Engagement Labs Reports Q4 Results Achieving Guidance

Newly Launched TotalSocial™ Data and Analytics Solution Delivers 2016 Revenue of $1M

MONTREAL, Quebec — April 26, 2017 - Engagement Labs Inc. (TSXV: EL) today released results for its fourth quarter and fiscal year ended December 31, 2016. Audited consolidated Financial Statements and Management Report are available on SEDAR’s website at www.sedar.com.

Company update: TotalSocial revenues top $1m in launch year; increase in Q4 revenues, improved gross margin and costs sharply reduced

TotalSocial contributed $1,016,328 of revenue in 2016, with a growing pipeline of new prospects. This revenue comes from 5 clients signed in 2016 from a mix of industries:

  • Banking (UK)
  • Beauty (global contract)
  • Broadcasting (US)
  • Mobile (US)
  • Tax preparation (US)

As the first solution to measure the totality of a brand’s social performance and impact, TotalSocial is a new and innovative measurement and analytics technology for brands and marketers. Launched in 2016, it encompasses both online and offline conversations, providing a scorecard ranking for 500+ US and 350+ UK brands across 18 major industry categories, in addition to diagnostics to guide improvement as well as predictive analytics. On October 3, 2016, the Company announced the closing of $4.3M in financing to fund the growth and further development of TotalSocial.

On August 30, 2016, Engagement Labs announced it had substantially re-aligned its day-to-day activities by exiting low margin businesses (primarily in Toronto) and thereby reducing costs sharply ($2.4M annually) and focusing fully on TotalSocial.

“During Q3 we took some important decisions to right size our business and focus on the area of greatest growth opportunity and improved gross margins, namely TotalSocial. I am pleased to report that our actions created a healthier outcome for us in Q4 and we are well positioned for an improved outcome in FY 2017,” said Engagement Labs CEO Ed Keller. “Further, the $1m in revenue for TotalSocial in 2016 is encouraging as this new product moved from the conceptual stage to commercial viability very quickly.”

Q4 2016 results met or exceeded the guidance given in November 29, 2016 press release:

  Q3 2016 Q4 2016 % improvement
Revenue $905k $1,315k +45%
Gross margin % 14% 52% +271%
Adjusted EBITDA loss -$1,332k -$623k +53%

Q1 revenue is historically lower than Q4 for Engagement Labs, and this pattern will affect Q1 2017 revenue. At the same time, the Company expects the lower cost base will help to mitigate the impact on comparative quarter-to-quarter Adjusted EBITDA loss.

4th Quarter Financial Highlights
Revenue for the fourth quarter was $1,314,557, compared to $905,056 in Q3 2016 and $2,372,296 in Q4 2015. The decrease from the fourth quarter of 2015 is fully attributable to the decline of revenue generated by the Canadian units, in Montreal and Toronto, for which the Company was unsuccessful in signing or renewing contracts for services that are no longer offered by the Company. Revenue from Keller Fay Group increased by 33%, from $790,522 in Q3 2016 to $1,052,473 in Q4 2016, and decreased by 17%, from $1,264,015 in Q4 2015. More importantly, the revenue for TotalSocial product increased by 51% from $266,623 in Q3 2016 to $402,035 in Q4 2016. Gross margin increased from 14% in Q3 2016 to 52% in Q4 2016, and increased from 44% in Q4 2015. Non-GAAP Adjusted EBITDA loss for the fourth quarter 2016 was $623,430, compared to a non-GAAP Adjusted EBITDA loss of $1,332,436 for Q3 2016 and $506,876 for Q4 2015. Basic and diluted loss per share was ($0.01) for the quarter ended December 31, 2016 compared to ($0.06) for the quarter ended September 30, 2016 and ($0.02) for the quarter ended December 31, 2015.

Fiscal year 2016 Financial Highlights
For the year ended December 31, 2016, the Company had revenue of $4,697,118 compared to revenue of $5,756,126 for the year ended December 31, 2015. The decrease of $1,059,008 is fully attributable to the decline of revenue generated by the Canadian units, in Montreal and Toronto, for which the Company did not renew contracts for services that are no longer offered by the Company. The decrease in revenue in the two Canadian units was $2,369,726 in 2016, and was compensated, in part, by an increase of $1,310,718 from Keller Fay Group’s Us and UK activities. Revenue for TotalSocial was $1,016,328 for the year ended December 31, 2016. Gross margin decreased from 38% for the year ended December 31, 2015 to 25% for the year ended December 31, 2016. Non-GAAP Adjusted EBITDA loss for the year was $4,341,185 compared to a non-GAAP Adjusted EBITDA loss of $4,001,155 for the year of 2015. Basic and diluted loss per share decreased by 19% from -$0.16 for the year of 2015 to -$0.13 for the year of 2016. As at December 31, 2016, the Company had cash and restricted cash of $4,536,999, compared to $3,989,697 as at December 31, 2015.

Mr. Keller added: “The Company’s success in achieving substantial cost reductions has given us added momentum in driving our business plan forward, resulting in initial sales endorsements of TotalSocial by some of the largest nationally recognized brands in the US.”

About Engagement Labs
Engagement Labs (TSX VENTURE: EL) is the world's first TotalSocial™ company, offering intelligent data, analytics and insights for marketers. We are leaders in tracking, measuring and benchmarking the social impact of conversations happening around a brand and industry -- both online and offline. Consumer conversations are a proven driver of critical business outcomes, including sales. Engagement Labs' TotalSocial measurement solutions provides brands with unique data fueled insights and powerful analytics to understand online and offline social impact and drive business results.
TotalSocial is the first technology that combines in-depth social listening with comprehensive offline conversation measurement to provide marketers with the only means to measure all the consumer conservation that drive their business results. It identifies the differences between the online and offline conversations about their brands and provides diagnostics about ways to improve performance. TotalSocial includes the power of Engagement Lab’s eValue and amplifies it many times over. eValue is a component of TotalSocial estimated to represent 1/8th of the algorithm. In addition, it builds upon and extends the world’s most extensive word of mouth database developed by the Keller Fay Group and acquired in 2015 when Engagement Labs acquired Keller Fay.

Disclaimer in regards to Forward-looking Statements
Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward-looking statements. Except as required by law, Engagement Labs does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For media inquiries please contact:
KCSA Strategic Communications, ktumino@kcsa.com/asingh@kcsa.com, 212-896-1252 / 212-896-1207
Ed Keller, CEO, Engagement Labs Inc., ed.keller@engagementlabs.com 732-846-6800