School districts across the country are increasingly taking on social media, filing lawsuits that argue that Instagram, Snapchat, TikTok and YouTube have helped create the nation’s surging youth mental health crisis and should be held accountable.
Media
Troika Media Group Inc. Reports Record Revenue of $187.9 million, Adjusted EBITDA of $5.0 million for the Six Months Ended December 31, 2022
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NEW YORK, March 7, 2023 /PRNewswire/ — Troika Media Group, Inc. (Nasdaq: TRKA) (“TMG”), a consumer engagement and customer acquisition group, today announced financial results for the six months ended December 31, 2022, a transition reporting period (“six month transition period”) as a result of the Company’s change in fiscal year to December 31 from June 30. TMG is a professional services company that architects and builds enterprise value in consumer brands to generate scalable, performance-driven revenue growth. The Company delivers three solutions pillars: TMG CREATES brands and experiences and CONNECTS consumers through emerging technology products and ecosystems to deliver PERFORMANCE based measurable business outcomes.
The six month transition period highlights include:
- Successive record revenue of approximately $187.9 million
- Revenue increase of 1125% over the comparative prior year period
- Adjusted EBITDA of approximately $5.0 million
- Continued strong revenue growth in new revenue streams
- Growing demand for Performance Solutions within Home Improvement, Residential Services, Legal and Professional Services Sectors
- Successful completion of restructuring of operations and cost optimizations following the acquisition of Converge
“The operational changes and record business performance during this six month transition period were delivered ahead of schedule in what was an aggressive timetable to alter the strategic course of the Company. In the last nine months, we repositioned the business, delivered successive record-breaking revenue, diversified our revenue sectors, and implemented changes to optimize operational efficiency. The Company is now focused on taking advantage of sustainably higher margin opportunities to meaningfully improve its strategic and financial results in scalable market sectors. The Management Team has delivered great results during an intensive period of change, demonstrating the resiliency of our services and business model. We continue to be excited at the growth opportunities in home improvement, residential services, legal and professional services and building on our internal consumer brand portfolio. We can now focus on optimizing our balance sheet and review strategic alternatives as we work with Jefferies, LLC to architect the best capital structure to grow the business and maximize shareholder value.” commented Sid Toama, Chief Executive Officer of TMG.
Results for the six months ended December 31, 2022 (six month transition period) compared to six months ended December 31, 2021:
| Six months ended | |||||||
| December 31, | Change | ||||||
| 2022 | 2021 | $ | % | ||||
| (in thousands) | |||||||
| Revenues | $ 187,910 | $ 15,343 | $ 172,567 | 1125 % | |||
| Net Loss | $ (9,580) | $ (6,249) | $ (3,331) | 53 % | |||
| EBITDA | $ 1,038 | $ (5,744) | $ 6,782 | 118 % | |||
| Adjusted EBITDA | $ 4,950 | $ (4,587) | $ 9,537 | 208 % | |||
Financial Results for TMG
The results of operations for the six months ended December 31, 2022, have been fundamentally powered by the Converge acquisition, which resulted in diversifying the Company’s revenue streams and created efficiencies recognized by integrating the acquired businesses.
Revenues for the six months ended December 31, 2022, increased $172.6 million, or 1125%, to $187.9 million as compared with the prior year period. The increase in revenue was directly attributable to the Converge business, which accounted for approximately $180.3 million, or 96%, of the Company’s total revenue for the six months ended December 31, 2022. The incremental revenue to the business was comprised of performance solutions revenue of $75.7 million, or 40%, and managed services revenue of $104.6 million or 56%.
“The acquisition of Converge continues to provide transformational changes for the Company. The revenue contributed by these new revenue streams totaled approximately $270.6 million since its acquisition in March 2022, a period of 285 days. Further, we are pleased by the continued growth in revenue that is derived from our owned and operated internal brands, which justifies our continued investment in this enterprise strategy,” said Erica Naidrich, CFO of TMG.
Selling, general, and administrative costs increased during the transition period by $8.6 million, or 61%, to $22.7 million when compared to the prior year period. This increase was primarily attributable to an increase in employee related costs of approximately $5.3 million, an increase of approximately $1.5 million in office and occupancy costs, an increase in professional fees of approximately $1.4 million, an increase of approximately $0.2 million in travel and entertainment costs, and an increase of approximately $0.2 million in other costs.
