared to the same period in 2023. For the six months ended June 30, 2024, revenue includes $18.3 million, which represents the impact of the Big Village Acquisition, which was completed in April 2023. This compares to $9.2 million for the same period in 2023. As a result, the acquisition contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in revenue for the six months ended June 30, 2024.
Previous report
Personnel cost increased by $361,000, or 8%, for the six months ended June 30, 2024 compared to the same period in 2023.
Previous report
Legal Expense
Previous report
Legal fees increased by $128,000, or 19%, for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $359,000 of legal expense for the six months ended June 30, 2023 represented costs associated with the Big Village Acquisition.
Previous report
Professional fees decreased by $2.0 million or 55% for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $685,000 of professional fees for the six months ended June 30, 2023 represented costs associated with the Big Village Acquisition.
Previous report
Interest is paid in kind at 12.30% per annum on approximately $35.4 million of the amount owed under the Credit Agreement, and at 15% per annum on $32.1 million of the amount owed under the Credit Agreement. With respect to the remaining $7.1 million owed under the facility, interest is paid in kind at 4% per annum and in cash at the SOFR plus 3.0% (for a total interest rate of 8.30% per annum at June 30, 2024).
Previous report
10% Convertible Promissory Note
Previous report
During November 2018, the Company issued a 10% convertible promissory note (the "Convertible Note") in the amount of $80,000 to the former Chairman of the Board, a related party. The Convertible Note is unsecured, matured five years from issuance and was convertible at the option of the holder into shares of our common stock at any time prior to maturity at a conversion price of $0.40 per share. The outstanding principal and interest on the Convertible Note was due and payable in November 2023. At June 30, 2024, approximately $123,000 inclusive of principal and interest is due and payable, and the outstanding principal continues to accrue interest. The amount was paid subsequent to the period end.
Previous report
For a full description of the Convertible Note, see Note 11, "10% Convertible Promissory Note" to the consolidated financial statements.
Reworded paragraphs (51)
Previous wording
The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2023. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, and in any subsequent filing we make with the SEC.
Current wording
The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2023. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and in the section "Cautionary Statement Regarding Forward-Looking Information", those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, and in any subsequent filing we make with the SEC.
Previous wording
Limited Number of Customers. During the six months ended June 30, 2024 and 2023, one customer represented 14.2% and 12.7% of revenue, respectively.
Current wording
Limited Number of Customers. During the nine months ended September 30, 2024 and 2023, one customer represented 13.4% and 13.5% of revenue, respectively.
Previous wording
As regulatory concerns accelerate the impact on existing industry standards, companies are actively seeking new methods to finely tailor their messages to target audiences. Tech companies will be limited in how they monetize personal information for advertising purposes. This trend is exemplified by two imminent developments: (1) the anticipated erosion of Google's third-party cookies and (2) the data security measures integrated into Apple iPhones. Consequently, companies must explore innovative methods to better understand their target audiences and have the tools to effectively engage with them.
Current wording
As regulatory concerns accelerate the impact on existing industry standards, companies are actively seeking new methods to finely tailor their messages to target audiences. Tech companies will be limited in how they monetize personal information for advertising purposes. This trend is exemplified by two imminent developments: (1) the anticipated erosion of Google's third-party cookies and (2) the data security measures integrated into Apple iPhone. Consequently, companies must explore innovative methods to better understand their target audiences and have the tools to effectively engage with them.
Previous wording
We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following is our analysis for the three and six months ended June 30, 2024 and 2023:
Current wording
We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following is our analysis for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Revenue increased $387,000, or 3%, for the three months ended June 30, 2024, compared to the same period in 2023. Revenue increased $11.3 million, or 80%, for the six months ended June 30, 2024, compared to the same period in 2023. See below for a detailed analysis of revenue for the three and six months ended June 30, 2024, and 2023.
Current wording
Revenue decreased $1.1 million or 7%, for the three months ended September 30, 2024, compared to the same period in 2023. Revenue increased $10.2 million, or 35%, for the nine months ended September 30, 2024, compared to the same period in 2023. See below for a detailed analysis of revenue for the three and nine months ended September 30, 2024, and 2023.
Previous wording
Cost of revenue increased approximately $1.2 million, or 14%, for the three months ended June 30, 2024 compared to the same period in 2023. Cost of revenue increased approximately $9.5 million, or 101%, for the six months ended June 30, 2024 compared to the same period in 2023. See below for a detailed analysis of cost of revenue for the three and six months ended June 30, 2024, and 2023.
