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Edited Transcript of MTMY.L earnings conference call or presentation 4-Jun-18 10:45am GMT

Q1 2018 Matomy Media Group Ltd Earnings Call

TEL AVIV-YAFO Jun 13, 2018 (Thomson StreetEvents) -- Edited Transcript of Matomy Media Group Ltd earnings conference call or presentation Monday, June 4, 2018 at 10:45:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Liam Galin

Matomy Media Group Ltd. - President & CEO

* Pamela Becker

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. Welcome to the Matomy Group Conference Call. (Operator Instructions) As a reminder, this conference is being recorded June 4, 2018.

With us online today are Mr. Liam Galin, CEO; and Ms. Keren Farag Krygier, CFO. Ms. Becker, would you like to begin?

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Pamela Becker, [2]

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Thank you. Hello, everyone. My name is Pamela Becker, and I'd like to welcome you to Matomy Media Group's 2018 First Quarter Results Call.

We published our quarterly results on Thursday morning, and they can be found on our Investors -- Investor Relations website at investors.matomy.com. On the call today are Liam Galin, President and Chief Executive Officer; and Keren Farag Krygier, Chief Financial Officer.

Please note that certain statements made during this call may pertain to forward-looking information. Although Matomy believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will be fulfilled.

Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Additionally, this call will include non-GAAP financial measurements. The definition of and the reconciliation of such measures can be found in our results release.

With that, I will pass the call over to President and Chief Executive Officer, Liam Galin, for his opening comments.

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Liam Galin, Matomy Media Group Ltd. - President & CEO [3]

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Thank you, Pamela, and good day, everyone. As Pamela mentioned, my name is Liam Galin, and I joined Matomy as the President and CEO in January.

I embarked on my journey with a clear focus on Matomy's 2 core activities, Team Internet and Mobfox, where we have both technological and business advantages. Having spent the first month conducting an in-depth analysis of Matomy's assets and performance, I've identified the key strengths and weaknesses of both our core and noncore assets, and taken decisive action to shut down cash-bleeding activities.

This will enable us to move forward with a laser-sharp focus on building long-term sustainable value for all our stakeholders, taking the required actions to quickly amend identified weaknesses and enhancing technology and market leadership in our core activities.

Matomy is taking aggressive actions to reduce costs, especially in noncore activities, bringing down operating losses and the rate of cash burn, which are planned to be completed by the end of Q3 this year. In addition, in February 2018, the company raised ILS 103 million, which is approximately $30 million in convertible bonds.

As part of the strategic changes announced in May 2017, we have decided to report our financial results under new segments. Our new reportable segments consist of our core activities, domain monetization and mobile in-app advertising; and our noncore activities, including email marketing and video advertising.

We also decided to report on a quarterly basis. Since this is the first time that Matomy is reporting quarterly results, comparative figures are not included, as past comparables are not available. Comparative numbers will, obviously, be included starting with the 2019 report.

The group's first quarter revenues reached $37.6 million. Of this, $31.8 million came from our core assets, Team Internet and Mobfox.

Team Internet remains a global market leader in the domain monetization space, with one of the largest portfolios of domains in the world.

Team Internet's proprietary ad delivery engines serve semantically-relevant ads to approximately 2 billion monthly visitors across about 145 million websites, generating more than 100 million paid clicks per month.

Team Internet's revenues reached $22.8 million, with direct adjusted EBITDA of $4.6 million in the 3-month period ending March 31, 2018. Matomy's share in Team Internet grew from 80% to 90% in the first quarter of 2018 and will reach 100% by the end of the year.

As you'll recall, Mobfox consists of several mobile advertising platforms, including the Mobfox supply-side platform, which has maintained its growth and performed according to expectations. Mobfox myDSP demand-side platform, however, underperformed relative to its forecast.

Mobfox revenues reached $9 million in the 3-month period ended March 31. Please note that our transition to programmatic-based advertising is also affected by the seasonality of mobile advertising spending, which normally exhibits lowest spending in Q1, growing significantly in the third, and peaking in the fourth quarter.

Email and video revenues reached $5.8 million in the first 3 months of 2018. Lower Matomy's email channels revenues have steadily improved over this quarter and continue to demonstrate a positive trend.

Matomy's video advertising channel continues to be negatively affected by changes across the entire video industry that have reduced the amount and price of available video advertising inventory together with stricter quality requirements.

These changes caused losses in Matomy's video activity, including bad debts of approximately $1.7 million from partners facing insolvency. During the second quarter, Matomy took steps to significantly streamline costs of this activity.

Overall, we believe that the steps we are taking to focus the business on those activities that have significant technological and business advantages, coupled with our decisive actions to stop cash-bleeding activities will enhance our leading position, enhancing our growth momentum as we move forward.

With that, Keren and I will be happy to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) There are no questions at this time. Mr. Galin, would you like to make your concluding statement?

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Liam Galin, Matomy Media Group Ltd. - President & CEO [2]

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Yes. Thank you, everyone, for participating. We appreciate your interest in Matomy and your vote of confidence throughout the time. Thank you very much. Bye-bye.

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Operator [3]

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Thank you. This concludes the Matomy Media Group Conference Call. Thank you for your participation. You may go ahead and disconnect.