Employee related costs increased due to the addition of the 80+ headcount acquired with Converge, which added $5.8 million. This increase was offset by the reduction in salaries and other employee related costs as a result of the discontinuation of certain subsidiary operations as part of the Company’s restructuring efforts. The combined employee related costs from the legacy Troika entities totaled $10.4 million during the six months ended December 31, 2022, which reflects a 5% decrease compared to the prior year period. The decrease is due to reduction in headcount from company lay-offs due to restructuring activities.
The increased professional fees were largely driven by the accounting and audit fees incurred during the six month transition period. Due to the change in year-end date, the Company incurred higher audit fees than in a normal six month period. Additional professional fees, mainly legal fees, were incurred from newly engaged firms to help the Company with various debt and equity financing matters.
TMG’s Adjusted EBITDA for the six months ended December 31, 2022, increased $9.5 million to approximately $5.0 million as compared to the prior year period. This increase was driven by the increase in revenues and gross margin attributable to the managed services and performance solutions revenue streams associated with the Converge acquisition. These increases were offset by several one-time costs incurred as a result of the ongoing restructuring and transformational efforts by management as well as non-cash charges.
The Company has made expeditious restructuring decisions in order to focus on business initiatives that will drive growth to ensure that the Company is well positioned to achieve value for our shareholders.
These offsetting amounts contained several non-recurring and non-cash costs including restructuring and other related charges totaling $6.9 million, gain on fair value of warrant derivative liabilities related to the Series E Preferred Stock of $20.0 million, foreign currency exchange losses of $0.9 million, $2.7 million in non-cash stock compensation expense (which are reflected in selling, general and administrative expenses), and loss contingencies on equity issuance of $3.4 million.
The Company has historically recognized the fluctuation in the fair value of the derivatives liabilities at each reporting period in the Statement of Operations. The conversion of the derivative liabilities to “Equity” classification will result in no future impact on the Statements of Operations from the fluctuation in the fair value of the derivatives liabilities.
About Troika Media Group
TMG is a consumer engagement and customer acquisition consulting and solutions group based in New York and Los Angeles. We deliver resilient brand equity, amplifying brands through emerging technology to deliver performance driven business growth. TMG’s expertise is in large consumer sectors including Insurance, Financial Services, Home Improvement, Residential Services, Legal, Professional Services, Media and Entertainment. For more information, visit www.thetmgrp.com.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not financial measures under generally accepted accounting principles (GAAP). These metrics are performance measurement tools used by our management team and you should not consider them in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP and are susceptible to varying calculations, the measures presented may differ from and may not be comparable to similarly titled measures used by other companies.
We define EBITDA as net income (loss) before (i) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (ii) interest expense, and (iii) tax expense.
We define Adjusted EBITDA as EBITDA before (i) share-based compensation expense or benefit, (ii) restructuring charges or credits, (iii) restructuring charges or credits, (iv) gains or losses on sales or dispositions of businesses and associated settlements, and (v) certain other non-recurring or non-cash items. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of our business without regard to the settlement of an obligation that is not expected to be made in cash. We eliminate merger and acquisition-related costs because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability.
We believe Adjusted EBITDA is an appropriate measure for evaluating the operating performance of our business and the Company on a consolidated basis. Adjusted EBITDA and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and gross margin as the most important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. Adjusted EBITDA should be used as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. For a reconciliation of net (loss) income to Adjusted EBITDA, please see page 6 of this release.
Forward-Looking Statements
This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements about future growth and growth rates and other information regarding future performance and strategies and appear throughout this press release. These forward-looking statements include, without limitation, statements about future growth and growth rates and other information regarding future performance and strategies and appear throughout this press release. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments or events may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the Company and its business, operations, financial condition and the industries in which it operates, the impact of the COVID-19 pandemic and the factors described in the Company’s filings with the Securities and Exchange Commission, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K in the Company’s Annual Report on Form 10-K. The Company disclaims any obligation to update any forward-looking statements contained herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof.
Investor Relations Contact:
Sid Toama
President and Chief Executive Officer
Troika Media Group, Inc.