Current wording
Cost of revenue decreased approximately $2.1 million, or 18%, for the three months ended September 30, 2024 compared to the same period in 2023. Cost of revenue increased approximately $6.6 million or 30%, for the nine months ended September 30, 2024 compared to the same period in 2023. See below for a detailed analysis of cost of revenue for the three and nine months ended September 30, 2024, and 2023.
Previous wording
General and administrative expenses decreased approximately $2.8 million, or 35%, for the three months ended June 30, 2024 compared to the same period in 2023. General and administrative expenses decreased approximately $1.0 million, or 9%, for the six months ended June 30, 2024 compared to the same period in 2023. See below for a detailed analysis of general and administrative expenses for the three and six months ended June 30, 2024 and 2023.
Current wording
General and administrative expenses increased approximately $300,000, or 7%, for the three months ended September 30, 2024 compared to the same period in 2023. General and administrative expenses remained consistent for the nine months ended September 30, 2024 compared to the same period in 2023. See below for a detailed analysis of general and administrative expenses for the three and nine months ended September 30, 2024 and 2023.
Previous wording
Net loss from operations for the quarter ended June 30, 2024 was $5.2 million as compared to a net loss of $6.1 million for the same period in 2023. The following is our analysis for the period.
Current wording
Net loss from operations for the quarter ended September 30, 2024 was $27,000 as compared to a net loss of $17.0 million for the same period in 2023. The following is our analysis for the period:
Previous wording
The Company focuses on digital publishing, advertising technology, consumer insights, creative and media services. Revenue generated by each such division is set forth below:
Current wording
Our revenue decreased $1.1 million, or 7%, for the three months ended September 30, 2024, compared to the same period in 2023. The reduction in revenue was largely attributable to our digital publishing and consumer insihts divisions. Changes in revenue generated by each such division are set forth below:
Previous wording
Digital publishing revenue decreased by $928,000, or 64%, for the three months ended June 30, 2024,compared to the same period in 2023. Approximately $516,000, or 4%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our digital publishing customers, compared to $1.4 million, or 11%, for the same period in 2023. This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.
Current wording
Digital publishing revenue decreased by $0.5 million, or 50%, for the three months ended September 30, 2024,compared to the same period in 2023. Approximately $0.5 million, or 4%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our digital publishing customers, compared to $1.0 million, or 7%, for the same period in 2023. This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.
Previous wording
Advertising technology revenue increased by $1.6 million, or 83%, for the three months ended June 30, 2024, compared to the same period in 2023. Approximately $3.6 million, or 28%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our advertising technology customers compared to $2.0 million, or 16%, for the same period in 2023. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue.
Current wording
Advertising technology revenue increased by $1.0 million or 28%, for the three months ended September 30, 2024, compared to the same period in 2023. Approximately $4.7 million, or 33%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our advertising technology customers compared to $3.6 million, or 24%, for the same period in 2023. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue.
Previous wording
Creative services revenue remained consistent for the three months ended June 30, 2024, compared to the same period in 2023. Approximately $1.7 million, or 13%, of the Company’s revenue for the three months ended June 30, 2024 and 2023, was generated from our creative services customers.
Current wording
Creative services revenue decreased by $185,000 or 10% for the three months ended September 30, 2024, compared to the same period in 2023. Approximately $1.6 million, or 11%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our creative services customers compared to $1.8 million, or 12% for the same period in 2023. This decrease was primarily related to a decrease in the number of projects for smaller tier revenue customers.
Previous wording
Media services revenue decreased by $83,000, or 13%, for the three months ended June 30, 2024, compared to the same period in 2023. Approximately $566,000, or 4%, of the Company’s revenue for the three months ended June 30, 2024, was generated from our consumer insights customers compared to $649,000, or 5%, for the same period in 2023.
Current wording
Media services revenue decreased by $203,000, or 26%, for the three months ended September 30, 2024, compared to the same period in 2023. Approximately $600,000, or 4%, of the Company’s revenue for the three months ended September 30, 2024, was generated from our media services customers compared to $793,000, or 5%, for the same period in 2023. This decrease was primarily related to the timing of customer needs and the moving of certain projects to year-end.
