Grom Social Enterprises Reports Second Quarter 2019 Financial Results
Q2 2019 Revenues Increase 17% to Record $2.1 Million
BOCA RATON, Fla., Aug. 15, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Grom Social Enterprises (OTCQB: GRMM) (the “Company”), developer of Grom Social, the leading social media platform for kids and original children’s entertainment content provider, reported results for its second quarter ended June 30, 2019.
|($ in millions)||Q2 2019||Q2 2018||Change|
|Gross Profit Margin||49.4%||62.4%||(21%)|
|Income (Loss) from Operations||$(0.8)||$(1.1)||27%|
|Net Income (Loss) Attributable to Common Shareholders||$(1.2)||$(1.4)||10%|
Recent Operational Highlights
- Grew our original short-form content library to over 1250 hours. Launched the COPPA-compliant GROM social networking app for kids on iOS and Android, following the success of the Grom Social website, a social media network designed for children, which has been visited by more than 17 million users from more than 200 countries and territories worldwide since inception.
- Formed strategic partnership with National Parenting Education Network (NPEN), a non-profit organization supporting the field of parenting education nationwide, to promote parental education and best practices for overseeing children’s online presence
- Engaged MZ North America to develop and execute a complete capital markets strategy designed to increase the Company’s visibility throughout the investment community.
“The second quarter of 2019 was highlighted by the launch of our revolutionary GROM app, following the success of our Grom Social website, which has aggregated more than 17 million users to-date,” stated Darren Marks, Chairman and Chief Executive Officer of Grom Social Enterprises. “Combining the most popular features Facebook, YouTube and Snapchat, GROM is the only COPPA-certified app that gives children the ability to create and record original videos using a range of face filters and effects, with access to an extensive library of videos on demand. Adding to this, we continue to gain traction with our MamaBear app, which allows parents to track children’s location and monitor their social media activity. Together, Grom Social and MamaBear offer us an incredible monetization opportunity, which will include a growing subscription and advertising revenue stream as we move forward.
“Our growth in the second quarter has continued unabated, evidenced by our revenue growth of 17% to a record $2.1 million, primarily as a result of the continued traction in our profitable and growing TDA subsidiary. This financially robust subsidiary maintains natural synergies with Grom social—currently providing over 1,000 hours of exclusive videos content on our platform—and remains an incredibly exciting business in and of itself.”
“As we look towards the reminder of 2019, we see a greenfield opportunity for growth as we gain traction and monetize our COPPA-compliant Grom Social and MamaBear platforms, while also further expanding the TDA business into new markets. Ultimately, we believe the steps we are taking today will build significant shareholder value over the long-term,” concluded Marks.
Revenue for the second quarter of 2019 increased 17% to a record $2.1 million, as compared to $1.8 million in the second quarter of 2018. The increase is primarily attributable to an increase of approximately $347,000 in revenues from our TDA animation business, offset in part by a decrease in revenues from our NetSpective web filtering business of approximately $43,000.
Gross profit in the second quarter of 2019 was $1.0 million, or 49.4% of revenues, as compared to $1.1 million, or 62.4% of revenues, in the second quarter of 2018. The decrease in gross margin is primarily attributable to more compressed margins in our animation business; offset in part by improved margins in our webfiltering division.
Total operating expenses decreased 17% to $1.8 million in the second quarter of 2019, as compared to $2.2 million in the second quarter of 2018. The decrease in operating expenses was primarily attributable to a decrease in general and administrative expenses, which was a result of general cost cutting efforts undertaken by the Company.
Net loss attributable to common shareholders in the second quarter of 2019 totaled $1.2 million, or $(0.01) per share, compared to a net loss of $1.4 million, or $(0.01) per share, in the second quarter of 2018.
Cash totaled $0.9 million at June 30, 2019, as compared to $0.8 million at March 31, 2019 and $0.6 million at December 31, 2018.
About Grom Social Enterprises, Inc.
Grom Social Enterprises, Inc. is a leading social media platform and original content provider of entertainment for children ages 5-16; providing safe and secure digital environments for kids that can be monitored by their parents or guardians. The Company has several operating subsidiaries, including Grom Social, which delivers its content through mobile and desktop environments (web portal and apps) that entertain children, let them interact with friends, access relevant news, and play proprietary games, while teaching them about being a good digital citizen. The Company owns and operates Top Draw Animation, Inc., which produces award-winning 2D animation content for some of the largest international media companies in the world. Grom Social Enterprises also includes Grom Educational Services, which has provided web filtering services for K-12 schools, government and private business.
Safe Harbor Statement
This press release may contain forward-looking statements about Grom Social Enterprises activities that are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially from those anticipated or expected, including statements related to the amount and timing of expected revenues and any payment of dividends on our common stock, statements related to our financial performance, expected income, distributions, and future growth for upcoming quarterly and annual periods. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors. Among other matters, the Company may not be able to sustain growth or achieve profitability based upon many factors including, but not limited to general stock market conditions. We have incurred and will continue to incur significant expenses in the expansion of our existing and new service lines, noting there is no assurance that we will generate enough revenues to offset those costs in both the near and long-term. Additional service offerings may expose us to additional legal and regulatory costs and unknown exposure(s) based upon the various geopolitical locations where we will be providing services, the impact of which cannot be predicted at this time. All forward-looking statements speak only as of the date of this press release. We undertake no obligation to update any forward-looking statements or other information contained herein. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
Greg Falesnik or Luke Zimmerman
MZ Group – MZ North America