(323) 297-8100
| Six Months Ended | |||
| December 31, 2022 | December 31, 2021 | ||
| Revenue | $ 187,910,491 | $ 15,343,000 | |
| Cost of revenue | 162,250,051 | 8,420,000 | |
| Gross margin | 25,660,440 | 6,923,000 | |
| Operating expenses: | |||
| Selling, general and administrative expenses | 22,658,206 | 14,097,000 | |
| Depreciation and amortization | 4,423,831 | 401,000 | |
| Restructuring and other related charges | 6,868,066 | — | |
| Impairment and other losses (gains), net | 11,066,341 | — | |
| Total operating expenses | 45,016,444 | 14,498,000 | |
| Operating loss | $ (19,356,004) | $ (7,575,000) | |
| Other income (expense): | |||
| Loss contingency on equity issuance | (3,385,000) | — | |
| Interest expense | (6,174,849) | (47,000) | |
| Foreign exchange loss | (944,417) | (26,000) | |
| Gain on change in fair value of derivative liabilities | 20,004,367 | 12,000 | |
| Net gain on sale of subsidiary | 82,894 | — | |
| Other income, net | 212,386 | 1,444,000 | |
| Total other income (expense) | $ 9,795,381 | $ 1,383,000 | |
| Loss from operations before income taxes | (9,560,623) | (6,192,000) | |
| Income tax expense | (19,122) | (57,000) | |
| Net loss | $ (9,579,745) | $ (6,249,000) | |
| Foreign currency translation adjustment | 955,438 | 32,000 | |
| Comprehensive loss | $ (8,624,307) | $ (6,217,000) | |
| Six Months Ended | |||
| December 31, 2022 | December 31, 2021 | ||
| Net Loss | $ (9,579,745) | $ (6,249,000) | |
| Interest expense | 6,174,849 | 47,000 | |
| Income tax expense | 19,122 | 57,000 | |
| Depreciation and amortization | 4,423,831 | 401,000 | |
| EBITDA | $ 1,038,057 | $ (5,744,000) | |
| Impairment and other losses (gains), net | 11,066,341 | (1,448,000) | |
| Business Acquisition Costs included in SG&A | — | 517,000 | |
| Restructuring and other related charges | 6,868,066 | — | |
| Share based compensation | 2,680,081 | 2,100,000 | |
| Loss contingency on equity issuance | 3,385,000 | — | |
| Net gain on sale of subsidiary | (82,894) | — | |
| (Gain) loss on derivative liabilities | (20,004,367) | (12,000) | |
| Adjusted EBITDA | $ 4,950,284 | $ (4,587,000) | |
The following is a description of the adjustments to net loss in arriving at adjusted EBITDA as described in this earnings release:
- Interest Expense.
- Income Tax Expense.
- Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets in all periods.
- Impairment and other (gains) losses, net. This adjustment eliminates non-cash impairment charges and the impact of gains or losses from the disposition of assets or businesses in all periods.
- Business acquisition costs. This adjustment eliminates costs related to acquisitions in all periods.
- Restructuring charges. This adjustment eliminates costs related to termination benefits provided to employees as part of the Company’s full-time workforce reductions
- Share based compensation. This adjustment eliminates the compensation expense relating to restricted stock units and stock options granted under the Troika Media Group Stock Plan.
- Loss Contingency on Equity Issuance related to Series E PIPE
- Net gain on sale of subsidiary
- (Gain) loss on derivative liabilities related to the Series E PIPE
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SOURCE Troika Media Group, Inc.
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NowVertical Group Solidifies its Media and Entertainment Vertical with Renewal of The Economist Group – Financial Post
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TORONTO, March 20, 2023 (GLOBE NEWSWIRE) — NowVertical Group Inc. (TSX-V: NOW) (OTCQB: NOWVF) (“NOW” or the “Company”), the Vertical Intelligence (“VI”) company is pleased to announce it has renewed its contract with The Economist Group, the leading source of analysis on international business and world affairs. This most recent renewal marks the second consecutive service extension between the two companies. Based in London and serving a global readership and client base, the Economist Group’s flagship businesses include The Economist newspaper and website and a research and analysis division.
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NOW’s UK-based Acrotrend Group began working with the Economist Group in 2020 to establish capabilities to define and standardize strategic and operational KPIs, provide critical insights for acquisition, retention and engagement, and provide solutions to improve the experience for their subscribers. The Company has also created a framework for delivering a modernized data platform to better serve demands from The Economists’ Marketing, Finance, and Customer Services teams. Under the renewed contract, NOW will continue to provide services to the Economist Group to support its robust architecture and introduce new technologies from the NOW VI-OS.
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With this recent extension, NOW builds on its established list of approximately 30 media and entertainment customers. NOW’s current and past customers include Universal Music Group, Starz, Spotify, and Lionsgate, amongst many others.