Previous wording
Direct salaries and labor cost decreased $382,000, or 15%, for the three months ended June 30, 2024, when compared to the same period in 2023. Approximately $2.1 million, or 22%, of the Company's cost of revenue for the three months ended June 30, 2024, was a result of direct salaries and labor cost compared to $2.5 million, or 31% the same period in 2023. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services divisions.
Current wording
Direct salaries and labor cost decreased $1.1 million, or 18%, for the three months ended September 30, 2024, when compared to the same period in 2023. Approximately $1.5 million, or 15%, of the Company's cost of revenue for the three months ended September 30, 2024, was a result of direct salaries and labor cost compared to $2.7 million, or 23% the same period in 2023. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services divisions.
Previous wording
Direct project cost increased $474,000, or 18%, for the three months ended June 30, 2024 when compared to the same period in 2023. Approximately $3.1 million, or 32%, of the Company's cost of revenue for the three months ended June 30, 2024, was a result of direct project cost compared to $2.6 million, or 31%, during the same period in 2023. These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative and media services divisions.
Current wording
Direct project cost decreased $487,000, or 14%, for the three months ended September 30, 2024 when compared to the same period in 2023. Approximately $3.0 million, or 31%, of the Company's cost of revenue for the three months ended September 30, 2024, was a result of direct project cost compared to $3.5 million, or 29%, during the same period in 2023. These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative and media services divisions. The decrease in direct project costs is related to the decrease in revenue from our consumer insights, creative and media services divisions.
Previous wording
Non-direct cost was $1.6 million, or 17%, of the Company's cost of revenue for the three months ended June 30, 2024, compared to $1.6 million, or 19%, for the same period in 2023. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights, creative and media services divisions.
Current wording
Non-direct cost was $1.8 million, or 18%, of the Company's cost of revenue for the three months ended September 30, 2024, compared to $2.9 million, or 24%, for the same period in 2023. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights, creative and media services divisions. The decrease in non-direct project costs is related to the decrease in revenue from our consumer insights, creative and media services divisions.
Previous wording
Publisher cost was $2.3 million, which represents 24% of overall cost of revenue, and $1.1 million, or 13%, of overall cost of revenue, for the three months ended June 30, 2024 and 2023, respectively. We experienced an increase of $1.2 million, or 103%, for the three months ended June 30, 2024, compared to the same period in 2023. This increase is consistent with the increase noted in revenue for our advertising technology division. These costs represent payments to media providers and website publishers.
Current wording
Publisher cost was $3.0 million, which represents 31% of overall cost of revenue, and $2.1 million, or 18%, of overall cost of revenue, for the three months ended September 30, 2024 and 2023, respectively. We experienced an increase of $930,000, or 45%, for the three months ended September 30, 2024, compared to the same period in 2023. This increase is consistent with the increase noted in revenue for our advertising technology division. These costs represent payments to media providers and website publishers.
Previous wording
Gross margin was $3.4 million, and $4.2 million for the three months ended June 30, 2024 and 2023, respectively. Our gross margin decreased $786,000, or 19%, for the three months ended June 30, 2024, when compared to the same period of 2023. Gross margin as a percentage of revenue decreased to 26% for the three months ended June 30, 2024 compared to 33% for the same period of 2023.
Current wording
Gross margin was $4.4 million and $3.4 million for the three months ended September 30, 2024 and 2023, respectively. Our gross margin increased $1.0 million, or 31%, for the three months ended September 30, 2024, when compared to the same period of 2023. Gross margin as a percentage of revenue increased to 31% for the three months ended September 30, 2024 compared to 22% for the same period of 2023.
Previous wording
General and administrative expenses decreased by $2.8 million, or 35%, for the three months ended June 30, 2024, compared to the same period in 2023. The reduction is due to a combination of factors as discussed below.
Current wording
General and administrative expenses increased by $293,000 or 7%, for the three months ended September 30, 2024, compared to the same period in 2023. The increase is due to a combination of factors as discussed below.
Previous wording
Personnel cost decreased by approximately $386,000, or 14%, for the three months ended June 30, 2024, compared to the same period in 2023. This change is mainly driven by a decrease in the Company's head count by a net change of 24 employees, including 13 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $75,000 in connection with this reduction.
