Q4 Revenue increased 11% to $19.9 million Q4 Adjusted EBITDA increased 22% to $10.1 million Q4 Free Cash Flow increased 17% to $9.4 million Record Q4 114 Million Monthly Active Users, up 6% from prior year
Unless otherwise stated, all amounts are in US dollars.
TORONTO, March 12, 2025--(BUSINESS WIRE)--VerticalScope Holdings Inc. ("VerticalScope" or the "Company") (TSX: FORA; OTCQX: VFORF), a technology company that has built and operates a cloud-based digital platform for online enthusiast communities, today announced financial results for the fourth quarter ended December 31, 2024 ("Q4" or "the quarter").
"I am very proud of what our team accomplished in 2024. We grew our revenue by double-digits organically and have vastly improved our financial position which will allow us to aggressively pursue growth in the year ahead. For the full year, revenue increased by 13% and Adjusted EBITDA by 27%," said Rob Laidlaw, Founder, Chair and CEO of VerticalScope. "Q4 saw a continuation of the strong trends we’ve experienced over the past several quarters. MAUs grew 6% YoY to 114 million while revenue improved by 11%, led by strength in both programmatic and direct advertising channels."
Mr. Laidlaw continued, "We were pleased to see Adjusted EBITDA margins reach 51% in Q4 as most of our revenue gains dropped to the bottom line. Most impressively, we converted 93% of our Adjusted EBITDA to Free Cash Flow. We intend to take advantage of our strong financial position and are actively pursuing accretive community acquisitions to add to the Fora platform."
Financial Highlights for the Three and Twelve Months Ended December 31, 2024 ("Q4 2024" and "FY 2024", respectively).
Q4 2024 revenue increased 11% to $19.9M, driven by 15% growth in Digital Advertising revenue, with double-digit growth in both programmatic and direct channels along with 6% MAU growth. FY 2024 revenue increased 13% to $69.1M, driven by 20% growth in Digital Advertising, attributed to new programmatic partnerships and 16% MAU growth.
Q4 2024 Adjusted EBITDA increased 22% to $10.1M, with a 51% Adjusted EBITDA Margin compared to 46% in the prior year. FY 2024 Adjusted EBITDA increased 27% to $29.8M, with a 43% Adjusted EBITDA Margin compared to 39% in the prior year, driven by double-digit revenue growth and operating leverage.
Q4 2024 Free Cash Flow increased 17% to $9.4M, reflecting a 93% Free Cash Flow Conversion. FY 2024 Free Cash Flow increased 34% to $27.6M, reflecting a 92% Free Cash Flow Conversion.
Q4 2024 operating cash flow increased $2.3M to $7.0M. FY 2024 operating cash flow increased $9.3M to $24.8M, with funds reinvested to reduce debt and strengthen our financial position.
Q4 2024 net income (loss) decreased by $2.7M to a net loss of $0.7M, compared to net income of $2.1M in Q4 2023, with a loss per share of $0.03. This decrease was primarily due to a $2.0M increase in share-based compensation which included performance-based incentives that were one-time in nature, and a $1.3M increase in interest expense mainly attributed to one-time financing fees relating to the October 4, 2024 amendment of our credit agreement. FY 2024 net loss improved $4.9M to $15.9K, with a loss per share of less than $0.01.
In March 2025, we entered into an agreement to purchase the assets of Enthused Digital, which include over 20 communities serving a number of diverse interests including musical instruments and sailing. Collectively, the sites reached over 3.5 million MAU in 2024.
"Our teams achieved outstanding results in 2024," said Vince Bellissimo, CFO of VerticalScope. "We generated over $27 million in Free Cash Flow, allowing us to strengthen our balance sheet by reducing debt by $19 million while repurchasing $2.1 million in shares. Building on this financial strength, we're now well-positioned to take a more aggressive approach to capital deployment in 2025, supporting accelerated growth. Enthused Digital is the first of many tuck-in acquisitions we will pursue and expect to close over the upcoming quarters as we continue to add communities to the Fora platform."
Earnings Conference Call and Webcast Management will host a conference call and webcast to discuss the Company's financial results at 8 a.m. ET on Thursday, March 13, 2025.
Founded in 1999 and headquartered in Toronto, Ontario, VerticalScope is a technology company that has built and operates a cloud-based digital platform for online enthusiast communities in high consumer spending categories. VerticalScope's mission is to enable people with common interests to connect, explore their passions, and share knowledge about the things they love. Through targeted acquisitions and development, VerticalScope has built a portfolio of over 1,200 online communities and over 100 million monthly active users.
