GlobeNewswire Inc | Nov 15, 2021 07:00AM EST

November 15, 2021

First quarter revenue growth significantly exceeds Company forecast

Revenue increased 102% quarter-over-quarter to $8.3 million

Adjusted EBITDA improved 78% and net loss improved 45% quarter-over-quarter

Company expects to continue revenue growth in FY 2022

Los Angeles, California, Nov. 15, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- Troika Media Group, Inc. (Nasdaq: TRKA) ("TMG" or "Company"), a brand consultancy and marketing innovations company that provides integrated branding and marketing solutions for global brands, today announced financial results for its first quarter of fiscal year 2022 ended September 30, 2021.

Financial Highlights

-- Revenue increased 102% to $8.3 million in Q1 2022, compared to the prior year quarter. -- Adjusted EBITDA improved 78% to $(0.6) million in Q1 2022, compared to the prior year quarter. -- Net loss improved 45% to $(2.1) million in Q1 2022, compared to the prior year quarter.

Management Commentary

Robert Machinist,TroikasChairman and CEO, said, Building on the momentum we saw in our business developing at the end of fiscal year 2021, we are off to a great start to fiscal 2022, with strong revenue growth of 102%, lower losses, and operating leverage across the entire business. We believe our very strong performance goes well beyond a post-COVID recovery,as growth was generated across our operating segments, and driven by broad-based contributions across our client sectors. Clients are making significant investments in marketing, particularly in digital media and experiential campaigns.TMG has positioned itself as a high-value partner that combines the power of creativity with the benefits of data and technology, to create integrated solutions for clients across a range of industry sectors. These outstanding results are a credit to our employees who have continued to show a high level of dedication and support to our clients and to one another.

Machinist added, We continue to carefully evaluate how to accelerate our growth strategythrough a targeted and scalable M&A approach to build on existing capabilities in growth areas such as experience, commerce and technology.We believe there are significant new growth opportunities for TMG as clients are looking for innovative and integrated solutions that harness new technologies to grow their business.

We will continue to focus on delivering strong results for our clients and innovating to expand the capabilities of our platform and better serve our global brands. As such, we see significant opportunity to create further value for our shareholders.

Three MonthsEnded PercentSeptember 30, 2021 2020 Change(Unaudited) (in thousands, except per share amounts) Revenue $ 8,349 $ 4,132 102%Operating loss $ $ 12% (3,493) (3,957)Net loss $ $ 45% (2,139) (3,921)Adjusted $ $ 78%EBITDA(1) (620) (2,763)Cash providedby (used in) $ $ -91%operating (2,261) (1,182)activitiesFree Cash Flow $ $ -86%(2) (2,180) (1,171)Diluted netloss per share $ $attributable (0.05) (0.22) 77%to commonstockholdersNon-GAAPdiluted net $ $ 91%income (loss) (0.01) (0.16)per share(3)Common sharesoutstandingplus shares 41,422,781 17,490,910 137%underlyingstock-basedawards (1)See page 8forreconciliation of net loss toAdjustedEBITDA.(2)See page 7 for reconciliation of cash provided by (used in) operating activities to Free Cash Flow.(3)See page 6 for reconciliation of GAAP diluted net loss per share to non-GAAP diluted net income (loss) per share.

First Quarter Fiscal 2022 Summary and Key Highlights

-- Continued focus on significant growth strategy post-COVID -- Accelerating expansion in fast growing gaming and Esports market -- Business mix and client spend shifting to faster growth areas: Experience, Consumer and Technology -- New client growth returning to pre-pandemic levels

-- Demand for client services across brands continues momentum in Q2 2022 with pipeline growing -- Well-positioned to leverage expected top-line growth

-- Strong net revenue growth expected to continue in fiscal 2022

Conference Call/Webcast Information

Investors can access the live webcast via the following link:

https://www.webcaster4.com/Webcast/Page/2817/43652

For those planning to participate on the call, please dial +1- 888-506-0062 (for domestic calls), or +1- 973-528-0011 (for international calls), passcode 730547. A replay of the conference call will be available for one week following the call at +1- 877-481-4010 (for domestic calls) or +1-919-882-2331 (for international calls), replay passcode # 43652.

Definitions

Free Cash Flow is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.