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“NOW continues to add incredible value for our Media and Entertainment customers,” said Daren Trousdell, Chairman and CEO of NOW. “This renewal further confirms our strength in the media and entertainment vertical, demonstrating how NOW delivers long-term value through the Vertical Intelligence (VI) approach. We look forward to continuing to drive value for The Economist and showcasing these winning use cases to more customers in this rapidly growing vertical.”
About NowVertical Group Inc.
NowVertical Group is a Vertical Intelligence (VI) software and services provider that delivers vertically-specific data, technology, and artificial intelligence (AI) applications into private and public verticals globally. NOW’s proprietary solutions sit at the foundation of the modern enterprise by transforming AI investments into VI, enabling its customers to minimize their risk, accelerate the time to value, and reduce costs. NOW is rapidly growing organically and through targeted acquisitions. For more information about NOW, visit www.nowvertical.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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For further information, please contact:
Daren Trousdell, Chief Executive Officer
e: daren@nowvertical.com
t: (212) 302-0868
Glen Nelson, Investor Relations
e: glen@nowvertical.com
t: (403) 763-9797
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The divisive CEO of Twitter and Tesla shared comments with followers on his social media site as the Swift began her new Eras Tour in Arizona.
Musk commented underneath a tweet from Dogecoin founder Billy Markus, which read: “Taylor Swift rules and if you disagree you’ll be kicked off the internet i’m pretty sure.”
“Her limbic resonance skill is exceptional,” Musk replied.
“Limbic resonance” refers to the notion that a person’s capacity for sharing deep emotional states stems from the brain’s limbic system.
Musk also responded directly to a tweet from Swift’s official account, which comprised four images of the singer on stage.
The 51-year-old billionaire responded to the collage with a “cigarette” emoji, seemingly implying that he thought Swift was “smoking”.
In another tweet, Musk reacted to a post from a user called “Teslaconomics”, which asked whether Musk and Swift would “make a cute couple”. He replied with a “crying laughing” emoji.
Swift fans were repelled by Musk’s shows of admiration for the artist, with many writing that he should “go to horny jail”.
“You stay away from her,” one person wrote, while another commented: “Elon Musk better leave Taylor Swift alone dawg.”
Enjoy unlimited access to 70 million ad-free songs and podcasts with Amazon Music Sign up now for a 30-day free trial
“I don’t know what a limbic resonance skill is but I’m gonna work on mine as soon as I find out,” one person joked.
The Independent has contacted a representative of Elon Musk for comment.
Taylor Swift performs at State Farm Stadium in Glendale, Arizona, 17 March 2023
(Getty Images for TAS Rights Mana)
The opening night of Swift’s tour drew rave reviews from critics and concert-goers, including The Independent’s Kelsey barnes.
In a five-star review, she wrote: “In the 44-song setlist that spans three hours and 15 minutes, [Swift] shows why the ‘era’ concept is so integral to who she is. Each chapter marks a specific shift in her artistry.
“There’s a palpable elation at the State Farm Stadium in Glendale, Arizona. Costumes are emblazoned with hand-painted lyrics; faces are bright with glitter; hands are covered in Swift’s lucky number 13. The fans I speak to say the concert feels like ‘coming home’.”
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The legal action started in January, with a suit by Seattle Public Schools, and picked up momentum in recent weeks as school districts in California, Pennsylvania, New Jersey and Florida have followed. Lawyers involved say many more are planned.
San Mateo County, home to 23 school districts and part of the Silicon Valley in northern California, filed a 107-page complaint in federal court last week, alleging that social media companies used advanced artificial intelligence and machine learning technology to create addictive platforms that cause young people harm.
“The results have been disastrous,” the filing asserts, saying more children than ever struggle with their mental health amid excessive use of the platforms. “There is simply no historic analog to the crisis the nation’s youth are now facing,” it said.
The suit points to recent data from the Centers for Disease Control and Prevention showing climbing rates of depressive symptoms and suicidal thoughts among the nation’s high school students. The increasing popularity of social media, it contends, “tracks precisely” with a youth mental health decline. It quotes President Biden’s remarks in his State of the Union address that tactics used by social media companies are an “experiment they are running on our children for profit.”
San Mateo County Superintendent of Schools Nancy Magee said in an interview that rampant social media use has left a mark on schools, to the point where administrators have observed a spike in mental health emergencies during the school day. There have been “very serious” cyberbullying incidents related to social media — with content “nearly impossible” to get the companies to take down — and school threats that have kept students at home, she said.
Magee also pointed to other harms — for example, vandalism in high school bathrooms during what was called the “Devious Lick Challenge.” Students across the country stole soap dispensers, flooded toilets, shattered mirrors — then showed off their stunts on TikTok.