Forward-Looking Statements
This news release contains forward-looking information within the meaning of applicable securities legislation that reflects the Company's current expectations regarding future events. When used in this news release, words such as "should", "could", "intended", "expect", "plan" or "believe" and similar expressions indicate forward-looking statements. Forward-looking information, including the Company’s plans for organic growth, deployment of capital, investments in our platform, the growth of revenue and MAU, information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, plans and objectives, is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company's control. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurances can be given that actual results will be consistent with these forward-looking statements. Such risks and uncertainties include, but are not limited to, the implementation and effectiveness of the Company's capital allocation strategy, the availability of high-quality M&A opportunities, and the factors discussed under "Risk Factors" in the Company’s Annual Information Form dated April 1, 2024, which is available on the Company’s profile on SEDAR Plus at https://sedarplus.ca. Actual results could differ materially from those projected herein. VerticalScope does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.
Non-IFRS Measures
This press release references certain non-IFRS measures, including Adjusted EBITDA and Free Cash Flow, and Free Cash Flow Conversion as described below. This press release also makes reference to MAU, which is an operating metric used in our industry. These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS.
The Company uses non-IFRS measures including:
"EBITDA" is calculated as net income (loss) excluding interest, income tax expense (recovery), and depreciation and amortization.
"Adjusted EBITDA" is calculated as EBITDA adjusted for share-based compensation, share performance related bonuses, unrealized gains or losses from changes in fair value of derivative financial instruments, severance, adjustments to contingent consideration liabilities measured at fair value through profit and loss, gain or loss on sale of assets, gain or loss on sale of investments, foreign exchange loss (gain), impairment and other charges that include direct and incremental business acquisition related costs.
"Adjusted EBITDA Margin" measures Adjusted EBITDA as a percentage of revenue.
"Free Cash Flow" means Adjusted EBITDA less capital expenditures and income taxes paid during the period.
"Free Cash Flow Conversion" is equal to Free Cash Flow for the period divided by Adjusted EBITDA for the period.
"Monthly Active Users" ("MAU") is defined as the number of individuals who have visited our communities within a calendar month, based on data as measured by Google Analytics. To calculate average MAU in a given period, we sum the total MAU for each month in that period, divided by the number of months in that period.
The following table sets forth a reconciliation of Adjusted EBITDA and Free Cash Flow to net income (loss):
Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands of US dollars)
2024
2023
2024
2023
Net income (loss)
($661)
$2,074
($16)
($4,951)
Net interest expense
2,462
1,207
5,685
5,087
Income tax expense (recovery)
887
(470)
1,761
(2,917)
Depreciation and amortization
4,399
4,634
17,892
21,322
EBITDA
7,087
7,445
25,322
18,541
Share-based compensation
2,917
886
4,091
4,517
Share performance related bonuses (1)
—
—
(3)
—
Unrealized loss (gain) from changes in derivative fair value of financial instruments
145
(62)
196
(51)
Severance (2)
—
5
—
1,475
Other income
(113)
—
(113)
—
Gain on sale of assets
—
(7)
(10)
(178)
Gain on sale of investments
—
—
(17)
(2)
Foreign exchange loss (gain)
21
(1)
32
(32)
Adjustment to contingent considerations
—
—
—
(1,051)
Other charges (3)
21
(5)
317
277
Adjusted EBITDA
10,077
8,260
29,817
23,496
Less capital expenditures
(562)
(431)
(1,889)
(2,258)
Income taxes received (paid)
(98)
243
(371)
(694)
Free Cash Flow
$9,418
$8,072
$27,557
$20,544
(1)
Share performance related bonus is included in wages and consulting on the consolidated statements of loss and comprehensive loss.
(2)
Severance is included in wages and consulting on the consolidated statements of loss and comprehensive loss.
(3)
Other charges are included in general and administrative on the consolidated statements of loss and comprehensive loss. For the twelve months ended December 31, 2024 and December 31, 2023, these charges include non-recurring legal related costs.
VERTICALSCOPE HOLDINGS INC.
