Halifax-based Wildbrain, formerly known as DHX Media, reported improved revenue during second quarter ended Dec. 31, 2019 and for the first half of the year.
The company reported that revenue grew four per cent to $122.1 million in the second quarter of fiscal 2020 and grew six per cent to $234.4 million in the first half of fiscal year.
Cash flow from operations was $46.6 million in the second quarter compared to $11.6 million in the same period in fiscal 2019. In the first half of the current fiscal year operating cash flow was $65.3 million verses $1.6 million a year ago.
Nevertheless, Wildbrain reported a net loss for the reporting period albeit a smaller loss. In the second quarter Wildbrain reported a $2.3 million compared to a net loss of $17.9 million in the second quarter of 2019. In the first half of fiscal 2020, which ended on Dec. 31, 2019, the company had a net loss of $18.3 million compared to a net loss of $20.3 million in the first half of 2019.
Wildbrain management, in its news release Thursday, indicated it expects to be negatively affected by changes to YouTube's rules and policies regarding advertising aimed at kids' content.
The new YouTube policies came into effect on January 1 this year.
"Absent WildBrain’s own initiatives in direct advertising sales and any mitigating actions by YouTube, we expect there would be a negative impact on revenue at WildBrain Spark in the back half of fiscal 2020. Initially, in the first few weeks following the change, WildBrain Spark experienced a revenue decline of approximately 40 per cent, compared with the same period last year," Wildbrain CEO Eric Ellenbogen, stated in a news release.
"We’re taking actions to address the changes made by YouTube and continue to see significant value in our large and growing user base, We believe these changes will result in a more positive and curated environment for kids, and ultimately, improved monetization that will reward quality content. We’re ideally positioned to benefit from this move over the long term,” Ellenbogen said in the company statement.
In the second quarter, Wildbrain reported positive free cash flow of $13.3 million compared to free cash flow of $12.9 million in the same quarter in fiscal 2019. In the first half of 2020, Wildbrain said it had positive free cash flow of $20.9 million compared to $7.4 million free cash flow in the first half of the prior year.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $25.6 million compared to $22 million in the second quarter of 2019. In the first half of 2020, the company reported adjusted EBITDA of $45.2 million, compared to $39.3 million in the first half of 2019.
WildBrain Spark, Wildbrain's web-based subsidiary, reported increased views of 36 per cent to more than 9.9 billion in the second quarter. and in the first half of the fiscal year views increased by 51 per cent to 22 billion.
CEO Ellenbogen said: “With double-digit growth in viewership this quarter, WildBrain Spark continues to be a valuable platform for our own IP and partner brands. We’re committed to growing views and building WildBrain Spark as an integral part of the overall WildBrain offering of content production, distribution and licensing. We’re also capitalizing on the demand for original kids’ shows with more Peanuts content for Apple TV+ and a global exclusive for a second season of the preschool series, Chip & Potato, for Netflix. Our improving financial position allows us to execute on our plans, focusing on creative development, our AVOD business and IP and brands, all of which will contribute to long-term growth.”
WildBrain Ltd. describes itself as a global leader in kids and family entertainment.