“The social media companies create the platforms and the tools but the impacts are felt by schools, and I would really like to see an understanding of that, ” Magee said. “And then that the education community receives the resources in both people and tools to help support students adequately.”
Social media companies did not directly comment on the litigation but in written statements said they prioritize teen safety and described measures to protect young users.
TikTok cited age-restricted features, with limits on direct messaging and livestreams, as well as private accounts by default for younger teens. It also pointed to limits on nighttime notifications; parental controls, called Family Pairing, that allow parents to control content, privacy and screen time; and expert resources, including suicide prevention and eating disorder helplines, directly reachable from the app.
You Tube, which is owned by Google, has Family Link, which allows parents to set reminders, limit screen time and block certain types of content on supervised devices, said spokesperson José Castañeda. Protections for users under 18 include defaulting uploads to private and well-being reminders for breaks and bedtime.
Meta, which owns Instagram, said more than 30 tools support teens and families, including age-verification technology, notifications to take regular breaks and features that allow parents to limit time on Instagram. “We don’t allow content that promotes suicide, self-harm or eating disorders, and of the content we remove or take action on, we identify over 99 percent of it before it’s reported to us,” said Antigone Davis, Global Head of Safety of Meta.
Snapchat said its platform “curates content from known creators and publishers and uses human moderation to review user generated content before it can reach a large audience.” Doing so “greatly reduces the spread and discovery of harmful content,” a spokesperson said, adding that Snapchat works with mental health organizations to provide in-app tools and resources for users.
The first of the lawsuits, filed Jan. 6 for Seattle Public Schools, said research shows that the social media companies “exploit the same neural circuitry as gambling and recreational drugs to keep consumers using their products as much as possible” and that social media is so popular it is used by 90 percent of those ages 13 to 17. One study showed users check Snapchat 30 times a day, it said. Nearly 20 percent of teens use YouTube “almost constantly,” it said.
Seattle has seen a surge in the share of youth “who say they cannot stop or control their anxiety, who feel so sad and hopeless they stop doing the activities they used to love, who are considering suicide,” or made plans to take their lives or attempted suicide, the suit said.
Outside Philadelphia, officials in Bucks County filed suit Tuesday against the social media companies, laying out a similar case. It’s not because they are against social media, said Commission Chair Bob Harvie — who points out the county itself has used TikTok — but rather that the algorithms that get teens to “keep looking, keep focusing, keep scrolling” take a toll on kids’ mental health.
“The way we look at it, it’s not unlike the way cigarette companies used to manipulate nicotine levels to make sure that people kept smoking,” Harvie said. “… Our number one priority is just to get the behavior of these companies to change.”
School districts are generally seeking that the conduct of social media companies be declared a public nuisance, that their practices change and that damages be paid to fund prevention, education and treatment for excessive and problematic use of social media.
The 109-page lawsuit on behalf of Bucks County highlights worsening mental health data, saying the problems have “advanced in lockstep with the growth of social media platforms deliberately designed to attract and addict youth to the platforms by amplifying harmful material, dosing users with dopamine hits, and thereby driving youth engagement and advertising revenue.”
Later, it says social apps “hijack a tween and teen compulsion – to connect – that can be even more powerful than hunger or greed.”
In northern New Jersey, the School District of the Chathams has invested increasing resources over the years to help students struggling with anxiety, depression and suicidal thoughts, said attorney Michael Innes, whose firm is representing the district in its litigation filed in mid February. The firm filed a similar action for another New Jersey school district, Irvington Public Schools, in early March.
“We’ve spoken to school districts that have made a decision between spending on mental health and spending on classroom education,” Innes said.
For Richard Weissbourd, a psychologist and senior lecturer at Harvard’s Graduate School of Education, the lawsuits may make a lot of sense but parents, coaches and others involved in teens’ lives need to become more effective in talking to adolescents about the benefits and hazards of social media.
One problem, Weissbourd said, is that many parents are preoccupied with their own devices. In recent research, he said, many teens reported that their primary caregiver was using a smartphone or computer at times when they wanted help or to be together.
Marisol Garcia, a staff therapist at the Family Institute at Northwestern University, said social media can be a powerful means of connection but the downsides are significant too. She was not surprised schools have begun filing lawsuits, saying they want to do what they think is good for their students’ mental and physical health.
The long-term ramifications of social media use — on attention span, social skills, mental health — are unclear, she said. The legal action, she said, “could be a positive thing.”
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