Common shares outstanding plus shares underlying stock-based awards includes common shares outstanding, restricted stock units, restricted stock awards, warrants and outstanding stock options.

Adjusted EBITDA is defined as net income (loss), excluding interest income; interest expense; other income (expense) net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and other payroll related tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time.

Note: For adjustments and additional information regarding the non-GAAP financial measures and other items discussed, please see Non-GAAP Financial Measures, Reconciliation of GAAP to Non-GAAP Financial Measures.

About Troika Media Group

Troika Media Group is an end-to-end brand solutions company that creates both near-term and long-term value for global brands in entertainment, sports and consumer products. Applying emerging technology, data science, and world-class creative, TMG helps brands deepen engagement with audiences and fans throughout the consumer journey and builds brand equity. Clients include Apple, Hulu, Riot Games, Belvedere Vodka, Unilever, UFC, Peloton, CNN, HBO, ESPN, Wynn Resorts and Casinos, Tiffany & Co., IMAX, Netflix, Sony, Yahoo and Coca-Cola. For more information, visit www.thetmgrp.com

Forward-Looking Statements

Certain statements in this press release that are not historical facts are forward-looking statements that reflect management's current expectations, assumptions, and estimates of future performance and economic conditions, and involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as "believe," "expects," "may," "looks to," "will," "should," "plan," "intend," "on condition," "target," "see," "potential," "estimates," "preliminary," or "anticipates" or the negative thereof or comparable terminology, or by discussion of strategy or goals or other future events, circumstances, or effects. Moreover, forward-looking statements in this release include, but are not limited to, the impact of the current COVID-19 pandemic, which may limit access to the Company's facilities, customers, management, support staff, and professional advisors, and to develop and deliver advanced voice and data communications systems, demand for the Company's products and services, economic conditions in the U.S. and worldwide, and the Company's ability to recruit and retain management, technical, and sales personnel. Further information relating to factors that may impact the Company's results and forward-looking statements are disclosed in the Company's filings with the SEC. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use the non-GAAP financial measure of Free Cash Flow, which is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. We believe Free Cash Flow is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business and is a key financial indicator used by management. Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.

We use the non-GAAP financial measure of Adjusted EBITDA, which is defined as net income (loss); excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and other payroll related tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in Adjusted EBITDA.

We use the non-GAAP financial measure of non-GAAP net loss, which is defined as net income (loss); excluding amortization of intangible assets; stock-based compensation expense and other payroll related tax expense; certain other non-cash or non-recurring items impacting net income (loss) from time to time; and related income tax adjustments. Non-GAAP net loss and weighted average diluted shares are then used to calculate non-GAAP diluted net loss per share. Similar to Adjusted EBITDA, we believe these measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses we exclude in the measure.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see below Reconciliation of GAAP to Non-GAAP Financial Measures.

Troika Media Group, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(Unaudited) September 30, 2021 June 30, 2021 ASSETS Current assets: Cash and cash $ 9,752,000 $ 12,066,000 equivalents Accounts 1,976,000 1,327,000 receivable, net Prepaid 625,000 670,000 expenses Other assets - short term 67,000 1,000 portion Total current 12,420,000 14,064,000 assets Other assets -long term 628,000 626,000 portion Property and 379,000 343,000 equipment, net Operating lease right-of-use 6,827,000 6,887,000 assets Intangible 2,431,000 2,603,000 assets, net Intercompany - - Goodwill 19,368,000 19,368,000 Total assets $ 42,053,000 $ 43,891,000 LIABILITIES ANDSTOCKHOLDERS? EQUITY (DEFICIT)Current liabilities: Accounts payable and $ 7,396,000 $ 8,363,000 accrued expenses Convertible 50,000 50,000 notes payable Note payable - related party - 180,000 200,000 short term portion Due to related 7,000 41,000 parties Contract 6,873,000 5,973,000 liabilities Operating lease liability - 3,115,000 3,344,000 short term portion Contingent consideration - short term - - portion Deferred rent - short term - - portion Derivative 1,000 13,000 liabilities Taxes payable 62,000 62,000 Stimulus loan program - short 15,000 22,000 term portion Total current 17,699,000 18,068,000 liabilities Long term liabilities: Operating lease liability - 5,785,000 5,835,000 long term portion Contingent consideration - long term - - portion Deferred rent - long term 0 0 portion Note payable - related party ? long term - - portion Stimulus loan program - long 425,000 547,000 term portion Rental deposits 119,000 119,000 Other long-term 309,000 477,000 liabilities Liabilities of discontinued operations - 107,000 107,000 long term portion Total 24,444,000 25,153,000 liabilities Stockholders? equity: Preferred stock, $0.01 par value: 15,000,000 shares authorized Series A Preferred Stock ($0.01 par value: 5,000,000 shares authorized, 7,000 7,000 720,000 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively) Common stock, ($0.001 par value: 300,000,000 shares authorized; 43,572,950 and 44,000 40,000 39,496,588 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively) Additional 206,973,000 204,788,000 paid-in-capital Stock payable 1,210,000 - Accumulated (189,028,000) (186,889,000) deficit Other Comprehensive (387,000) (418,000) (Gain)/Loss Total stockholders? 17,609,000 18,738,000 equity (deficit)Total liabilitiesand stockholders? $ 42,053,000 $ 43,891,000 equity (deficit) The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.