Current wording
Personnel cost decreased by approximately $381,000, or 17%, for the three months ended September 30, 2024, compared to the same period in 2023. This change is mainly driven by a decrease in the Company's head count by a net change of 47 employees, including 13 employees that were terminated as a reduction in force. The Company employee's headcount was 141 and 188 at September 30, 2024 and 2023, respectively.
Previous wording
Data processing increased by $132,000, or 80%, for the three months ended June 30, 2024, compared to the same period in 2023. The Big Village Acquisition was completed in April 2023, and is the main driver of the increase in data processing.
Current wording
Data processing increased by $38,000, or 17%, for the three months ended September 30, 2024, compared to the same period in 2023.
Previous wording
Financing and other expense, net increased by $1.2 million, or 54%, for the three months ended June 30, 2024, compared to the same period in 2023. This increase was largely attributable to a $1.1 million increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.
Current wording
Financing and other expense, net increased by $480,000, or 17%, for the three months ended September 30, 2024, compared to the same period in 2023. This increase was largely attributable to a $477,000 increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.
Previous wording
Net loss from operations for the six months ended June 30, 2024 was $10.0 million as compared to a net loss of $9.9 million for the same period in 2023. The following is our analysis for the period.
Current wording
Net loss from operations for the nine months ended September 30, 2024 was $4.0 million as compared to a net loss of $23.8 million for the same period in 2023. The following is our analysis for the period.
Previous wording
Digital publishing revenue decreased by $1.5 million, or 60%, for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $950,000, or 4%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our digital publishing customers compared to $2.4 million, or 17%, for the same period in 2023. This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.
Current wording
Digital publishing revenue decreased by $2.0 million, or 57%, for the nine months ended September 30, 2024, compared to the same period in 2023. Approximately $1.5 million, or 4%, of the Company’s revenue for the nine months ended September 30, 2024, was generated from our digital publishing customers compared to $3.4 million, or 12%, for the same period in 2023. This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.
Previous wording
Advertising technology revenue increased by $3.7 million, or 148%, for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $6.2 million, or 24%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our advertising technology customers compared to $2.5 million, or 18%, for the same period in 2023. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue.
Current wording
Advertising technology revenue increased by $4.7 million, or 77%, for the nine months ended September 30, 2024, compared to the same period in 2023. Approximately $10.9 million, or 28%, of the Company’s revenue for the nine months ended September 30, 2024, was generated from our advertising technology customers compared to $6.1 million, or 21%, for the same period in 2023. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn has allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue.
Previous wording
Consumer insights revenue increased by $6.5 million, or 94%, for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $13.4 million, or 53%, of the Company’s revenue for the six months ended June 30, 2024 was generated from our consumer insights customers compared to $6.9 million, or 49%, for the same period in 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in consumer insights revenue for the six months ended June 30, 2024.
Current wording
Consumer insights revenue increased by $5.2 million, or 35%, for the nine months ended September 30, 2024, compared to the same period in 2023. Approximately $20.1 million, or 51%, of the Company’s revenue for the nine months ended September 30, 2024 was generated from our consumer insights customers compared to $14.9 million, or 51%, for the same period in 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and is the main driver of the increase in consumer insights revenue for the nine months ended September 30, 2024.
Previous wording
Creative services revenue increased by $2.0 million, or 123%, for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $3.7 million, or 15%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our creative services customers compared to $1.7 million, or 12%, for the same period in 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in creative services revenue for the six months ended June 30, 2024.
Current wording
Creative services revenue increased by $1.8 million or 53%, for the nine months ended September 30, 2024, compared to the same period in 2023. Approximately $5.3 million, or 13% of the Company’s revenue for the nine months ended September 30, 2024, was generated from our creative services customers compared to $3.5 million, or 12%, for the same period in 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and is the main driver of the increase in creative services revenue for the nine months ended September 30, 2024.
Previous wording
Media services revenue increased by $557,000, or 86%, for the six months ended June 30, 2024, compared to the same period in 2023. Approximately $1.2 million, or 5%, of the Company’s revenue for the six months ended June 30, 2024, was generated from our media services customers compared to $649,000, or 5%, for the same period in 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in media services revenue for the six months ended June 30, 2024.
Current wording
Media services revenue increased by $366,000 or 26%, for the nine months ended September 30, 2024, compared to the same period in 2023. Approximately $1.8 million, or 5%, of the Company’s revenue for the nine months ended September 30, 2024, was generated from our media services customers compared to $1.4 million, or 5%, for the same period in 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and is the main driver of the increase in media services revenue for the nine months ended September 30, 2024.
