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CSSE: Reports Q2 Results and Announces the Acquisition of Pivotshare

08/20/2018
By Lisa Thompson

NASDAQ:CSSE

READ THE FULL CSSE RESEARCH REPORT

Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) continues to expand its OTT streaming capability by purchasing Pivotshare, a provider of a subscription-based video on demand (SVOD) platform for content providers. As the YouTube of paid for streaming channels, this platform allows customers to create a video channel with their own content and charge viewers a monthly or per view fee. Pivotshare retains a 30% split of viewer revenues. The network generates approximately $2.5 million in annual revenue and has approximately 25,000 paid subscriptions with an average monthly revenue of $9 per subscription. It has a wide range off offerings on a variety of topics including channels such as fitness, sports, culture, and even instructional videos. Examples range from the Gold’s Gym channel with workout videos for $12.99 a month to ChukkerTV, the leader in polo broadcasting, for $500 per month or $150 per match. CSSE paid $4.35 million for this company using a combination of $3.35 million of preferred stock, $257,000 in cash and 74,235 shares of CSSE common stock (to Adam Mosam.) CSSE expects to save $1 million per year once its has ported its channels to the Pivotshare platform by not having to pay a third party service. As a result we expect CSSE gross margins to rise in its online networks business.

Q2 Earnings

CSSE reported Q2 2018 revenues of $3.1 million down from $6 million in Q1, as there were no shows delivered and the distribution business was in its seasonally weak period. This number compared with $0.8 million a year ago, before Screen Media was bought.

Revenue was broken down into the company’s three lines of business:

Television & Short-form Video Production – The company booked $306,000 in revenue versus $701,000 last year. No shows were delivered this quarter and selling rights to existing shows generated revenue.

Television and Film Distribution – is the main business of Screen Media. It includes buy, selling, licensing, and distributing TV and film content for its library of 1200 TV and films, but does not include the revenues generated by Popcornflix. This business generated $2.0 million in revenues down sequentially from the $3.2 million in revenues in Q1. Screen Media was purchased in November 2017 and there were no revenues to CSSE in its second 2017 quarter.

Online Networks (Video on Demand) – is the portion of Screen Media’s business that generates revenues from ads on Popcornflix, its other channels, and its online OTT programming. It contributed $725,000 in revenues in the quarter versus $92,000 a year ago

Net income was a loss $1.4 million versus a loss of $0.7 million or -$0.12 per share versus -$0.08 per share on 27% more shares outstanding. More importantly adjusted EBITDA for the company was $385,000 versus $166,000 a year ago.

Subsequent Events

On July 18, 2018 CSSE announced the production launch of its new series The Fixer, a show that teaches millennials how to deal with personal finances. It is being executive produced by actor and investor Ashton Kutcher.

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