Consolidated Statements of Financial Position
(In U.S. dollars)
December 31,
December 31,
2024
2023
Assets
Current assets:
Cash
$5,189,315
$6,015,184
Restricted cash
97,244
93,840
Trade and other receivables
14,874,882
14,175,352
Lease receivable
326,267
595,961
Income taxes receivable
784,332
797,465
Prepaid expenses
761,652
804,692
Derivative instruments
—
51,303
22,033,692
22,533,797
Property and equipment
482,276
754,293
Right-of-use asset
1,564,687
2,123,739
Intangible assets
37,597,990
52,480,458
Goodwill
52,635,164
52,635,164
Other assets
154,497
283,278
Deferred tax asset
17,937,708
21,786,506
Lease receivable
—
354,288
Total assets
$132,406,014
$152,951,523
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities
$6,864,256
$5,563,354
Income taxes payable
426,778
229,770
Derivative instruments
145,068
—
Deferred revenue
1,125,592
1,157,049
Current portion of long-term debt
687,875
3,614,396
Lease liability
946,626
1,227,160
10,196,195
11,791,729
Long-term debt
38,000,000
54,431,100
Lease liability
1,180,878
2,248,029
Deferred tax liability
315,607
3,609,683
Other long-term liabilities
26,612
185,399
Total liabilities
49,719,292
72,265,940
Shareholders' equity:
Share capital
163,250,013
167,705,234
Contributed surplus
25,413,119
22,435,738
Accumulated other comprehensive loss
(145,494)
(145,494)
Deficit
(105,830,916)
(109,309,895)
82,686,722
80,685,583
Total liabilities and shareholders' equity
$132,406,014
$152,951,523
VERTICALSCOPE HOLDINGS INC.
Consolidated Statements of Loss and Comprehensive Loss
(In U.S. dollars, except per share amounts)
Twelve Months Ended December 31,
2024
2023
Revenue
$69,052,081
$60,899,089
Operating expenses:
Wages and consulting
28,095,581
28,157,502
Share-based compensation
4,091,018
4,517,052
Platform and technology
6,870,305
6,941,603
General and administrative
4,780,358
4,005,025
Depreciation and amortization
17,892,421
21,321,892
Adjustment to contingent considerations
—
(1,051,222)
61,729,683
63,891,852
Operating income (loss)
7,322,398
(2,992,763)
Other expenses (income):
Other income
(112,715)
—
Gain on sale of assets
(10,024)
(178,450)
Net interest and financing expense
5,684,899
5,087,087
Gain on sale of investments
(17,110)
(1,791)
Foreign exchange loss (gain)
32,339
(31,661)
5,577,389
4,875,185
Income (loss) before income taxes
1,745,009
(7,867,948)
Income tax expense (recovery)
Current
1,567,662
(420,837)
Deferred
193,210
(2,496,156)
1,760,872
(2,916,993)
Net loss
($15,863)
($4,950,955)
Other comprehensive loss
Items that may be reclassified to net loss:
Foreign currency differences on translation of foreign operations
—
(59,349)
Total comprehensive loss
($15,863)
($5,010,304)
Earnings (loss) per share:
Basic
$—
($0.23)
Diluted
—
(0.23)
VERTICALSCOPE HOLDINGS INC.
Consolidated Statements of Cash Flows
(In U.S. dollars)
For the year ended December 31,
2024
2023
Cash provided by (used in):
Operating activities:
Net loss
($15,863)
($4,950,955)
Items not involving cash:
Depreciation and amortization
17,892,421
21,321,892
Net interest expense
5,684,899
5,087,087
Gain on sale of assets
(10,024)
(178,450)
Gain on sale of investments
(17,110)
—
Unrealized loss (gain) in derivative instruments
196,371
(51,303)
Income tax expense (recovery)
1,760,872
(2,916,993)
Adjustment to contingent considerations
—
(1,051,222)
Share-based compensation
4,091,018
4,517,052
29,582,584
21,777,108
Change in non-cash operating assets and liabilities
(317,000)
(1,068,235)
Interest paid
(4,121,413)
(4,507,773)
Income taxes paid
(370,533)
(694,349)
24,773,638
15,506,751
Financing activities:
Repayment of term loan
(43,750,000)
(2,500,000)
Proceeds from issuance of revolving loan
41,250,000
15,000,000
Repayment of revolving loan
(16,500,000)
(12,750,000)
Repurchase of share capital for cancellation
(2,101,298)
(134,803)
Credit facility financing fees
(1,503,900)
—
Lease payments
(1,363,370)
(1,455,419)
Proceeds from sublease
590,893
599,634
Proceeds from leasehold improvement allowance
—
106,426
(23,377,675)
(1,134,162)
Investing activities:
Additions to property and equipment and intangible assets
(2,159,218)
(2,257,811)
Proceeds from sale of assets
11,747
191,288
Proceeds from sale of investments
17,110
—
Payment of contingent considerations
—
(15,000,000)
(2,130,361)
(17,066,523)
Decrease in cash
(734,398)
(2,693,934)
Cash, beginning of year
6,015,184
8,766,769
Change in restricted cash balances
(3,404)
22,990
Effect of movement of exchange rates on cash and restricted cash held