Previous wording
Cost of revenue increased $9.5 million, or 101%, for the six months ended June 30, 2024, compared to the same period of 2023. For the six months ended June 30, 2024, cost of revenue includes $14.0 million, or 74% from the impact of the Big Village Acquisition, which was completed in April 2023. This compares to $6.7 million, or 72%, for the same period in 2023. As a result, the acquisition contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in cost of revenue for the six months ended June 30, 2024.
Current wording
Cost of revenue increased $6.6 million, or 30%, for the nine months ended September 30, 2024, compared to the same period of 2023. For the nine months ended September 30, 2024, cost of revenue includes $20.3 million, or 71% from the impact of the Big Village Acquisition, which was completed in April 2023. This compares to $16.5 million, or 75%, for the same period in 2023. As a result, the Big Village Acquisition is the main driver of the increase in cost of revenue for the nine months ended September 30, 2024.
Previous wording
Direct salaries and labor cost increased $1.5 million, or 61%, for the six months ended June 30, 2024, when compared to the same period in 2023. Approximately $4.1 million, or 22%, of the Company's cost of revenue for the six months ended June 30, 2024 was a result of direct salaries and labor cost compared to $2.5 million, or 27%, for the same period in 2023. As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in direct salaries and labor cost for the six months ended June 30, 2024. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services divisions.
Current wording
Direct salaries and labor cost increased $415,000, or 8%, for the nine months ended September 30, 2024, when compared to the same period in 2023. Approximately $5.1 million, or 20%, of the Company's cost of revenue for the nine months ended September 30, 2024 was a result of direct salaries and labor cost compared to $5.2 million, or 24%, for the same period in 2023. As discussed above, the Big Village Acquisition, which was completed in April 2023, is the main driver of the increase in direct salaries and labor cost for the nine months ended September 30, 2024. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services divisions.
Previous wording
Direct project cost increased $3.6 million, or 141%, for the six months ended June 30, 2024 when compared to the same period in 2023. Approximately $6.2 million, or 33%, of the Company's cost of revenue for the six months ended June 30, 2024, was a result of direct project cost compared to $2.6 million, or 27%, for the same period in 2023. As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in direct project cost for the six months ended June 30, 2024. These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative and media services divisions.
Current wording
Direct project cost increased $3.1 million, or 52%, for the nine months ended September 30, 2024 when compared to the same period in 2023. Approximately $9.2 million, or 32%, of the Company's cost of revenue for the nine months ended September 30, 2024, was a result of direct project cost compared to $6.1 million, or 27%, for the same period in 2023. As discussed above, the Big Village Acquisition, which was completed in April 2023, is the main driver of the increase in direct project cost for the nine months ended September 30, 2024. These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative and media services divisions.
Previous wording
Non direct project cost increased $2.1 million, or 126%, for the six months ended June 30, 2024, when compared to the same period in 2023. Approximately $3.7 million, or 20%, of the Company's cost of revenue for the six months ended June 30, 2024, was a result of direct project cost compared to $1.6 million, or 17%, for the same period in 2023. As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to cost of revenue for three months of the prior period and for the full six months of the current period and is the main driver of the increase in non- direct project cost for the six months ended June 30, 2024. These costs represent overall client service costs that are not specifically related to a particular project.
Current wording
Non-direct project cost increased $187,000, or 4%, for the nine months ended September 30, 2024, when compared to the same period in 2023. Approximately $5.5 million, or 19%, of the Company's cost of revenue for the nine months ended September 30, 2024, was a result of non-direct project cost compared to $6.1 million, or 24%, for the same period in 2023. As discussed above, the Big Village Acquisition, which was completed in April 2023, is the main driver of the increase in non-direct project cost for the nine months ended September 30, 2024. These costs represent overall client service costs that are not specifically related to a particular project.
Previous wording
Publisher cost was $4.1 million, which represents 22% of overall cost of revenue, and $1.6 million, or 17%, of overall cost of revenue for the six months ended June 30, 2024 and 2023, respectively. We experienced an increase of $2.5 million, or 153%, for the six months ended June 30, 2024 compared to the same period in 2023. This increase is consistent with the increase noted in revenue for our advertising technology division. These costs represent payments to media providers and website publishers which drive revenue for our advertising technology division.