Troika Media Group, Inc. and SubsidiariesCondensed Consolidated Statements of Operations and Comprehensive Loss(Unaudited) Three Months Ended September 30, 2021 2020 Project revenues, net $ 8,349,000 $ 4,132,000 Cost of revenues 4,837,000 2,280,000 Gross profit 3,512,000 1,852,000 42.1% 44.8% Operating expenses: Selling, general and 6,235,000 4,450,000 administrative expenses Professional fees 568,000 788,000 Depreciation expense 30,000 31,000 Amortization expense of 172,000 540,000 intangibles Goodwill impairment expense - - Intangibles impairment expense - - Acquisition costs - - Gain from release of contingent earn out - - Total operating expenses 7,005,000 5,809,000 Loss from operations (3,493,000) (3,957,000) Other income (expense): Income from government 262,000 grants - Amortization expense of (17,000) note payable discount - Interest expense (13,000) (4,000) Foreign exchange gain (16,000) (47,000) Gain on early termination (3,000) of operating lease - Gain on derivative 12,000 (23,000) liabilities Other income 1,112,000 127,000 Other expenses - - Total other income 1,354,000 36,000 (expense) Net loss from continuing (2,139,000) (3,921,000) operations before income taxProvision for income tax - -Net loss from continuing (2,139,000) (3,921,000) operations after income tax Net income from discontinued operations - -Net loss $ (2,139,000) $ (3,921,000) Deemed dividend on preferred stock - -Net loss attributable to (2,139,000) (3,921,000) common stockholdersForeign currency translation 31,000 (93,000) adjustmentComprehensive loss $ (2,108,000) $ (4,014,000) Basic earnings (loss) per share Continuing operations $ (0.05) $ (0.22) Discontinued operations $ $ - - Net loss attributable to $ (0.05) $ (0.22) common stockholders Diluted earnings (loss) per share Discontinued operations $ $ - - Weighted average basic shares 41,422,781 17,490,910 Weighted average diluted 41,422,781 23,665,662 shares The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Troika Media Group, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(Unaudited) Three Months Ended September 30, 2021 2020 CASH FLOWS FROMOPERATING ACTIVITIES:Net $ (2,139,000) $ (3,921,000) lossAdjustments toreconcile net lossto net cash provided by (usedin) operatingactivities: Depreciation 30,000 31,000 Amortization 172,000 540,000 of intangibles Amortization of right-of-use - - assets Amortization of discount on 17,000 convertible - note payables Impairment of goodwill - - Impairment of intangibles - - Release of contingent - - earn out Stock-based compensation 107,000 166,000 on options Stock-based compensation 67,000 154,000 on warrants Stock-based compensation relating to 805,000 - Redeeem acquisition Warrants related to legal - - settlement Warrants related to financing of - - convertible note payables Imputed interest for - 4,000 note payable Gain on early termination of 3,000 operating - lease Loss on derivative (12,000) 23,000 liabilities Discount on derivative - - liability Income from government - - grants (Recovery) and provision for (69,000) (100,000) bad debt Preferred shares converted to - - common stock Beneficial conversion features on convertible - - promissory notes Tax provision for income - - Gain from derecognition of liabilities from - - discontinued operationsChange inoperating assets and liabilities: Accounts (580,000) (426,000) receivable Prepaid 45,000 (48,000) expenses Accounts payable and (969,000) 2,030,000 accrued expenses Deferred expenses - - Due from related - - parties Other assets (68,000) (4,000) Rental deposits - - Operating lease (222,000) 171,000 liability Deferred rent - Due to related (34,000) parties - Other long-term (168,000) - liabilities Taxes payable - Contract liabilities 1,170,000 181,000 relating to revenue Contract liabilities to (399,000) government - grants Liabilities of discontinued - - operations Net cash used in (2,261,000) (1,182,000) operating activities CASH FLOWS FROMINVESTING ACTIVITIES: Net cash paid for acquisiton - - of Redeeem Purchase of (68,000) (7,000) fixed assets Net cash used in (68,000) (7,000) investing activities CASH FLOWS FROMFINANCING ACTIVITIES: Issuance of series D convertible preferred - - shares for cash Proceeds from initial public offering net - - of offering costs Proceeds from stimulus loan - 565,000 programs Payments to note payable (20,000) of related - party Proceeds from convertible - 150,000 note payable Payments to convertible - - note payable Net cash provided by (20,000) 715,000 financing activities CASH FLOWS FROMDISCONTINUED OPERATIONS Net income from discontinued - - operations Gain from release of contingent - - earn out Change in accounts payable and - - accrued expenses Net cash used in discontinued operations - - - operating activities Net cash used in discontinued operations - - - financing activities Net cash (used in) provided by - - discontinued operations Effect ofexchange rate on 35,000 (9,000) cash NET INCREASE(DECREASE) IN $ (2,314,000) $ (483,000) CASH AND CASHEQUIVALENTSCASH AND CASHEQUIVALENTS ? 12,066,000 1,706,000 beginning ofperiodCASH AND CASHEQUIVALENTS ? end $ 9,752,000 $ 1,223,000 of period SUPPLEMENTALDISCLOSURE OF CASH FLOWINFORMATION: Cash paid during the period for: Income taxes $ $ - - Interest $ 3,000 $ expense - Noncash investing and financing activities: Retirement of common $ $ - stock Shares to be issued for $ $ Redeeem - - acquisition Record derivative liability on $ - $ 110,000 convertible notes Issuance of common stock related to $ $ 1,300,000 convertible - note payables Issuance of common stock related to $ - $ - stock payable Conversion of $ $ 1,400,000 converible - note payable Deemed dividend on $ $ preferred - - stock Right-of-use assets acquired $ $ 8,931,000 through - adoption of ASC 842 Right-of-use assets acquired $ 467,000 $ 2,398,000 through operating leases The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.

Troika Media GroupIncomeStatement Summary Non-GAAP Q1 FY 2022 Q1 FY 2021 MeasuresQuarter / September 30, 2021 September 30, 2020 Variance Quarter(Un-Audited) (Un-Audited) (Un-Audited) (Un-Audited) %Revenue 8,348,989 4,132,303 4,216,686 102%Cost of Sales (4,836,527) (2,279,879) (2,556,649) Gross 3,512,462 1,852,425 1,660,037 Profit 42.1% 44.8% Operating (6,803,383) (5,140,369) (1,663,014) ExpensesEBITDA (3,290,922) (3,287,944) (2,978) Other Income & 1,152,900 (631,681) 1,784,581 ExpenseNET INCOME $ (2,138,022) $ (3,919,625) $ (1,781,603) 45%(LOSS)Non-GAAPMeasures (Un-Audited)Unrealizedgains - Not 159,530 Recognized -Under GAAPNon-cashexpenses(Depreciation,amortizationof intangibles 201,289 587,772 & amortizationof notepayablediscount)Interest 13,063 expense 2,869Non-operatingrelated management 150,000 - bonusesexpenseLosses onforeign 16,253 46,507 exchangeStock-basedcompensation 979,078 320,194 non-cashexpenseLitigation 200,000 expenses -Adjusted (618,809) (2,762,284) (2,143,475) 78%EBITDA

Contact:Investor RelationsTraDigital IRKevin McGrath+1-646-418-7002kevin@tradigitalir.com