Current wording
Publisher cost was $7.1 million, which represents 25% of overall cost of revenue, and $3.7 million, or 17%, of overall cost of revenue for the nine months ended September 30, 2024 and 2023, respectively. We experienced an increase of $3.4 million, or 92%, for the nine months ended September 30, 2024 compared to the same period in 2023. This increase is consistent with the increase noted in revenue for our advertising technology division. These costs represent payments to media providers and website publishers which drive revenue for our advertising technology division.
Previous wording
Our gross margin increased $1.8 million, or 38%, for the six months ended June 30, 2024, compared to the same period for 2023. Gross margin as a percentage of revenue decreased to 26% for the six months ended June 30, 2024, compared to 34% for the same period of 2023.
Current wording
Our gross margin increased $3.6 million, or 49%, for the nine months ended September 30, 2024, compared to the same period of 2023. Gross margin as a percentage of revenue increased to 28% for the nine months ended September 30, 2024, compared to 25% for the same period of 2023.
Previous wording
General and administrative expenses decreased by $1.0 million, or 9%, for the six months ended June 30, 2024, compared to the same period in 2023. The reduction is primarily due to a combination of factors as discussed below.
Current wording
General and administrative expenses increased by $43,000 for the nine months ended September 30, 2024, compared to the same period in 2023. The increase is primarily due to a combination of factors as discussed below:
Previous wording
The Company reduced its head count by 44 employees including 22 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $93,000 in connection with this reduction. The Company incurred severance cost of approximately $236,000 associated with a head count reduction during the same period for 2023.
Current wording
Personnel cost increased by $734,000, or 12%, for the nine months ended September 30, 2024 compared to the same period in 2023. The Company reduced its head count by 47 employees, including 22 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $93,000 in connection with this reduction. The Company incurred severance cost of approximately $322,000 associated with a head count reduction during the same period for 2023.
Previous wording
Professional fees decreased by $2.0 million, or 73%, for the three months ended June 30, 2024, compared to the same period in 2023. Approximately $685,000 of professional fees for the three months ended June 30, 2023, represented costs associated with the Big Village Acquisition.
Current wording
Professional fees decreased by $530,000 or 18% for the nine months ended September 30, 2024, compared to the same period in 2023. $685,000 of professional fees for the nine months ended September 30, 2023 represented costs associated with the Big Village Acquisition.
Previous wording
Data processing increased by $512,000, or 259%, for the six months ended June 30, 2024, compared to the same period of 2023. As discussed above, the Big Village Acquisition, was completed in April 2023, and contributed to data processing for three months of the prior period and for the full six months of the current period and is the main driver of the increase in data processing for the six months ended June 30, 2024.
Current wording
Data processing increased by $550,000, or 130%, for the nine months ended September 30, 2024, compared to the same period of 2023. As discussed above, the Big Village Acquisition was completed in April 2023, and contributed to data processing for six months of the prior period and for the full nine months of the current period, and is the main driver of the increase in data processing for the nine months ended September 30, 2024.
Previous wording
Financing and other expense, net increased by $2.9 million, or 96%, for the six months ended June 30, 2024, compared to the same period during 2023. This increase was largely attributable to $2.9 million or 86%, increase in interest expense related to the Centre Lane Senior Secured Credit Facility which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.
Current wording
Financing and other expense, net increased by $3.4 million, or 59%, for the nine months ended September 30, 2024, compared to the same period during 2023. This increase was largely attributable to $3.4 million or 55%, increase in interest expense related to the Centre Lane Senior Secured Credit Facility which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2023.
Previous wording
All of the items included in the reconciliation fromnet loss before taxesto EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business.
Current wording
All of the items included in the reconciliation from net loss before taxes to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business.
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Previous report — wording carried elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous report — wording carried elsewhere
The Company employee's headcount was 150 and 232 at June 30, 2024 and 2023, respectively.
Previous report — wording carried elsewhere
The Company focuses on digital publishing, advertising technology, consumer insights, creative and media services. Revenue generated by each division are set forth below:
Previous report — wording carried elsewhere
The Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10-Q, is not expected to be sufficient to fund its anticipated level of operations over the next twelve months. As a result, such matters create a substantial doubt regarding the Company’s ability to meet its financial obligations and continue as a going concern.